In this week’s weekly, we want to discuss why align can continue to maintain its global industry monopoly after the early patent period? And what is the core competitiveness of invisible orthodontic enterprises
Why can align continue to maintain its global industry monopoly after the early patent period?
After the expiration of the early patents of align’s yinshimei products, yinshimei still maintained its dominant and monopoly position. According to the number of cases, in 2020, the global market share of yinshimei was 57% and the national market share was 64%. In addition, in the five years from 2015 to 2020, yinshimei raised its ex factory price four times and continued to maintain a high gross profit margin and high net profit margin. After the patent expires, why can yinshimei continue to maintain its absolute industry leading edge?
What is the core competitiveness of invisible orthodontic enterprises?
We believe that the core competitiveness of the invisible orthodontic system enterprise lies in the leading position in the cognition of invisible orthodontic mechanics, which is reflected in the continuous iteration of products to consolidate the competitive advantage. The expiration of early patents does not affect the company’s dominant position in the cognition of invisible orthodontic mechanics, which is the real reason why hidden Shimei still maintains the absolute dominant position in the industry.
What are the real barriers to materials?
The real barrier of orthodontic materials lies in the understanding of the mechanical mechanism of orthodontic treatment. The cognition of orthodontic mechanical mechanism in turn will put forward requirements for the performance of materials, which largely determines that the development of better performance materials also depends on the improvement of the cognition of orthodontic mechanical mechanism, and the real barrier of orthodontic materials lies in the understanding of orthodontic mechanical mechanism. Yin Shimei, the angel of the times, these pioneers, have summarized and found experience in countless cases, and have a deeper understanding of what conditions the mechanical properties of appliance materials should meet, so as to make it play a good therapeutic effect. Therefore, in essence, the development of better orthodontic materials comes from the understanding of invisible orthodontic mechanics.
Why does invisible orthodontics need a database?
Compared with fixed correction, there is still a gap in the effect of invisible correction. In essence, it is because orthodontists have limited mastery of the mechanical rules of stealth correction, because the current mechanical system of stealth correction is lack of detailed research, and the mechanics of stealth correction is not perfect at present. Under the background of imperfect invisible orthodontic mechanics system, we believe that the significance of case database is to constantly explore invisible orthodontic mechanics through practical clinical verification.
We believe that the core competitiveness of invisible orthodontic system enterprises lies in the leading advantage of the cognition of invisible orthodontic mechanics.
Through the analysis of the core technical links (materials and database) of invisible orthodontic treatment, it is not difficult to find the source of the advantages of invisible orthodontic treatment, which comes from the cognition of invisible orthodontic mechanics, runs through the understanding, discovery and transformation of material properties, and makes a reasonable design of invisible orthodontic scheme. We believe that the core competitiveness of the invisible orthodontic system enterprise lies in the leading position in the cognition of invisible orthodontic mechanics. The products are continuously iterated to consolidate the competitive advantage. The expiration of early patents does not affect the dominant position of the company in the cognition of invisible orthodontic mechanics, which is the real reason why yinshimei still maintains the absolute dominant position in the industry.
Is invisible orthodontics a good business? Yes?
1. The penetration rates of Orthodontics and invisible orthodontics in China are both low, and there is sufficient room for growth.
2. Under the traditional offline mode, the industry maintains a stable high profit margin and can continue to maintain;.
3. The first mover enterprises continue to maintain the leading edge of cognition and product iteration. It is easy to create a moat in the industry, with obvious economies of scale and stable competition pattern. A strong man is always strong.
4. From the perspective of capital expenditure, there is basically no investment to maintain the existing cash flow. Products are mainly micro innovation, and the R & D cost is not high. In order to maintain the existing cash flow and maintain the industry status, the capital expenditure is small, and the pressure brought by technology subversion is small.
Key companies: era angel. The Chinese market is complex and there are many cases. Era angel has more local advantages
Market review: the biomedical sector pulled back 4.55% this week, underperforming the CSI 300 index by 2.17pct and outperforming the gem index by 2.24pct, ranking ninth among 30 CITIC primary industries. This week, the circulation of traditional Chinese medicine decoction pieces and traditional Chinese medicine drinks in CITIC medicine sub plate increased by 2.86% and 2.11% respectively; The callback rates of medical services, medical devices and chemical raw materials were – 8.36%, – 7.86% and – 6.67% respectively; Biomedicine – 4.55%, chemicals – 1.32%, Chinese patent medicine – 1.11%.
Investment suggestions:
Recent view: focus on growth and cost performance, and continue to suggest two ideas in the short term: no game policy, on the premise of relative immunity of the policy, preferably:
1. Rapid growth, continuous improvement of performance, estimation is still in a reasonable range, and grasp the valuation switching market. Vaccines: Beijing Wantai Biological Pharmacy Enterprise Co.Ltd(603392) , Chongqing Zhifei Biological Products Co.Ltd(300122) and Shenzhen Kangtai Biological Products Co.Ltd(300601) ; Oral consumables: Yantai Zhenghai Bio-Tech Co.Ltd(300653) (active biological bone will be approved soon); 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. 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) ); Pharmacy sector ( Yifeng Pharmacy Chain Co.Ltd(603939) , Yixintang Pharmaceutical Group Co.Ltd(002727) , Lbx Pharmacy Chain Joint Stock Company(603883) and Dashenlin Pharmaceutical Group Co.Ltd(603233) ), Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) (short-term policy disturbance does not change the long-term development logic), China’s sublingual desensitization leader Zhejiang Wolwo Bio-Pharmaceutical Co.Ltd(300357) ; China’s leading pharmaceutical glass enterprise Shandong Pharmaceutical Glass Co.Ltd(600529) .
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 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 advantages, China benefits from domestic alternative logic, with high growth and great development potential.
2) IVD raw materials and consumables: covid-19 epidemic opens a window for the transfer of global IVD raw materials and consumables production 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) ;
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: 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 subjects: 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.
