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Next year's pharmaceutical bull market?

 Last Update: 2023-01-05
 Source: Internet
 Author: User

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If you think of a bull market as a sporty, frothy, no
.

After the external pressure is relieved, medicine will return to the track of stable and long-term success, which can be expected
.

Strangely, on the eve of the reversal, the institution was still holding its head and fleeing
.
Biomedicine was the industry that reduced the most positions of public funds in the third quarter, and the overallocation ratio was close to the lowest level
in 10 years.

As of Q3 2022, among the heavy holdings of all public funds, the holding ratio of pharmaceutical stocks was 8.
96% (-0.
59pp compared with Q2); Among the heavy holdings of pharmaceutical public funds, the holding ratio of pharmaceutical stocks was 86.
97% (compared with Q2, -1.
65pp), and the holding ratio of non-pharmaceutical public funds was 4.
63% (compared with Q2, -0.
50pp).

In the third quarter, fund managers with only more than 15 years of experience were concentrated on increasing biomedicine
.
This corresponds to the bottom
of the pharmaceutical sentiment and fundamentals.

There is nothing new in the market, mistakes are repeated over and over again, and common sense is repeatedly doubted
.

The long-term prosperity of biomedicine is one of the common sense, and the extended cycle can find that this industry has produced the most 10-year 10-fold stocks, of which 40% of the top 20 A-shares in the past decade have come from medicine
.

As of November 15, Shenwan Biologics' PE-TTM was 23.
6x (the average value in the past decade was 38x), which is still at a relatively low historical level
.
Taking into account the cross-year switch, the overall valuation level will fall below
20 times.

Drug collection has come to an end

If you are not careful, the centralized procurement of drugs has entered the sweeping stage, and the stock market is about to be cleared
.

The national centralized procurement of drugs has completed seven batches and eight rounds, covering 295 varieties, and the amount involved accounts for about 35%
of the annual procurement of chemical drugs and biological drugs in public medical institutions according to the pre-procurement price.
The target for 2025 is to reach 500 350 varieties will be completed by the end of this year
.
According to the sales amount of PDB sample medicines, it is expected that the sales amount of 350 varieties collected by the end of 2022 will account for about 80%
of the "500 varieties".

It should be harvested and close at hand
.
In fact, most traditional pharmaceutical companies have been immune to centralized procurement, and Huadong Pharmaceutical, Enhua Pharmaceutical, CSPC Pharmaceutical Group, Kelun Pharmaceutical, Lizhu Group, Jingxin Pharmaceutical, Salubris and Xianju Pharmaceutical have all performed
steadily.
Hengrui Pharmaceutical and China Biopharmaceutical will also reach the inflection point
of performance.

The centralized procurement of medical devices has changed from the bidding model to the limit price model, giving domestic manufacturers stable expectations, which will improve the domestic market share, industry concentration and market penetration
.
The adjustment of the centralized procurement plan of liver function biochemical detection reagents once set off waves, but it did not undermine the logic
of warming the fee control policy.
The original plan was to reduce the price by 20% on the basis of the highest effective declared price to be shortlisted, and it was inappropriate for a market with severe involution to enjoy better treatment than orthopedic spine classes
.
Now the price reduction of 40% can be shortlisted, consistent with the orthopedic spine collective procurement plan, to promote more enterprises to choose, still relatively mild
.

The low point of medical devices has passed, and the three bottoms of policy bottom, position bottom and valuation bottom resonate
.
With the increase in positive catalytic events, funds are also continuing to absorb bottom chips, which can also be felt
from the upward flow of funds from market vane ETFs.

Taking the largest A-share medical device ETF (159883) as an example, its share outstanding in the market has nearly doubled
from 1.
712 billion in early October to 3.
337 billion.
In terms of liquidity, the average daily turnover of medical device ETFs since October has been 188 million yuan, far exceeding the average daily turnover of 41 million yuan in September, which shows that funds are returning
.

Domestic substitution + innovation and upgrading + policy-side financial support, the high prosperity of the medical device industry will continue, and it will also become one of the
core main lines of future pharmaceutical investment.

Innovative drugs can say no

In terms of incremental market, 10 exclusive innovative drugs have been eligible to participate but have not participated in this medical insurance negotiation, and it is expected that more innovative drugs will abandon medical insurance when they are not negotiated, and it is recommended that the media do not describe this phenomenon
as losing or being out.

Living space can also be found outside of medical insurance, which is a manifestation of the confidence of innovative drugs and can meet the unmet clinical urgent needs
.
Antengene Medic Celiniso commercialized in Chinese mainland May this year, with sales of 54 million yuan in more than one month, and is expected to achieve the sales target
of 180-200 million yuan for the whole year.
Previously, multiple myeloma (MM) patients purchased the US version of the original drug in Hong Kong, with a specification of 20mg*16 tablets/box, which required nearly 300,000 yuan, which could not be affordable
.
Akeso PD-1/CTLA-4 bi-antibody has strong clinical demand, with a prescription of nearly 100 million yuan and nearly 200 million yuan shipped within 6 weeks of launch, and the sales target
of 1 billion yuan is expected to reach in the first 12 months.
As innovative drugs gradually move towards primary and differentiated innovation, based on unmet clinical needs, there will be more and more
products that can open the market without medical insurance.

According to 2017 data, private health insurance is the largest payer of the overall prescription drug scale in the United States, consuming 42% of prescription drugs, while Medicare is the second largest payer, accounting for 30%
of prescription drugs.
Pharmaceutical companies will not lose everything
by exiting health care negotiations.

In the first half of this year, China's health insurance premium income was 534.
1 billion yuan.

Commercial medical insurance has given birth to two major Internet celebrity phenomena, one is the million-dollar medical insurance launched by traditional insurance companies, which has become a popular product, with the scale of users exceeding 90 million in 2020 and the premium scale exceeding 50 billion yuan
.
By the end of 2021, the total number of insured persons reached 140 million, and the total premium income exceeded 14 billion yuan
.

Recently, many places across the country have launched 2023 Huimin Insurance products, upgraded and expanded, and included new citizens in the insurance coverage, and no longer take participation in local medical insurance as a prerequisite
.
The list of Chongqing Yukuaibao tumor drugs has been expanded from 31 to 38, and the list of rare disease drugs has been expanded from 11 to 12
.
Qingdao Qindao eInsurance increased the number of positive list drugs not covered by medical insurance from 683 to 2,000
.
The number of domestic special drugs in Beijing Universal Health Insurance increased to 40
.

Diversification of payment channels can change the situation
where a single payer is too strong and the bargaining power of pharmaceutical companies is unbalanced.

The weight of medical science and technology

In addition to the above payment policies, another factor affecting the pharmaceutical industry, industrial policies
, is also warming at the margin.

The wind has long been blowing, but you haven't noticed
it yet.
While pharmaceutical and device companies are still in disgrace in the capital market, at the level of the real economy, the status of biotechnology is improving
from the bottom up.

First-tier cities have joined the battle for industrial centers and taken biotechnology as a strategic pillar for development
.

On June 7 this year, Mindray started construction of the Global Supply Chain Headquarters Base, with a land area of about 128,000 square meters and a total investment of 2.
2 billion yuan, which will carry more than 60% of the company's supply chain production capacity
after completion.
The day before, Shenzhen just released an action plan to build Shenzhen into a world-renowned high-end medical device R&D center and a domestic leading and international first-class high-end medical device industry cluster and development highland
by 2025.

Relying on the support of Westlake University and state-owned assets, Hangzhou has also become a hot spot for biotechnology entrepreneurship, and issued 25 articles to support biopharmaceutical enterprises in November this year, of which the maximum reward for a single product for support for innovative drug research and development has been raised from 48 million yuan (last year's policy) to 70 million yuan
.

Biomedicine is one of the three major industries in Shanghai, and at the end of last year, it was proposed to initially build a world-class biomedical industry cluster core bearing area by 2025, with a manufacturing output value of 240 billion yuan and 25 varieties with annual sales of more than 1 billion yuan
.
After a year, it has increased its weight and issued 16 articles to support local innovative drugs and devices, from research and development, production to commercialization, and meticulous care
.

Among them, municipal hospitals are required to include corresponding innovative drugs in the hospital drug supply catalog as soon as possible according to clinical needs and hospital characteristics after the release of the national medical insurance drug catalog
.
For newly added Class 1 innovative drugs that have not yet been included in the national medical insurance drug catalogue, but the holder of the drug marketing authorization is a Shanghai enterprise, as well as innovative medical devices with high clinical use value but not yet included in the scope of medical insurance payment
, encourage them to apply for inclusion in the specific high-value drug protection liability scope of "Huhuibao".

This article is of great
significance to the survival of Biotech.

Shanghai eats from north to south and is the largest inflow of
medical treatment in the country.
Get Shanghai, Biotech is full
.

The number of Shanghai's top 100 hospitals accounts for nearly 20% of the country, ranking among the top 10 hospitals in the country, and Shanghai occupies 3 seats
.
In 2021, the number of beds in Shanghai exceeded 160,000, second only to Chongqing
.
Shanghai is the city with the largest number of consultations and treatments in China, reaching 272 million in 2021
.

Top-down support is also coming, and the 200 billion financial discount loan for new medical infrastructure will promote the domestic replacement of medical equipment, which is a long-term benefit to drive the volume of domestic consumables
.

Most of the domestic high-end pharmaceutical and device fields are still dominated by foreign capital, and the upstream supply chain of biological drugs has also been dominated by foreign capital for a long time
.
Geopolitical risks warn of the urgency of independent and controllable life safety, and the curtain of import substitution has slowly opened
.

Shanghai is a vane of industrial policy and is forward-looking
.
We have reason to expect
that next year, the top level will introduce more support policies based on a deeper understanding of the biotechnology industry.

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