Compared to other industries, the pharmaceutical industry has a clearer trend in the "aging population + demand for quality upgrades", and its relative advantages have become more apparent with an increase of 28.10% year-on-year, in which the operating income of products of 10-30 billion yuan is 401/1288/60 million yuan respectively.
According to the research report released by Tianfeng Securities, the current adjustment of the overall medical biology sector is relatively sufficient, and the industry is expected to gradually enter a normal stage. Compared to other industries, the pharmaceutical industry has a clearer trend in the "aging population + demand for quality upgrades", and its relative advantages have become more apparent. The team believes that it is now possible to gradually increase the weight of stock selection growth, focusing on medium-term opportunities: in terms of innovation (drugs + devices), products with good competitive landscape or those with significant advantages; in terms of essential needs (aging population), the essential drugs and consumables that have completed price clearing.
Real-time updates.
On August 5, 2024, the National Medical Insurance Bureau released the main indicators of the basic medical insurance fund and maternity insurance for January-June 2024. From January to June 2024, the revenue of our country's basic medical insurance fund was 1,388.428 billion yuan, an increase of 3.23% year-on-year; during the same period, the expenditure of the basic medical insurance fund was 1,173.575 billion yuan, an increase of 16.76% year-on-year.
Last week (August 5-9), the pharmaceutical sector fell by 0.41% (ranked 10/31), and since the beginning of the year (January 1-August 9), the sector has fallen by 21.12% (ranked 24/31).
Investment Strategy.
Tianfeng Securities believes that the overall sector adjustment is relatively sufficient, and the industry is expected to gradually enter a normal stage. Compared to other industries, the pharmaceutical industry has a clearer trend in the "aging population + demand for quality upgrades", and its relative advantages have become more apparent.
Tianfeng Securities believes that it is now possible to gradually increase the weight of stock selection growth, focusing on medium-term opportunities: 1) Innovation (drugs + devices): products with good competitive landscape or those with significant advantages; 2) Essential needs (aging population): the essential drugs and consumables that have completed price clearing; 3) Going abroad: Although there is still uncertainty in the short-term geopolitical risks, in the medium-term, laying out overseas business may be an inevitable path for industrial development.
Recommendations:
(1) Innovative drugs: BeiGene, Hengrui Medicine, DiZhe Medicine, Innovent Bio, Hutchmed (China), Akeso;
(2) Medical devices: Medical Equipment-Lianying Medical, Sonoscape Medical, AOIHUA Endoscope; Consumables-Shenzhen New Industries Biomedical Engineering, Yahui Long, MicroPort Physiological, Apt Medical Inc., Shanghai MicroPort Endovascular Medtech (Group) Co., Ltd., Micro-Tech. Paying attention to Chunli Medical, Shanghai Sanyou Medical Co., Ltd., AK Medical (H).
(3) Inpatient: Kelun Pharmaceutical, Jiangsu NHWA Pharmaceutical, Humanwell Healthcare, Haisco Pharmaceutical Group.
(4) Aging population: Henan Lingrui Pharmaceutical, Jiangsu Yuyue Medical Equipment & Supply (electronic group joint coverage), Yihua Health.
(5) Going abroad: Intco Medical Technology, Kexing Biopharm.
(6) Individual stocks: Hubei Jumpcan Pharmaceutical, Zhejiang Jolly Pharmaceutical, Olin Bio-technology, Hunan Jiudian Pharmaceutical.
(7) Trading opportunities: CXO sector (Tigermed, WuXi AppTec, Pharmaron).
Risk warning: market volatility risks, industry policy change risks, product sales falling below expected risks, progress of international relations risks.