The executive meeting of the State Council held on January 10 pointed out that “it is decided to normalize and institutionalize the centralized procurement of drugs and high-value medical consumables, so as to further reduce the medical burden of patients.”
This news has aroused widespread praise in the market. “For a long time, medical expenditure has been an important part of China’s household consumption expenditure, and has also shown an upward trend in recent years. According to the latest data of the National Bureau of statistics, the proportion of household medical and health care expenditure of urban residents will reach 8.04% and that of rural residents will reach 10.34% in 2020.” According to Chen Li, chief economist of Chuancai securities and director of the Research Institute, since April 2019, the national centralized drug purchase has been officially launched. After the reform in recent years, the prices of many kinds of drugs have fallen sharply, which has greatly alleviated the medical burden of patients. The national standing committee meeting proposed to “decide to normalize and institutionalize the centralized procurement of drugs and high-value medical consumables.” It means that more drugs will be included in the scope of centralized purchase in the future, and the medical burden of patients will be further reduced.
nearly 80% of the company’s market value increased
In fact, after years of industrial chain development and changes, China Meheco Group Co.Ltd(600056) industry segments are in full bloom, and the growth space is expected to be released. Relevant data show that in 2020, the scale of China National Chemical Engineering Co.Ltd(601117) drug market will reach 120.9 billion US dollars, the scale of traditional Chinese medicine market will reach 73.7 billion US dollars, and the scale of biological agent market will reach 53.5 billion US dollars. In 2021, the market scale of China National Chemical Engineering Co.Ltd(601117) drugs, traditional Chinese medicine and biological agents is expected to reach US $125.5 billion, US $75.3 billion and US $63.5 billion respectively. Overall, the total profit of China Meheco Group Co.Ltd(600056) industry is expected to reach 578.02 billion yuan in 2025.
From the perspective of capital market, as of January 11, the total market value of pharmaceutical and biological sector reached 8.26 trillion yuan, accounting for 8.43% of the total market value of A-Shares (97.93 trillion yuan). It ranks second in Shenwan industry, second only to 10.35 trillion yuan in the banking sector.
At the same time, many companies have inserted the “wings of capital”. After years of development, there have been Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) , Jiangsu Hengrui Medicine Co.Ltd(600276) and other “yaomao” companies with prominent growth value. According to statistics, of the 424 companies in the pharmaceutical and biological sector, 326 companies achieved an increase in the latest total market value compared with the total market value of the initial public offering, accounting for 76.89%. Among them, the total market value of Yunnan Baiyao Group Co.Ltd(000538) and Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) increased by more than 10000%, and the total market value of 52 companies, including Jiangsu Hengrui Medicine Co.Ltd(600276) , Changchun High And New Technology Industries (Group) Inc(000661) , Pacific Shuanglin Bio-Pharmacy Co.Ltd(000403) , Meinian Onehealth Healthcare Holdings Co.Ltd(002044) , Shanghai Pharmaceuticals Holding Co.Ltd(601607) , Dong-E-E-Jiao Co.Ltd(000423) , Xi’An International Medical Investment Company Limited(000516) , Humanwell Healthcare (Group) Co.Ltd(600079) , Topchoice Medical Co.Inc(600763) , Hangzhou Tigermed Consulting Co.Ltd(300347) , increased by more than 10 times.
In this context, some professionals pointed out that with the increasing concentration of the industry, the competition among enterprises will become more intense, and the pharmaceutical industry will face a “big reshuffle” in 2022. A financial commentator told the reporter of Securities Daily that the development of China Meheco Group Co.Ltd(600056) industry has experienced “genetic recombination” transformation, and more and more reflects the core concept of “people-oriented”. With the gradual implementation of drug audit reform and volume procurement policy, the market elimination mechanism will promote pharmaceutical enterprises to open an innovative model, increase scientific research investment and the transformation of medical scientific and technological achievements.
experts suggest paying attention to three main lines
The industry said that the investment value of the pharmaceutical sector has been verified by the market for many years and is considered to be the “blue ocean” of investment. With the high-quality development of listed companies, individual stocks that emphasize speculation and ignore value are being abandoned by market funds.
“Pharmaceutical stocks, as a long-term investment theme in the A-share market, will be seen in combination with the national regular meeting.” Chen Li believes that for listed companies, although the centralized purchase of medicine will lead to a sharp decline in drug prices, it has brought greater room for improvement to the company’s drug sales and reduced the sales cost. Under the “small profit but quick sales”, pharmaceutical enterprises will still have a certain profit space.
“From the perspective of valuation and stock price, the pharmaceutical sector has continued to fall since June last year. At present, the overall valuation has been relatively low, and the investment value is highlighted again.” Chen Li suggested that investors should pay attention to pharmaceutical companies in three segments: first, enterprises with strong innovation ability. Pharmaceutical enterprises with strong innovation ability realize their own profits by continuously improving treatment means and developing new drugs; Second, enterprises in line with the development direction of national policies. Under the background of population aging, there are great investment opportunities in the pension industry in the future; Third, the traditional Chinese medicine industry. At present, the coordinated development of traditional Chinese and Western medicine has become a national strategy. At the same time, the capacity of Chinese patent medicine in the medical insurance catalogue has also continued to expand recently. The overall valuation of the industry is relatively low and has a certain investment value.
According to the reporter’s combing, the cumulative increase in the three segments of traditional Chinese medicine, pension concept and innovative drugs in the month was 3.10%, 0.61% and 2.04% respectively.
In terms of individual stocks, Asahi biology, Shanghai Kaikai Industry Company Limited(600272) , Beijing Hotgen Biotech Co.Ltd(688068) , Zhejiang Yatai Pharmaceutical Co.Ltd(002370) , Hangzhou Alltest Biotech Co.Ltd(688606) and other stocks rose more than 50% in the month. Among them, an Xu biological harvested 20cm trading limit for four consecutive trading days, ranking first in the A-share list.
In addition, by combing 82 industry research reports including Everbright Securities Company Limited(601788) during the month, the reporter found that Beijing Tiantan Biological Products Corporation Limited(600161) , Pharmaron Beijing Co.Ltd(300759) and other two stocks were recommended by institutions, and the future performance is worthy of attention
Chart: list of market performance of some pharmaceutical stocks in the month (prepared by Xu Yiming)
(source: Securities Daily)
