With the deepening of population aging in China, the future development of the pharmaceutical industry has a solid mass base. If we look at the listed companies in the pharmaceutical industry, we can find that a large number of bull stocks have emerged in the past decade, with many ten-fold shares, which have given long-term investors rich returns. It is worth spending some time to learn how to invest in the pharmaceutical industry.
Interestingly, apart from its high professionalism, although the pharmaceutical industry is called an industry, it is actually not an industry with consistent business and financial logic, but a large collection of sub-industries with completely different logics. Therefore, the first article in our "Zero Basic Medicine" series will first carefully sort out how many sub-sectors there are in the pharmaceutical industry and briefly introduce them one by one.
The subdivision of the pharmaceutical industry begins with the separation of medicines.
When it comes to medical care, people first think of hospitals. Where is the hospital? This is where doctors treat patients. What does a doctor do? Provide medical services for patients. Therefore, from the medical point of view, the first sub-industry of the pharmaceutical industry is medical services.
Among A-share listed companies, the representative medical service enterprise is Aier Ophthalmology. Aier Ophthalmology is a professional ophthalmology chain medical institution. As of 20 19, more than 270 specialized eye hospitals have been established in 30 provinces and cities in Chinese mainland, covering more than 70% of the national medical insurance population, with an annual outpatient volume of more than 6.5 million. Moreover, there are more than 80 eye hospitals in the United States, Europe and Hong Kong.
Meinian Health, which is engaged in physical examination, is another representative enterprise in the field of medical services. Meinian Health is a professional medical examination and medical service group with health examination as the core and integrating health consultation, health assessment and health intervention. Headquartered in Shanghai, the company has cultivated more than 200 core cities such as Beijing, Shenzhen, Shenyang, Guangzhou, Chengdu, Wuhan, Xi, Tianjin, Chongqing and Hangzhou, and has more than 400 medical and physical examination centers. The professional service team has more than 40,000 full-time experts, medical and management teams. In 20 17, professional health services have been provided to 20 million people, and the number of physical examinations in 20 18 is expected to exceed 30 million. It is a listed company with outstanding market value and influence in the medical and health sectors.
In addition, some listed companies participate in private hospitals, and this part of the business also belongs to medical services. At the beginning of 20 18, Chancheng Hospital, a representative hospital invested by Fosun Pharma, passed the JCI certification of international hospitals, becoming the first 3A general hospital in China to pass the sixth edition of JCI standards.
The medical service industry is a very good industry, because people always get sick and need to go to the hospital to see a doctor when they are sick, and doctors provide medical services; Healthy people also need regular physical examinations to find potential hidden dangers as soon as possible. These are rigid demands, which are hardly affected by economic cycle fluctuations. From the perspective of supply, professional doctors need long-term study and practice to develop, and the number of services they can provide is generally limited, so the price of the medical service industry is constantly increasing in the long run, which can effectively overcome inflation.
After talking about medicine, let's look at medicine again.
Pharmaceutical manufacturing here is a broad concept, including drug research and development, production and manufacturing. First, pharmaceutical companies need to discover and create a new drug through research and development. This is the concept of innovative drugs, with emphasis on research and development. Second, after a new drug is developed by a pharmaceutical company and approved by the US Food and Drug Administration, it can be mass-produced and ready to go on the market. The key point of this link lies in production. Therefore, the key point of pharmaceutical manufacturing in a broad sense is whether it is necessary to develop innovative drugs.
Innovative drugs
If a pharmaceutical company focuses on research and development and mainly discovers new drugs, then this company is an innovative drug company. Internationally, famous pharmaceutical companies are all innovative pharmaceutical companies, such as Pfizer, Novartis, Roche, Merck, Sanofi and Johnson & Johnson. Johnson & Johnson), Gilead Science, GlaxoSmithKline, Abbey, Amgen, etc.
In the A-share market, the most famous representative innovative pharmaceutical company is Hengrui Pharma, which is also the pharmaceutical company with the highest market value at present, with the latest market value as high as 250 billion yuan. Hengrui Pharma is a medical and health enterprise engaged in medical innovation and R&D, producing and popularizing high-quality drugs. By the end of 20 18, * * * has more than 20,000 employees worldwide, and is a well-known supplier of anti-tumor drugs, surgical drugs and contrast agents in China, and also the leading unit of the national anti-tumor drug technology innovation Industry-University-Research Alliance, with a national targeted drug engineering technology research center and a postdoctoral research center.
Innovative pharmaceutical companies have a high proportion of R&D investment. Take Hengrui Pharma as an example, the company's annual investment in R&D exceeds 10% of its sales, and it has set up R&D centers or branches in the United States, Europe, Japan and China. By the end of 20 18, the company had more than 3,000 R&D team members, including more than 2,000 doctors and masters, and more than 0/00 returnees. The company has applied for a total of 655 domestic invention patents, including 147 domestic effective invention patents, 226 foreign patents authorized by Europe, America and Japan, 2 second-class national scientific and technological progress awards for proprietary core technologies, and China patent gold award 1 item.
generic drugs
If the focus of a pharmaceutical company is not original research and development, but imitation production of drugs with expired patent protection, then the company is a generic drug company.
The significance of generic drugs is that they don't need high R&D investment, and they don't need to repeat preclinical animal research and human clinical research for many years before the innovative drugs are approved, so their production cost is obviously lower than that of innovative drugs. In order to ensure that generic drugs can treat diseases, generic drugs need to have the same active ingredients, dosage forms, routes of administration and therapeutic effects as generic drugs, that is, they need to prove the same bioequivalence as the original drugs.
In China, the Food and Drug Administration monitors the efficacy of generic drugs through consistency evaluation. Only pharmaceutical companies that have passed the consistency evaluation of generic drugs can sell generic drugs and participate in the bidding for medical insurance drugs. Therefore, the number of generic drugs that pass the consistency evaluation is usually a quantitative index to examine the R&D strength of generic drug companies.
In the A-share market, the representative generic drug company is Huadong Medicine. The company is mainly engaged in the production and sales of antibiotics, proprietary Chinese medicines, chemical synthetic medicines and genetic engineering medicines, as well as the wholesale and retail of Chinese and western medicines, Chinese herbal medicines and medical devices. It is a large-scale comprehensive pharmaceutical listed company integrating pharmaceutical research and development, pharmaceutical industry, pharmaceutical circulation, retail and pharmaceutical logistics. Huadong medicine mainly completes the production of generic drugs through its subsidiary, Sino-American Huadong. Its 20 17 annual sales exceeded 6 billion yuan, and it is a leading enterprise in organ transplantation and diabetes drug research and development and production in China. East China medicine is a distinctive enterprise. From its business strategy slogan, we can see that: "We don't want many varieties, but we want big products;" Either the only one or the first; You don't have to be a locomotive, but you must take the first carriage. "
In addition to the classification of whether to do the original drug research, drug production enterprises can also be divided into:
Among them, chemical pharmaceutical companies can be further subdivided into:
Below, we will introduce various pharmaceutical companies classified according to drug attributes.
Active pharmaceutical ingredients (API)
API (active pharmaceutical ingredient) refers to any substance or mixture of substances used in pharmaceutical manufacturing, which becomes the active ingredient of drugs when used in pharmaceuticals.
Specifically, API enterprises are divided into two categories:
In the A-share market, the representative bulk API enterprise is the first small and medium-sized board (00200 1) Xinhe. The company is a national high-tech enterprise mainly engaged in the production and sales of nutritional products, flavors and fragrances, new polymer materials and raw materials. The company is one of the four largest vitamin manufacturers in the world, a large-scale domestic flavor and fragrance manufacturer and a vitamin feed additive enterprise.
The representative enterprise of characteristic APIs is Huahai Pharmaceutical. The company is the first pharmaceutical company in China that has passed the FDA preparation quality certification and has its own ANDA document number. It is also the first pharmaceutical company in China to realize large-scale preparation sales in the United States. The company has more than 6500 employees and more than 40 molecular companies (including the United States, Japan, Germany, Russia, Spain, India, etc.). ) all over the world. Its main business covers chemicals, biological drugs, drug packaging, trade circulation and other fields. It has established long-term cooperative relations with more than 500 pharmaceutical companies around the world and provided health care products to nearly 200 countries and regions. It is one of the major manufacturers of cardiovascular and mental health medical products in the world.
Raw materials are similar to bulk commodities, which makes their production enterprises have typical cyclical properties. From the perspective of investment, it is more like a chemical enterprise, buying when the industry is low (low PB and high PE) and selling when the industry is high (high PB and low PE).
Characteristic raw materials are mainly used to support downstream pharmaceutical companies and finished pharmaceutical companies, thus having the characteristics similar to "Apple Industrial Chain". From the perspective of investment, it mainly depends on who the downstream customers of this enterprise are. If the top ten customers are internationally renowned pharmaceutical companies, then this company has good strength; If the top ten customers are relatively few pharmaceutical companies, they may need to invest carefully.
chemical agent
Pharmaceutical preparation, generally speaking, is to process raw materials and other auxiliary materials (such as medical capsules) into finished drugs. In the field of chemical preparations, most pharmaceutical companies are generic companies.
In the A-share market, there are many chemical companies. In addition to Huadong Pharmaceutical mentioned in the "Generic Drugs" section above, representative listed companies include Livzon Group, Xinlitai and Hua En Pharmaceutical.
From the perspective of investment, we mainly consider the following points:
Chinese patent medicine
Chinese patent medicine is a characteristic of our country, which has a long history of traditional Chinese medicine as a broad mass base. Chinese patent medicines can be divided into:
In the A-share market, the representative Chinese patent medicine companies are Yunnan Baiyao, Tongrentang, Dong 'e Ejiao, Pien Tze Huang and Tasly. In addition, the representative enterprise of Chinese herbal pieces is Kangmei Pharmaceutical.
Biomedical Science
Biological drugs refer to a kind of products that use the research results of biology, medicine and biochemistry, as well as the principles and methods of physics, chemistry, biochemistry, biotechnology and pharmacy, and use organisms, biological tissues, cells and body fluids for prevention, treatment and diagnosis.
Generally speaking, biopharmaceutical enterprises are enterprises that manufacture drugs based on biology. Biopharmaceuticals have many subdivisions, including:
In the A-share market, the representative blood products enterprise is Hualan Bio. The company is a national high-tech enterprise engaged in research and development, production and sales of blood products, vaccines and genetic engineering products. It is also one of the enterprises with the highest comprehensive utilization rate, the most varieties and the most complete specifications in the blood products industry in China.
Representative vaccine companies are interested in flying creatures, watson biological, Kangtai creatures, and of course, the protagonist of the vaccine incident, longevity creatures. Among them, zhifei Bio is one of the listed private biological vaccine suppliers and service providers with the strongest comprehensive strength in China.
The representative recombinant protein drug enterprise is Vingosine, and its main products are recombinant human growth hormone (assisted growth) and recombinant human follicle stimulating hormone for injection (assisted reproduction). In addition, tonghua dongbao produces recombinant human insulin, making China the third country to produce recombinant human insulin after the United States and Denmark.
Representative monoclonal antibody companies include Fu Honghanlin, Xinda Biopharmaceutical and Qilu Pharmaceutical under Fosun Pharma.
After reading the pharmaceutical manufacturing, let's take a look at another big subdivision of the pharmaceutical industry: medical devices. Similar to drugs, medical devices are also varied.
First of all, let's look at pharmaceutical equipment, which is necessary for every pharmaceutical company. Representative A-share listed companies are Dongfulong and Chutian Technology. Dongfulong is a comprehensive pharmaceutical equipment service provider providing pharmaceutical technology, core equipment and system engineering solutions for global pharmaceutical enterprises, and is the largest freeze-drying equipment manufacturer in China. Chutian Technology's main business is the research and development, design, production, sales and service of water-based pharmaceutical equipment, and it is a representative enterprise that replaces imported pharmaceutical equipment products in China.
Pharmaceutical equipment, similar to excavators in infrastructure field, represents the needs of GMP workshop transformation of downstream pharmaceutical companies, so there is obvious industry periodicity in some fields. When the demand for downstream GMP transformation increases substantially, the order volume of upstream pharmaceutical equipment enterprises will increase, which will bring about a substantial increase in operating income and net profit; When the demand for downstream GMP transformation weakens, orders will be greatly reduced, and revenue and net profit will be greatly reduced.
Secondly, let's take a look at high-end medical devices, such as common coronary stents and orthopedic medical devices. The unit price of these varieties is often very high, and the terminal price even exceeds 10,000 yuan. The ex-factory price is almost 30% of the terminal price, which embodies the characteristics of high unit price and high gross profit. At the same time, it may take five years or more for the three types of medical devices to enter the clinic and finally be approved. The R&D investment is expensive and the R&D cycle is long, which is similar to innovative drugs.
Among A-shares, the representative high-end medical device company is Lepu Medical, which is the leading high-end medical product industry group of interventional diagnosis and treatment equipment for cardiovascular diseases in China, and has the only national research center of interventional diagnosis and treatment equipment and equipment engineering technology awarded by the Ministry of Science and Technology, and is one of the few enterprises in the field of high-end medical devices in China that can form strong competition with foreign products. The core product of Lepu Medical is the heart stent, and the product research and development has also gone through many iterations, from the earliest partner series to the Nano series, and then to the fully degradable NeoVas series being declared, and the product research and development has been continuously upgraded.
Finally, let's look at the mass consumer goods in the field of medical devices: home medical devices. Common household medical instruments include sphygmomanometer, oxygen generator, ventilator, blood glucose meter, wheelchair, crutch and so on. These products are similar to over-the-counter drugs, tend to be consumer-oriented, and are usually bought in pharmacies.
In the A-share market, the representative home medical device company is Yuyue Medical. Yuyue Medical is a company that mainly provides home medical equipment, medical clinical equipment and Internet medical services. Its products mainly focus on respiratory oxygen supply, rehabilitation nursing, medical first aid, surgical instruments, traditional Chinese medicine instruments, nursing consumables, medical stickers and polymer health accessories, and provide hospital disinfection and infection control solutions. The company has become a leading enterprise in the domestic medical device industry and the largest manufacturer of rehabilitation nursing and medical oxygen supply series in China.
Compared with drugs, the ceiling in the field of medical devices is much lower. In medicine, the annual sales of a large single product can be billions or even billions, but it is difficult to find such a single product for medical devices. At the same time, products that are successful in one sub-field usually cannot copy their successful experience to another sub-field. These two characteristics make the medical device field mainly rely on extension mergers and acquisitions to expand the scale of enterprises, which has been fully reflected in the development and growth of Mindray Medical, the largest medical device listed company in China.
Mindray Medical is the largest and leading provider of medical equipment and solutions in China, covering three main fields: life information and support, in vitro diagnosis and medical imaging. The company has branches in more than 30 provinces, municipalities and autonomous regions in China and 39 subsidiaries abroad. There are nearly 10,000 employees worldwide, of which R&D personnel account for more than 20% and foreign employees account for more than 10%. They come from more than 30 countries and regions around the world, forming a huge global R&D, marketing and service network.
Finally, let's look at the pharmaceutical business. There are two main formats of pharmaceutical business (business model):
State-owned enterprises dominate the pharmaceutical commercial market. The top three pharmaceutical commercial enterprises in China are all state-owned enterprises, namely Sinopharm Holdings (Hong Kong stocks), China Resources Pharmaceutical (Hong Kong stocks) and Shanghai Pharmaceutical (A shares). Some local pharmaceutical business leaders also have the background of state-owned assets, such as Nanjing Medicine, East China Medicine, Chongqing Medicine, Liuzhou Medicine and People's Tongtai.
In the category of A shares, Yifeng Pharmacy is a representative enterprise of pharmaceutical retail. The company is one of the leading drug retail chain enterprises in China, mainly engaged in the chain retail business of drugs, health care products, medical devices and daily convenience products related to health. By June 30th, 20 18, the company had opened 2,499 chain stores in Hunan, Hubei, Shanghai, Jiangsu, Zhejiang, Jiangxi and Guangdong provinces, selling medicines, medical devices, health products, healthy food, personal care products and daily convenience products related to health to customers.
From the perspective of investment, pharmaceutical retail is mainly a chain pharmacy model, and the development of the industry mainly depends on two factors: one is the number of chain pharmacies, which are expanded through self-operation, joining and mergers and acquisitions; The other is the operating efficiency of a single store, which is considered by indicators such as floor efficiency and per capita profit. In addition, with the gradual outflow of prescription drugs, considering that prescription drugs are a trillion-dollar market and retail drugs are still at the level of 300 billion to 400 billion, there is still a large room for prescription outflow in the pharmaceutical retail industry in the future.
Due to the diversity of the pharmaceutical industry, we systematically sort it out in this paper, and divide the sub-sectors into four aspects, namely, medical service (medicine), pharmaceutical manufacturing (medicine), medical devices (instruments) and pharmaceutical commerce (circulation).
These are summarized by the following mind map, which is convenient for readers to read.