Key investment points:
Market review:
Last week, the overall performance of A-Shares was strong. The Shanghai index rose 2.02%, the Shenzhen Component Index rose 2.64% and the gem index rose 2.51%. Among the Shenwan sub industries, 30 sub industries rose. Coal (+ 7.39%), power equipment (+ 7.26%) and non-ferrous metals (+ 6.91%) led the gains, while only the biomedical industry fell (- 2.01%).
During the reporting period, the pharmaceutical and biological sector underperformed the gem index by 4.52% and the CSI 300 index by 4.24%. All sub sectors in the pharmaceutical industry fell, from high to low, respectively Pharmaceutical Commerce (- 2.96%), biological products (- 2.86%), traditional Chinese medicine (- 2.15%), medical services (- 2.01%), chemical pharmacy (- 1.62%), and medical devices (- 1.54%).
Industry highlights of the week:
The general office of the State Council printed and distributed the national health plan for the 14th five year plan;
Monkeypox cases found in many countries
Industry Week view:
1. CXO sector: in the long run, the policy with medical insurance fee control as the core restricts the large market of the whole industry. The tightening at the payment end means that there will only be structural market as a whole; 1) CXO sector is not affected by policies and has high prosperity. At present, the core problem of CXO sector is to kill valuation, and there is no significant change in fundamentals. The problem with the CXO sector is that there is a risk of valuation adjustment when the valuation is high to a certain extent, resulting in a large decline in the sector. The tightening of CXO monetary policy has a greater impact on the valuation of overseas stocks. In the short term, we suggest to be cautious and wait-and-see. The CXO sector has not fallen to a particularly cost-effective position at present. At present, it can only be regarded as a reasonable valuation range.
2. Traditional Chinese medicine: in the long run, 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) 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, the risk that the implementation of policies does not meet the expectation, the risk of repeated global epidemics, and the risk of failure in the research and development and marketing of innovative drugs
