Zhitong Financial APP learned that Zhejiang Merchants Securities released a research report sayingIt is optimistic about the trend of the prosperity of innovative pharmaceutical equipment under the background of the deterministic growth of medical demand and the improvement of medical insurance regulation.① Q3 performance exceeded expectations:With the continuous deepening of health care reform, it is recommended to pay attention to the CXO plate driven by the demand of the industrial chain of weight loss superimposed by policy immunization; ② innovation and upgrading: innovative pharmaceutical equipment with strong competitiveness, rigid demand for surgery to bring continuous volume, global competitiveness, product continuous iteration to bring income long-term certainty; ③ low valuation: with a high margin of safety undervalued traditional Chinese medicine, circulation (including pharmacies), generic drugs related targets.

The main points of Zheshang Securities are as follows:

Traditional Chinese medicine: steady growth is still expected to continue, the traditional Chinese medicine industry is in the business improvement cycle after the clearance of the industry, some state-owned enterprises reform traditional Chinese medicine enterprises see the net interest rate continues to improve.The announcement of the measures for the registration and management of traditional Chinese medicine provides the direction for the research and development of innovative traditional Chinese medicine. In the future, traditional Chinese medicine is expected to enter a new product-driven era, and the pipeline value of traditional Chinese medicine innovation enterprises can be reflected. The promotion of the follow-up catalogue of base drugs is expected to provide a new driving force for the promotion of traditional Chinese medicine at the grass-roots level.

CXO:The differentiation of plate performance continues.1) the prosperity of investment and financing is expected to pick up. 2023Q1 China Healthcare Investment and financing fell back to the 2017Q1-Q3 level, the global level returned to the 2018-2019 level, the absolute value is relatively low, the bank is optimistic that 2023H2 investment and financing will hit bottom, and the boom is expected to gradually pick up (with the annual base as a reference). 2) the main business of 2023H1 CXO is still strong. Excluding the disturbance of some short-term large order base of 2022H1, the main business income of 2023H1 still maintains high growth, highlighting the leading bargaining power and the anti-risk ability under the coordinated development of multi-business. 3) the bank is optimistic that the year-on-year growth rate of the main business income of the leading 2023H2 CXO will improve, and the growth rate of main business income will further improve in 2024 under the relatively low base (the impact of the large order base will be gradually eliminated), and the prosperity will gradually pick up. At the same time optimistic about investment and financing 2023H2 hit the bottom and polypeptide CDMO orders under the catalysis of leading investment opportunities.

Innovative drugs:The progress of commercialization of innovative drugs continues.1) the 2023ESMO conference will be held soon (October 20-24) to focus on the catalysis of clinical data disclosure in the innovative drug industry. 2) in the context of the continuous deepening of medical reform, the bank is optimistic that local innovative drugs will enter the accelerated period of commercialization. 3) Medical insurance pricing-the regulatory thinking is gradually clear, and the pricing strategy of the innovative drug industry has gradually become clear, which is expected to usher in the inflection point of high-quality upward development under strict supervision. It is optimistic that the commercialization of local innovative drugs is accelerated, and the rhythm of product cashing is clear, and the income is expected to enter the leader of the inflection point.

API and generic drugs: serious internal differentiation, capital expenditure cycle, business structure adjustment are still the leading factors.From the perspective of APIs, the year-on-year growth rate of 2023H1 revenue has slowed down, mainly due to the short-term price pressure caused by the destocking cycle of some API products and increased competition, in addition, changes in the product structure of some companies have dragged down income growth. From the perspective of generic drugs, with the early collection and renewal of contracts, and the completion of national mining of large varieties one after another, the bank expects that the income and profits of some generic drug enterprises are expected to decline marginally due to the impact of collection.

Upstream scientific service: the cardinality effect is gradually cleared, and the marketing system and product echelon are built in the energy period.The bank believes that improving human efficiency, expanding overseas markets and enhancing the innovation of its own products are the main attractions of upstream companies in 2023. From the perspective of chemical reagents, the upstream demand has recovered slightly, and the supply side is still in the stage of product homogenization competition. Taking into account the recovery of industrial production and the 22Q3 base, the bank believes that 2023Q3 revenue growth is slightly under pressure, improving human efficiency, expanding overseas markets and enhancing the innovation of its own products are the main points of interest. Biological reagents and consumables, considering the delivery pace and investment and financing recovery of some companies' COVID-19-related products in 2022, the bank expects the revenue growth of some upstream companies from 2023Q3 to increase slightly; from the scientific research point of view, the bank believes that the company's product upgrading and SKU expansion are expected to support month-on-month steady growth. From the equipment company's point of view, the bank expects capital expenditure to resume growth in 2023 as a process, and it is recommended to pay attention to marginal changes in industry-wide capital expenditure and overseas market expansion.

Vaccine: new agent varieties constitute the core catalysis, large variety expansion, inoculation recovery, ring-to-ring improvement is obvious.The regular vaccination of 2023Q2 resumes growth, adult vaccines such as HPV are still in the period of increasing coverage rate, and children's vaccines such as 13-valent pneumonia vaccine are growing under the influence of channel sinking. the bank expects that the demand for Q3 vaccine will continue to improve, and it is recommended to pay attention to the clinical and registration progress of new vaccines of various companies, as well as the corresponding pace of R & D expenditure.

Innovative equipment: new product iteration helps hedge the impact of collection, and some companies continue the trend of rapid growth.The innovation-driven effect in the field of equipment is obvious, innovative devices are advancing rapidly in R & D and commercialization, and the payer is expected to have policy improvement expectations for innovative devices. At the same time, orthopedic trauma and other recent instrument collection price reduction marginal improvement, has been collected varieties, is expected to appear obvious import substitution effect.

Chain drugstores: the acceleration of new stores, the acceleration of concentration, and the steady growth of 2023Q3 is expected.After the chain drugstore field has experienced four types of drug restrictions and the chain expansion has slowed down, the new opening of 2023Q1-Q3 stores has accelerated, and the concentration of the chain head continues to increase. It is expected that designated drugstores will be included in the outpatient clinic to undertake prescription outflow.

Medical services: under the recovery of diagnosis and treatment, Q3 continues to grow.Ophthalmology, stomatology and other medical services are in the recovery stage, the bed utilization rate of new hospitals is increasing rapidly, and the newly listed ophthalmic hospitals are in the stage of rapid expansion and net interest rate increase. Private medical institutions in ophthalmology, stomatology, oncology and other fields have developed continuously and rapidly.

IVD:In the field of immunochemiluminescence, it is in a new stage of high-speed instrument product upgrading and collection is expected to increase the market share of domestic enterprises.

Medicine circulation:The circulation plate is not only an important link between the supply side and the demand side of the pharmaceutical industry, but also an important plate that takes the lead in the new medical reform. The bank believes that the leading pattern of the circulation industry is basically stable, with moderate improvement or sustained acceleration under the promotion of policies. With the deepening of the superimposed medical reform, the higher requirements of fine management and informatization, and the gradual realization of the leading industrial ends of the circulation, the growth and profitability of the plate are expected to continue to improve. The bank recommends the circulation leader who pays attention to the continuous improvement of market share and the continuous expansion of capacity boundaries and service capabilities.

Risk hint

The risk of policy change; the risk of failure in new drug research and development; the uncertainty of the effectiveness of sales reform.