The upsurge of innovation will not decrease and embrace the main line of innovation. The aging of the population is deepening, there are a large number of unmet medical and health needs, the reform of drug audit is unprecedented, the centralized purchase with quantity tends to be normal, and accelerating innovation is the key way out. We believe that a new era of pharmaceutical innovation has come. In terms of innovative drugs, the number of clinical applications and approvals has increased rapidly, heavy varieties are gradually entering the harvest period, and the expansion of indications + combination of drugs + inclusion in medical insurance help innovative drug enterprises break through. In terms of innovative devices, policies continue to support, domestic medical devices welcome good opportunities for development, the public health system complements its weaknesses and then upgrades, resulting in huge market increment, continuous increase in R & D investment, capital pursuit, and accelerated development of domestic medical devices. We believe that the rise of domestic medical devices and import substitution is at the right time.
The great health boom continued, and consumption upgrading promoted growth. On the one hand, policy support is superimposed on consumption upgrading, and the consumption of traditional Chinese medicine ushers in a good opportunity for development. We believe that consumer traditional Chinese medicine has the attributes of medical insurance, immunity and consumption, and has high investment value. On the other hand, with the increase of residents’ income and health care expenditure, the demand for specialized medical services in China continues to increase, while the number, number of beds and reception capacity of private specialized hospitals continue to increase and improve, and the supply capacity of specialized medical services also increases. At the same time, supporting policies for social medical services have been issued one after another to promote the rapid development of specialized medical services. We are optimistic about maintaining high growth and high outlook in the field of specialized medical treatment.
The operation of the pharmaceutical industry has an obvious improvement trend, and the relative valuation of the sector is at the historical medium level. The impact of the epidemic gradually dissipated, the growth rate of medical insurance revenue and expenditure recovered, the business volume of medical institutions and hospitals rebounded significantly, and the income growth of pharmaceutical manufacturing industry exceeded the GDP growth again. The performance of the pharmaceutical sector has been weak since the beginning of the year, and the relative valuation of the sector is at the historical medium level. In the third quarter, the pharmaceutical position was still over allocated, and the concentration of heavy positions increased. There is no need to be overly pessimistic about the attack of the Omicron variant. We believe that under the background of repeated global epidemics, the comparative advantage of the pharmaceutical industry is expected to continue, and the anti epidemic sector is expected to continue to maintain high economic growth. At the same time, benefiting from the acceleration of population aging, consumption upgrading and other factors, the pharmaceutical sector, as a rigid demand in domestic demand, has a more certain industrial logic of long-term sustainable development.
Investment suggestion: be optimistic about the high-quality track leader of innovation Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) chain and consumption attribute. We believe that the pharmaceutical sector has high allocation value and are optimistic about: (1) innovation and innovation service industry chain, and pay attention to enterprises with sustainable innovation ability. (2) high quality track leaders with consumption attribute.
Research framework and main conclusions:
In this report, we analyzed how the great changes in the industrial environment in recent years led to the development of pharmaceutical innovation, and deeply analyzed the investment logic of high-quality tracks such as innovative pharmaceutical machinery industry chain, innovative vaccine and medical consumption. We believe that, on the one hand, the “new” era of pharmaceutical innovation has come, and heavy varieties have gradually entered the harvest period and accelerated to the world; On the other hand, with the deepening of population aging, the continuous improvement of medical demand and consumption level, the value of high-quality medicine sector with innovation and consumption attributes is highlighted. In addition, we analyzed the industry operation data such as medical insurance data, medical service data and the growth rate of pharmaceutical manufacturing industry. We believe that the industry has gradually dissipated affected by the epidemic and the improvement trend is obvious. We reviewed the market performance of the pharmaceutical sector since the beginning of 2021, analyzed the valuation of the international Chinese industry, and compared the valuation and growth of international giants and Chinese leading companies. In terms of investment strategy, we recommend innovation, innovative service industry chain and high-quality track leaders with consumption attributes.
Our different views from the market:
We believe that the “new” era of pharmaceutical innovation has arrived, and some enterprises with early layout, R & D and innovation will gradually enter the harvest period. Innovative drug investment has become the top priority of pharmaceutical investment, and China is expected to gain a place in global drug creation in the future.
Investment strategy: recommend innovation, innovative service industrial chain and high-quality track leaders with consumption attribute
We believe that the new era of pharmaceutical innovation and R & D has arrived. We are optimistic about: (1) innovation and innovation service industry chain, and pay attention to enterprises with sustainable innovation ability, such as Jiangsu Hengrui Medicine Co.Ltd(600276) , Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , Wuxi Apptec Co.Ltd(603259) , Porton Pharma Solutions Ltd(300363) , Chongqing Zhifei Biological Products Co.Ltd(300122) . (2) we are optimistic about high-quality racing track Longtou company with consumption attribute, such as Jianmin Pharmaceutical Group Co.Ltd(600976) , Aier Eye Hospital Group Co.Ltd(300015) , Topchoice Medical Co.Inc(600763) , Changchun High And New Technology Industries (Group) Inc(000661) , Bloomage Biotechnology Corporation Limited(688363) .
Catalysts for Industry Performance:
The support of medical insurance and other industrial policies for innovative drugs exceeded expectations; Technological breakthroughs in precision medicine and other fields exceeded expectations.
Main risk factors:
The pressure of cost control and price reduction is higher than expected, and the expansion of drug and high-value consumables procurement is higher than expected.
