Key investment points
Looking back on 2021: looking at the changes of China Meheco Group Co.Ltd(600056) advanced manufacturing companies from the perspective of international comparison. Looking back on the financial performance and product registration of major API & preparation export companies in China and the world from 2020 to 2021, we believe that the comparative advantage & Competitiveness margin of Chinese companies is constantly strengthening, and the growth space is also rapidly opening up in this process.
① financial performance: Chinese companies have accelerated catch-up in revenue and investment.
Analysis of revenue and profitability: in terms of growth rate, the median growth rate of overseas leading revenue from January to September 2021 was 10.0%, lower than the median of Chinese companies in the same period (i.e. 26.1%); In terms of profitability, the median ebitmargin of overseas companies in the first half of 2021 was 17.2%, lower than the median of Chinese companies in the same period (i.e. 23.4%). Therefore, we believe that Chinese companies have accelerated to catch up with leading companies in India, Europe and the United States in terms of revenue and net profit.
Capital expenditure and turnover rate: the absolute amount of investment of overseas companies is higher, the relative intensity is lower, and the turnover rate of fixed assets is significantly higher. We think it may be related to the proportion of preparation income (it is estimated that it is related to different industrial chain positioning). In 2020, the median ratio of capital expenditure of overseas sample companies to total assets was 2.9% (the median of Chinese companies in the same period was 6.7%), the median capital expenditure was about 880 million yuan (the median of Chinese companies in the same period was 320 million yuan), and the median turnover rate of fixed assets was 3.1 (the median of Chinese companies in the same period was 2.2). Therefore, we believe that Chinese companies are in the acceleration period of production, and the growth rate of medium and short-term income may increase, As Chinese companies strengthen the layout of downstream generic drugs, we expect the turnover rate of fixed assets to have room for improvement.
② Registration & inspection: there is still a gap in the number of product projects, and the quality system continues to upgrade.
API registration: the activation number of overseas companies is significantly higher than that in China, and there are differences in product approval. In terms of the number of products, 48 DMFS were newly activated by overseas sample companies and 21 DMFS were newly activated by major listed companies in China in 2021. In terms of varieties, the newly activated varieties of overseas sample companies include not only the raw materials of new drugs listed after 2017 (oxagolide sodium, apalumide, baretinib, ncofeni, etc.), but also the large variety somaluptide whose patent is about to expire. Compared with Chinese companies, Brightgene Bio-Medical Technology Co.Ltd(688166) new activated varieties are mostly antibacterial varieties involving fermentation, Zhe Jiang Hua Hai Pharmaceuticalco.Ltd(600521) new activated varieties are some new varieties whose patents are about to expire (sitagliptin anhydrous phosphate, oxagolide sodium, etc.), and other Chinese companies are traditional large varieties ( Zhejiang Starry Pharmaceutical Co.Ltd(603520) iohexol, Zhejiang Tianyu Pharmaceutical Co.Ltd(300702) losartan potassium, etc.). On the whole, we believe that the differences in variety approval between Chinese and overseas companies may be related to the differences in generic drug layout (whether to compete for imitation) and technology platforms (polypeptides, high activity API technology platforms, etc.), and Chinese companies are still in the window of accelerated improvement in the number of applications and product approval.
Generic layout: the internationalization of generic injections in China has gradually narrowed the registration gap, but there is still room to catch up with the variety echelon and comprehensive ability. From the number of Anda approved, the overseas sample companies approved 198 anda in 2021, including 41 sterile injections anda. We believe that, from the perspective of the number of varieties and product competition pattern, Chinese companies still have a large gap with Indian companies in the export of preparations. However, in the field of sterile injection export, we are concerned that the approval of Anda, a leading Chinese company, has accelerated and gradually narrowed the gap with American injection head companies in the field of registration (such as Nanjing King-Friend Biochemical Pharmaceutical Co.Ltd(603707) , Hainan Poly Pharm.Co.Ltd(300630) etc.). We are optimistic about the research and development of Chinese companies under the international competition of generic drugs Project initiation and production capacity upgrading.
Inspection and quality system: the proportion of Nai of Chinese companies has increased, and the production quality control has been continuously upgraded. From the inspection results, the proportion of NaI (noaction indicated, i.e. "zero defect") of Chinese companies has increased. We think it can reflect the progress and changes of Chinese companies in production and quality control system.
Development strategy and competitiveness of leading API companies from the perspective of euroapi
① company: from Sanofi API supplier to global leader in small molecule API.
Global small molecule API head company, supplying more than 200 kinds of APIs and more than 30 cdmo project pipelines. According to the company's announcement, the company's total revenue in 2021 was about 902 million euros (about 6.9 billion yuan), a year-on-year decrease of 5.5%. In terms of classification ① according to the business model, cdmo revenue accounted for 33% and API revenue accounted for 67% in 2021. ② According to customers, in 2021, the revenue from Sanofi accounted for 49.1% and the revenue from other customers accounted for 50.9%. Taking the data of 2020 as an example, excluding the sales revenue of Sanofi, 75% of the remaining revenue is exclusive supply (i.e. monosourcing) and 25% is non exclusive supply (i.e. Multisourcing). ③ The proportion of synthetic polypeptides / oligopeptides accounted for 17.7%, accounting for about 1.5% of the total revenue in 2022, accounting for about 1.5% of the total revenue of synthetic polypeptides. ④ Capacity: according to the company's announcement, the company has 6 plants, 576 reactors and 8038 cubic meters of capacity, of which fermentation related capacity accounts for 76%. The capital expenditure in 2021 is about 88 million euros (corresponding to about 670 million yuan). According to the company's production expansion plan, the target capital expenditure is 500 million euros from 2022 to 2025. It is hoped to increase the production capacity of high value-added APIs of vitamin B12 (25-50% expansion in 2024), prostaglandins (4 times increase in output) and hormones (10 tons of production capacity in 2025).
② enlightenment 1: the technology platform determines the ceiling of cdmo expansion.
Based on the company's advantages in complex chemical synthesis, fermentation (synthetic biology, fermentation semi synthesis, etc.), highly active APIs (prostaglandins, ADC, etc.) and polypeptide / oligonucleic acids, the company accelerated the expansion of cdmo business in relevant fields: in 2021, the number of cdmo business talks of the company was 5 times of the average value from 2019 to 2020, the RFPs received (request for proposal) was 3 times of the average value from 2019 to 2020, and the number of fermentation, polypeptides The proportion of Oligonuclear acid projects increased.
③ enlightenment 2: international and differentiated API project initiation strategy.
The company's API differentiation competitive strategy can be used as a reference for other companies: nichemarketcharacteristics (less than 5 suppliers and few Asian competitors), scale / efficiency requirements (scale advantage through process optimization), chemical complexity (more than 20 synthetic steps), and value chain complexity (requirements for special industrial chains such as raw materials and cold chain). Most Chinese api companies have less category quantity and differentiation. We believe that it is related to the development stage of Chinese companies (the expansion of new varieties is a long-term slow variable) and the competitive factors of Chinese companies (the chemical foundation constitutes an important comparative advantage in the international competition of Chinese api companies), The single large product strategy can also have stable and sustained revenue growth (from the growth of global generic drug consumption at the rate of 5-10%) and high profitability (the ebitmargin of divi'slab is generally 35-40%, much higher than the euroapi of multi variety strategy and Lonza dominated by cdmo business).
Investment advice
We believe that in the international competition, most Chinese api companies do not have a high degree of participation in the internationalization of APIs with high barriers and high premium. See you in 20202021. We are concerned that some companies accelerate the registration of new products based on technology platforms (such as Brightgene Bio-Medical Technology Co.Ltd(688166) ), or accelerate the application / sales of Anda based on international manufacturing capacity (such as Nanjing King-Friend Biochemical Pharmaceutical Co.Ltd(603707) , Hainan Poly Pharm.Co.Ltd(300630) ), As more and more Chinese companies accelerate their integration into the global API manufacturing regulatory system and supply chain division of labor, we continue to be optimistic about the upgrading trend of China's API industry.
On the investment target, we suggest that we should look at the development stages and investment opportunities of China's export companies of APIs and preparations from the perspectives of the competitiveness of APIs, the competitiveness of raw drug varieties, the layout of international preparations, the resilience of C (d) Mo, and the resilience of C (D-D) Mo, among the investment targets. We recommend the development stages and investment opportunities of China's export companies of APIs and preparations from the perspectives of the competitiveness of raw drug varieties, the competitiveness of the competitiveness of APIs, the international layout of international preparations, the resilience of C (d-d-d-mo, the resilience of C (D-D) Mo, and so on the competitiveness of raw drug varieties, the competitiveness of international distribution, the resilience of C (d-d-d-mo) and so on the development stages and investment opportunities of China's export companies that export companies of APIs and preparations for Chinese APIs and preparations, recommend the development stages and investment opportunities, recommend the ' Poten Environment Group Co.Ltd(603603) 7070707070707 \ \companiesincluding Zhejiang Xianju Pharmaceutical Co.Ltd(002332) , Zhejiang Starry Pharmaceutical Co.Ltd(603520) , Jiangsu Sinopep-Allsino Biopharmaceutical Co.Ltd(688076) , Hainan Poly Pharm.Co.Ltd(300630) , etc.
Risk tips
Production safety accidents and quality risks, the risk that the standard flow or sales of core preparations are less than expected, the risk of exchange rate fluctuation, the risk of order delivery volatility, and the risk of changes in pharmaceutical regulatory policies.
