The acceleration of centralized drug procurement and the expansion of the scope of medical device stocks increases the pressure on the valuation of medical device stocks.

Original title: Centralized drug procurement accelerated, expanded coverage, and increased valuation pressure on medical device stocks Source: Securities Daily

Our reporter Wang Lixin

Trainee reporter Guo Jichuan

The recently held State Council executive meeting set the tone for centralized procurement in 2022. It is necessary to focus on chronic diseases and common diseases, continue to promote the centralized procurement of drugs at the national level, and carry out provincial or inter-provincial alliance procurement of drugs outside the national centralized procurement. By the end of this year, there will be more than 350 medicines in each province at the national and provincial levels.

　　The investment logic of the pharmaceutical sector has changed

Compared with the launch of the first centralized procurement in 2018, the pharmaceutical index dropped by more than 30%. After the sixth centralized procurement was launched, not only the impact of the index was not obvious, but some listed companies participating in the centralized procurement were sought after by the market because of the “barefoot varieties”. Shares rose one after another.

“Barefoot varieties” refers to the related varieties of pharmaceutical companies that have not yet sold in the market, or have very few sales. Once these varieties win the bid for centralized procurement, they will be able to achieve a substantial increase in sales. Tian Xinjie, a pharmaceutical researcher at Senrui Investments, told the “Securities Daily” reporter that at the beginning of the centralized procurement, the market saw that the price reduction of many drugs was relatively large, which may affect the profits of pharmaceutical companies and produced a large emotional response. In 2021, under the background of the normalization of centralized procurement, the market is already familiar with centralized procurement. Most generic drug companies are expected to fully release the market, and many pharmaceutical companies must be exhausted.

　　Guosen SecuritiesSenior researcher Zhang Lichao told the “Securities Daily” reporter that after the volume-based procurement work became normalized, the investment logic of the pharmaceutical sector is undergoing obvious changes compared with the past.The change is reflected in the readjustment and re-understanding of the valuation of the sector. In the future, the core competitive advantage of pharmaceutical companies will come from the thickness of the R&D pipeline and the ability to control costs, and the sales ability will be further weakened. On this basis, policy optimization, product innovation, transformation and upgrading will be the main investment logic in the pharmaceutical sector.In the medium and long term, high-quality pharmaceutical companies with scale advantages, strong independent innovation capabilities, diversified business layouts and rich product pipelines willTo stand out, through the mechanism of survival of the fittest, the pharmaceutical sector as a whole is developing in the direction of intensification, standardization and health.

It can also be seen from the current changes in the valuation of the pharmaceutical sector that a group of pharmaceutical companies that were regarded as “white horse stocks” in the past have lost their previous stable growth performance under the pressure of centralized procurement, and their valuations are gradually decreasing.WuXi AppTec(rights protection),PharmaronThe innovative pharmaceutical company represented by it has a market valuation of about 100 times.

Zhang Lichao said: “With medicineThe era of medical care and sales-driven has passed, and technological innovation and technological progress capabilities will become an important criterion for measuring the value and growth of pharmaceutical companies. Among them, innovative drugs and preparations, biological drugs, and proprietary Chinese medicines are particularly concerned by the market, while generic drugs, original drugs with expired patents and other sectors are gradually turning into the sunset. The effect of pharmaceutical companies’ transformation under the pressure of centralized procurement is very obvious. “

　　There is still water in the valuation of medical device stocks

　　Unlike the pharmaceutical industry, which has experienced six nationalCollective baptism,medical instrumentsThe industry only started the centralized procurement of cardiac stents in 2020, and the second round of centralized procurement of medical devices, although the industry expected to focus on orthopedic consumables, has not been implemented. Tian Xinjie told reporters that compared with the centralized procurement of generic drugs, the centralized procurement of medical devices is more complicated, and the usage and supply capacity of different regions need to be considered, and the process is relatively slow.

The State Council executive meeting further pointed out that it is necessary to gradually expand high-value medicalThe coverage of centralized procurement of consumables is carried out at the national and provincial levels respectively for orthopedic consumables, drug balloons, and dental implants that are of concern to the public. Among them, the centralized procurement of dental implants also responded to the voice of the masses, which was rarely mentioned in previous policies.

Chen Qiaoshan, a medical researcher at the Research Institute, told the Securities Daily reporter that at present, there are three clear investment lines in the medical industry, namely innovative drugs, CXO (pharmaceutical R&D outsourcing) and high-tech investments.From the IPO situation of medical companies in recent years, it can be seen that the number and scale of listing of these three types of companies are the highest. Among them, the market attention of the medical device sector has always been very high. Although it has experienced a round of national centralized procurement, from the valuation level, the valuation of the medical device sector is relatively high, and it is not limited to high-end medical device companies.

Chen Qiaoshan said, “The high valuation of the medical device sector is due to market optimism and policy promotion on the one hand;On the other hand, it is because the products of some low-end medical device companies have not been clearly included in the centralized procurement, and they are supported by concepts such as big health, and can even become a hot spot for market speculation. This situation will change significantly with the centralized procurement of the medical device sector, and many listed medical device companies will be squeezed out of the valuation water just like listed pharmaceutical companies. “