Will the undead be stronger?

We're all living
hard.

This week, the market is super dark
.

The pharmaceutical industry has actually undergone a large-scale survival stress test in the past 4 years, and there is no greater test than Jicai
.

The original intention of Jicai is to save money for medical insurance, without over-interpreting it as forcing innovation
.

However, a small number of companies are still struggling, and the lessons are worth reflecting on
.

01 Coronary stent

Coronary stents are the worst battles in
collection.

In 2019, the wind and sunshine, minimally invasive medical cardiovascular intervention revenue of 265 million US dollars, net profit of 111 million US dollars, is the strongest hematopoietic capacity of the business sector, for the feeding of innovative layout to provide a
source.

In November 2020, the coronary stent was collected, with an average reduction of 93%, and the minimally invasive medical winning product Firebird 2 was quoted at 590 yuan, and the firekingfisher was quoted at 750 yuan
.

Since then, spending 30,000 yuan on surgery to implant a 590 yuan coronary stent always feels strange
.

In the first half of this year, minimally invasive medical cardiovascular intervention revenue has shrunk to $60.

In the first half of this year, minimally invasive medical cash reserves decreased by $343 million, and research and development expenses were $186 million, the former being 1.

Winter has arrived, and it is becoming more and more difficult
to continue to reach out to the capital market for money.

Lepu Medical Coronary Stent GuReater won the bid at the time with 645 yuan, and his own about the frame, with tears to finish, actively responded to the impact, and now has come out of the shadows
of collection.

Innovation has not been delayed, research and development investment of 570 million yuan, an increase of 27.

Lanfan Medical subsidiary Jiwei Medical's EXCROSS product won the lowest bid price, 469 yuan / piece, covering more than 2,300 hospitals across the country, with sales of more than 200,000 in the first half of this year, and the domestic market share further increased to 23%.

However, the performance fell off a cliff, and the revenue of cardiovascular and cerebrovascular products fell from 1.

In the first half of this year, the revenue of cardiovascular and cerebrovascular products increased by 3.
4% year-on-year, and the gross profit margin also turned upwards, of which the transcatheter aortic valve replacement system (TAVR) revenue increased by about 110% year-on-year, and the new product BioFreedom polymer-free drug-coated coronary stent began to contribute to the performance
.
Innovative medical device "Beautiful Motsimus Coated Coronary Balloon Expansion Catheter" has recently been approved
.

Coronary stent renewal rules marginal improvement, the highest effective declaration price of 798 yuan, just the highest winning bid price of the year, compared with the respective bid prices have a certain room for improvement (Jiwei Medical 469 yuan + 70.
15%, minimally invasive medical 590 yuan + 35.
25%, Lepu Medical 645 yuan + 23.
72%), plus 50 yuan accompanying service fees, can cross the break-even line
as a whole.

The ceiling of 798 yuan is still too low
.

Lepu Medical Heavy Research Products and Market Forecast

02 Insulin

This week, investors asked Gan&Lee Pharmaceutical about the health
of 74-year-old chairman Gan Zhongru.

The degree of deterioration of the insulin competition pattern is far less than that of coronary stents and generic drugs, but Gan&Lee Pharmaceutical has aggressively reduced prices in the collection and finally suffered bitter fruits
.

In November last year, the average decline in insulin collection was 48%, and Gan&Lee Pharmaceutical reported ultra-low prices to deter opponents and numb themselves
.
The company's 6 insulin products all won the bid in high order, of which 4 were won by Group A, which means that the decline is huge, sperm human insulin (30R) quoted 17.
89 yuan / stick, a decrease of 64%, aspart insulin reported 19.
98 yuan / piece, a decrease of 72%, accounting for the largest proportion of revenue of the product - insulin glargine injection (Chang Xiulin) 48.
71 yuan / stick, a drop of 63%, the basic band of nearly 13 million
.

The old rival Tonghua Toho insulin quoted 77.
98 yuan / stick, a decrease of 41%.

Foreign company Sanofi glargine insulin quoted 69 yuan / stick, a decrease of 48%, obtained the basic band of 12.
12 million pieces, according to this data estimate, the total income of 836 million yuan, even surpassed the collection of the first place Gan&Lee Pharmaceutical 630 million yuan
.

Gan&Lee Pharmaceutical announced on the day of the collection that it "recruited thousands of sales elites for the whole country", and proudly obtained the purchase volume of 35.
3377 million in the first year, covering a total of more than 21,000 medical institutions, of which nearly 10,000 were newly admitted medical institutions
.
In the first half of this year, the sales volume of preparations increased by 23.
2% year-on-year, of which the sales volume of non-Changxiulin series products increased by 123.
0%
year-on-year.

However, in the first half of this year, revenue was 835 million yuan, down 43.
4% year-on-year, and net profit loss was 198 million yuan, down 153.
0% year-on-year, of which Q2 loss was 311 million yuan
.

What is the point of getting more market share in a situation where the market size has shrunk significantly?

Tonghua Dongbao adopts a steady and steady collection strategy of insuring prices and volumes, and the average price of the winning product is reduced by 41%, with the retreat as the advance
.
In the first half of this year, the sales volume of insulin analogues increased by more than 100% year-on-year, but the revenue of biological products was 1.
167 billion yuan, down 18.
9% year-on-year, and the price exchange volume also failed
.

However, the impact of mining is controllable, Tonghua Dongbao did not have a loss, and the non-net profit deducted in the first half of this year was 440 million yuan, down 32.
7% year-on-year, of which the Q2 net profit was 52.
07 million yuan
.

The effects of insulin collection take 2 years to digest
.

03 Orthopedic joints

After experiencing the largest declines of 93% and 87% respectively, Chunli Medical and iKang Medical have stabilized and rebounded, and orthopedics has become the strongest performing medical device segment.

The endogenous growth of the joint business has gradually recovered, and the worst expectations of collection have been reflected, and marginal improvements
have occurred.

iKang Medical's revenue in the first half of this year was 531 million yuan, an increase of 18.
7% year-on-year, and net profit was 126 million yuan, an increase of 13.
1%
year-on-year.
Hip replacement implants (including 3D printing products) revenue of 328 million yuan, an increase of 15.
87% year-on-year, knee replacement internal implants (including 3D printing products) revenue of 128 million yuan, an increase of 16.
56%
year-on-year.
The annual revenue growth rate of the joint plate is expected to exceed 40%, and the annual sales volume will hit 200,000 sets
.

iCOS customized products/services are expected to achieve a compound revenue growth rate of 100% in the next 2 years, and 5 new products are expected to be launched in the next 1-2 years on the digital platform, of which the heavy hip navigation system is expected to be registered within the year
.
In terms of bone biomaterials, there are 5 varieties (2 varieties have been registered and 3 varieties are under research), and SBG artificial bones are expected to be registered within this year
.

Elken Healthcare management said in an online communication that conservatively expects revenue to return to 2020 levels this year and net profit margin to return to more than
15%.

Chunli Medical's joint product revenue in the first half of this year was 524 million yuan, an increase of 13% year-on-year, and it is expected that the growth rate will be further improved
next year after the price is stabilized.
The R&D expense ratio rose to 12.
7%, accelerating the development of new materials and new pipelines for joint surgery robots, sports medicine, PRP, and oral cavity
.
Obtained the first 3D printing of trabecular bone products, that is, the registration certificate of the orthophyllodomular pad block of the trabecular bone, and obtained the registration certificate of the knee joint prosthesis, filling the domestic blank, and also making the company's knee joint prosthesis the best
domestic wear resistance.

Weigao Orthopedics' net profit in the first half of this year was 398 million yuan, an increase of 7.
8% year-on-year, and the revenue of joint products was 295 million yuan, an increase of 13.
39% year-on-year, which was the fastest growing business segment
.

However, orthopedic spinal collection is about to be carried out, and if the average decline exceeds 80%, it will also constitute a greater impact
.
Weigao orthopedic spine products accounted for 45.
8% of
revenue.

Chunli Medical and iKang Medical only have their revenue bottomed out and stabilized, their net profit margin and gross profit margin are lower than before the collection, the growth rate of net profit is lower than the growth rate of revenue, and the quality of earnings has declined
.
The net profit growth rate of iKang Medical is faster than that of Chunli Medical because of the compression of research and development expenses
.

Weigao Orthopedics' Q2 net profit growth rate shows signs of recovery, the root cause is still compressed sales expenses, management expenses, research and development expenses
.

The dawn is ahead, and the road is obstructed and long
.

04 Traditional pharmaceutical companies

The direction of the incident is always unexpected, and the collection has not cleared the generic drug companies in a large area
.

In the face of the cold of medical insurance control costs, it is not traditional pharmaceutical companies that are struggling to support, but the new generation of pharmaceutical companies
.

Standing in the depth of history, we find that comprehensive operational capabilities, especially commercialization capabilities, are also important moats
.
By 2025, the national and provincial drug centralized procurement varieties will reach more than 500, and about 60% have been completed, and large varieties should be almost exhausted
.
For products, collection and procurement will still be cruel, but traditional pharmaceutical companies reshape business lines and product lines, the marginal impact is decreasing, multi-line business disperses risks, and hematopoietic capacity is significantly restored
.

The most prominent representative is East China Pharmaceutical, this year's Q2 revenue of 9.
265 billion yuan, an increase of 11.
9% year-on-year, deducting non-net profit of 573 million yuan, an increase of 15.
1% year-on-year, the traditional basic disk pharmaceutical industry strong recovery, differentiated layout of consumer medical and ADC, international medical beauty, synthetic biology will open the company's second growth curve
.

In the first three quarters of this year, the net profit is expected to be 1.
315 billion yuan – 1.
442 billion yuan, an increase of 55% -70% year-on-year, of which Q3 net profit is 447 million yuan – 574 million yuan, an increase of 26% -61%
year-on-year.

In the first half of the year, through the authorization of MSD macromolecule project, it recognized revenue of 370 million yuan and increased net profit by 160 million yuan, and received another payment of 35 million US dollars in September, increasing net profit by 129 million yuan
.

Chuan Ning Bio washed the obscurity of the oil bottle, the price of the API was at a high level, and the profit increased
.
Chuanning Bio has established the Shanghai Research Institute, relying on mature biological fermentation technology and enzyme technology platform, based on synthetic biology and enzyme engineering research, to the
field of health care product raw materials, biopesticides, high value-added natural products, high-end cosmetic raw materials, biodegradable materials.

Among the traditional three Bigpharma, CSPC Pharmaceutical Group has the fastest transformation to promote innovative drugs with the efficiency of generic drugs, Mingfule for the treatment of cerebral infarction indications is expected to be approved for listing next year, and the strengthening of the central nervous system product matrix, Duvelisib (PI3K), Irinotecan and JMT103 (RANKL) are expected to be listed
in 2022-2023.
Hengrui Pharmaceutical is the largest, the slowest turn, pessimism has been fully priced, it is expected that the performance will gradually stabilize at the end of this year or early next year, and the predicament will be reversed
.
China's biopharmaceutical transformation is also slow, but the cash reserve of 26.
4 billion yuan, there is a possibility of a non-linear reversal through mergers and acquisitions, the main problem is that the family management is young and layman
.

Second- and third-tier traditional pharmaceutical companies are also generally growing steadily, randomly choosing two
.

Puli pharmaceutical stock of large varieties have been collected and destroyed, the first half of the revenue increased by 27.
7% year-on-year, the net profit increased by 27.
8% year-on-year, as stable as an old dog
.
Large varieties of voriconazole and sodium nitroprusside injection were approved, bringing new growth momentum
.
The field of innovation focuses on boron drugs, mRNA drugs, and SiRNA drugs for boron neutron capture therapy (BNCT
).

Xianju Pharmaceutical's Q2 net profit is significantly increased
.
In the first half of the year, the revenue of respiratory preparation business was 310 million yuan, an increase of 40% year-on-year, and it was difficult to collect and collect in 1-2 years, and the market competition pattern was good
.
Anesthesia muscle and pine preparation revenue of 305 million yuan, down 5% year-on-year, of which cisa trakoammonium injection won the bid for the fifth batch of national collection, sales decreased by about 66 million yuan year-on-year, down 88% year-on-year, rocuronium bromide injection won the bid for seven national collections, is expected to land in November, which will have an impact on
the revenue side.
The revenue of the preparation business accounted for 60%, multi-line development, and the overall stability
.

Collecting and killing is not necessarily more powerful, but for pharmaceutical and equipment companies, collection is the biggest pressure, which can survive, and what can not survive, generally surviving is no problem
.

At present, the valuation of pharmaceutical PE in the Shenwan first-class sector has hit a new low in ten years, and the PE valuation of the China Securities Medical Device Index has rarely fallen to 17.
11 times
.
From a medium- and long-term perspective, the four major factors of valuation bottom + allocation bottom + policy improvement + environmental recovery are complete with medical and pharmaceutical products, which still have the value of
adhering to it.

Since July, in the industrial chain of the northbound capital allocation sector, medical devices have ranked second in the market with a net inflow of 5.
43 billion yuan, second only to lithium battery materials
.
In addition, the share of the largest A-share medical device ETF (159883) has increased by 187 million since September, and the share growth rate of this ETF has reached 79%
this year.
It's really hard to buy at the lows, but buying at the bottom of the range is something most people can do
.
In practice, try to combine your own capital situation, calmly enter the market in batches of fixed investment, and wait for the reversal
of the industry with long-term persistence.