The closed loop of “vaccine + detection + therapeutic drugs” has been gradually formed, the covid-19 epidemic has become normalized, the covid-19 epidemic will not disappear in the short term, and the closed loop of medium and long-term prevention and control has been basically formed. China implements a dynamic clearing strategy, adopting various methods, such as ① vaccination to establish an immune barrier, ② rapid diagnosis of patients through nucleic acid testing, and ③ treatment with various drugs. From the perspective of investment, the driving factors of covid-19 industrial chain are mainly the changes of prevention and control strategies in China and abroad and the progress of product supply. From the perspective of prevention and control policies, countries around the world are promoting covid-19 vaccine vaccination. Overseas countries mainly focus on antigen testing, and compulsory free testing is gradually cancelled. China’s antigen testing has not been liberalized, Covid-19 oral drug has not been widely used in clinical treatment. In terms of supply, the current production capacity of covid-19 test kits (nucleic acids and antigens) in China and vaccines outside China can basically meet the global demand, and the main gap is covid-19 oral drugs.
Covid-19 antigen detection may become an important supplementary means for epidemic prevention and control in China. According to the latest statement, “improve the normalization prevention and control and emergency response mechanism for sudden outbreaks, highlight the focus of epidemic prevention and control in port areas, and hold the bottom line of no large-scale rebound of the epidemic”. We believe that Chinese antigen detection may become an important supplementary means for epidemic prevention and control, mainly based on the following three points: 1 Chinese antigen detection products are mature, and the sensitivity can reach 90%; European antigen testing has been implemented for more than a year and has been verified for epidemic prevention and control. 2. The production capacity of products is sufficient. In 2021, China exported covid-19 test kits worth 66.893 billion yuan overseas, and the production expansion cycle of enterprises is relatively short. 3. Specific application scenarios require rapid response to antigen detection. For example, places such as ports, airports and sea transportation are places with high risk of covid-19 virus infection, and migrant workers such as takeout and taxi drivers are high-risk transmission sources. If covid-19 virus infection spreads widely in these places and populations, the epidemic situation is easy to spread quickly, the cost of nucleic acid detection is high and the detection speed is slow, Antigen detection or provide more convenient control.
The enhanced vaccination of covid-19 vaccine in China will be accelerated, and sequential vaccination and homologous vaccination will be promoted simultaneously. As of February 25, 2022, the total number of vaccinations is 1.269 billion, and about 554 million people have completed the third dose of enhanced vaccination. In the future, about 680 million people will be required for the third dose of enhanced covid-19 vaccination, accounting for 55% of the basic immunization. At present, sequential vaccination is the same as homologous vaccination, which is free of charge. It is preferred to be implemented in key areas such as ports and borders. Other people carry out sequential and enhanced vaccination according to needs. We expect that manufacturers of covid-19 vaccine for the third injection will be in a competitive state.
Covid-19 oral drugs are in short supply, and domestic products are undergoing clinical trials
At present, two covid-19 oral drugs have been approved for marketing, including molnupiravir of MSD and paxlovid of Pfizer Covid-19 oral medicine is in short supply. Pfizer is actively improving its production capacity. According to Pfizer’s 2021 annual report, it is expected that the output of paxlovid will reach 30 million courses in the first half of 2022, 90 million courses in the second half of 2022 and 120 million courses in the whole year. According to MSD’s announcement, 10 million courses of molnupiravir have been produced by the end of 2021, and it is expected that at least 20 million courses of molnupiravir will be produced in 2022 Domestic drugs such as r80 Domestic 3clpro inhibitors are still in the early stage of research and development. At present, Frontier Biotechnologies Inc(688221) (injection) has entered clinical phase 1.
Investment suggestion: covid-19 epidemic is expected to coexist with humans in the medium and long term, and the trend of the epidemic is highly uncertain. It is suggested to screen theme investment opportunities from three dimensions: 1) good demand sustainability, 2) better competition pattern, and 3) traditional business has certain valuation support. It is recommended to pay attention to the relevant subjects:
1) covid-19 antigen detection: Zhejiang Orient Gene Biotech Co.Ltd(688298) , Guangzhou Wondfo Biotech Co.Ltd(300482) , anxiu biology, Hangzhou Biotest Biotech Co.Ltd(688767) , Hangzhou Alltest Biotech Co.Ltd(688606) ; 2) Vaccine booster: Chongqing Zhifei Biological Products Co.Ltd(300122) , Cansino Biologics Inc(688185) , Shenzhen Kangtai Biological Products Co.Ltd(300601) ; 3) Covid-19 drugs: Shanghai Junshi Biosciences Co.Ltd(688180) , Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) ;
4) cdmo supply chain: Wuxi Apptec Co.Ltd(603259) , Asymchem Laboratories (Tianjin) Co.Ltd(002821) , Porton Pharma Solutions Ltd(300363) .
Risk tips: covid-19 virus mutation risk, covid-19 antigen detection release is less than expected, covid-19 vaccination is less than expected, covid-19 drug research and development is less than expected, covid-19 drug preparation process is uncertain, which is the subjective expectation of analysts, covid-19 drug industry chain company’s participation is uncertain, etc.
