Core view
In the 2022 government work report, a total of 15 sub goals and tasks are proposed in the field of medicine and health. The core is still the “three medical linkage” to ensure and improve people’s livelihood, that is, the linkage of medical system reform, medical and health system reform and medical insurance system reform. The report focuses on volume procurement, innovative drugs, vaccines and traditional Chinese medicine. It can be predicted that the high-quality development of the pharmaceutical industry will continue to focus on these areas in 2022. It is recommended that investors pay attention to investment opportunities in innovative drugs, traditional Chinese medicine, CXO sector and covid-19 prevention and treatment.
Analysis of key tasks in the field of medicine and health in the 2022 government work report
Innovative drugs: the government work report emphasizes improving the guarantee level of prevention and treatment services for cardiovascular diseases, cancer and other diseases, and strengthening the guarantee of drug use for rare diseases. China’s incidence rate of cardiovascular diseases and cancer has been increasing with the improvement of the material life. According to the report of China’s cardiovascular health report 2020, 330 million people in China have cardiovascular disease. According to the global cancer burden report 2020, 4.57 million new cancer patients were born in China in 2020, accounting for 30.2% of the world’s deaths. Therefore, in the field of cardiovascular and oncology, China Meheco Group Co.Ltd(600056) innovation has a long way to go.
Strengthening the drug protection for rare diseases was written into the government work report for the first time. At the end of 2021, nosinasheng sodium injection, which was used to treat spinal muscular atrophy (SMA), was officially included in the scope of medical insurance, and each needle was reduced from nearly 700000 yuan to more than 30000 yuan. In the future, the investment in drugs for rare diseases deserves attention.
China’s requirements for innovative drugs are increasing. In November 2021, CDE released the guiding principles for clinical research and development of anti-tumor drugs guided by clinical value (Exposure Draft), which clearly pointed out that “control drugs” are the basis for reflecting the clinical value of new drugs, and we should pay attention to whether the positive control drugs reflect and represent the best treatment choice of target patients in clinical practice. Therefore, under the guidance of the policy, pharmaceutical enterprises and enterprises will shift from gathering similar me too drugs to similar me better and first in class drugs with more clinical value.
Vaccine: in the 2021 government work report, it was emphasized that “orderly promote vaccine development and accelerate free vaccination, and improve the ability and level of scientific and accurate prevention and control”. As of March 8, 2022, five new vaccines have been approved for conditional listing in China, including three inactivated vaccines, one recombinant protein vaccine and one adenovirus vector vaccine. Generally speaking, the current supply of new vaccines in China is sufficient. The key lies in popularizing the vaccination of the third dose and improving the vaccination rate of the third dose.
Traditional Chinese medicine: the government work report emphasizes supporting the revitalization and development of traditional Chinese medicine and promoting the comprehensive reform of traditional Chinese medicine. Traditional Chinese medicine is the treasure of ancient Chinese science. It embodies profound philosophical wisdom and thousands of years of health preservation concept and practical experience of the Chinese nation. It plays a positive role in all-round and full-cycle protection of people’s health, such as health care, disease prevention and health care, health care and elderly care. For the second pharmaceutical innovation, in addition to innovative chemical drugs and innovative biological drugs with high capital attention, innovative traditional Chinese medicine is also a key part of pharmaceutical innovation. Therefore, efforts should be made to promote the revitalization and development of traditional Chinese medicine, pay equal attention to traditional Chinese and Western medicine, promote the coordinated development of traditional Chinese medicine and Western medicine, and realize the innovative development of traditional Chinese medicine health culture.
Investment suggestions: it is suggested to grasp the investment opportunities in the fields of innovative medicine, traditional Chinese medicine and covid-19 prevention and treatment
Second, the consumption is upgraded, the demand for medical care is growing rapidly, and the demand for innovative drugs and brand traditional Chinese medicine has a long-term growth trend. It is the general trend for innovative drugs to go to sea. Cilta cel, jointly developed by legendary biology and Johnson & Johnson, has recently been approved by FDA for listing. In the future, innovative drug enterprises with strong R & D ability, rich product pipelines and strong internationalization ability are expected to be stronger and stronger; Driven by the rising prices of core raw materials and booming demand, the price of traditional Chinese medicine is expected to continue to rise. The epidemic situation in China is gradually desensitized, but recently, the epidemic situation in China has been distributed at many points, and it is still urgent to build an integrated epidemic prevention chain of “drug + vaccine”. Investors are advised to pay close attention to investment opportunities in innovative medicine, traditional Chinese medicine, CXO sector and covid-19 prevention and treatment.
Innovative medicine: grasp the innovative medicine enterprises of “large and complete” and “small and beautiful”. Over the past decade, a number of “large and comprehensive” pharmaceutical enterprises have gradually come to the fore. Such enterprises have a wide variety layout and rich varieties on the market and under research; With a huge sales team and strong commercial strength, it is expected to become a “bigpharma” with global reputation. For the second “small and beautiful” enterprises, we suggest paying attention to the traditional pharmaceutical enterprises that are overweight innovation and are expected to fully enjoy the innovation dividend in the future.
In addition, the logic of innovative drugs going to sea is becoming clearer and clearer. Recently, legendary bio’s car-t therapy has been approved by FDA with excellent clinical data, which has verified the R & D strength of China’s innovative pharmaceutical enterprises. It will be a milestone for FDA to explore the international market in April. In the context of increasingly fierce medical insurance negotiations in China, it is the general trend to go overseas. We continue to be optimistic about innovative drug enterprises, especially innovative drug enterprises with differentiated R & D strength, rich pipelines, strong expectation of going to sea and large-scale commercial capacity, such as Jiangsu Hengrui Medicine Co.Ltd(600276) , Shanghai Junshi Biosciences Co.Ltd(688180) , etc.
Traditional Chinese medicine: at the end of 2021, the traditional Chinese medicine sector ushered in an explosive market. We believe that the rise of traditional Chinese medicine is a strong rebound catalyzed by multiple factors such as performance, policy and innovation. From the perspective of performance, as of the third quarter of 2021, the net profit attributable to the parent company of traditional Chinese medicine was 26.26 billion yuan, a year-on-year increase of 20.79%; From the perspective of policy, since 2021, the state has intensively issued many heavy documents, and the support for traditional Chinese medicine has been significantly strengthened; From the perspective of innovation, the State Food and Drug Administration approved a total of 11 new traditional Chinese medicine drugs to be listed in 2021, becoming the year with the largest number of new traditional Chinese medicine drugs approved in recent five years.
From the perspective of TCM segments, investors are advised to focus on the most deterministic directions supported by policies, including innovative TCM drugs, brand TCM and TCM formula particles. For the second innovative traditional Chinese medicine, the declaration of innovative traditional Chinese medicine is gradually simplified, and the price reduction of traditional Chinese medicine is mild and has obvious advantages in the medical insurance negotiation. It is recommended that investors pay attention to high-quality targets such as Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) , Tasly Pharmaceutical Group Co.Ltd(600535) , Jiangsu Kanion Pharmaceutical Co.Ltd(600557) and so on; Brand traditional Chinese medicine is expected to benefit from long-term consumption upgrading. Considering that brand traditional Chinese medicine has high price maintenance ability and strong growth momentum in the future, it is recommended to pay attention to guangyujin, China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) , Dong-E-E-Jiao Co.Ltd(000423) , Hubei Jumpcan Pharmaceutical Co.Ltd(600566) and other enterprises; For the second traditional Chinese medicine formula granules, the review of the pilot work of traditional Chinese medicine formula granules will be completed and the new standards will be implemented in 2021. On the one hand, the market scale is expected to expand. On the other hand, the cost advantage brought by the standardized threshold will be conducive to the development of the second pilot enterprises, including China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) , Chinese traditional medicine, Tianjin Chase Sun Pharmaceutical Co.Ltd(300026) , etc.
Covid-19 prevention and control field: Although the vaccination rate of new vaccine in China has increased steadily, hundreds of millions of people in China have not completed the whole course of vaccination. In addition, there are requirements for “booster injection” and sequential immunization. At the same time, due to the expectation of vaccine going to sea and the requirements of the future “vaccine + drug” integrated epidemic prevention chain, there are still a lot of investment opportunities in covid-19 prevention and control.
In addition to “vaccine + drug” “In addition, with the recurrence of the epidemic, Xinxi detection is expected to return to the wind. Xinxi detection is mainly divided into three types, including antigen detection, antibody detection and nucleic acid detection. At present, nucleic acid detection is widely used in China. Its window period is high and its specificity is high. It can detect virus infection at an early stage, but it has high requirements for detection equipment, environment and personnel. The accuracy of antigen detection is not high Such as nucleic acid detection, but it takes a short time, the development conditions are low and the price is cheap. At present, it has become an important means of home nucleic acid self-test in Europe, America and other countries. Recently, with the outbreak of the epidemic in Hong Kong, antigen home detection also plays an important role in large-scale screening. The National Health Commission has also recently emphasized the addition of antigen detection as a supplement to nucleic acid detection. Investors are advised to pay attention to antigen testing related enterprises, including Guangzhou Wondfo Biotech Co.Ltd(300482) , Zhejiang Orient Gene Biotech Co.Ltd(688298) , Beijing Hotgen Biotech Co.Ltd(688068) , etc.
Risk tips
Policy implementation is less than expected and drug price reduction risk
