Analyzing the data indicators of listed companies in three years, we have summarized the five major characteristics of the development of China's pharmaceutical and health industry

Listed companies are excellent representatives of the corporate group and the backbone of economic development.
The data of listed companies can reflect the development of the industry to a certain extent
.

According to the Firestone Creation Database, as of August 2021, there are 390 A-share listed companies in China's medical and health field (excluding NEEQ companies)
.
Pharmaceutical and health listed companies can be divided into chemical pharmaceutical companies, traditional Chinese medicine companies, biological products companies, medical device companies, medical service companies, and pharmaceutical commercial companies

.

01 Thirty years have spawned the "five waves of listing craze", and the science and technology innovation board got together to "specialize, specialize and new"

The listing process of China's pharmaceutical and health companies started in 1991
.
In the past 30 years, there have been five waves of "upsurges" in corporate listings, and the overall number of corporate listings has shown a substantial upward trend

.

Figure 1: Annual distribution of medical and health companies listed Source: Flint Creation Database

The first wave of corporate listing craze was between 1993 and 1997.
The annual peak of listed companies reached 17, and state-owned pharmaceutical companies
went public on a large scale, and the overall strength of the company was relatively strong .
Large pharmaceutical commercial companies such as Shanghai Pharmaceuticals, Sinopharm Accord, and China Pharmaceuticals went public during this period

.

The first wave of corporate listing craze was between 1993 and 1997.

In the second wave of corporate listing boom, the number of listed companies was lower than the first wave from 1999 to 2004.

The third wave of corporate listing craze was between 2009 and 2012.

The fourth wave of corporate listing boom was between 2014 and 2017.

The fifth wave of corporate listing boom has continued since 2019

Source: Flint Creation Database (data as of August 2021)

02 The total revenue of listed companies is approaching 2 trillion yuan, and the profit margin and R&D investment intensity have steadily increased

The overall development of China's listed companies in the field of medicine and health is improving

.

The scale of corporate revenue has steadily expanded

Corporate profitability continues to increase

Corporate R&D investment has increased significantly
.
The total R&D investment of listed companies in 2020 will reach 62 billion yuan, an increase of 22.

2% over 2019

Corporate R&D investment has increased significantly
.

Figure 2: Annual distribution of medical and health companies listed Source: Firestone Creation Database Note: R&D investment intensity = R&D investment cost/Total revenue of the enterprise × 100%

03 The industrial structure presents a pattern of "8332111", and medical devices are rising strongly

China's listed companies in the medical and health field can be divided into two major sectors: the medical and health industry and industrial services
.
The pharmaceutical and health industry sector includes five major categories: chemical raw materials, chemical preparations, traditional Chinese medicine, biological products and medical devices; the industrial service sector includes two major categories: pharmaceutical business (circulation services, etc.
) and industrial services (R&D outsourcing, medical testing services, etc.
)
.

China's listed companies in the medical and health field can be divided into two major sectors: the medical and health industry and industrial services
.

As of August 2021, among the 390 A-share listed companies, 94 are medical device companies, 86 are chemical preparation companies, 70 are traditional Chinese medicine companies, 49 are biological products companies, 35 are chemical raw materials companies, and 29 are pharmaceutical commercial companies.
There are 27 medical service companies
.

In the composition of nearly 2 trillion yuan in revenue of listed companies, the pattern of "8332111" is present
.
In terms of revenue scale, the pharmaceutical business is 800 billion yuan, chemical preparations and traditional Chinese medicine are both 300 billion yuan, medical devices are 200 billion yuan, and biological products, chemical raw materials and medical services are 100 billion yuan
.
From the perspective of the growth trend of revenue scale, the pharmaceutical business and medical device fields have grown the most rapidly.
Biological products, chemical raw materials and medical services have grown steadily, while chemical preparations and traditional Chinese medicine have declined to a certain extent
.

In the composition of nearly 2 trillion yuan in revenue of listed companies, the pattern of "8332111" is present
.

Figure 3: 2018-2020 revenue statistics of various industries.
Source: Firestone Creation Database

Revenue growth in the medical device field is driven by the epidemic in the short-term, and by "localized substitution" in the long-term
.
Driven by the surge in demand for epidemic prevention and control materials (testing kits, ventilators, masks, etc.
), the total revenue of listed companies in the medical device field in 2020 will exceed the 200 billion mark, an increase of 62% from 2019
.
With the gradual control of the global epidemic, it will be difficult for the total revenue of medical device companies to maintain such a high growth rate in the future; however, with the improvement of the technical level and quality of China’s medical device products, the scope of “localized substitution” has gradually expanded.
The equipment industry will continue to maintain a good growth momentum and is expected to maintain a revenue scale of 200 billion yuan
.

Revenue growth in the medical device field is driven by the epidemic in the short-term, and by "localized substitution" in the long-term
.

Biological products and medical services have huge potential, and together with medical devices, they will become the "troika" for the growth of China's medical and health industry
.
In 2020, the total revenue of listed companies in the field of biological products will be around 130 billion yuan, with a growth rate of 7.
8%
.
To be honest, this growth is not eye-catching, especially considering the huge investment in the biological products industry in recent years
.
However, the biological products industry is mostly frontier technology, antibody drugs have just entered the early stage of industrialization, cell therapy, gene therapy and other technologies are not yet mature, and it is difficult to apply large-scale industrialization in the short term
.
In the future, as more antibody drugs, cell therapies, new vaccines and other products are launched on the market, the field of biological products will usher in a burst period.
It is estimated that the scale of revenue will exceed the 200 billion yuan mark in the next five years
.
In 2020, the total revenue of listed companies in the field of medical services (R&D outsourcing, medical testing services, etc.
) is close to 80 billion yuan, with a growth rate of 15%, and the growth momentum is strong
.
With China’s transformation from a country of generic drugs to a country of innovative drugs, the demand for R&D outsourcing services has surged; China’s health concept is shifting from "treatment-centered" to "health-centered", and health management is receiving more and more attention.
The market for the medical testing industry still has great growth potential
.
Under the superposition of various positive expectations, the medical service sector will maintain a rapid growth trend, and it is estimated that the scale of revenue will exceed the 200 billion yuan mark in the next five years
.

Biological products and medical services have huge potential, and together with medical devices, they will become the "troika" for the growth of China's medical and health industry
.

The fields of chemical preparations and traditional Chinese medicine are in a "transitional period", and are consolidating the "basic plate" of China's medical and health industry by improving product quality and product innovation
.
In 2020, the total revenue of listed companies in the chemical preparation field and Chinese medicine field will be 300 billion yuan.
Affected by a series of factors such as the epidemic situation and policies, the revenue scale of these two fields has declined to a certain extent, and the growth rate is -5.
3%.
, -4.
3%
.
Chemical medicines and traditional Chinese medicines have always been the most important components in China's pharmaceutical industry, with the two accounting for nearly 80%
.

The fields of chemical preparations and traditional Chinese medicine are in a "transitional period", and are consolidating the "basic plate" of China's medical and health industry by improving product quality and product innovation
.

In recent years, a series of measures introduced by the state have had a greater impact on these two areas, such as "restraint order", "generic drug consistency evaluation", "traditional Chinese medicine injection restriction", "auxiliary drug catalog", and "centralized drug procurement".
and so on
.
The old extensive imitation development model is unsustainable, and many companies have begun to deploy in high-value-added fields such as high-end dosage forms, first generic drugs, children's drugs, rare disease drugs, and innovative drugs
.
The development of the traditional Chinese medicine industry is also ushering in new opportunities.
The State Council has issued a special policy to support the "righteous innovation" of traditional Chinese medicine.
It is the general consensus of the current enterprise development to develop modern Chinese medicine by mining classic prescriptions, conducting real-world research, and using big data technology.

.
With the gradual passing of the "transitional pain period", the revenue of these two fields will maintain a slow growth state, and the estimated revenue scale will stabilize at the 350 billion yuan mark in the next five years
.

04 The average revenue scale of enterprises in different fields is obvious, the profitability continues to diverge, and the R&D investment is growing rapidly

The average revenue volume of enterprises in different fields is clearly stratified
.
According to the revenue data of listed pharmaceutical and health companies (excluding pharmaceutical commercial companies) in 2020, the average revenue of companies in the field of Chinese medicine and chemical preparations is at the level of 4 billion yuan; the average revenue of companies in the fields of chemical raw materials, medical services and biological products is 3 billion yuan level; the average revenue of medical equipment companies is 2 billion yuan level
.

The average revenue volume of enterprises in different fields is clearly stratified
.

Figure 4: 2018-2020 average revenue changes in various fields Source: Firestone Creation Database

The growth trend of average revenue of enterprises in different fields diverged greatly
.
According to the data of the past three years, the average revenue scale of enterprises in the fields of traditional Chinese medicine, chemical preparations, and chemical raw materials is declining; while the average revenue scale of enterprises in the fields of medical services, biological products, and medical devices is increasing, especially in the field of medical devices, which is just one year away.
In a year, the average revenue scale of enterprises has jumped from 1.
5 billion yuan to 2 billion yuan
.

The growth trend of average revenue of enterprises in different fields diverged greatly
.

Figure 5: The change in average net profit in various fields from 2018 to 2020 Source: Flint Creation Database

The profitability of companies in different fields continues to diverge
.
Judging from the average net profit of enterprises in different fields (excluding pharmaceutical commercial enterprises) in the past three years, the average net profit of enterprises has maintained an overall growth trend
.
In 2018, the average net profit of enterprises in various fields was relatively close, and most of them were between 200 million and 300 million yuan; differentiation began in 2019, and the degree of differentiation will deepen in 2020
.
Judging from the average net profit of enterprises in different fields in the past three years, chemical preparations have fallen slowly, traditional Chinese medicine has fallen sharply, biological products and chemical raw materials have grown steadily, and medical devices have increased significantly
.

The profitability of companies in different fields continues to diverge
.

The development of China's pharmaceutical and health industry is shifting from quantity growth to quality improvement and product innovation
.
Companies in various fields generally transform to R&D innovation and continue to increase R&D investment
.
Except for the field of chemical raw materials, the average R&D investment of enterprises in all fields (excluding pharmaceutical commercial enterprises) in 2020 will increase by more than 50% compared with 2018
.

The development of China's pharmaceutical and health industry is shifting from quantity growth to quality improvement and product innovation
.

Figure 6: Changes in average R&D investment in various fields from 2018 to 2020 Source: Flint Creation Database

05 Listed companies are mainly located in coastal areas, and the "three modes" of regional industrial development coexist

By analyzing the total revenue, net profit and R&D investment of listed pharmaceutical and health companies (excluding pharmaceutical commercial companies) in various provinces (municipalities) in mainland China in 2020, the listed companies are mainly distributed in Guangdong, Zhejiang, Jiangsu, Shanghai, Beijing, Shandong and other places are coastal provinces (cities) except Beijing
.
The number of listed companies in the above six regions accounted for 57% of the total number
.
Among them, the number of listed companies in Guangdong Province reached 49, ranking first; Zhejiang Province and Jiangsu Province ranked second and third, with 44 and 36 listed companies respectively
.
The total revenue of listed companies in the above six regions accounted for 61% of the total
.
Among them, Guangdong Province ranked first with revenue of more than 210 billion yuan; Zhejiang Province and Jiangsu Province ranked second and third, with total revenue of listed companies of 160 billion yuan and 100 billion yuan respectively
.

Listed companies are mainly distributed in Guangdong, Zhejiang, Jiangsu, Shanghai, Beijing, Shandong and other places.
All of them are coastal provinces (cities) except Beijing
.
The total revenue of listed companies in the above six regions accounted for 61% of the total
.

According to the degree of dispersion of the revenue, profit and R&D investment indicators of listed companies in various provinces (municipalities), regional industrial development can be summarized into "three models
.
"

According to the degree of dispersion of the revenue, profit and R&D investment indicators of listed companies in various provinces (municipalities), regional industrial development can be summarized into "three models
.
"

Zhejiang, Jiangsu, Beijing, Shanghai, Shandong, Hunan and other provinces (cities) are at the forefront of the list in terms of revenue, profit, and R&D investment.
All indicators are evenly distributed and promote each other.
The level of industrial development is relatively high, which is called the "positive cycle model".
";

"Positive Cycle Mode";

In Sichuan, Hainan, Shaanxi, Guizhou and other provinces, listed companies rank relatively low in revenue and profit, but relatively high in R&D investment.
Companies increase R&D to stimulate the potential of industrial development, which is called the " R&D breakthrough model.
" ；

R&D breakthrough model";

In Yunnan, Liaoning, Hebei and other traditional provinces in the pharmaceutical industry, listed companies rank relatively high in revenue and profit, but relatively low in R&D investment, which does not match the regional industrial development, which is called the "R&D shortage model
.
"

"R&D shortage mode"
.

In the long run, the "R&D shortage model" is unsustainable due to the lack of follow-up development momentum and high revenue and high profitability
.
The "R&D breakthrough model" starts from R&D as the core element of the industry and cultivates the core competitiveness of the industry.
It will become one of the preferred paths for the leap-forward development of the medical and health industry in the vast underdeveloped regions; however, this model requires a long time and a lot of effort.
The funding is a test of the endurance of the leader
.
"Positive cycle model" is the ideal pace of industrial development.
Regional industries are on the eve of taking off, but this model is not always worry-free.
Black swan events often disrupt the good momentum of regional industrial development
.
For example, Guangdong Province, which ranks first in terms of revenue and R&D investment, caused the total profit ranking of listed companies to drop to 19th due to the "Kangmei Pharmaceutical" incident
.

Figure 7: China's mainland provinces (autonomous regions, municipalities) pharmaceutical and health industry development rankings

Source: Flint Creation Database

06 Conclusion

Through the analysis of listed pharmaceutical and health companies, we can see the overall trend of the current development of China's pharmaceutical and health industry: the scale of the industry continues to grow, the adjustment of the industrial structure is accelerating, R&D innovation has become a consensus, the development of enterprises continues to differentiate, and the regional structure continues to adjust
.

The scale of the industry continues to grow, the adjustment of the industrial structure is accelerated, R&D innovation has become a consensus, the development of enterprises continues to differentiate, and the regional structure continues to adjust
.

In the era of major industrial changes and breakthroughs, we use data to clarify the trajectory of industrial changes and use data to record the pulse of industrial development
.