Current market review
In the current period (4.23 – 4.30), the Shanghai Composite Index closed at 304706, down 1.29%; The CSI 300 index closed at 401624, up 0.07%; SME 100 closed at 761363, up 1.65%; In the current period, Shenwan pharmaceutical and biological industry index closed at 873796, down 1.08%, ranking 11th among Shenwan’s 31 primary industry indexes. Among the seven secondary sectors, medical services rose the most, outperforming the Shanghai Composite Index and the Shanghai and Shenzhen 300.
Important information
CDE: release of two guiding principles such as traditional Chinese medicine compound preparation based on human experience
On April 29, 2022, the evaluation center of the State Food and Drug Administration issued the guiding principles for clinical research and development of new drugs of traditional Chinese medicine compound preparations based on human experience (Trial) and the guiding principles for communication and exchange based on the “Three Combinations” registration and evaluation evidence system (Trial), which will come into force as of the date of promulgation.
Domestic 1000 yuan, import 1500 yuan! Collected and planted teeth
On April 29, Ningbo Medical Security Bureau announced that it was the first country to fully launch the price limit payment policy for dental implant insurance, and organized 100 medical institutions to carry out collective signing. For brands within the planting catalogue of contracted medical institutions in Ningbo, the whole process of planting a tooth requires only 3000 yuan for domestic production and 3500 yuan for import, which can be paid by using the medical insurance account over the years. At present, 103 medical institutions in Ningbo have participated in the medical insurance dental implant project, and 14 mainstream brands such as wolan, DIO, domestic chuangying and zdi have been imported into the catalogue.
The national centralized insulin collection measures announced that the average decline of the selected products was 48%
On April 29, the state medical security administration and the State Health Commission issued the notice on improving the supporting measures for the centralized procurement and use of drugs (insulin special) organized by the state. The notice requires that the products selected in the centralized purchase of insulin should be linked to the network on the provincial pharmaceutical centralized purchase platform according to the selected price.
Core view
In the current period, Shenwan pharmaceutical and biological industry index closed at 873796, down 1.08%, ranking 11th among Shenwan’s 31 primary industry indexes. Among the seven secondary sectors, medical services rose the most, outperforming the Shanghai Composite Index and the Shanghai and Shenzhen 300.
Epidemic situation: the global Omicron epidemic has further eased this week. At present, the number of new cases per day is about 400000. Although the epidemic situation in Shanghai, China has been effectively controlled, the number of new cases in a single day has decreased from the peak of 27000 to 7189, the RT value has decreased from 2.27 to 0.67, and nearly two-thirds of the infected people have been cured and discharged, they are still in a critical period of retreat or advance. All localities are exploring the correct epidemic prevention strategies in preventing and controlling the epidemic and ensuring economic development. Normalized nucleic acid detection may become the main strategy for large and medium-sized cities to maximize the normal operation of the economy on the basis of epidemic prevention and control in the future, bringing more vigorous demand for normalized nucleic acid detection. In terms of vaccination, vaccination has made steady progress. As of April 30, 2022, China has reported 3.345 billion doses of covid-19 virus vaccine.
News: on April 29, 2022, the evaluation center of the State Food and Drug Administration issued two guiding principles: the guiding principles for clinical research and development of new drugs of traditional Chinese medicine compound preparations based on human experience (Trial) and the guiding principles for communication and exchange based on the “Three Combinations” registration and evaluation evidence system (Trial). The guiding principles for clinical research and development of new drugs of traditional Chinese medicine compound preparations based on human experience, in view of the essential differences between traditional Chinese medicine and chemical drugs in the research and development path, and taking fully into account the characteristics of traditional Chinese medicine, will change the excessive restrictions of the original policy on the research and development of traditional Chinese medicine, and will bring benefits to the development of innovative traditional Chinese medicine. On April 29, Ningbo Medical Security Bureau announced that it was the first to fully launch the price limit payment policy for dental implant insurance in China, and organized 100 medical institutions to carry out collective signing. For brands within the planting catalogue of contracted medical institutions in Ningbo, the whole process of planting a tooth requires only 3000 yuan for domestic production and 3500 yuan for import, which can be paid by using the medical insurance account over the years. At present, due to the disposable income and the price of dental implant surgery, the penetration rate of dental implant in China is low. The penetration rate of implant teeth in developed countries is generally 100200 teeth / 10000 people, while China corresponds to 25 teeth / 10000 people in 2020. There is a huge market space for dental implants in China. For domestic implant manufacturers, large-scale centralized purchase of dental implants will provide opportunities for products to be quickly introduced to the market. If enterprises actively respond to winning the bid, it is expected to rapidly increase the market share. For private medical service institutions, it is expected to expand the coverage of consumer groups by launching low-cost dental implant projects.
Performance: on the whole, the operating revenue and net profit attributable to parent company of the industry in 2021 and 2022q1 continued the growth trend of the previous year. Especially in 2022q1, although the growth rate slowed down, the industry still maintained the growth trend under the high growth base of the previous year. From the perspective of profitability, the profitability of the industry has continued to improve in the past three years, which shows that the overall product structure of China’s medical industry is continuously optimized. With the influence of factors such as centralized procurement and medical insurance negotiation, as well as the continuous inclination of China’s policies to the field of innovation, the proportion of high value-added products continues to increase in the industry, driving the overall profitability of the industry upward. We believe that with the improvement of China’s per capita medical expenditure and the continuous advancement of the aging process, the continuous improvement of the demand for conventional medical treatment has driven the rapid development of the industry. At the same time, the demand for protection, detection, prevention and treatment brought by the impact of covid-19 pneumonia epidemic is superimposed. The industry as a whole is in the stage of rapid development, and the continuous increase of capital expenditure also shows that the industry is in the period of expansion.
On the whole, the epidemic broke out again in Shanghai at the end of March, and the market is generally expected to put some pressure on China’s economy in the short term. Affected by the resonance of many factors such as macroeconomic and market pessimism, the overall turnover and volume of the industry showed a significant contraction, and the valuation was at the bottom of history. From the “important signal of economic work” released by the Political Bureau of the CPC Central Committee on April 29, it is required to minimize the impact of the epidemic on the economy. The medical sector with strong market demand and consumption attributes may gradually show marginal improvement in May and June. In the short term, covid-19 treatment is still a definite opportunity to implement the whole year. It is recommended to pay attention to Shanghai Junshi Biosciences Co.Ltd(688180) -u, Shandong Xinhua Pharmaceutical Company Limited(000756) etc. In the long run, with the continuous promotion of the procurement of drugs and consumables, enterprises with high safety margin, strong innovation ability, rich product pipelines and good competition pattern are expected to continue to benefit in the long cycle. It is suggested to continue to focus on the layout of innovative drugs and innovative drug industry chain, high-end medical devices, medical consumption terminals and medical consumption with scarcity and consumption attributes, and tap the second-line blue chips with relatively low valuation:
1) innovative drugs and the industry chain of innovative drugs and innovative drugs, including synthetic and specialist innovative drug enterprises, CXO industry, and the industrial chain of innovative drugs, including comprehensive and specialist innovative drug enterprises, and CXO industry. It is suggested to focus on ‘ Jiangsu Hengrui Medicine Co.Ltd(600276) ‘ \ and Apeloa Pharmaceutical Co.Ltd(000739) etc;
2) it is recommended to pay attention to Shenzhen Mindray Bio-Medical Electronics Co.Ltd(300760) and Lepu Medical Technology (Beijing) Co.Ltd(300003) as the leader of high-end medical devices with outstanding import substitution ability;
3) for medical consumption terminals benefiting from increased market concentration, it is recommended to pay attention to Yixintang Pharmaceutical Group Co.Ltd(002727) , Yifeng Pharmacy Chain Co.Ltd(603939) and Dian Diagnostics Group Co.Ltd(300244) etc;
4) biological products enterprises with scarcity and consumption attributes, including Chongqing Zhifei Biological Products Co.Ltd(300122) , Changchun High And New Technology Industries (Group) Inc(000661) , Hualan Biological Engineering Inc(002007) , Cansino Biologics Inc(688185) and Pacific Shuanglin Bio-Pharmacy Co.Ltd(000403) .
Risk tips: covid-19 epidemic fluctuation risk and market adjustment risk
