The commercialization of innovative drugs continued to grow at a high rate in the second quarter, and newly-needed categories such as narcotics and OTC of some brands of traditional Chinese medicine also maintained a steady growth rate.
The Zhitong Finance App learned that Guotai Junan Securities released a research report that the overall revenue growth of the pharmaceutical sector is under pressure due to multiple factors such as the high epidemic base in some industries, the expansion of collection, and industry rectification. Among them, commercialization of innovative drugs continued to grow at a high rate in the second quarter, and newly-needed categories such as narcotics and OTC of some brands of traditional Chinese medicine also maintained a steady growth rate. In the second half of the year, the hospital market is expected to recover moderately as pressure is removed or slowed down, and more pharmaceutical device categories are expected to recover moderately. The popularity of innovative drugs is expected to remain high in the second half of the year; the demand for in-hospital prescriptions, in-hospital diagnoses, and equipment is expected to pick up quarterly after being pressured in the first half of the year.
Listed 2024H1 pharmaceutical companies were affected by multiple factors such as industry restructuring, and the pace of impact and recovery in different segments began to diverge. As disturbances gradually weaken, more sectors are expected to improve.
Changes in the industry environment put pressure on the growth of the 2024H1 pharmaceutical sector. Under the influence of multiple factors such as the high epidemic base, the expansion of collection, and industry rectification in some industries, the overall revenue growth of the sector was under pressure, including the tightening of the new internal and external environment over the past year, which had a further impact on the first half of this year. Among them, commercialization of innovative drugs continued to grow at a high rate in the second quarter, and newly-needed categories such as narcotics and OTC of some brands of traditional Chinese medicine also maintained a steady growth rate. In the second half of the year, the hospital market is expected to recover moderately as pressure is removed or slowed down, and more pharmaceutical device categories are expected to recover moderately.
The in-hospital market is expected to gradually recover. It is expected that the boom will remain high in the second half of the year: innovative drugs; the boom is expected to pick up quarterly after being pressured in the first half of the year: in-hospital prescriptions, in-hospital diagnosis, and equipment tenders; stable, individual stock differentiation: OTC and circulation of traditional Chinese medicines; improved prosperity and increased certainty: blood products, APIs, and some collected surgical consumables (such as artificial joints). Among the minor beta changes in the segmented sector, due to the relatively limited space expected in the overall growth rate range of the industry, it is more important to grasp the alpha small cycle of individual stock management from the bottom up, such as the inventory cycle, the stage of release of new products, and the specific impact of policies.
It is expected that the revised valuation balance will be more reasonable. After the interim report, the market once again lowered its annual performance forecast for the pharmaceutical sector, and the impact of policies such as collection and price control that have not yet been fully implemented has also been fully priced (discounted) by the market. The latest valuation for the pharmaceutical sector (wind agreed, median forecast for 2024) is 2024PE19.1X, which is lower than 21.0X at the beginning of the year. Looking at segments and individual stocks, the market still gives a certain valuation premium for higher growth rate and more deterministic growth. We believe that reasonable valuation premiums are expected to be maintained after verifying the sentiment trend.
Focus on the main line of “innovation” and “improvement.” The innovation policy support direction is clear: Hengrui Pharmaceuticals (600276.SH), BeiGene (688235.SH), Kangfang Biology (09926), Cinda Biotech (01801), Columbite (06990), Zhixiang Jintai (688443, SH); Strong and strong require steady growth: Enhua Pharmaceutical (002262.SZ), Pailin Biotech (000403.SZ), China Resources 39 (000999.SZ); In-hospital drug and device recovery: Mindray Medical (3000.76SZ), New Industries (300832.SZ) ), Huadong Pharmaceutical (000963.SZ), Jingxin Pharmaceutical (002020.SZ).
Risk warning: Industry collection and restructuring affected or exceeded expectations.
