Industry Review
During the reporting period, the pharmaceutical and biological industry index increased by 0.39%, ranking 17th among Shenwan’s 31 primary industries, outperforming the Shanghai and Shenzhen 300 index (0.24%). From the perspective of sub industries, among the three-level pharmaceutical and biological industries, hospitals, medical R & D outsourcing and traditional Chinese medicine accounted for the largest increase, with an increase of 9.52%, 5.92% and 3.61% respectively; Blood products, offline pharmacies and vaccines led the decline, with declines of 8.35%, 4.08% and 3.78% respectively. In terms of valuation, as of April 1, 2022, the PE (TTM overall method, excluding negative values) of the pharmaceutical and biological industry was 28.99x (28.69x in the previous period), lower than the negative double standard deviation. The PE (TTM overall method, excluding negative values) of API, chemical agents, traditional Chinese medicine, blood products, vaccines, other biological products, pharmaceutical circulation, offline pharmacies, medical equipment, medical consumables, in vitro diagnosis, diagnostic services, medical R & D outsourcing, hospitals and other medical services in Shenwan tertiary industry of medicine and biology are 36.12x, 27.85x, 30.23x, 31.87x, 29.17x, 28.01x, 15.27x, 24.30x, 40.55x, 15.80x, 19.96x, 19.40x 59.58x、62.99x、69.97x。
During the reporting period, the shareholders of 37 listed companies in the pharmaceutical and biological industries in the two cities reduced their net holdings by 2.226 billion yuan. Five of them increased their holdings by 28 million yuan and 32 reduced their holdings by 2.254 billion yuan.
As of April 5, 2022, 125 of the 422 listed companies in the pharmaceutical and biological industry we tracked have disclosed the annual report of 2021. Among them, there are 51 companies whose net profit attributable to the parent company is greater than or equal to 30%; From the perspective of subdivided industries, the net profit attributable to the parent company is increasing. The top three sub industries are chemical pharmacy, medical devices and traditional Chinese medicine, with the number of 26 / 18 / 18 respectively. Among them, the chemical pharmaceutical sub industry performed brilliantly, with 7 companies with a growth rate of more than 100% and 13 companies with a growth rate of more than 30%.
Important industry information
The general office of the State Council printed and distributed the development plan of traditional Chinese medicine in the 14th five year plan
The National Medical Insurance Bureau said: the cost of covid-19 vaccine is more than 120 billion yuan, which is shared by the medical insurance fund and the finance
Domestic mRNA covid-19 vaccine: Shiyao group and Cansino Biologics Inc(688185) products have been approved for clinical trial, and Sri Lanka microorganism has submitted an application for clinical trial
Investment suggestions:
The 14th five year plan for the development of traditional Chinese medicine was officially released, which made important task arrangements in ten aspects, such as the service system of traditional Chinese medicine, the inheritance and protection of traditional Chinese medicine, scientific and technological innovation, and the open development of traditional Chinese medicine, and arranged 44 major projects in 11 categories; The introduction of the policy is conducive to the long-term and steady development of the traditional Chinese medicine industry. At this stage, the reform of centralized procurement with quantity has entered a new stage of normalization and institutionalization. Drugs, high-value medical consumables, biological products and Chinese patent medicines have been affected to varying degrees. In the future, quality and cost control will still be the main theme of pharmaceutical policies.
During the reporting period, the valuation level of the pharmaceutical industry sector is still significantly lower than the industry average and slightly lower than the negative standard deviation level of the industry. The valuation is at the bottom of history. At present, the investment value of the industry is prominent. We suggest increasing the allocation proportion of the industry and paying attention to the investment opportunities in six aspects: first, the annual report of 2021 and the performance of the first quarterly report of 2022 are disclosed successively, and paying attention to the leading enterprises with high growth or exceeding expectations in the annual report and the performance of the first quarterly report; Second, with the official release of the 14th five year plan for the development of pharmaceutical industry, under the premise of controlling medical insurance expenses, innovation and internationalization will be the core main line of the industry in the future. It is suggested to pay attention to innovation driven companies and pharmaceutical enterprises with international ability; The third is the CXO industry. The valuation of CXO industry is at the bottom of history. With the listing of covid-19 oral medicine, China’s high-quality cdmo enterprises have obtained sufficient orders. Contrarian, focus on companies with reasonable valuation and sufficient orders; Fourth, drugstore chain companies with reasonable valuation and stable recovery; Fifth, pay attention to the traditional Chinese medicine sector. The successive release of the guiding opinions on medical insurance supporting the inheritance, innovation and development of traditional Chinese medicine and the “14th five year plan” for the development of traditional Chinese medicine shows the state’s determination to the inheritance, innovation and development of traditional Chinese medicine, which will play a positive role in the traditional Chinese medicine industry; Sixth, pay attention to the consumer medical section. Under the background of medical insurance fee control, ophthalmology, medical beauty and other medical sub industries with consumption attribute have policy immunity, and consumption upgrading will drive their development.
Risk tips:
The performance release of medical insurance negotiation varieties is less than expected; Covid-19 epidemic situation is repeated; Policy uncertainty.
