According to the data, as of 10 p.m. on April 29, 429 A-share pharmaceutical and biological companies had released their annual reports for 2021. Among them, the net profit of more than 60% increased year-on-year. From the perspective of subdivided areas, the performance of vaccines, medical devices, medical services and other sectors is outstanding, and the pace of approval and listing of innovative drugs continues to accelerate.
Analysts believe that in the long run, CXO (Pharmaceutical outsourcing), scientific services, vaccines and innovative drugs may usher in sustained high growth on the basis of the continuous improvement of international industrial division penetration and R & D capacity.
4 companies’ net profit increased by more than 10 times
Among the 429 A-share pharmaceutical and biological companies, 68 had a year-on-year increase in net profit of more than 100%. Among them, there are four companies whose net profit has increased by more than 1000% year-on-year, namely Chimin Health Management Co.Ltd(603222) , Beijing Hotgen Biotech Co.Ltd(688068) , Tianjin Lisheng Pharmaceutical Co.Ltd(002393) and Harbin Medisan Pharmaceutical Co.Ltd(002900) .
The increased demand for covid-19 testing and vaccine injection has driven the growth of the company’s demand for medical devices. In Chimin Health Management Co.Ltd(603222) 2021, the net profit increased by 220602% year-on-year. In 2021, Jumin biosafety syringes (needles), a wholly-owned subsidiary of the company, achieved sales of about 600 million pieces, with a year-on-year increase of 138.94%; The net profit was 152 million yuan, a year-on-year increase of 193.33%.
Beijing Hotgen Biotech Co.Ltd(688068) 2021 net profit increased by 185041% year on year. The reason is that the epidemic continues to spread in Europe, the company’s foreign trade orders for novel coronavirus antigen detection kits and other products have surged, and the proportion of overseas revenue (mainly covid-19 detection products) in the total revenue has increased significantly.
There are also many highlights in the performance of biological products companies. Among them, Cansino Biologics Inc(688185) 2021 net profit reached 1.914 billion yuan, turning losses into profits Chongqing Zhifei Biological Products Co.Ltd(300122) strive to ensure the R & D progress, production and supply of covid-19 vaccine and other products. In 2021, the net profit reached 10.209 billion yuan, a year-on-year increase of 209.23%.
Some innovative pharmaceutical enterprises at a loss narrowed or even reversed their losses due to the listing of heavy products. For example, in Shanghai Junshi Biosciences Co.Ltd(688180) 2021, due to the substantial growth of technology licensing revenue, the increase of franchise revenue and the sales revenue brought by the commercialization of treprizumab injection in the Chinese market, the revenue increased by 152.36% year-on-year, and the net profit narrowed significantly year-on-year loss.
Driven by the demand for medical R & D outsourcing and life science services, the performance of the medical service sector remained strong. Among them, the net profit of Wuxi Apptec Co.Ltd(603259) , Asymchem Laboratories (Tianjin) Co.Ltd(002821) , Porton Pharma Solutions Ltd(300363) and other small molecule cdmo related companies increased by more than 40% year-on-year in 2021.
industry’s long-term prosperity logic and foundation remain unchanged
In recent years, China has actively responded to the general trend of global biomedical innovation and development, launched a series of medical reform policies, accelerated the review and approval of pharmaceutical equipment, encouraged product R & D and innovation, and initiated structural adjustment and upgrading with innovation, quality improvement, cost reduction and efficiency enhancement as the core. China’s biomedical industry is moving from imitation to innovation and from China to the world.
In 2021, biomedical companies will continue to increase R & D investment and accelerate transformation and upgrading. In terms of R & D investment, in 2021, a total of 13 companies invested more than 1 billion yuan in R & D. Among them, Jiangsu Hengrui Medicine Co.Ltd(600276) and Shanghai Fosun Pharmaceutical (Group) Co.Ltd(600196) ranked first and second, with 6.2 billion yuan and 5 billion yuan respectively.
In terms of the proportion of R & D investment in operating revenue, 36 companies’ R & D investment accounted for more than 20% of operating revenue in 2021. Among them, the R & D investment of three companies accounted for more than 1200% of the operating revenue.
According to the statistics of the reporter of China Securities Journal, a total of 39 innovative drugs were approved for listing in 2021, many of which were products independently developed and owned by China with independent intellectual property rights. In the first half of 2021 alone, more than 20 class 1 innovative drugs were approved for listing, exceeding the number of 20 innovative drugs approved in 2020, and the approval speed of innovative drugs was significantly accelerated.
Brokers said that with the deepening of understanding of drug targets and the continuous maturity of new technologies, all kinds of new products around the world have gradually entered the clinical and listing stage. Combined with the strong support of the capital market, China’s innovative drugs have entered the harvest period since 2018. It is expected that more innovative drugs will be approved in the next 2-3 years. In 2022, the heavyweight varieties of many innovative pharmaceutical enterprises are expected to be approved for listing in China, and some loss making biological innovative pharmaceutical companies are expected to turn around their losses rapidly and increase their revenue significantly after the heavy products are listed.
Zheshang Securities Co.Ltd(601878) believes that based on the structural upgrading of policy oriented industries in the pharmaceutical sector in the past 3-4 years, industrial differentiation has accelerated. From the time dimension, the medical reform has entered an obvious deep-water area. In terms of the overall development direction of the industry, the pharmaceutical industry is obviously in the key stage of replacement of old and new kinetic energy and supply side reform, but the logic and foundation of long-term prosperity remain unchanged. The global covid-19 epidemic is a disturbance in the short term and a catalyst in the long term. In 2022, the pharmaceutical investment strategy is to “grasp manufacturing and welcome innovation”, and continue to be optimistic about characteristic API, production outsourcing, pharmaceutical upstream, innovative pharmaceutical machinery and other sectors.
In addition, with the accumulation of innovative drug R & D experience, innovative drug projects of Chinese innovative drug enterprises continue to emerge, and many projects are favored by overseas drug enterprises. Anjie Securities believes that under the premise of limited pricing and market space of innovative drugs in China, domestic drugs go to sea and embrace the global market, which has become an important way for China Meheco Group Co.Ltd(600056) company to open the valuation ceiling.
