Pharmaceutical and Biological Industry Weekly Report: Traditional Chinese Medicine Industry Steps into High-quality Development

Market review: Last week, the A-share medical and biological index rose by 0.53%, outperformingCSI 300 Index 1.21pp, outperformed the GEM KLCI by 3.88pp, ranking 10/28, mainly due totraditional Chinese medicineThe impact of the overall rise in the sector. The H-share Hang Seng Healthcare Index closed down 2.02%, underperforming the Hang Seng China Enterprises Index by 1.83pp, ranking 11/11.

Listed company research and development progress tracking: last week,Hengrui MedicineThe IND application for SHR0302 tablets and pyrrotinib maleate tablets of SHR0302,Hengrui MedicineSHR-1316 injection, SHR-1501 for injection, SHR-A1811 for injection andJunshi BioThe new contractor of the clinical application for JS001sc injection,Fosun PharmaPeople’s erythropoietin injection andCorningJerry’sReorganizationThe listing application of human follicle stimulating hormone injection was newly undertaken.HundredAotai BioAdalimumab is undergoing Phase IV clinical trials; Amy Weixin Bio’s 13-valent pneumococcal polysaccharide conjugate vaccine and XZP-3621 are undergoing Phase III clinical trials; Lingke Pharmaceutical’s LNK01001 and Nuocheng Jianhua Pharmaceutical Obutinib is undergoing phase II clinical trials; HZ-H08905 of Hezheng Medicine and TQB2916 of Zhengda Tianqing are undergoing phase I clinical trials.

Views this week:traditional Chinese medicineThe industry has entered a high-quality development, optimistic about the brandtraditional Chinese medicineOTC and formula granule industry chain.

The Chinese medicine sector surged last week, which we believe is mainly related to market style switching and industry price increases expectations. The low-valued Chinese medicine sector has the logic of steady growth in domestic consumption, policies to encourage high-quality development, and continuous price increases. Under the background of the end-of-the-year style switch, it has gained universal recognition of funds.By combing through the industry policies and investment logic of Chinese patent medicines and Chinese medicine formula granules, we believe that the Chinese medicine industry has entered a stage of high-quality development and is waitingPerformanceRealization and revaluation. The policy encourages the inheritance and development of traditional Chinese medicine companies, and innovative Chinese medicine companies are ushering in a high-speed period of approval, and the Chinese medicine formula granule industry embraces market expansion and upgrading of standards and quality. It is recommended to pay attention to 3 types of investment opportunities in the Chinese medicine industry chain: 1. Brand Chinese patent medicine OTC:Tai Chi Group、Zhongxin Pharmaceutical、Tongrentang、Ling Rui Pharmaceutical、Jianmin Group、Yunnan Baiyao2. Chinese medicine formula granules:Chinese Traditional Medicine(H)(Tai Chi Groupparent company),Hongri Pharmaceutical、China Resources Sanjiu; 3. Chinese medicine pharmaceutical equipment:Canaan Technology、Xinhua MedicalWait.

Investment strategy in 2022: Know the changes, keep the integrity and innovate. Based on the changes and changes in pharmaceutical investment, we believe that in the future, we should actively grasp investment opportunities in the direction of innovation and internationalization.In terms of innovative drugs and vaccines, recommendCinda Bio(H), Rongchang Biological (H); CXO, recommendedWuXi Biologics(H)、Kanglong Chemical、Haoyuan Pharmaceutical、Medicine Stone Technology; Equipment and life sciences, recommendedMindray Medical、Minimally Invasive Medicine(H)、Xinhua Medical、Ed Bio、Yirui Technology; In terms of innovative cutting-edge technology, pay attention to unlisted companies such as Aibo Biological; in terms of domestic consumption, recommendJinxin Fertility(H)、Common people、Walter Dyne、Boya Bio。

Risk analysis: the risk of drug/consumable price reduction; the industry “black swan” event; the risk of R&D failure.

(Article Source:Everbright Securities）

Article source: Everbright Securities

Editor in charge: 91

Original Title: Weekly Report of the Pharmaceutical and Biological Industry: Traditional Chinese Medicine Industry Steps into High-quality Development