Core view
In order to better observe the changes of valuation, rise and fall in various segments of medicine, Anxin pharmaceutical team re divided the core targets of the pharmaceutical industry into three categories: Pharmaceutical upstream (including CXO, scientific research preparations, API, pharmaceutical equipment, etc.), pharmaceutical midstream (including drugs, vaccines, devices, consumables, etc.), consumer medicine (including medical services, brand traditional Chinese medicine, retail pharmacy, household medical devices, etc.). Among them, the Valuation: (1) The valuation of upstream medicine was relatively low from 2018 to 2019; the overall valuation of upstream medicine continued to move upward from 2020; since 2021, there was differentiation within the valuation of upstream medicine, and the valuation of API continued to decline due to price fluctuations and exchange gains and losses, while the performance of CXO and life Science reagents continued to grow high, and the valuation range continued to rise to the first echelon The average value, peak value and minimum value of PEG in the upstream (excluding API) are 2.60, 3.17 and 1.82 respectively; (2) the valuation of the middle reaches of medicine is relatively high from 2018 to 2020; from 2020 to now, due to the suppression of price reduction and other policies, the valuation range has gradually moved down to the third echelon. (3) The valuation of downstream consumer healthcare was relatively high from 2018 to 2020; from 2021 to now, due to the disturbance of policy pressure, the valuation range gradually fell to the second echelon. In terms of rise and fall: from Q1 to 2021, Q4 pharmaceutical upstream opened a unique market, with 11 quarters leading the rise in 16 quarters. Among them, from 2021q4 to now, Q4 pharmaceutical upstream, pharmaceutical midstream and consumer healthcare Medical expenses rose or fell by – 10.49%, – 8.40% and – 4.73% respectively.
CXO: according to the exclusive CXO multi-dimensional tracking system of Anxin pharmaceutical, the current CXO industry still maintains a high outlook. At the macro level, according to the data of CrunchBase, the investment and financing amount of VC & PE in the pharmaceutical industry increased by 54.38% year-on-year from January to November 2021, and the investment and financing of innovative drugs continued to grow at a high level; At the meso level, from 2021q1 to Q3, the net profit attributable to the parent company of China’s CXO listed companies increased by 49.28% year-on-year, and the performance continued the high growth trend; At the micro level, the continuous investment in fixed assets / projects under construction and the rapid growth in the number of employees indicate that the future performance of CXO listed companies is expected to grow high. Recommended targets: Wuxi Apptec Co.Ltd(603259) , Pharmaron Beijing Co.Ltd(300759) , Shanghai Haoyuan Chemexpress Co.Ltd(688131) , etc.
Life science services: the “water seller” of life science innovation, the acceleration of securitization in the upstream and downstream of the industrial chain, or it can become a strong undertaker of CXO plate. Scientific research reagents, experimental consumables, instruments and equipment and other sub fields are blooming everywhere. Under the catalysis of the epidemic, import substitution has become the general trend. Recommended targets: Shanghai Titan Scientific Co.Ltd(688133) , Nanjing Vazyme Biotech Co.Ltd(688105) , Acrobiosystems Co.Ltd(301080) , Qingdao Haier Biomedical Co.Ltd(688139) , Suzhou Nanomicro Technology Co.Ltd(688690) , Sino Biological Inc(301047) , etc.
API: under the influence of medium and short-term dimension, upstream cost transmission and downstream inventory digestion, characteristic API is expected to start a new round of price increase cycle. At present, the price of valsartan has gradually bottomed out, and telmisartan, irbesartan, calcium pantothenate, caffeine and other varieties have gradually begun to increase their prices. In the medium and long term, with the continuous implementation of orders from major customers, characteristic API companies are expected to realize cdmo business transformation. Recommended targets: Apeloa Pharmaceutical Co.Ltd(000739) , Zhejiang Tianyu Pharmaceutical Co.Ltd(300702) , Ningbo Menovo Pharmaceutical Co.Ltd(603538) , Aurisco Pharmaceutical Co.Ltd(605116) , etc.
Pharmaceutical preparations: Several heavyweight drugs are included in the medical insurance catalogue in 2021, which is expected to improve the problem of difficult access in 2022, accelerate the penetration in hospitals and pharmacies, and realize the rapid expansion of sales. In addition, under the background of the superposition of innovative drugs with medical insurance cost control, it has become a general trend for innovative drugs to go to sea. In 2022, many innovative drugs in China are expected to be approved by FDA for listing, and the wave of innovative drugs to go to sea will gradually set sail; In terms of clinical data disclosure, after years of clinical trial layout, Chinese innovative drug enterprises are expected to usher in intensive clinical data disclosure in 2022, with many short-term catalytic nodes. Recommended targets: Cinda biology, Rongchang biology, kangfang biology, Humanwell Healthcare (Group) Co.Ltd(600079) , Shenyang Xingqi Pharmaceutical Co.Ltd(300573) , Huadong Medicine Co.Ltd(000963) , etc.
Vaccine: in the long run, the number of batches issued and the share of non immunization planned vaccines have increased year by year, driving the upward development of the vaccine industry; In the short term, driven by covid-19, China’s vaccine industry has accumulated a large amount of cash under the domestic + export mode of covid-19 vaccine in 21 years, which lays a good capital foundation for future innovation and development on the one hand, and lays a good foundation for other types of vaccines to go to sea in the future on the other hand. Recommended targets: Chongqing Zhifei Biological Products Co.Ltd(300122) , Shenzhen Kangtai Biological Products Co.Ltd(300601) , Beijing Wantai Biological Pharmacy Enterprise Co.Ltd(603392) , etc.
Medical devices: the epidemic performance has a great impact on the valuation of segments and individual stocks. Under the background that the market is generally unwilling to give high valuation to the epidemic beneficiary stocks, We think we can find the expected difference from several aspects: (1) after the epidemic performance ebbed in 22 years, we can still maintain high growth of endogenous business: such as pharmaceutical equipment (Sensong international, Shinva Medical Instrument Co.Ltd(600587) ), sensing control ( Zhende Medical Co.Ltd(603301) , Jiangsu Yuyue Medical Equipment And Supply Co.Ltd(002223) , Shinva Medical Instrument Co.Ltd(600587) ), household medical devices ( Jiangsu Yuyue Medical Equipment And Supply Co.Ltd(002223) ), and some covid-19 detection leaders ( Zhejiang Orient Gene Biotech Co.Ltd(688298) ); (2) Wrong killing of epidemic situation: the benefit attribute of epidemic situation of some companies is overestimated by the market to a certain extent, resulting in “wrong killing”, such as some leading life science equipment ( Qingdao Haier Biomedical Co.Ltd(688139) ); (3) policy implementation category: after the centralized collection of spine is implemented, the target of high-quality and high-value consumables ( Micro-Tech (Nanjing) Co.Ltd(688029) , Shanghai Microport Endovascular Medtech (Group) Co.Ltd(688016) ) has the possibility of valuation repair.
Medical services: the reform policy of guiding pricing of medical services has a far-reaching impact on the industry. Private medical institutions are expected to maintain a competitive advantage by virtue of their fine management ability. After 21 years of three rounds of valuation correction, the sector valuation has been basically restored to the pre epidemic level. It is suggested to focus on the consumer medical track with long-term growth potential, and the leading companies in the subdivided fields have more investment value. Recommended targets: Aier Eye Hospital Group Co.Ltd(300015) , Topchoice Medical Co.Inc(600763) , Jinxin reproduction, Guizhou Xinbang Pharmaceutical Co.Ltd(002390) , Shanghai General Healthy Information And Technology Co.Ltd(605186) .
Risk tip: the investment and financing of innovative drugs slowed down, resulting in a decline in the prosperity of the upstream CXO industry; The price reduction pressure of midstream drugs and consumables exceeded expectations; Quality problems in downstream medical services; Stagflation weakens consumption capacity and affects the process of consumption upgrading.
