Core view
Medicine fell the first last week, mainly due to the large withdrawal of covid-19 industrial chain and traditional Chinese medicine. Judging from the recent market sentiment, the pessimistic expectation is that medicine will become a “public utility”. We believe that this is a negotiation on medical insurance and the price of self funded drugs in the hospital, which amplifies the pessimism. Whether the long-term pressure policy can continue to increase, we maintain an optimistic attitude towards medicine. Throughout the year, the tightening of monetary policy in the United States and Europe and the uncertainty of covid-19 epidemic in China are two key factors affecting investment. The United States and Europe are open to repair the industrial chain damaged in the covid-19 epidemic in the United States and Europe, including non covid-19 intermediates, APIs, equipment and diagnosis. China’s uncertainty comes from the recovery of the pace of epidemic control and consumption capacity. In the bear market, the deterministic growth of consumption is defensive, but the continued downturn of consumption will affect the growth of consumption. The consumption downturn is short-lived. The starting point of the policy, including tax cuts, has a lot of room to benefit the people’s livelihood.
In the first half of the year, non covid-19 pharmaceutical investment still focused on the eight character policy: consumption growth, depth and value
Deep value: the valuation is low enough, the stock price position is low, the chip structure is good, and there are changes in investment logic expectations. Industries with low valuation include traditional Chinese medicine, blood products, pharmacies, large traditional Sinochem companies and circulation, and choose areas with imagination for expected changes in the future. Traditional Chinese medicine consumer goods and consumer medical equipment are the general direction we choose. These two tracks are also the better combination of in-depth value and consumption growth. The logic of traditional Chinese medicine is more strengthened. First, look for resource products such as “Mao and Pian”; Second, OTC consumer goods are clearly upward; Third, traditional Chinese medicine formula granules have a large market, but whether they can match the overvalued value depends on the medical insurance intervention at the payment end in the future; Fourth, prescription drugs and medical insurance support will gradually become clear. But one thing is certain that bigpharma of traditional Chinese medicine has come out and started a new round of growth with multiple exclusive variety strategies. Last week, in the implementation opinions of Zhejiang Medical Security Bureau on supporting the inheritance, innovation and development of traditional Chinese medicine, it was mentioned to assess the “medium treatment rate”. The medium treatment rate refers to the proportion of the sum of the three incomes of traditional Chinese medicine decoction pieces, traditional Chinese medicine medical service items and traditional Chinese patent medicine in the hospital medical income, which is similar to the implementation of assessing the “medicine proportion”, It is the rapid implementation of the national policy at the end of last year. The varieties of traditional Chinese medicine formula granules are included in the payment scope of medical insurance fund in batches. For the varieties that have not obtained the national code of traditional Chinese medicine formula granules, the expenses can be settled temporarily according to the code of traditional Chinese medicine decoction pieces. In the future, the medical insurance payment standard of formula particles will be implemented based on the reimbursement price of corresponding decoction pieces, and the growth space of formula particles will be opened. The implementation of the policy is good for the long-term investment logic 3 and 4 of traditional Chinese medicine.
Covid-19 epidemic related: pay attention to eliminating the false and retaining the true in the industrial chain of oral specific drugs
Covid-19 industrial chain company suffered the biggest decline last week. The first is the diagnosis industrial chain. It is expected that the United States and Europe will soon liberalize, which is unsustainable for the diagnosis performance; Second, the concept stocks of the industrial chain of oral specific drugs and their intermediates fell sharply. We believe that at present, there are two things worth looking forward to: first, the advent of oral covid-19 in China; Second, the upstream intermediate industry chain driven by Pfizer specific drug paxlovid. After Pfizer paxlovid is authorized by the pharmaceutical patent pool Organization (MPP), the consumption of upstream intermediates is expected to be 3-6 times the current scale. In addition, the demand for upstream 3CL general intermediates will increase explosively in the follow-up, such as the listing of 3CL in yanyeyi, Japan.
Focus on the company:
Traditional Chinese medicine: resource-based, Jianmin Pharmaceutical Group Co.Ltd(600976) , Tianjin Zhongxin Pharmaceutical Group Corporation Limited(600329) ; (category) OTC consumer goods, China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) , Inner Mongolia Furui Medical Science Co.Ltd(300049) ; Traditional Chinese medicine bigpharma, Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) , Hubei Jumpcan Pharmaceutical Co.Ltd(600566) , Shandong Buchang Pharmaceuticals Co.Ltd(603858) , etc. Consumer medical care: Jiangsu Yuyue Medical Equipment And Supply Co.Ltd(002223) , Yantai Zhenghai Bio-Tech Co.Ltd(300653) etc. Covid-19 oral drug related: Shandong Jincheng Pharmaceutical Group Co.Ltd(300233) , Shanghai Junshi Biosciences Co.Ltd(688180) etc. Large pharmaceutical enterprises: Huadong Medicine Co.Ltd(000963) etc. Innovation and overseas industrial chain: Truking Technology Limited(300358) , Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) etc. Others: Humanwell Healthcare (Group) Co.Ltd(600079) , Sichuan Kelun Pharmaceutical Co.Ltd(002422) etc.
Risk warning: market fluctuation risk caused by rapid rise in the short term; Risk of policy implementation falling short of expectations
