This week, we will report the relevant information of our gene sequencing industry chain.
DNA sequencing refers to the technology of obtaining the base sequence of target DNA fragments. Upstream of the gene sequencing industry chain are suppliers of instruments, consumables and reagents related to gene sequencing, providing gene sequencing platforms and solutions. Gene sequencing technology is the core of gene sequencer. Among a variety of gene sequencing technologies, high-throughput sequencing technology has successfully promoted the process of large-scale commercialization of gene sequencing due to its advantages of large flux, high precision and relatively low cost compared with Sanger sequencing technology. It is the mainstream gene sequencing technology at present.
With the large-scale use of high-throughput sequencing technology, the cost of human whole genome sequencing has been reduced rapidly, to about US $100000 in 2009 and about US $1000 in 2015. At present, the dnbseq-t7 series of Huada Zhizao sequencer can reduce the sequencing cost to about $500.
With the joint promotion of expanding application scenarios and further strengthening of sequencing capacity, the global gene sequencer and consumables market has maintained double-digit growth in the past few years. It is estimated that the global gene sequencer and consumables market will reach US $24.58 billion by 2030, and the CAGR will be 18.2% from 2019 to 2030; China’s gene sequencer and consumables market will reach 30.39 billion yuan, and the CAGR will reach 19.7% from 2019 to 2030.
Huada Zhizao breaks the monopoly of foreign enterprises, and its independently developed technical route is internationally competitive. At present, the enterprises with the ability to independently develop and mass produce clinical high-throughput gene sequencer mainly include Illumina, thermofisher and Huada Zhizao. Due to the early start of overseas gene testing technology and the long development time of the industry, overseas suppliers occupy a large market share in gene sequencing instruments, equipment and reagent consumables. At present, in the global gene sequencer supplier market, Illumina has a high market share because of its first mover advantage.
Although Huada Zhizao was founded relatively late, the performance of its sequencer has been gradually improved with the continuous updating and improvement of the company’s products: Huada Zhizao independently developed a sequencing technology route combining DNA nanospheres and joint probe anchored polymerization. The sequencing accuracy of the gene sequencer is high and the cumulative error rate of amplification is very low, Production quality and product price have certain advantages over competitive products. In China’s high-throughput gene sequencer supplier market, Illumina and Huada Zhizao currently occupy a large market share.
Suggested attention: Huada Zhizao (about to go public through IPO).
Market review: the biomedical sector rose 1.91% this week, outperforming the CSI 300 index by 3.59 PCT and the gem index by 0.89 PCT, ranking among the top 30 CITIC primary industries. Most of CITIC pharmaceutical sub sectors rose this week, including chemical raw materials and medical services, with increases of 4.44% and 3.67% respectively; Traditional Chinese medicine decoction pieces and medicine circulation sectors fell.
Investment suggestions:
Recent view: the bottom trend of the sector is gradually clear. Considering that the relevant policy guidance on the fundamentals has not changed, it is still recommended to stick to the stocks with strong certainty of performance growth in the current annual report and the first quarterly report, grasp the valuation safety cushion, control the fluctuation risk and wait for the sector to pick up. In the short term, we should continue to suggest two ideas: no game policy, and on the premise that the policy is relatively immune, it is preferred:
1. Rapid growth, continuous improvement of performance and reasonable valuation range.
1) vaccine: Beijing Wantai Biological Pharmacy Enterprise Co.Ltd(603392) , Chongqing Zhifei Biological Products Co.Ltd(300122) ;
2) oral consumables: Yantai Zhenghai Bio-Tech Co.Ltd(300653) (active biological bone will be approved soon); Angel of the times (local invisible orthodontic leader)
3) life related upstream: Jenkem Technology Co.Ltd(688356) (PEG derivative), Nanjing Vazyme Biotech Co.Ltd(688105) (molecular enzyme), Acrobiosystems Co.Ltd(301080) (recombinant protein reagent).
2. Downside risk is limited, waiting for Fundamentals to catalyze.
1) blood products sector (leading enterprises are expected to benefit from the 14th five year plan of pulp stations in many provinces and further open the growth of pulp volume, including Beijing Tiantan Biological Products Corporation Limited(600161) and Hualan Biological Engineering Inc(002007) );
2) pharmacy sector ( Yifeng Pharmacy Chain Co.Ltd(603939) , Yixintang Pharmaceutical Group Co.Ltd(002727) , Lbx Pharmacy Chain Joint Stock Company(603883) , Dashenlin Pharmaceutical Group Co.Ltd(603233) , Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) (short-term policy disturbance does not change long-term development logic),
3) auxiliary reproductive Service Leader: Jinxin reproductive;
4) China sublingual desensitization faucet Zhejiang Wolwo Bio-Pharmaceutical Co.Ltd(300357) .
Medium and long term perspective: focus on the invariance in change and look for opportunities for relative certainty
With the continuous expansion of the impact of centralized mining, the opportunity at the investment level lies in that the foundation for the establishment of centralized mining is that “multiple enterprises supply mutually replaceable varieties, and the production capacity can be supplied indefinitely in theory”. The basis for enterprises to maintain product price and profit space is the competition pattern, and the dynamic excellent competition pattern lies in the ability to continuously develop products and product iteration, which remains unchanged.
Start DRG / Dip reform in 2022. As a means of payment, the core role of DRGs is to achieve a balance between improving the efficiency and quality of diagnosis and treatment and ensuring the sustainability of medical insurance through refined medical insurance management. Hospitals that cannot actively adapt to the rules of the game will be eliminated. The opportunity at the investment level lies in that excellent private medical institutions have paid more attention to cost control for a long time, with higher operation efficiency and competitive advantage.
The general trend of industrial development is: China Meheco Group Co.Ltd(600056) industrial manufacturing is upgraded, the competitiveness is continuously improved, and moves upstream in the global production value chain.
The competitiveness of upstream raw materials is prominent:
1) biological “core” – life science support industrial chain: domestic enterprises have developed rapidly, reagent quality has reached the international leading level, and their competitiveness has been continuously improved. Entering the overseas market through global comparative advantage, China benefits from domestic alternative logic, with high growth and great development potential.
2) IVD raw materials and consumables: covid-19 epidemic opens the window for the transfer of global IVD raw materials and consumables production and supply chain to China.
Accelerated internationalization process: with the breakthrough of key technologies of Chinese enterprises, not only the localization rate of the Chinese market is accelerating, but also some high-quality enterprises have the strength to compete with international giants.
1. Manufacturing upgrading of pharmaceutical industry and continuous improvement of Competitiveness:
Upstream: life science support industry chain, IVD raw materials and consumables, related targets: Nanjing Vazyme Biotech Co.Ltd(688105) , Sino Biological Inc(301047) , Acrobiosystems Co.Ltd(301080) ;
High end medical devices: endoscope and sequencer, related subjects: Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , Qingdao Novelbeam Technology Co.Ltd(688677) , Sonoscape Medical Corp(300633) , Aohua endoscope, Micro-Tech (Nanjing) Co.Ltd(688029) ; Huada Zhizao (IPO application in progress);
International layout of medical devices, related subjects: Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) ;
Others: Jenkem Technology Co.Ltd(688356) , Shandong Pharmaceutical Glass Co.Ltd(600529) .
2. Pay attention to the supply pattern: blood products, related subjects: Beijing Tiantan Biological Products Corporation Limited(600161) , Boya Bio-Pharmaceutical Group Co.Ltd(300294) and Palin
Biology; Desensitization preparation, related subject matter: Zhejiang Wolwo Bio-Pharmaceutical Co.Ltd(300357) .
3. Private medical service sector with differentiated competition. Ophthalmology, Aier Eye Hospital Group Co.Ltd(300015) ; Dentistry, general policy
Medical treatment; Assisted reproduction, Jinxin reproduction; Cancer treatment services, Hagia.
4. Pharmacy sector. Related objects: Yifeng Pharmacy Chain Co.Ltd(603939) , Dashenlin Pharmaceutical Group Co.Ltd(603233) , Lbx Pharmacy Chain Joint Stock Company(603883) and Yixintang Pharmaceutical Group Co.Ltd(002727) .
5. Aging and consumption upgrading.
Class II vaccine, related targets: Chongqing Zhifei Biological Products Co.Ltd(300122) , Beijing Wantai Biological Pharmacy Enterprise Co.Ltd(603392) and Changchun Bcht Biotechnology Co(688276) ;
Invisible orthodontics, related subjects: Angel of the times;
Risk tips: policy risk, price risk, performance risk less than expected, product R & D risk, expansion progress risk less than expected, medical accident risk, uncertainty of overseas covid-19 virus epidemic, M & A integration risk less than expected, etc.
