Key investment points:
Market review: in January 2022, the pharmaceutical and biological (Shenwan) sector increased by – 9.25%, ranking 27th among Shenwan’s 28 primary industries. As of February 10, 2022, the average value of PE (TTM, overall method) in the pharmaceutical and biological sector is 28.99 times, which is in the last 9.60% quantile since 2012.
The 14th five year plan for the development of pharmaceutical industry was released, focusing on innovation, stable and controllable industrial chain, manufacturing upgrading and internationalization. On January 30, the Ministry of industry and information technology and other nine departments jointly issued the “14th five year plan” for the development of pharmaceutical industry. The plan focuses on the following aspects: (1) innovation leading. The average annual growth rate of R & D investment in the whole industry is more than 10% (the average annual growth rate of R & D investment during the 13th Five Year Plan period is about 8%), and the intensity of innovation investment is increased. Support enterprises to face the global market, focus on new targets and new mechanism drugs, carry out R & D layout, actively lead innovation and put forward higher requirements for innovation quality. (2) The industrial chain is stable and controllable. Supplement the short board of the industrial chain and improve the stability and competitiveness of the industrial chain. (3) Manufacturing upgrade. Promote the high-end, intelligent and green development of the pharmaceutical industry. (4) Internationalization has been accelerated in an all-round way. A number of large pharmaceutical companies with global layout of R & D and production and high proportion of international sales have been formed, and breakthroughs have been made in the “going out” of traditional Chinese medicine. In terms of investment suggestions, it is suggested to focus on investment opportunities in differentiated innovation, internationalization of innovative drugs, innovation Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) chain, high-end pharmaceutical manufacturing and other fields.
The UVL inventory event has limited impact on CXO enterprises. It is suggested to pay attention to the domestic substitution opportunities in the upstream of life sciences. On February 8, the Bureau of industry and safety (BIS) of the U.S. Department of Commerce listed drug Ming organisms on the “unverified list” (UVL). For China’s CXO industry, considering: (1) there are many suppliers of upstream equipment and consumables, and the domestic substitution ability is continuously improved; (2) China’s CXO industry has outstanding advantages in cost, efficiency, scale and supply chain, and strong international competitiveness; We don’t think it’s necessary to pay much attention to the improvement of CXO’s structure and performance price ratio in the early stage. At the same time, we don’t think it’s worth paying attention to the significant deterioration of CXO’s basic service capability after the adjustment of CXO’s structure and performance price ratio. In addition, this event reminds us once again that we should pay attention to the investment opportunities of domestic alternatives in the upstream of life sciences.
Risk warning: the price decline of consumables and drugs exceeds the expected risk; Failure risk of innovative drug research and development; Industry policy risk; The risk of intensified industry competition; Covid-19 epidemic recurrence risk, etc.
