The high base superimposed epidemic situation has been repeated, the sector has been under phased pressure in 21 years, and the bearing is expected to rise in 22 years. Benefiting from the catalysis of the epidemic in 2020, the average growth rate of same store sales of retail pharmacies was 13.81%, the highest in recent five years. Although the epidemic situation was controlled as a whole in 2021, the local prevention and control policies were not relaxed. In order to avoid the gathering of people under the epidemic situation, the promotional activities of pharmacies were also reduced compared with previous years, resulting in the reduction of passenger flow and the slowdown of the climbing of new stores. In addition, in areas with repeated epidemics, the sale of anti fever, cough, antiviral and antibacterial drugs is limited or needs to be strictly registered, which also has a great impact on the passenger flow and sales of retail pharmacies. The high base effect catalyzed by the epidemic has gradually weakened since Q4 in 2021, superimposed with the release of new store profits, and the inflection point of performance in 2022 is clear.
The expansion of leading enterprises is accelerated, and new stores are expected to contribute to the increment since 22 years. In the first three quarters of 2021, the number of net stores of major listed pharmacies such as Dashenlin Pharmaceutical Group Co.Ltd(603233) , Yifeng Pharmacy Chain Co.Ltd(603939) , Lbx Pharmacy Chain Joint Stock Company(603883) , Yixintang Pharmaceutical Group Co.Ltd(002727) , Yunnan Jianzhijia Health-Chain Co.Ltd(605266) was 1590 / 1255 / 1770 / 1151 / 557 respectively, all exceeding the number of the whole year in 2020, and the expansion of stores of leading pharmacies increased significantly. Affected by the epidemic and other factors in 2021, the climbing speed of new stores in the industry generally slowed down. We believe that the newly opened stores in 21 years are expected to contribute a significant increase in revenue from the first half of 2022. Due to the lengthened break even cycle, the profit contribution is expected to be reflected in the second half of the year. By Q3 of the 21st year, Yifeng Pharmacy Chain Co.Ltd(603939) , Dashenlin Pharmaceutical Group Co.Ltd(603233) , Lbx Pharmacy Chain Joint Stock Company(603883) , Yixintang Pharmaceutical Group Co.Ltd(002727) had 17%, 16%, 18% and 14% of the secondary new stores respectively, which were all at historical highs, and will continue to provide performance momentum in the future.
Under the policy encouragement, the concentration of pharmacy industry will continue to increase steadily. In October 2021, the guiding opinions on promoting the high-quality development of the drug circulation industry during the 14th Five Year Plan period issued by the Ministry of Commerce proposed: it is planned to cultivate 5-10 drug retail chain enterprises exceeding 50 billion in the next five years; In 2025, the drug retail chain rate will be close to 70%. In 2020, the total number of pharmacies in China was 546000, with an overall chain rate of 57.3%, From the perspective of the overall environment of the industry, with the promotion of pharmacy classification policy and the continuous strengthening of industry standardization, the differentiation will be accelerated. The leading enterprises have obvious advantages in information construction and talent reserve, and are expected to take the lead in the wave of industry integration.
Dual channel superimposed chronic disease coordination, accelerated professional transformation of retail pharmacies, and is expected to undertake more outflow prescriptions. In recent years, the proportion of prescription sales in retail pharmacies has been steadily increasing. According to the data of China pharmacy, the proportion of prescription drug sales was 33.8% in 2015 and 43.6% by 2020. In 2021, the “dual channel” new policy was introduced, the payment standards of dual channel varieties in and out of hospital medical insurance were unified, and the value of out of hospital channels of retail pharmacies was further recognized. Since the second half of 2021, the dual channel policies of all provinces have been implemented one after another, the dual channel varieties continue to expand, and retail pharmacies are expected to undertake more external prescriptions. In addition, the access of pharmacies to the medical insurance overall planning account will continue to be promoted, and the leading chain pharmacies with more advantages in professional qualification, category, logistics and other aspects will benefit significantly.
Investment suggestion: the weakening of base effect and the release of new store profits, the upward trend of the performance inflection point of leading chain drugstores in 2022 is clear, and it is expected to usher in valuation repair; In the long run, the industry concentration will continue to increase steadily under the policy encouragement, the outflow of prescriptions under the resonance of multiple factors is expected to accelerate, the industry has broad long-term development space, and the industry leaders are expected to further expand their leading advantages. It is suggested to focus on the leading chain drugstores with capital and management advantages: Yifeng Pharmacy Chain Co.Ltd(603939) , Dashenlin Pharmaceutical Group Co.Ltd(603233) , Lbx Pharmacy Chain Joint Stock Company(603883) , Yixintang Pharmaceutical Group Co.Ltd(002727) , Yunnan Jianzhijia Health-Chain Co.Ltd(605266) .
Risk warning event: store expansion is less than expected risk, and medical policy disturbance risk
