Market review this week (2022.02.07-2022.02.11). The pharmaceutical sector fell 3.5% this week, underperforming the Shanghai and Shenzhen 300 index (- 0.8%) and the Shanghai Composite Index (0.97). Due to the impact of PD-1 “failure to go to sea” and unexpected unverified list events, the pharmaceutical sector fell by a large margin. At present, the PE (TTM, negative value) of the pharmaceutical sector is about 27.57 times, close to the lowest valuation of the pharmaceutical industry in recent five years (pe23 times in January 2019). On February 12, 2022, the food and Drug Administration approved Pfizer paxlovid to be listed conditionally, and China began to have oral specific drugs for covid-19 epidemic in a real sense. This week, we will focus on the opportunity for the pharmaceutical industry to get out of the epidemic.
The demand for covid-19 treatment is expected to gradually release and accelerate the upstream dose of covid-19. Paxlovid China has been approved to further expand its huge target group, and a breakthrough in domestic covid-19 drugs is imminent, which is expected to benefit the API industry chain. First, pay attention to Pfizer paxlovid’s cdmo industrial chain; Secondly, the listing and stable supply of domestic oral covid-19 drugs are the basis to ensure the real opening of the country. At present, China has entered phase 3 clinical, with real azvudine and Shanghai Junshi Biosciences Co.Ltd(688180) nucleoside vv116, and other domestic oral drugs with the same mechanism as Pfizer are currently in preclinical stage.
The end of the epidemic is just around the corner, and consumer medical services are expected to improve marginally. The covid-19 epidemic has lasted a long time. Although China’s resumption of production and work has been carried out in an orderly manner, the long-term epidemic prevention measures have had a great negative impact on the economy, and the consumption power is still relatively weak. Therefore, in the post epidemic era, the gradual opening of the country will be conducive to the recovery of China’s consumption power, resulting in the marginal improvement of medical services, Focus on specialty chain medical services and traditional Chinese medicine chain medical services.
Geopolitical panic is expected to dispel and regain confidence in the internationalization of pharmaceutical “manufacturing + innovation”. This time, the State Food and Drug Administration urgently approved Pfizer paxlovid as China’s first oral specific drug to deal with the covid-19 epidemic, which itself shows that there is no need to worry too much about foreign policy and other events, which is expected to dispel the market’s panic about geopolitics to a certain extent and regain the international confidence of “manufacturing + innovation” of medicine. Previously, the problem of poor communication between China and foreign countries caused by the epidemic will be gradually solved, and the China Meheco Group Co.Ltd(600056) industry will continue to deeply practice the internationalization path.
Investment suggestion: the pharmaceutical industry has many subdivided fields, which have benefited and lost in this round of covid-19 epidemic. At present, affected by a variety of events, the industry valuation has been reduced to a very prominent position of cost performance. However, we believe that the evergreen attribute of medicine has not changed and maintain the “recommended” rating for the pharmaceutical industry.
This week’s stock recommendations focus on Portfolio:
Growth Portfolio: Pharmablock Sciences (Nanjing) Inc(300725) , Beijing Balance Medical Technology Co.Ltd(688198) , Eyebright Medical Technology(Beijing) Co.Ltd(688050) ; Robust combination: China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) , Chongqing Taiji Industry (Group) Co.Ltd(600129) , Baicheng medicine; Elastic combination: Shanghai Junshi Biosciences Co.Ltd(688180) , Porton Pharma Solutions Ltd(300363) , GUSHENG Hall
Risk tip: there is a risk of new variants of covid-19 virus. The development of oral covid-19 drugs in China is less than expected, and the epidemic control is less than expected.
