Market review:
Last week, the overall performance of A-Shares was weak. The Shanghai index fell 3.87%, the Shenzhen Component Index fell 5.12% and the gem index fell 6.66%. Among shenwanyi sub industries, only textile and garment Rose (+ 4.09%), real estate (- 9.20%), steel (- 9.05%) and non-ferrous metals (- 8.08%) led the decline.
During the reporting period, the pharmaceutical and biological sector underperformed the CSI 300 index by 3.15% and the gem index by 0.69%. All sub sectors in the pharmaceutical industry fell, with the decline from high to low being biological products (- 8.83%), traditional Chinese medicine (- 8.30%), medical devices (- 8.13%), pharmaceutical commerce (- 7.71%), chemical pharmacy (- 6.71%) and medical services (- 5.59%).
Industry highlights of the week:
Shanghai Junshi Biosciences Co.Ltd(688180) release the latest research results of covid-19 oral drug vv116;
National Medical Insurance Administration: the DRG / Dip function module will be applied nationwide by the end of November 2022
Industry Week view:
The pharmaceutical sector fell 7.34% this week, focusing on the track with long-term investment value. In the long run, 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 we 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.
