Investment opportunities in the pharmaceutical sector in the fourth quarter: focus on three major directions

【Pharmaceutical Network Market Analysis】Last week, the pharmaceutical biotechnology sector rose significantly, and the rebound trend appeared
.
According to Dongguan Securities Research Report, from October 10 to October 14, 2022, the pharmaceutical and biological industry rose by 7.
54%, outperforming the CSI 300 Index by about 6.
55 percentage points
in the same period.
In this regard, some institutions said that the recent domestic policies are favorable, the policy marginal improvement is significant, the market sentiment is expected to continue to repair, and continue to be optimistic about the investment opportunities
in the pharmaceutical sector in the fourth quarter 。 For investment opportunities in the fourth quarter, the agency pointed out that it will focus on three major directions: first, areas involving domestic independent controllability and import substitution logic, such as high-end equipment and equipment, upstream of life science/pharmaceutical industry, etc.
, recommend Xinhua Medical, United Imaging Medical, Mindray Medical, Antu Biotechnology, etc.
; Second, the traditional Chinese medicine sector supported by the policy, recommend Taiji Group, Tongrentang, Yunnan Baiyao, Shouxian Valley, etc.
; 3.
Innovative drugs and devices that differentiate/truly meet clinical needs, recommend Remegen (A+H), Connoya (H), Haichuang Pharmaceutical-U, etc
.
From the perspective of medical devices, in recent years, China's medical device market has gradually developed and has a certain scale, during the "Thirteenth Five-Year Plan" period, China's medical equipment industry has achieved rapid development, from 2015 to 2020, China's medical device market size has increased from 480 billion yuan to 840 billion yuan, with an average annual compound growth rate of 11.
8%.

In the future, the field of medical devices involving domestic independent controllability and import substitution logic will usher in investment opportunities
.
Taking Xinhua Medical as an example, it is reported that the company is mainly engaged in the production and sales of medical devices such as disinfection and sterilization equipment, pharmaceutical equipment, as well as medical and pharmaceutical services
.
The company's infection control equipment has a large variety and output; The main business of the subsidiary Chengdu Yingde is the development and manufacture of biopharmaceutical equipment, and there is daily business cooperation with CanSino and other pharmaceutical manufacturers; The company has a large-scale disinfection and sterilization equipment development and production base; The subsidiary Changchun Boxun is mainly engaged in the research and development, production and sales of biological in vitro diagnostic reagents, and is an enterprise
that independently develops microcolumn gel immunodetection technology.
It is reported that on October 14, Xinhua Medical touched the limit board, and the stock has risen and stopped 8 times in
the past year.
On October 17, Xinhua Medical rebounded
rapidly intraday.
According to the analysis of relevant people, Xinhua Medical may continue to have high momentum in the future market
.
In addition, on October 18, Xinhua Medical said on the investor relations platform that the company will comprehensively use a variety of scientific and compliant value management methods to manage market value in the future to maximize the company's
value.
In addition, the company attaches great importance to the development of
international markets.
According to the international market demand, the company's existing products are designed and certified, constantly innovate and improve the international marketing model, and gradually enter the high-end mainstream markets such as Europe and the United States by improving their own product strength, so as to achieve the continuous improvement
of the proportion of business in the international market.
From the perspective of the traditional Chinese medicine sector, the past two years can be described as the outbreak period
of the implementation of policies in the traditional Chinese medicine industry.
On May 20, China issued the "14th Five-Year Plan" National Health Plan, which clearly stated that the role of traditional Chinese medicine in health services should be fully exerted, and guidance and suggestions
were given for subdivided fields.
The "14th Five-Year Plan for the Development of Traditional Chinese Medicine" issued in March also coordinated and planned
the key areas of traditional Chinese medicine.
The introduction of a series of policies has made the Chinese medicine industry welcome another good opportunity
for development.
Taking Taiji Group as an example, it is mainly engaged in the production and sales of Chinese and Western proprietary medicines, and has a complete pharmaceutical industry chain
such as pharmaceutical industry, pharmaceutical commerce, and herbal medicine planting.
It has 13 pharmaceutical factories, including Southwest Pharmaceutical Co.
, Ltd.
, Taiji Group Chongqing Fuling Pharmaceutical Factory Co.
, Ltd.
, Taiji Group Chongqing Tongjunge Pharmaceutical Factory Co.
, Ltd.
, and Taiji Group Sichuan Mianyang Pharmaceutical Co.
, Ltd.
; With more than 20 pharmaceutical commercial companies such as Chongqing Tongjunge Co.
, Ltd.
, it is a large-scale pharmaceutical group integrating "industry, commerce, science and trade", and is one of
the large enterprise groups with a relatively complete domestic pharmaceutical industry chain.
Driven by favorable policies, at the beginning of this year, Taiji Group launched the "14th Five-Year Plan of Taiji Group", which will anchor the main business of medicine and health, penetrate the entire industrial chain of traditional Chinese medicine under the strategy of modern Chinese medicine intelligent manufacturing as the main line, hemp essence specialty chemical medicine and regional commercial enterprises as the double auxiliary line, and build Sinopharm Group's strategic growth pole
in western China.
At present, strategic planning has begun to bear fruit
.
Data show that in the first half of this year, Taiji Group achieved a net profit attributable to shareholders of listed companies of 124 million yuan, a year-on-year increase of 61.
40%, and a net profit attributable to shareholders of listed companies after deducting non-recurring profits and losses reached 179 million yuan, a year-on-year increase of 112.
48%.

Analysts pointed out, and Deppon Securities analysis pointed out that with the improvement of operating efficiency, the company's performance is expected to improve
quarter by quarter.
Data show that on October 18, Taiji Group rebounded rapidly intraday, rising more than 2% in 5 minutes, as of 9:48, it was 28.
69 yuan, with a transaction of 37.
8945 million yuan and a turnover rate of 0.
24%.

From the perspective of innovative drugs, with years of R&D investment and accumulation, domestic innovative drugs are increasingly emerging in global academic conferences, and some molecules with differentiated innovation characteristics and fast clinical progress are expected to achieve commercialization value
in the vast global market in the future.
In the domestic market, the impact of the existing generic drug business of large pharmaceutical enterprises has gradually weakened by centralized procurement, the proportion of innovative drug revenue has continued to increase, and the performance growth rate will continue to rise; Biotech has initially acquired hematopoietic capabilities and continues to advance pipeline research and development
as blockbuster products have been commercialized.
The industry said that in the future, innovative drug companies that differentiate/truly meet clinical needs will usher in more investment opportunities
.
Disclaimer: Under no circumstances does the information or opinions expressed in this article constitute investment advice
to anyone.