Market review:
Last week, the overall performance of A-Shares was weak. The Shanghai index fell 1.25%, the Shenzhen Component Index fell 2.60% and the gem index fell 4.26%. Shenwanyi sub coal (+ 5.02%), food and beverage (+ 4.40%), commerce and retail (+ 3.12%) led the rise; Losses were led by power equipment (- 7.37%), media (- 6.39%) and communications (- 5.67%).
During the reporting period, the pharmaceutical and biological sector underperformed the CSI 300 index by 0.38% and outperformed the gem index by 2.89%. Among them, only the medical devices and medical services sector rose, up 2.94% and 2.33% respectively; Biological products sector led the decline, down 5.17%.
Industry highlights of the week:
Centralized purchase and landing of Chinese patent medicine of Guangdong Alliance
Industry Week view:
On April 8, Guangdong Pharmaceutical Trading Center issued the notice on publicizing the proposed winning / alternative results of centralized procurement of Chinese patent medicines such as Guangdong alliance Qingkailing, involving 53 varieties and 361 products. The overall price reduction of non exclusive varieties is 67.8%, and that of exclusive varieties is about 20%. Among them, the proportion of exclusive varieties to be selected by listed companies is about 24.94%, and the overall price reduction of exclusive varieties is moderate. The exclusive varieties to be selected include China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) Shenfu injection, tianlishi Compound Danshen dropping pills, etc; The exclusive varieties to be selected include Chongqing Taiji Industry (Group) Co.Ltd(600129) xiaojinpian, Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) Lianhua Qingwen granules, etc. At present, there are 21 provinces in Hubei and Guangdong, covering more than half of China. The results of centralized purchase and selection of Chinese patent medicines have been basically determined, and the centralized purchase will continue to be fully deployed in the future.
We believe that the price reduction rate of exclusive varieties is better than expected. At the same time, the bid winning enterprise of centralized procurement will “exchange price for quantity”, which is good for the bid winning enterprise. In addition, retail pharmacies are mainly voluntary, so the off-site market is still immune. In addition, the state has successively issued supporting policies related to traditional Chinese medicine. We believe that the traditional Chinese medicine industry has long-term investment value and suggest paying attention to relevant racetracks. 1) OTC of traditional Chinese medicine: it has strong policy immunity, low risk of fee control and price reduction, sufficient power of enterprise layout outside the hospital market, and the future expansion of the industry can be expected; 2) Innovation of traditional Chinese medicine: it is one of the core competitiveness of traditional Chinese medicine enterprises to innovate in combination with modern advanced research means and layout R & D pipelines in advantageous fields. Policies will increase support for scientific and technological innovation of traditional Chinese medicine. Enterprises are expected to accelerate innovation transformation on the basis of inheritance; 3) Traditional Chinese medicine formula granules: demand expansion (terminal liberalization) + medical insurance access landing, driving industrial expansion; 4) Covid-19 treatment related traditional Chinese medicine track: the state recognizes the role of traditional Chinese medicine in the prevention and control of major infectious diseases, including covid-19 pneumonia, and brings some traditional Chinese medicine and medical services into the covid-19 pneumonia diagnosis and treatment plan, further improving the strategic position of traditional Chinese medicine; 5) Traditional Chinese medicine: the State supports the expansion of the total amount of high-quality traditional Chinese medicine medical resources, encourages social forces to run traditional Chinese medicine at the grass-roots level, and drives the expansion of the traditional Chinese medicine medical industry; 6) Chinese medicine going to sea: taking advantage of the “epidemic” to go to sea, promote Chinese medicine enterprises to explore international key markets, and usher in an opportunity for overseas registration and sales of Chinese medicine.
Risk factors: the risk that the implementation of policies such as cost control and volume procurement exceeds the expectation, and the risk that the implementation of policies does not meet the expectation.
