This week, we will discuss the investment value of Heyuan Biology - living on hardships and tasting bravery, and "Haofeng" will take advantage of the green cloud.
Cell gene therapy (CGT) has great potential, and the upstream cdmo industry is expected to usher in explosive growth
Investment and financing in the field of CGT are heating up rapidly, and a large number of drugs under research have entered the clinic. As of October 2021, there are 1890 CGT projects under research (less than 400 in 2015 from pre clinical to pre registration). With complex technical mechanism, high threshold process development and large-scale production, strict regulatory requirements and limited industrialization experience, CGT products are more dependent on cdmo, and its outsourcing penetration rate is more than 65% (35% of traditional biological agents). As the core, the production of virus vectors involves very complex processes, extremely difficult and long preparation cycle. It is expected that the outsourcing rate of CGT will remain high in the future.
It is estimated that in 2025, the global cgtcdmo market will reach US $10.1 billion (five-year compound 35%) and the Chinese market will reach US $1.7 billion (five-year compound 51%). As CXO giants such as Lonza and Wuxi Apptec Co.Ltd(603259) have relatively large production capacity and perfect GMP standards, it is expected that the dividends of the rapid development of cdmo market in the future will be shared by major giants.
The company has been grinding a sword for ten years, focusing on the difficulties of the industry and the development of carrier technology
The company started gene therapy cro business as early as 13 years ago, and built and improved the basic technology platform required for early research and development of gene therapy through basic and pilot research. Since then, taking advantage of the development of the industry, actively build cdmo process team and build GMP production capacity, layout the whole industrial chain business of CGT R & D and production, and form advanced production process development, quality control technology development and production and manufacturing level, as well as large-scale industrialization ability, so as to comprehensively ensure product quality and service ability, which is in the leading position in the industry.
Technological upgrading, capacity upgrading, economies of scale, and rapid growth in operating revenue and profits
Thanks to the first mover advantage of R & D and technology and the continuous improvement of project experience, the company's order volume has increased year by year. Up to now, the company has implemented more than 100 projects with an amount of more than 650 million yuan; In recent years, the revenue has maintained rapid growth. The company's revenue is expected to reach 250 million yuan in 21 years, with a compound growth rate of nearly 80% in three years.
Abundant orders on hand, rapid growth and strong driving force
Up to now, the company has 23 projects in hand, with orders of 400 million yuan, covering many fields such as oncolytic virus, AAV and Lv. Thanks to the accumulation of early-stage technology and the reserve of project resources, the company's cdmo business, especially ind-cmc, has developed rapidly in recent years. Among them, the oncolytic virus projects serving Yinuowei and funuojian have entered phase II clinic, which will contribute to rich commercial order revenue in the future. In addition, thanks to the early layout of cro service business, in-depth grasp of the development direction of cutting-edge technologies and processes, and continuous accumulation of know-how, the company is expected to form a virtuous cycle of mutual transformation of cro and cdmo projects. At present, many cro and preclinical projects will become the potential source of rapid growth of the company in the future.
Risk tip: customer expansion is less than expected, order volume is less than expected, new product development is less than expected, and price decline is more than expected
Market review: Market Review: the sector fluctuated, with traditional Chinese medicine decoction pieces and medical devices leading the decline. This week (from March 14 to March 18), the biomedical sector rose 0.86%, outperforming the CSI 300 index by 1.80pct and underperforming the gem index by 0.95pct, ranking second among the 30 CITIC primary industries. CITIC pharmaceutical sub sector fell this week except for the chemical raw materials sector. Among them, the circulation of Chinese patent medicine, chemical agents, biomedicine and medicine increased by 1.72%, 0.90%, 0.86% and 0.23% respectively, and the chemical raw materials, medical services, medical devices and prepared pieces of traditional Chinese Medicine decreased by 0.04%, 0.43%, 1.65% and 5.93% respectively.
Investment suggestions:
Recent view: high-quality companies have become more and more cost-effective. In the short term, continue to suggest two ideas, preferably:
1. Rapid growth, continuous improvement of performance and reasonable valuation range.
1) vaccines: Beijing Wantai Biological Pharmacy Enterprise Co.Ltd(603392) , Chongqing Zhifei Biological Products Co.Ltd(300122) and Shenzhen Kangtai Biological Products Co.Ltd(300601) ;
2) oral consumables: Yantai Zhenghai Bio-Tech Co.Ltd(300653) (active biological bone will be approved soon); Angel of the times (local invisible orthodontic leader)
3) life related upstream: Jenkem Technology Co.Ltd(688356) (PEG derivative), Nanjing Vazyme Biotech Co.Ltd(688105) (molecular enzyme), Acrobiosystems Co.Ltd(301080) (recombinant protein reagent).
2. Downside risk is limited, waiting for Fundamentals to catalyze.
1) blood products sector (leading enterprises are expected to benefit from the 14th five year plan of pulp stations in many provinces and further open the growth of pulp volume, including Beijing Tiantan Biological Products Corporation Limited(600161) and Hualan Biological Engineering Inc(002007) );
2) pharmacy sector ( Yifeng Pharmacy Chain Co.Ltd(603939) , Yixintang Pharmaceutical Group Co.Ltd(002727) , Lbx Pharmacy Chain Joint Stock Company(603883) , Dashenlin Pharmaceutical Group Co.Ltd(603233) , Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) (short-term policy disturbance does not change long-term development logic),
3) private service leaders: haijiya medical and Jinxin reproductive;
4) China sublingual desensitization faucet Zhejiang Wolwo Bio-Pharmaceutical Co.Ltd(300357) ;
5) China's leading pharmaceutical glass enterprise Shandong Pharmaceutical Glass Co.Ltd(600529) .
3. Continue to pay attention to covid-19 antigen detection.
1) recommendation: Guangzhou Wondfo Biotech Co.Ltd(300482) , Nanjing Vazyme Biotech Co.Ltd(688105) , Sino Biological Inc(301047) , Beijing Wantai Biological Pharmacy Enterprise Co.Ltd(603392) ;
(2) suggestions and concerns: (1) a self-test kit for an antigen: (1) a suggested concern: (1) a suggested concern: (1) a self-test kit kit for an antigen: (1) a kit kit kit for self testing of an antigen: (1) a kit kit kit for self testing of an antigen: (1) a kit kit kit kit for self testing of an antigen: following: (1) a kit kit kit kit kit for self testing of an antigen: 3 Zhongyan Technology Co.Ltd(003001) self kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit Kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit kit Kit kit kit kit kit kit, Jiangsu Bioperfectus Technologies Co.Ltd(688399) , Lepu Medical Technology (Beijing) Co.Ltd(300003) , Getein Biotech Inc(603387) , Maccura Biotechnology Co.Ltd(300463) ; (2) Online channels: Jiangsu Yuyue Medical Equipment And Supply Co.Ltd(002223) , Cofoe Medical Technology Co.Ltd(301087) ; (3) Retail pharmacies: Dashenlin Pharmaceutical Group Co.Ltd(603233) , Lbx Pharmacy Chain Joint Stock Company(603883) , Yixintang Pharmaceutical Group Co.Ltd(002727) , Yifeng Pharmacy Chain Co.Ltd(603939) .
Medium and long term perspective: focus on the invariance in change and look for opportunities for relative certainty
With the continuous expansion of the impact of centralized mining, the opportunity at the investment level lies in that the foundation for the establishment of centralized mining is that "multiple enterprises supply mutually replaceable varieties, and the production capacity can be supplied indefinitely in theory". The basis for enterprises to maintain product price and profit space is the competition pattern, and the dynamic excellent competition pattern lies in the ability to continuously develop products and product iteration, which remains unchanged.
Start DRG / Dip reform in 2022. As a means of payment, the core role of DRGs is to achieve a balance between improving the efficiency and quality of diagnosis and treatment and ensuring the sustainability of medical insurance through refined medical insurance management. Hospitals that cannot actively adapt to the rules of the game will be eliminated. The opportunity at the investment level lies in that excellent private medical institutions have paid more attention to cost control for a long time, with higher operation efficiency and competitive advantage.
The general trend of industrial development is: China Meheco Group Co.Ltd(600056) industrial manufacturing is upgraded, the competitiveness is continuously improved, and moves upstream in the global production value chain.
The competitiveness of upstream raw materials is prominent:
1) biological "core" - life science support industrial chain: domestic enterprises have developed rapidly, reagent quality has reached the international leading level, and their competitiveness has been continuously improved. Entering the overseas market through global comparative advantage, China benefits from domestic alternative logic, with high growth and great development potential.
2) IVD raw materials and consumables: covid-19 epidemic opens the window for the transfer of global IVD raw materials and consumables production and supply chain to China.
Accelerated internationalization process: with the breakthrough of key technologies of Chinese enterprises, not only the localization rate of the Chinese market is accelerating, but also some high-quality enterprises have the strength to compete with international giants.
1. Manufacturing upgrading of pharmaceutical industry and continuous improvement of Competitiveness:
Upstream: life science support industry chain, IVD raw materials and consumables, related targets: Nanjing Vazyme Biotech Co.Ltd(688105) , Sino Biological Inc(301047) , Acrobiosystems Co.Ltd(301080) ;
High end medical devices: endoscope and sequencer, related subjects: Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) , Qingdao Novelbeam Technology Co.Ltd(688677) , Sonoscape Medical Corp(300633) , Aohua endoscope, Micro-Tech (Nanjing) Co.Ltd(688029) ; Huada Zhizao (IPO application in progress); International layout of medical devices, related subjects: Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) ; , .
2. Pay attention to the supply pattern: blood products, related subjects: Beijing Tiantan Biological Products Corporation Limited(600161) , Boya Bio-Pharmaceutical Group Co.Ltd(300294) and Pacific Shuanglin Bio-Pharmacy Co.Ltd(000403) ; Desensitization preparation, related subject matter: Zhejiang Wolwo Bio-Pharmaceutical Co.Ltd(300357) .
3. Private medical service sector with differentiated competition. Ophthalmology, Aier Eye Hospital Group Co.Ltd(300015) ; Dentistry, Topchoice Medical Co.Inc(600763) ; Assisted reproduction, Jinxin reproduction; Cancer treatment services, Hagia.
4. Pharmacy sector. Related objects: Yifeng Pharmacy Chain Co.Ltd(603939) , Dashenlin Pharmaceutical Group Co.Ltd(603233) , Lbx Pharmacy Chain Joint Stock Company(603883) and Yixintang Pharmaceutical Group Co.Ltd(002727) .
5. Aging and consumption upgrading.
Class II vaccine, related targets: Chongqing Zhifei Biological Products Co.Ltd(300122) , Beijing Wantai Biological Pharmacy Enterprise Co.Ltd(603392) and Changchun Bcht Biotechnology Co(688276) ; Invisible orthodontics, related subjects: Angel of the times;
Risk tips: policy risk, price risk, performance risk less than expected, product R & D risk, expansion progress risk less than expected, medical accident risk, uncertainty of overseas covid-19 virus epidemic, M & A integration risk less than expected, etc.
