The capacity of life science service market has expanded rapidly and the prosperity has continued to rise
Life science services mainly include scientific research reagents, model organisms, laboratory equipment and consumables, sequencing and database building services. Without considering the laboratory equipment (extremely low localization rate), we estimate that the overall market scale will exceed 60 billion yuan in 2020, and the CAGR will be about 20% from 2020 to 2024. The driving forces of industry growth are mainly:
The biopharmaceutical industry is booming: the scale of the global biopharmaceutical market exceeds US $trillion, which leads to the continuous growth of the demand for life science services. Emerging fields such as mRNA vaccine, cell and gene therapy are expected to bring additional increment;
Rapid growth of R & D expenditure in life sciences: the R & D expenditure of global biological enterprises and scientific research institutions in Colleges and universities continued to grow rapidly ( China Meheco Group Co.Ltd(600056) Industrial Enterprises above designated size increased by 28.7% year-on-year in 2020). Covid-19 epidemic further boosted the prosperity of the industry;
Domestic substitution space is broad, and covid-19 epidemic provides a rare window period
The scientific research service industry is interdisciplinary and has high barriers. International giants monopolize the market for a long time. The Chinese market accounts for about 10% of its total revenue every year. After the epidemic, there will be an accelerated period of domestic substitution:
The quality of Chinese products is gradually approaching the international level: after more than ten years of technology accumulation, the performance of mainstream products is gradually comparable to that of imported brands, laying the foundation for domestic substitution; Moreover, the price of Chinese products is about 50% - 80% of that of imported products, with fast response speed, high-quality service and local advantages; In contrast, scientific research reagents, laboratory equipment and consumables have greater domestic substitution space (70% - 90%);
The demand for cost reduction of upstream enterprises has increased: life science services account for more than 60% of the cost of some biological enterprises. Medical insurance negotiation and centralized purchase have gradually become normalized, with a large price decline, pressure on the profit side of enterprises, and there is a strong demand for cost reduction;
Covid-19 epidemic catalyst: logistics, freight transportation, epidemic prevention and control and other issues under covid-19 epidemic have brought a rare window period for Chinese enterprises and greatly promoted the process of domestic substitution; At the same time, the epidemic has given birth to new needs in the field of global life sciences, providing excellent opportunities for Chinese enterprises to go to sea, increasing revenue in the short term and benefiting brand construction in the long term;
Policy guidance and support: a series of policies issued before and after the epidemic emphasize the safety and stability of the upstream supply chain and escort domestic substitutes.
Focus dimension:
① bottom technology platform and product performance: domestic substitution is based on product quality, which requires enterprises to have solid bottom technology, comparable to imported product performance and inter batch stability; ② Horizontal business expansion ability: the life science service segment has a low ceiling, and the development of international giants such as comerfield, we believe that the long-term development of enterprises needs to deepen their own fields and constantly expand their business layout; ③ Accelerate to seize the import share in the epidemic window period: the covid-19 epidemic highlights the local advantages of Chinese enterprises. We believe that the next 3-5 years is a critical period for domestic substitution, and we need to pay attention to the process of relevant enterprises developing Chinese customers and enhancing stickiness; ④ Progress in overseas market development: covid-19 epidemic also provides a rare opportunity for life science service enterprises to go to sea. It is beneficial for enterprises with excellent product quality to strengthen overseas brand construction, and the overseas market is broader. We believe that the coordinated development of China and abroad can open up the growth board for the company.
Investment suggestions:
Jin Sirui is recommended for biological reagent, and it is suggested to pay attention to Acrobiosystems Co.Ltd(301080) , Nanjing Vazyme Biotech Co.Ltd(688105) , Sino Biological Inc(301047) , Feipeng biology, kangweishi, youningwei, etc; It is suggested to pay attention to Shanghai Aladdin Biochemical Technology Co.Ltd(688179) , Shanghai Titan Scientific Co.Ltd(688133) etc. for chemical reagents; It is suggested to pay attention to the model organism, such as baiaosaitu, jijiyaokang, Nanmo organism, etc; It is suggested to pay attention to Bgi Genomics Co.Ltd(300676) , Huada Zhizao, Novogene Co.Ltd(688315) , etc. for gene sequencing; Laboratory equipment and consumables are recommended Qingdao Haier Biomedical Co.Ltd(688139) , Suzhou Nanomicro Technology Co.Ltd(688690) , and it is recommended to pay attention to aupmay, Guangzhou Jet Bio-Filtration Co.Ltd(688026) , Zhejiang Gongdong Medical Technology Co.Ltd(605369) , etc;
Risk warning: the market promotion is not as expected; The R & D of new products is less than expected; Intensified market competition; Covid-19 epidemic has repeatedly affected overseas business development.
