This week we discuss the cancer medical services industry
1. The industry scale is expected to reach 700.3 billion yuan in 2025, with low-level cities accounting for the main share, and private hospitals growing rapidly
According to the prospectus of haijiya medical, from 2015 to 2019, the scale of China’s tumor medical service market increased from 231.4 billion yuan to 371 billion yuan, with a compound growth rate of 12.5%. It is expected to increase to 700.3 billion yuan by 2025, with a compound growth rate of 11.5% in 19-25 years.
According to the regional market, the third tier and below cities account for the main market share. In 2019, the market scale of cancer services in third tier and below cities was 213 billion yuan, accounting for 57.4%. It is expected to increase to 415.3 billion yuan in 2025, accounting for 59.3%, with a compound growth rate of 12.1%.
According to the nature of hospitals, the market scale of private hospitals is growing rapidly. In 2019, the market scale of tumor services in private hospitals was 34.3 billion yuan, accounting for 9.25%. It is expected to increase to 102.3 billion yuan in 2025, accounting for 14.6%, with a compound growth rate of 20.1%.
2. Demand side: the number of cancer cases in China continues to increase, with third tier and below cities accounting for the largest proportion
According to the prospectus of haijiya medical, from 2015 to 2019, the number of cancer cases in China increased from 4 million to 4.4 million, with a compound growth rate of 2.41%, accounting for about 20% of the global number of cancer cases in 2019. It is the country with the highest number of cancer cases in the world. It is estimated that the number of cases in China will increase to 5.11 million by 2025, with a compound growth rate of 2.52% in 19-25 years.
From the perspective of regional market, the third tier and below cities account for the largest proportion of cancer incidence. According to the prospectus of haijiya medical, in 2019, the number of cancer cases in China’s first tier cities / second tier cities / third tier and lower tier cities was 290000 / 805000 / 3304000 respectively, accounting for 7% / 18% / 75% respectively, and the compound growth rate of the number of cases in 15-19 years was 2.1% / 2.4% / 2.8% respectively. The proportion and growth rate of third tier and lower tier cities were higher than those in first tier and second tier cities.
3. Supply side: the supply of cancer hospitals is insufficient and the resources are mismatched, which are mainly concentrated in the first / second tier cities
The supply of cancer treatment resources in China is insufficient, and the utilization rate of cancer hospital beds is the highest among all specialized hospitals. Compared with the strong demand for tumor treatment, the supply of tumor treatment resources in China is significantly insufficient. In 2019, the utilization rate of beds in cancer hospitals in China was 106.07%, which was higher than that in other specialized hospitals.
The supply and demand of resources are mismatched. The supply resources of tumor treatment are mainly concentrated in the first / second tier cities, and the medical resources in the grass-roots market are insufficient. According to the prospectus of haijiya medical, in 2019, the number of radiotherapy equipment per million population in China’s first-line / second-line / third-line and below cities was 4.9 / 3.4 / 2.4 respectively, and the number of operating beds in the cancer Department of hospitals per million population was 197 / 180 / 147 respectively. The mismatch between supply and demand of cancer hospitals leads to a large number of patients from low-level cities going to first / second tier cities for treatment, which greatly increases the treatment cost of patients and the medical burden of first / second tier cities.
4. Policy side: the policy encourages the society to run hospitals, and private hospitals welcome good opportunities for development
Since 2010, the state has continuously encouraged social medical services at the policy level, clearly limited the number and scale of public hospitals, and left enough space to support the development of social medical services. In addition, the recent medical service price adjustment focuses on highlighting the value of labor and technology, and the overall increase is the main. Compared with other medical service projects, tumor treatment is difficult and has high technical requirements, and the overall treatment price is expected to rise. According to the current experience of implementation in various places, the price of service items involving tumor surgery has increased significantly.
Related enterprises: haijiya medical (China’s private cancer medical service leader).
Risk tips: policy risk, major medical malpractice risk, M & A integration risk.
Market review: the sector showed a trend of high before and low after, and the traditional Chinese medicine and CXO sectors performed well. This week (from March 21 to March 26), the biomedical sector rose 0.51%, outperforming the CSI 300 index by 2.65 PCT and the gem index by 3.30 PCT, ranking among the top 30 CITIC primary industries. This week, only the medical device sector of CITIC medicine sub sector fell, down 1.92%, and medical services, proprietary Chinese medicine and decoction pieces of traditional Chinese medicine rose by 3.93%, 2.62% and 1.76% 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)
Medium and long term perspective: pay attention to the invariance in change and look for opportunities with relative certainty. The impact of centralized mining continues to expand. The opportunity at the investment level lies in that the establishment of centralized mining is based on “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 fine 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) , Suzhou Nanomicro Technology Co.Ltd(688690) ; 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) ; Others: Jenkem Technology Co.Ltd(688356) , Shandong Pharmaceutical Glass Co.Ltd(600529) .
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. Department of Ophthalmology; 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.
