The covid-19 epidemic in the United States is getting worse and worse, giving rise to a demand of 10 billion US dollars per month. According to the U.S. government statistics, as of January 14, the cumulative number of covid-19 confirmed cases in the United States was about 63.83 million, accounting for nearly 20% of the total population, and nearly 90% of the cities became high-risk areas. According to relevant CNBC reports, the United States will officially implement the covid-19 rapid testing plan from January 15, 2022, requiring insurance companies to reimburse the applicant for home covid-19 testing expenses up to 8 times a month. Based on the government purchase price of $5 / person and the U.S. population of 330 million, the United States can consume covid-19 rapid test kit worth about $13.2 billion a month.
Covid-19 kits of three Chinese enterprises have been approved by FDA, and there is still potential in the detection market. As of January 15, 2021, there are 12 covid-19 antigen rapid detection products approved by FDA in the world, and three enterprises in China Andon Health Co.Ltd(002432) , Zhejiang Orient Gene Biotech Co.Ltd(688298) and Aikang biology have obtained fda-eua approval of relevant products by the end of 2021. Based on the large unmet demand for covid-19 home testing in the U.S. market, we believe that some Chinese POCT companies still have opportunities. Based on the order share of 30%, we are optimistic that the remaining profit space in the U.S. covid-19 fast testing market will exceed 20 billion yuan.
Fully tap industry opportunities from the upstream of covid-19 rapid inspection industry chain. Since covid-19 in 2020, although most of the market share of IVD upstream such as biological raw materials is still occupied by imported enterprises, considering the stability of supply chain and product cost performance, midstream detection end enterprises have a greater incentive to choose Chinese enterprises as suppliers. Therefore, The aggressive covid-19 epidemic in the United States will also have a strong performance catalytic effect on China’s upstream suppliers.
Investment suggestion: the increasingly severe epidemic situation in the United States has spawned a testing demand of 10 billion US dollars per month. We believe that at present, we need to: 1) focus on the two listed companies that have obtained fda-eua certification of covid-19 rapid test kit, with high order certainty, such as Andon Health Co.Ltd(002432) and Zhejiang Orient Gene Biotech Co.Ltd(688298) ; 2) Continue to pay attention to mainstream POCT testing enterprises with the possibility of obtaining approval; 3) Pay close attention to IVD upstream raw material enterprises. Under the wave of domestic substitution, it is expected to obtain more than expected orders.
This week’s stock recommendations focus on the portfolio
Growth Portfolio: Pharmablock Sciences (Nanjing) Inc(300725) , Beijing Balance Medical Technology Co.Ltd(688198) , Eyebright Medical Technology(Beijing) Co.Ltd(688050)
Robust portfolio: Zhe Jiang Hua Hai Pharmaceuticalco.Ltd(600521) , Baicheng pharmaceutical, Beijing Sun-Novo Pharmaceutical Research Co.Ltd(688621)
Elastic combination: Guangzhou Wondfo Biotech Co.Ltd(300482) , Sansure Biotech Inc(688289) , Zhejiang Orient Gene Biotech Co.Ltd(688298)
Risk tips: 1) uncertainty of covid-19 epidemic situation; 2) Changes in US epidemic prevention policy.
