Market performance
Last week, the CSI 300 index closed down 2.01%, and the performance of real estate, architectural decoration, household appliances and other sectors was eye-catching. The pharmaceutical and biological sector closed down 2.94% for the whole week, ranking 23rd among Shenwan’s 31 sub industries. The six pharmaceutical sub sectors showed obvious differentiation, among which the pharmaceutical business increased the most, with an increase of 1.02%; The medical service sector decreased significantly, with a decrease of – 9.56%.
Industry perspective
Key events this week include the progress of special centralized collection of insulin and 16 guiding principles issued by CDE.
On January 6, according to the news of Shanghai Sunshine pharmaceutical procurement network, according to the work arrangement, the results of the special centralized purchase of insulin will be implemented in May 2022. The specific implementation date is subject to the notice issued by all localities. The Sixth Batch of national drug centralized purchase is a special centralized purchase of insulin, and the quotation was opened in Shanghai on November 26. Finally, 11 enterprises participated in the bidding and all won the bid, including Novo Nordisk, Lilly, Sanofi, Gan & Lee Pharmaceuticals(603087) , Tonghua Dongbao Pharmaceutical Co.Ltd(600867) and other foreign enterprises. In terms of the decline, the average price of the bid winning products of centralized insulin purchase was reduced by 48%, and the highest decline was more than 70%.
From January 4 to 7, CDE’s official website successively released 16 guiding principles, involving drug clinical trials, chemical generic drugs, new drug research and development, including guiding principles for sample research for toxicological research of new traditional Chinese medicine (Trial), guiding principles for research on drug non clinical dependence, guiding principles for research on clinical pharmacokinetics of modified new drug release formulations Technical guidelines for research on human bioavailability and bioequivalence of innovative drugs, guiding principles for random allocation of drug clinical trials (Trial), etc. The 16 guiding principles cover new traditional Chinese medicine, drugs for rare diseases, antiviral drugs for chronic hepatitis C, drugs for the treatment of ulcerative colitis, drugs for the treatment of Crohn’s disease, antitumor drugs, etc., aiming to further standardize and guide the clinical trials of innovative drugs and provide referential technical specifications. We believe that the issuance of 11 guiding principles by the State Drug Administration at the beginning of 2022 represents that the State Drug Administration attaches great importance to innovative drugs, which is consistent with our view that “the State Drug Administration is gradually improving the accessibility of innovative drugs through drug review reform, MAH, priority review and approval and medical insurance payment policies”.
Our views on this week’s segment are as follows:
(1) innovative drugs: since 2015, policies such as drug review reform, MAH, priority review and approval and medical insurance payment policies have gradually improved the accessibility of innovative drugs. In this regard, first, we emphasize enterprises that pay attention to transition and innovation. Such enterprises have the characteristics of low valuation, stable profit and top R & D. It is recommended to pay attention to Huadong Medicine Co.Ltd(000963) , Sichuan Kelun Pharmaceutical Co.Ltd(002422) , Zhejiang Medicine Co.Ltd(600216) , etc. Second, investors are suggested to pay attention to FIC enterprises in research with high R & D investment and strong innovation ability, and it is suggested to pay attention to Shanghai Junshi Biosciences Co.Ltd(688180) , Cinda biology, Baiji Shenzhou, etc.
(2) Innovation Medical Management Co.Ltd(002173) devices: the continuous promotion of consumption upgrading on the demand side drives the rapid expansion and development of the medical device industry. Independent research and development and import substitution accelerate the rise of domestic products and break the monopoly position of imported enterprises in high-end fields. We recommend three main logical lines: (1) upstream equipment and consumables enterprises with good competition pattern, such as Tofflon Science And Technology Group Co.Ltd(300171) , Truking Technology Limited(300358) ; (2) The characteristic enterprises with strong innovation strength and product differentiation in the segment track are expected to enjoy innovation dividends for a long time, such as Micro-Tech (Nanjing) Co.Ltd(688029) , Sansure Biotech Inc(688289) ; (3) Layout of downstream equipment leaders in overseas markets, such as Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) .
(3) traditional Chinese medicine: catalyzed by multiple factors such as performance, policy and innovation, the traditional Chinese medicine sector has rebounded strongly recently. However, the state is gradually strengthening the regulation of the traditional Chinese medicine sector, and the volume procurement directly refers to the varieties of Chinese patent medicines with large consumption and high amount. It is expected that the state’s price regulation of Chinese patent medicines will be gradually strengthened in the future. For, we suggest investors pay attention to traditional Chinese medicine enterprises with exclusive varieties and layout in the international market, such as Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) , Yunnan Baiyao Group Co.Ltd(000538) , Dong-E-E-Jiao Co.Ltd(000423) , Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) , etc.
(4) CXO industry: in recent years, thanks to the global industrial chain transfer, Chinese engineers’ bonus, cost advantage, the acceleration of drug examination reform and the upgrading of drug innovation, China’s CXO industry has shown an ultra-high prosperity. For the CXO sector, it is recommended to focus on five main investment lines, including the number of enterprise orders, the number of overseas customers, enterprise core capacity, enterprise technical barriers and enterprise transformation expectations. However, considering the general rise of CXO plate in 2020 and 2021, the current plate valuation is high, so we must be vigilant against the correction and differentiation of CXO plate in the future. It is recommended to pay attention to Asymchem Laboratories (Tianjin) Co.Ltd(002821) , Zhejiang Jiuzhou Pharmaceutical Co.Ltd(603456) , Pharmaron Beijing Co.Ltd(300759) , etc.
(5) vaccine: with the emergence of “Ihu” new strain, the global epidemic prevention war may be upgraded. Superimposed on the omecron mat roll worldwide, although the toxicity is slight, the extremely strong transmissibility can not be underestimated. We believe that the key to epidemic prevention is to popularize the third vaccination and improve the vaccination rate of the third vaccination. Considering that the country has significantly strengthened the vaccination of the third injection recently and superimposed the vaccination expectation of the potential fourth injection, it is recommended that investors pay attention to covid-19 pneumonia epidemic prevention targets, such as Chongqing Zhifei Biological Products Co.Ltd(300122) , Cansino Biologics Inc(688185) , Shenzhen Kangtai Biological Products Co.Ltd(300601) .
News comments
(1) on January 4, according to the Research Report of medrxiv, a medical research website, a new variant of covid-19 virus was found in Marseille, France. The virus strain number is “b.1.640.2”, also known as “Ihu”. At present, the new variant has infected 12 people in France. The “Ihu” strain contained 46 mutation sites and 37 deletions, slightly lower than the 50 mutations of Omicron. The new strain carries e484k mutation, which is often related to the vaccine resistance of the virus; In addition, Ihu carries n501y mutation, making it more transmissible. However, due to the small number of samples of “Ihu”, its infectivity and risk are still difficult to assess, and it is impossible to judge whether it will affect the protective efficacy of the vaccine. However, the World Health Organization has listed the strain as a covid-19 variant to be observed. Comments: with the emergence of the new strain of “Ihu”, the global epidemic prevention war may be upgraded. Superimposed on the omecron mat roll worldwide, although the toxicity is slight, the extremely strong transmissibility can not be underestimated. According to who statistics, as of January 5, 293 million confirmed cases and 5.45 million deaths had been reported worldwide.
In the face of severe and complex epidemic forms, Israel, the United States and Thailand have planned to implement the fourth dose of covid-19 vaccine. The latest research shows that the effect of two doses of vaccine is weakening, and the third dose is imminent. We believe that the key to epidemic prevention is to popularize the third vaccination and improve the vaccination rate of the third vaccination. Considering that the country has significantly strengthened the vaccination of the third injection recently and superimposed the vaccination expectation of the potential fourth injection, it is recommended that investors pay attention to covid-19 pneumonia epidemic prevention targets, such as Chongqing Zhifei Biological Products Co.Ltd(300122) , Cansino Biologics Inc(688185) , Shenzhen Kangtai Biological Products Co.Ltd(300601) .
Risk tips
Policy implementation is not as expected, drug price reduction risk and drug R & D risk
