The Zhitong Finance App learned that Guojin Securities released a research report saying that judging from the performance of the first three quarters, the A-share pharmaceutical sector initially stopped the downward trend in revenue and profit. It is still in the process of bottoming out, and the recovery is slower than expected. However, as the degree of aging continues, residents' consumption of pharmaceuticals expands steadily, and the volume of medical treatment in the industry continues to recover, the long-term growth logic of pharmaceuticals is still clear, and the overall basic market is stable. Looking ahead to 2025, core investment opportunities in the pharmaceutical sector will revolve around innovation, recovery in demand and policy expectations reversing the three major logics. We are optimistic about the racetrack opportunities for innovative drugs and generic drugs and the reversal of individual stock sentiment in the fields of devices, traditional Chinese medicine, pharmacies, and consumer health services.

The main views of Guojin Securities are as follows:

The pharmaceutical sector was under pressure in the early stages, but a turning point is already being nurtured

Due to various factors, the boom in the pharmaceutical sector experienced a long period of decline after 2021. Judging from the performance of the first three quarters, the A-share pharmaceutical sector initially stopped the downward trend in revenue and profit. The margin has narrowed, but it is still bottoming out, and the recovery is slower than expected. Due to this pressure, the overall performance of the pharmaceutical sector as of 2024 is still weak, and the institutional allocation ratio continues to decline.

However, even considering these difficulties, as the degree of aging continues, residents' consumption of pharmaceuticals expands steadily, and the industry continues to recover, the long-term growth logic of pharmaceuticals is still clear, and the overall basic market is stable. At the same time, the level of pharmaceutical dividends and dividends continues to rise, and dividend attributes are increasing; pharmaceutical industry business cooperation transactions (BD) and external drug licensing further enhance the hematopoietic capacity of the industry, while reflecting the value of pharmaceutical companies' R&D pipelines ahead of time; policy expectations are reversed: there is a turning point in fee control, and marginal improvements are possible.

The layout of the 2025 pharmaceutical reversal revolves around three major logics

In 2025, core investment opportunities in the pharmaceutical sector will revolve around three major logics:

Innovate overseas: Overseas BD continues to bear fruit, and domestic innovation and commercialization have brought about improved performance.

Demand recovery: In recent years, due to pressure on collection fees and changes in the consumption environment, the growth rate of some types and segments has declined, and the inventory of enterprises, channels, and terminals is at a low level. In the future, such as improved demand for in-hospital and consumer medical care, it may boost performance.

Policy expectations are reversed: the industry tends to be standardized, prices tend to be reasonable, the share of contractionary policies has declined, and support for incentive policies has emerged.

Segment Views

Innovative drugs: The internationalization of cutting-edge technology has taken off, and innovative drug policies have clearly picked up; foreign licensing transactions are frequent, and innovative technology is leading the new trend of going overseas. In terms of target selection, it is recommended to select innovative targets with high sea potential, innovative tracks with strong US stock reflection, and buy bottom-reversal leading targets.

Medical devices: Domestic procurement is expected to rebound in 2025, and demand for renewal will gradually be released. It is recommended to focus on medical equipment, in vitro diagnosis and recovery, overseas equipment, CGM, etc.

Biological products: Track differentiation, optimistic about interferon and insulin, and focus on high-growth varieties and opportunities to reverse performance.

Traditional Chinese medicine: base and inventory digestion, lightweight; price management is showing results + raw material costs are expected to be reduced, and gross margin is expected to pick up; continue to pay attention to the main line of state-owned enterprise reform; the basic drug catalogue is ready to be released; the margins of collection and implementation are expected to improve, focusing on the volume of key varieties; industry mergers and acquisitions and important innovations are also worth paying attention to.

Pharmacies: Clean up and rectify, the rest is king, and the industry is expected to bottom up.

Medical services and aesthetic medicine: Medical services focus on changes in the macro environment and restoration of consumer sentiment; medical and aesthetic focus on targets with the core elements of application expansion+strong product capability+category broadening.

CXO and upstream pharmaceuticals: The industry has bottomed out, and a rebound is imminent.

Investment advice and valuation: Based on innovation, recovery in demand, and policy expectations to reverse the three major marginal changes, we are actively optimistic that the pharmaceutical circuit will go light in 2025 to achieve a reversal.

Implemented in track and sector selection, the above three logics are mapped to two types of opportunities:

Optimistic race opportunities for innovative drugs and generic drugs from the top down (overseas innovation+policy reversal)

From the bottom up, I am optimistic about opportunities for individual stock sentiment reversal in the fields of equipment, traditional Chinese medicine, pharmacies, consumer medical services, etc. (demand recovery+policy reversal)

Key targets: Collumbotai Bio-B (06990), Renfu Pharmaceuticals (600079.SH), Tebao Biotech (688278.SH), Kangfang Bio-B (09926), Hengrui Pharmaceuticals (600276.SH), Taiji Group (), Yifeng Pharmacy (Dabao), Mindray Healthcare (300760.SZ), Air Ophthalmology (300015.SZ), Aimeike (300896.SZ), etc. 600129.SH 603939.SH

Risk warning: Collection fee control measures exceed expectations, exchange risk, risk of domestic and foreign policy fluctuations, risk of investment and financing cycle fluctuations, risk of mergers and acquisitions integration falling short of expectations.