Key investment points
Market review: this week, the pharmaceutical biological index fell 2.73%, 3.56 percentage points lower than the CSI 300 index, and the industry ranked 29th in terms of rise and fall. Since the beginning of 2022, the pharmaceutical industry has fallen by 17.27%, 10.4 percentage points lower than the CSI 300 index, and the industry ranks 29th in terms of rise and fall. This week, the valuation level (pe-ttm) of the pharmaceutical industry was 27.63 times, with a premium rate of 77% (- 9.5pp) relative to all a shares, 34% (- 6.6pp) relative to all A-Shares excluding banks, and 117% (- 12.1pp) relative to CSI 300. In terms of pharmaceutical sub industry, the five sub industry sectors rose this week, and vaccine was the sub industry with the largest increase, with an increase of about 6.4%. Hospitals and pharmaceutical circulation sub industries ranked second and third, with an increase of about 1.7% and 1.4% respectively. The sub industry with the smallest decline since the beginning of the year is blood products, down about – 6.5%.
The independent and controllable industrial chain is highlighted, and the sea route of innovative drugs is clear. The pharmaceutical sector continued to adjust this week, which was mainly affected by three events: 1) the industry and Security Bureau of the U.S. Department of Commerce updated the unverified list (UVL) and announced the inclusion of 33 Chinese entities, including Yaoming biological’s Shanghai and Wuxi subsidiaries, triggering a correction in the CXO sector. The UVL event further highlights the importance of independent control of the industrial chain, and the domestic substitution process of core equipment, instruments, consumables and reagents is expected to accelerate in the future. 2) Cinda / Lilly cindilimab officially announced the results of the tumor drug advisory committee (ODAC) convened by the FDA. The FDA requires additional supplementary tests to prove the applicability of cindilimab in the American population and medical practice in the United States. The sea route of innovative drugs is clearer, and the leading pharmaceutical enterprises with original innovation are expected to continue to benefit. 3) The State Information Office held a regular policy briefing. The deputy director of the State Medical Insurance Administration introduced that in 2022, the centralized purchase of drugs was carried out in three sectors: chemical drugs, Chinese patent drugs and biological drugs. High value medical consumables focused on orthopedic consumables, drug balloons, dental implants and other varieties. Current time point: it is suggested that investors focus on: 1) traditional Chinese medicine consumer goods with immune attribute of medical insurance; 2) Independent and controllable directions of pharmaceutical industry chain, such as equipment field; 3) Undervalued varieties with upward business trend;
This week’s elastic combination: Shanghai Runda Medical Technology Co.Ltd(603108) (603108), Chongqing Taiji Industry (Group) Co.Ltd(600129) (600129), Tianjin Zhongxin Pharmaceutical Group Corporation Limited(600329) (600329), Zhejiang Shouxiangu Pharmaceutical Co.Ltd(603896) (603896), Truking Technology Limited(300358) (300358), Haisco Pharmaceutical Group Co.Ltd(002653) (002653).
This week’s robust portfolio: Jiangsu Hengrui Medicine Co.Ltd(600276) (600276), Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) (300760), Baiji Shenzhou (688235), Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) (600436), China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) (000999), Topchoice Medical Co.Inc(600763) (600763).
Risk warning: drug price reduction risk; The implementation progress of medical reform policy is lower than the expected risk; Risk of R & D failure
