Key points:
The pharmaceutical and biological index fell rapidly, focusing on the oversold rebound
This week, pharmaceutical biology fell 7.3%, ranking fourth in the decline of the first-class industry, losing 3.2% of Shanghai and Shenzhen 300. In terms of tertiary industries, 13 tertiary sub industries showed different declines, with vaccines and medical equipment leading the decline, with declines of 10.3% and 8.9% respectively. In the field of innovative drugs, pharmaceutical and biological products in the three places all fell sharply by more than 5%. Among them, China’s A-share Biotechnology Index fell the most, down 8%, Hang Seng biotechnology and Nasdaq biotechnology fell 7.2% and 6.3% respectively. In terms of valuation, the Pb indexes of China and Hang Seng biotechnology were 3.77x and 2.3x respectively, which have reached a new low in recent five years. Chemical pharmaceutical fell 6.2%, ranking third in 13 tertiary industries, outperforming the pharmaceutical biological index by 1.1%. In terms of valuation, the current Pb is 2.3x, which has reached a new low in recent five years, with a discount of 26% compared with the pharmaceutical biological index. In addition to being affected by the decline of the overall market, the sharp decline in the performance of leading companies triggered a sharp retreat of the sector. The industry leading company Jiangsu Hengrui Medicine Co.Ltd(600276) disclosed its annual report and the first quarterly report. In 2021q and 2022q1, the net profit attributable to the parent decreased by 84% and 17% respectively, which is also the first decline in the company’s performance in recent 10 years. API fell 8.3%, ranking fourth in the decline of tertiary industry. Underperformed the medical biological index by 1%. In terms of valuation, the current Pb is 2.5x, which is at the lower limit of double the standard deviation of the average annual value in recent five years, with a discount of 19% compared with the pharmaceutical biological index.
Two Chinese products have won the fast track of FDA and paxlovid has been strongly recommended by who
In terms of R & D, this week, there were two anti-tumor drugs cart and claudin 18 from Chinese enterprises 2. Obtain FDA fast track qualification. In terms of covid-19 treatment, the inactivated covid-19 virus vaccine of Chinese medicine Zhongsheng Omicron mutant obtained clinical approval, and Shanghai Junshi Biosciences Co.Ltd(688180) launched the head-to-head clinical trial of vv116 tablets and Pfizer paxlovid III. On April 22, who updated the covid-19 treatment guidelines, strongly recommended Pfizer covid-19 oral drug paxlovid (nirmatrelvir + ritonavir) for the treatment of patients with mild to moderate covid-19 pneumonia with high risk of hospitalization, and said it was the best treatment option so far.
Investment advice
This week, the pharmaceutical and biological industry experienced a rapid and sharp decline. On the one hand, it was affected by the overall market environment. On the other hand, the leading companies of innovative drugs and vaccines showed varying degrees of bad performance and product use. The sharp decline of share price led to the spread of pessimism. After this round of rapid decline, the overall valuation level of the pharmaceutical biological index has reached the low level in 2018. From the perspective of industry fundamentals, the industry has undergone rapid iteration in the past five years, and the industry has completely shifted from sales driven to innovative product driven. At the current position, it is recommended to build warehouses gradually from bottom to top, with medium and long-term logic, rigid demand and relatively matching performance valuation. The biotech sector has continued to decline for nine consecutive months and has fully digested the negative factors such as policy and liquidity. There is no need to be pessimistic about its current position. Through our continuous tracking of industry fundamentals, biotech has initially emerged in the international market, product certification qualification and overseas authorization have been implemented one after another, and the sector has moved from speculation expectation to performance fulfillment. At present, most biotechs have relatively abundant cash reserves. It is suggested to actively pay attention to the oversold investment opportunities in the biotechnology sector.
The medium and long-term investment ideas under the post epidemic situation should return to the industrial operation trend, and grasp the two main investment lines of bottom process innovation and cutting-edge scientific and technological innovation.
1. The main line of bottom process innovation: tob end invisible champion. It is suggested to pay attention to the opportunities of individual stocks in the upstream equipment, gene consumables, biological enzymes, high-end analytical instruments and reagents of the biopharmaceutical industry chain.
2. The main line of cutting-edge scientific and technological innovation: the value of cutting-edge technology platform. It is suggested to pay attention to the potential investment opportunities of ADC, shuangkang and mRNA technology platform companies.
In the medium and long term, the industry has ushered in the historical opportunity of transformation and upgrading. In the short term, it has fluctuated under the influence of the external macro environment and sentiment. In the long term, we maintain the overweight rating of the industry.
Risk tips
1. The clinical research and development of innovative drugs failed, and the pharmaceutical procurement policy continued to be under high pressure.
2. Slow internationalization process.
