The Zhitong Finance App learned that Guosheng Securities released a research report saying that China's new pulp station requires a long time, high threshold, and regional exclusivity. Coupled with China's more strict pulp collection policies compared to European and American countries, these factors have largely limited the supply of blood products. Some provinces have proposed pulp station planning policies for the “14th Five-Year Plan” period, and the expansion of new pulp stations is imminent. The scale of pulping directly determines the size of the enterprise. Existing and under development products are an intuitive gripper for determining the short-term improvement of net profit of tons of slurry. However, considering the resource attributes of blood products, having a background as a central enterprise has more potential for outreach expansion. Focus on the following blood product targets: Tiantan Biology (600161.SH), Pailin Biotech (000403.SZ), and Liberal Arts Biotech (300294.SZ).

Guosheng Securities's views are as follows:

The supply and demand for blood products continues to expand, and the nearly 60 billion market still has room for growth.

1) The structural supply of blood products in China is insufficient. The per capita usage is less than half that of developed countries, and there is still room for improvement. 2) The “14th Five-Year Plan” pulp station plan is gradually implemented+new products with high added value are being launched one after another.

Horizontal mergers and acquisitions will continue, and scarcity will be recognized by the industry.

1) Due to the scarcity of operating licenses, blood products companies continue to integrate horizontal mergers and acquisitions. 2) There is a clear trend of state-owned assets entering the market. 3) Haier Group bought Shanghai Rice at a premium, and the scarcity of blood products was recognized by the industry.

Supply side: The number of batches issued for blood products is rising steadily, and the supply of raw plasma is tight.

Blood products are a resource-monopoly industry, and currently there are only 28 companies left. The length of time it takes to set up new pulp stations in China, high threshold, and regional exclusivity. Coupled with China's more strict pulp collection policies compared to European and American countries, these factors have largely limited the supply of blood products. Some provinces have proposed pulp station planning policies for the “14th Five-Year Plan” period, and the expansion of new pulp stations is imminent. The scale of pulp harvesting determines the size of the enterprise. Currently, only four companies, Tiantan Biology, Shanghai Laishi, Hualan Biology, and Taibang Biotech, rank in the 1,000-ton pulp harvesting echelon.

Demand side: The consumption base is low, and there is great potential for growth.

In China, the per capita dosage of albumin, hydroxypropyl, and coagulation factor VIII is only 50%, 10%, and 1.6% of developed countries, respectively, and there is still plenty of room for improvement. With the gradual expansion of medical insurance coverage, the continuous deepening of academic promotion, and the increase in clinical application symptoms of blood products, demand for terminals is expected to grow steadily. In terms of terminal prices, blood products have been collected in three rounds, and the implementation has been moderate, and mainstream products have had no significant price reduction effect.

By product: The product structure needs to be optimized, and high value-added products continue to emerge.

Albumin: It is mature and has the highest share. As the only blood-derived blood product allowed to be imported in China, imports account for more than half of the share of albumin, and there is still plenty of room for import substitution.

Acetic acid: There are only 6 approved indications, and the scope needs to be expanded. Jingbing became the guide drug for COVID-19 a few years ago, achieving a sharp rise in volume and price; in 2022, 1,125 batches were developed. In September 2023, Tiantan Biotech 4th Generation 10% chromatography was launched, and the product production technology was in line with the leading international level.

Human coagulation factor VIII: Mainly used to treat haemophilia A, patients need lifelong medication. Due to the relatively insufficient supply of coagulation factor VIII and its high price, the penetration rate in 2021 was only 11.2%. In addition, this product can be obtained through recombinant technology. Currently, three domestic recombinant factors have been marketed by Shenzhou Cell, Chia Tai Tianqing, and Tiantan Biotech.

Pulp harvesting scale and net profit per ton of slurry are the core elements of individual stock screening.

The scale of pulping directly determines the size of the enterprise. Existing and under development products are an intuitive gripper for determining the short-term improvement of net profit of tons of slurry. However, considering the resource attributes of blood products, having a background as a central enterprise has more potential for outreach expansion. Comprehensively comparing the scale of pulp collection, number of R&D pipelines, pulp stations, and future growth potential of various companies, the bank focuses on the following blood product targets: Tiantan Biology (600161.SH) (industry leader, leading pulp station resource and capacity layout fault), Pailin Biotech (000403.SZ) (Shaanxi Provincial State-owned Assets Administration Commission enters and is about to enter the kiloton slurry volume echelon), and Liberal Arts Biotech (300294.SZ) (backed by Huarun, gradually divesting itself from the non-blood business, leading the gross margin industry).

Risk warning: The approval process for the fresh pulp plant falls short of expectations, changes in operating compliance and policies, the progress of new product development falls short of expectations, and product safety risks.