Is innovative drug investment a good track?
Innovative medicine has become one of the core investment themes of the pharmaceutical sector, but the stock price often fluctuates greatly, and the reasons for the rise and fall and the valuation system are complex. Investing in innovative drugs requires a lot of professional academic research, but it may not produce good investment returns. It is often the harvest of knowledge but not wealth. Although there are more and more innovative drug listed companies, many investors are more and more confused, and even question whether innovative drug investment is a good track. Therefore, in this report, we try to build a set of innovative drug investment methodology to guide innovative drug investment with better strategies.
We selected Cansino Biologics Inc(688185) bio-b and Cinda bio, the two biotech companies with the largest increase after listing (their increases reached 393% and 183% respectively as of December 29, 2021), and summarized the driving forces of rise and fall through the in-depth resumption of their stock price history. We believe that the rise and fall of the share price of innovative drug companies have both industrial and stock factors, α And β If you want to obtain good investment returns, you should seek both a domain and the overall situation.
What is the of innovative medicine β： Times have changed, and the offensive and defensive trends are different
1) population change is the underlying logic. The growth of total population, aging and improvement of people's life will lead to the growth of total clinical demand and the change of disease spectrum, which is the most fundamental logic for the development of innovative drugs.
2) policy is the strongest cycle of the pharmaceutical industry. The regulatory ability of the policy continues to be enhanced. The industry takes policy guidance as the direction, and the policy cycle often creates the cycle of innovative drug development.
3) the driving force of industrial emergencies can be encountered but not sought, which may lead to the general rise of the industry.
4) the change of market risk preference will affect the flow of funds.
What is the of innovative medicine stocks α： Expectation is not what I want, and certainty is what I want
In the rNPV valuation system widely used in the current market, there are two subjective parameters that have a significant impact on the valuation results, namely, success rate and penetration rate. Therefore, two investment strategies are derived, betting on the results of clinical trials vs. betting on the growth of the company.
1) the core contradiction of the strategy of betting on clinical trial results is not whether to obtain positive results, but whether the results exceed the consensus expectations of the previous market. It is necessary to find differences in clinical value and become opponents of the market. In essence, it is an investment strategy based on poor expectations;
2) the key point of betting on the company's growth strategy is to understand the path of enterprise development and growth, predict the key inflection points of fundamentals in advance, and become a friend of the trend. In essence, it is an investment strategy based on certainty.
Investment advice: a gentleman sees the opportunity and knows his life
Investment in innovative drugs needs to grasp the correct β， Select potential α。 Innovative drugs β The root of lies in the change of population, and policy reform will drive the cycle of the industry, and factors such as emergencies and market risk preference may have a short-term impact; Of innovative drugs α It is divided into betting on clinical trial results and betting on the growth of the company. The essential difference lies in whether the investment expectation is poor or the investment is uncertain. There is no absolute difference between the two strategies. It is recommended that investors select individual stocks of innovative drugs based on their own needs.
Risk analysis: the risk of policy adjustment; The risk of changes in market risk appetite; Risk of clinical trial failure.
