Ping An View:
Industry perspective: the release of the guidance of medical insurance on supporting the inheritance, innovation and development of traditional Chinese medicine is conducive to the long-term development of the industry. On December 30, the State Medical Security Bureau and the State Administration of traditional Chinese Medicine issued the guiding opinions on medical insurance supporting the inheritance, innovation and development of traditional Chinese medicine, emphasizing the need to give full play to the advantages of the medical security system and support the inheritance, innovation and development of traditional Chinese medicine. The opinions mentioned that TCM will be supported through medical insurance through the following five points: 1) qualified TCM institutions will be included in the designated medical insurance; 2) Strengthen the price management of traditional Chinese medicine services; 3) Bring appropriate traditional Chinese medicine and traditional Chinese medicine medical service items into the scope of medical insurance payment; 4) Improve the payment policy suitable for the characteristics of traditional Chinese medicine; 5) Strengthen the supervision of medical insurance funds. The opinions expanded the scope of medical insurance payment for traditional Chinese medicine and traditional Chinese medicine services, so as to promote the release of the demand for traditional Chinese medicine. At the same time, TCM medical institutions may temporarily not pay by disease diagnosis related grouping (DRG). For areas that have implemented DRG and pay by disease score, appropriately improve the coefficient and score of TCM medical institutions and TCM diseases, so that TCM and TCM medical services can have more time to explore DRG payment. At the same time, the state emphasizes the need to strengthen the supervision of medical insurance funds and guide the gender development of the industry while liberalizing the payment of medical insurance of traditional Chinese medicine. We believe that the release of the opinions further shows the state’s highly recognized attitude towards traditional Chinese medicine and strengthens its support for the development of the traditional Chinese medicine industry. The introduction of the opinions will promote the further release of the demand for traditional Chinese medicine, so as to benefit the long-term development of the industry. We suggest paying active attention to the traditional Chinese medicine sector and stock selection ideas: 1) targets with stable fundamentals, sufficient adjustment and high valuation cost performance; 2) Mainly OTC varieties, low proportion of traditional Chinese medicine injections and strong R & D ability of new traditional Chinese medicine; 3) The consumption attribute is strong, and the core products should have the expectation of price increase.
Investment strategy: Main Line 1: innovation Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) chain, including innovative drugs (machinery) and CXO. CDE’s new deal accelerates the evolution of “new ecology” of China’s innovation, and the industry is facing “re differentiation”. We should pay attention to companies with clinical Oriented Innovation Ability and license out ability. We suggest to pay attention to: Jiangsu Hengrui Medicine Co.Ltd(600276) , Baiji Shenzhou, Xinda biology, Corning Jerry, Shenzhen Chipscreen Biosciences Co.Ltd(688321) . In terms of CXO, we prefer cdmo and macromolecular CXO tracks by maintaining a high outlook. We suggest paying attention to: Asymchem Laboratories (Tianjin) Co.Ltd(002821) , Porton Pharma Solutions Ltd(300363) , Pharmablock Sciences (Nanjing) Inc(300725) . Main line 2: products go to sea. The overseas market is a huge incremental market, there is a high threshold for the export of preparations, and the going to sea of medical devices has also become a new growth driving force of the industry. It is suggested to pay attention to: Nanjing King-Friend Biochemical Pharmaceutical Co.Ltd(603707) , Hainan Poly Pharm.Co.Ltd(300630) , Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , etc. Main line 3: consumer healthcare. With the growth of per capita disposable income, the demand for consumer medical care is increasing. At the same time, consumer medical products are self funded products, with independent pricing power and immunization fee control policy. It is suggested to pay attention to: Topchoice Medical Co.Inc(600763) , Aier Eye Hospital Group Co.Ltd(300015) , Yantai Zhenghai Bio-Tech Co.Ltd(300653) , etc. Main line 4: the traditional Chinese medicine sector has been in the adjustment stage for a long time, and the overall valuation is low. Enterprises with steady performance growth in the sector have high cost performance and prominent layout advantages. Moreover, the export of traditional Chinese medicine products is small and the internal circulation attribute is obvious, so it will not be disturbed by foreign policies towards China. Some traditional Chinese medicine products are more inclined to health care products with stronger consumption attributes, which can be benchmarked with some food enterprises. On this premise, we believe that the subject matter with sufficient adjustment and low valuation deserves special attention. Among them, enterprises with a larger proportion of OTC drugs in the fee control policy of immunization and medical insurance, better room for price increase of products and a smaller proportion of traditional Chinese medicine injections have greater flexibility. It is suggested to pay attention to: Henan Lingrui Pharmaceutical Co.Ltd(600285) , Kpc Pharmaceuticals Inc(600422) , etc. In addition to the above three main lines, there are also some other tracks with high prosperity and high barriers: including characteristic API and nuclear medicine. It is suggested to pay attention to: Zhejiang Starry Pharmaceutical Co.Ltd(603520) , Jiangxi Fushine Pharmaceutical Co.Ltd(300497) , Zhejiang Tianyu Pharmaceutical Co.Ltd(300702) , Yantai Dongcheng Biochemicals Co.Ltd(002675) , and Yuanda medicine.
Industry highlights: 1) Cansino Biologics Inc(688185) acyw135 meningococcal polysaccharide conjugate vaccine was approved for marketing; 2) Zhejiang Borui biological Trispecific antibody br110 (cmg1a46) clinical trial application was approved; 3) Cornerstone pharmaceutical precision targeted drug ayvakit for gastrointestinal stromal tumor ® Approved in Hong Kong, China; 4) Boston science fault pulsed electric field ablation system enters the Innovation Medical Management Co.Ltd(002173) device special review procedure.
Market review: Market Review: last week, the A-share pharmaceutical sector rose 3.16%, the Shanghai and Shenzhen 300 index rose 0.39% in the same period, and the pharmaceutical industry ranked 10th among 28 industries. Last week, the H-share pharmaceutical sector rose 0.77%, the Hang Seng Composite Index rose 0.58% in the same period, and the pharmaceutical industry ranked first among 11 industries.
Risk tips: 1) policy risk: policies such as medical insurance fee control and drug price reduction have a great negative impact on the industry; 2) R & D risk: pharmaceutical R & D investment is large and difficult, and there is the possibility of R & D failure or slow progress; 3) Company risk: the company’s operation does not meet expectations.
