What is the future situation of the pharmaceutical sector? In the industry: the bottom has a bottom, and the upper can be expected

【Pharmaceutical Network Market Analysis】Since the end of July to the beginning of August 2020, the pharmaceutical industry has come out of the high point, the industry has continued to decline, 2021 is particularly dismal, into 2022, the pharmaceutical sector continues to enter the relative valuation low
.

According to the report of Soochow Securities, as of 2022Q2, the proportion of pharmaceutical stocks in the heavy holdings of all public funds was only 6.
78%, down 2.
68 pp from the same period last year; among the heavy holdings of pharmaceutical public funds, the proportion of pharmaceutical stocks held was 88.
62%, down 4.
44 pp from the same period last year, which is a low level
that has not been seen since 2018.

Recently, the market has generally been pessimistic
.

So, what is the future market of the pharmaceutical sector? Is it still worth investors' attention? And what directions can we pay more attention to? Pharmaceutical industry (image source: pharmaceutical network) collection policy swept the industry From the perspective of the decline in the pharmaceutical sector, it is mainly affected by the collection
and procurement.

Since the "4 + 7" pilot in 2018, the drug collection and procurement organized by the state has been carried out to the seventh batch, of which the seventh batch of collection and procurement of 60 kinds of drugs has been successfully purchased, and the average price of the selected drugs is reduced by 48%, which is expected to save 18.
5 billion yuan
per year according to the agreed procurement volume.

In the first six batches of collection, there are 234 kinds of drugs selected, the average price of drugs has dropped by 53%, and the medical cost has been saved by more than 260 billion yuan, which has effectively reduced the burden of medical treatment for the masses and brought changes
to nearly 5,000 domestic pharmaceutical companies.

The scope of collection is expanding, not only generic drugs have been impacted, but also high-value consumables have become the object of
collection.

Since 2019, the collection of high-value consumables has first operated on coronary stents, followed by bone and joints, ophthalmic consumables, etc.
, which are high-value medical consumables
with large clinical consumption, higher procurement amount, more mature clinical use, more adequate market competition, and higher homogenization level.

The National Medical Insurance Bureau has made it clear that it will continue to promote the centralized procurement of high-value medical consumables and gradually expand the coverage, and the entire high-value consumables market is facing a major reshuffle
.

In addition, the new policy of the CDE to combat pseudo-innovation in November 2021 has brought volatility
to the entire industry.

The "Clinical Value-Oriented Clinical Research and Development Guidelines for The Clinical Development of Anti-tumor Drugs" emphasizes that drug research and development should be guided by clinical value, which to a certain extent increases the difficulty of new drug research and development, and the industry generally believes that me too, me follow-based research or be eliminated, the entire innovative drug industry has thus ushered in a cooling
.

Pharmaceutical sector "lower bottom, upper can be expected" So, the pharmaceutical sector in the future is still promising? From the perspective of many securities companies, the pharmaceutical sector "has a bottom, the upper can be expected", the upward growth space is still worth looking forward to, the main logic has the following points
.

First, in terms of market demand, the pharmaceutical sector has a high growth logic
.

With the intensification of population aging, the continuous upgrading of consumption, the growth of per capita disposable income, and the promotion of medical insurance policies, the market demand for drugs, including innovative drugs and biological drugs, is expected to continue to expand
.

Second, from the policy point of view, the purpose of collecting and controlling medical insurance fees is to squeeze out inflated water and reduce the burden
of patient costs.

For pharmaceutical companies, the decline in drug prices in the short term will put pressure on corporate profit margins, but in the long run, with the release of the market, pharmaceutical companies may usher in growth
.

At the same time, the collection of pharmaceutical companies to accelerate the transformation and upgrading in the direction of innovation is conducive to the healthier and sustainable development of
enterprises.

In addition, the "Guidelines for Clinical Research and Development of Clinically Value-Oriented Antineoplastic Drugs" issued by CDE is aimed at the situation of hot targets and indications being declared together, encouraging pharmaceutical companies to make real innovations and avoid overcrowding
of the track.

This direction is conducive to the weakening of homogeneous competition among pharmaceutical companies, so that the industry's capital, technology, clinical and other resources are concentrated in the head of innovative enterprises, and the concentration of the entire innovative drug research and development industry is expected to increase
.

Data show that of the 2602 clinical trials registered in 2020, new drug clinical trials accounted for 57%, and generic drugs accounted for 43%.


Although the number of clinical trials of new drugs is larger, there is a serious homogenization in the distribution of indications and targets
.

Taking PD-1, a popular research and development field, as an example, according to southwest securities statistics, it is expected that in the next 2-3 years, the number of PD-1 monoclonal antibodies listed in China will reach 15
.

At present, there are a large number of products of hundreds of pharmaceutical companies in the declaration, these products are similar in indications, molecular formulas, and drug delivery methods, so that even if it can be successfully listed, the share left for the latecomers will only be less and less, and the price of similar products will be lower and lower, which is not conducive to the healthy development of the market, and will also bring mismatch and waste
of resources.

Conclusion In general, from the policy direction, it is not difficult to find that innovation is the general trend of the development of the pharmaceutical industry, and China has successively introduced a series of policy measures such as innovative drugs and innovative medical device priority review and approval systems, the purpose is to force pharmaceutical companies to innovate and develop, healthy development, and high-quality development
.

With the acceleration of the transformation and upgrading of the pharmaceutical industry and the increase in R&D and innovation investment of pharmaceutical companies, I believe that pharmaceutical companies will be able to see a rainbow
after a painful period.

Disclaimer: In no event shall the information or opinions expressed herein constitute investment advice
to any person.