Weekly market review (202203.07202203.11). This week, the pharmaceutical sector fell – 0.80%, outperforming the Shanghai and Shenzhen 300 index by 3.85 percentage points, and the PE (TTM) of the pharmaceutical sector was about 28.53 times, still at a historical low of nearly a decade. China has newly approved two covid-19 antigen detection and issued covid-19 antigen detection policy (Trial). This week, we will focus on the necessity, feasibility and corresponding market space calculation of covid-19 antigen detection.
The outbreak of asymptomatic infection in China is sporadic, highlighting the significance of antigen detection. Since February 2022, the covid-19 epidemic in China has broken out in a scattered way, and the number of new cases has increased every day. Especially since March, the number of medium and high-risk areas in China has increased sharply, and a large number of asymptomatic infections have emerged. The necessity of antigen detection has greatly increased. It is the best means to screen positive under the condition of gradual opening. Recently, the state approved and liberalized the use of covid-19 antigen detection kit, which we believe is to lay the foundation for the steady relaxation of epidemic prevention measures in the future, so as to make high-risk floating population and asymptomatic infection more controllable, and antigen detection is expected to be spread nationwide.
Five covid-19 antigen testing products have been approved in China, and home testing has spawned a 10 billion testing market. As of March 12, 2022, five covid-19 antigen detection kits have been approved in China. From the perspective of methodology, it is divided into latex method, fluorescence immunochromatography and colloidal gold method. Immunochromatography needs necessary equipment to be used, while latex method and colloidal gold method can be applied to family self-test. In the long run, with the normalization of covid-19 epidemic, covid-19 home self inspection is expected to be popularized nationwide. Assuming that the ex factory price of the product is 6-10 yuan / person, and the median value is 30% based on the penetration range of 10% – 50%, the corresponding market space for covid-19 antigen detection in China is 20.16-33.6 billion yuan per month.
The upstream of covid-19 testing industry chain is expected to benefit fully. The raw materials of the kit can be mainly divided into biological raw materials, NC film and other auxiliary packaging materials. Based on our dominant position in their respective market segments, we suggest to focus on Nanjing Vazyme Biotech Co.Ltd(688105) in the field of biological enzymes, Acrobiosystems Co.Ltd(301080) and Sino Biological Inc(301047) in the field of antigen and antibody, North Chemical Industries Co.Ltd(002246) in the field of NC membrane, and Shenzhen Changhong Technology Co.Ltd(300151) , Zhejiang Gongdong Medical Technology Co.Ltd(605369) and Guangzhou Jet Bio-Filtration Co.Ltd(688026) .
Recommended portfolio of stocks this week: 1) Growth Portfolio: Pharmablock Sciences (Nanjing) Inc(300725) , kingship biotechnology, Focused Photonics (Hangzhou) Inc(300203) ; 2) Robust combination: Zhejiang Jiuzhou Pharmaceutical Co.Ltd(603456) , Baicheng pharmaceutical, Beijing Sun-Novo Pharmaceutical Research Co.Ltd(688621) ; 3) Elastic combination: Sino Biological Inc(301047) , Nanjing Vazyme Biotech Co.Ltd(688105) , Guangzhou Wondfo Biotech Co.Ltd(300482) .
Investment suggestion: Based on the scattered outbreak of covid-19 epidemic in China and the gradual liberalization of covid-19 detection policy, we believe that we need to: 1) focus on the enterprises whose covid-19 antigen products have been approved by nmpa, such as Guangzhou Wondfo Biotech Co.Ltd(300482) and Nanjing Vazyme Biotech Co.Ltd(688105) ; 2) Continue to pay attention to IVD enterprises that have obtained relevant product certification overseas, such as Andon Health Co.Ltd(002432) , Zhejiang Orient Gene Biotech Co.Ltd(688298) , Wuhan Easy Diagnosis Biomedicine Co.Ltd(002932) ; 3) Pay close attention to IVD upstream raw material enterprises, such as Nanjing Vazyme Biotech Co.Ltd(688105) , Acrobiosystems Co.Ltd(301080) , Sino Biological Inc(301047) , North Chemical Industries Co.Ltd(002246) , Shenzhen Changhong Technology Co.Ltd(300151) , Zhejiang Gongdong Medical Technology Co.Ltd(605369) and Guangzhou Jet Bio-Filtration Co.Ltd(688026) .
Risk tips: 1) uncertainty of covid-19 epidemic situation; 2) The uncertainty of China’s epidemic prevention policy.
