Companies in the health sector had a good 2021, and most of the subdivisions are growing, and the performance is good or even doubled
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After two years of the new crown epidemic and fading the initial panic, in the "post-epidemic era" of 2021, which subdivisions of the health sector have really shown their strength?
Referring to the Shenyin Wanguo Industry Classification, "Finance and Economics Health" includes 14 sub-sectors in the health field, covering more than 400 A-share listed companies related to medical and pharmaceuticals, including APIs, chemical preparations, traditional Chinese medicines, blood products, vaccines, pharmaceutical circulation, offline pharmacies, medical equipment, medical consumables, in vitro diagnosis, diagnostic services, medical research and development outsourcing, private hospitals, and medical beauty.
There is one more subdivision in the health field that has not been included, that is, Internet pharmacy related stocks. A-share listed companies that do not take it as their main business for the time being are mostly found in Hong Kong stocks and US stocks.
The specific calculation method is to calculate the sum of the total operating income of A-share listed companies in various sub-sectors in the first three quarters of 2021, and compare it with the figures of the first three quarters of 2020 to record the change.
In the same way, the net profit changes in the first three quarters of 2021 and the first three quarters of 2020 are compared. Then the two change figures take the average to observe the specific scale change in the A-share health field in 2021.
The larger the number, the more obvious the growth and expansion of this subdivision industry; conversely, the smaller the number, it means that the subdivision industry is undergoing a reduction.
We take the performance changes of listed companies as an incision to observe various industries, because these companies are generally larger, more standardized in governance, have considerable strength, and have certain reference value in various fields. Companies in various sub-sectors are attached at the end of the article.
Finance & Health observed that overall, companies in the health sector had a good 2021: 12 of the 14 sub-sectors showed growth; only 2 industries showed a downward trend.
This article focuses on the top 5 industries with the highest growth, the 1 industry with the weakest growth, and the 2 industries that have suffered shrinkage.
The following are the specifics of each industry:
Double the group
Vaccines: 252% increase
The vaccine industry, 2021 without suspense to come out on top.
There are 10 companies in the vaccine industry, with total revenue of 45.297 billion yuan in the first three quarters of 2021, an increase of 204.67% over the same period in 2020; net profit totaled 14.004 billion yuan, an increase of 298.4%.
The rapid growth of the vaccine industry is due to the national vaccination of the new crown vaccine, as of December 27, the country has been vaccinated with more than 2.7 billion doses of new crown vaccine; the second is that the HPV vaccine and other heavy varieties have entered a period of rising sales after being approved for listing, such as merck's HPV vaccine sales of Zhifei Biological Agent over 10 billion.
Finance & Health observed that the entire biologics industry, including the vaccine industry, also showed very considerable growth in 2021, with an increase of 138%.
"We are firmly optimistic about the domestic vaccine industry." For the future expectations of the vaccine industry, Capital Securities believes that vaccine head companies will continue to list large varieties of products in the next few years; at the same time, the overseas demand for new crown vaccines is strong, which is also an opportunity for China's vaccine industry to go overseas.
As of 25 December, more than 1.2 billion people in China have completed the full course of COVID-19 vaccination. In 2022, the new crown vaccine companies in the domestic fight is to strengthen the needle market, while taking into account exports, two legs to walk to maintain stable performance.
For reference, from the perspective of stock price performance, from January 1 to December 24, 2021, the stock price of the vaccine industry fell by an average of 16%, and the biologics industry fell by 5%.
Second, medical beauty: an increase of 134%
Medical beauty is a niche industry in A shares, with only three companies.
In the first three quarters of 2021, the total revenue of the medical aesthetic industry was 5.477 billion yuan, an increase of 165.78% over the same period in 2020; the net profit totaled 1.475 billion yuan, an increase of 102.63%.
Due to people's pursuit of beauty, the influence of Internet celebrity culture, coupled with the increase in per capita disposable income, and the reduction of information asymmetry by medical beauty platforms to a certain extent, consumers' understanding of medical aesthetic services has gradually deepened in recent years.
The size of the medical beauty market is growing, but the growth rate has slowed down. iResearch estimates that the scale of China's medical beauty market reached 176.9 billion yuan in 2019, and the growth rate slowed down to 22.2%; in 2020, due to the impact of the epidemic, the development of the industry will be slightly affected, and it is expected that after the next 3-5 years of industry adjustment and change, the market will gradually pick up.
In the long run, the users of the medical beauty industry will continue to grow, with 13.672 million medical beauty users in 2019, and iResearch predicts that it will reach 25.483 million in 2023.
A researcher in the pharmaceutical industry described the popularity of this industry to "Finance and Economic Health", "medical beauty, touch and fly".
For reference, from the perspective of stock price performance, from January 1 to December 24, 2021, the average share price of the medical aesthetic industry rose by 34%.
Medical R&D outsourcing (CRO): 105% increase
There are 20 companies in the medical research and development outsourcing industry in A-shares, and in the first three quarters of 2021, the total revenue of the industry was 39.256 billion yuan, an increase of 105.87% over the same period in 2020; the total net profit was 9.651 billion yuan, an increase of 104.17%.
Take WuXi AppTec, a typical company in the CRO industry, as an example, the role of such companies is to provide new drug development and production services to those pharmaceutical companies, biotechnology companies, and medical device companies, helping them to develop new drugs faster and better.
If new drug research and development is a lifelong journey to gold, then the role of CRO is the "water seller" of gold diggers, which is considered to be a relatively controllable link.
Niu Zhengqian, vice president of the China Pharmaceutical Enterprise Management Association, once analyzed to "Finance and Economic Health" that the continuous addition of CRO in the industry has turned innovative drugs, a high-threshold game that only a few people can play, into a mass game of "giving a molecule, you can produce medicine".
However, by the second half of 2021, the CRO industry has suffered a shock. On July 2, the Drug Review Center of the State Food and Drug Administration issued a draft of the "Guidelines for Clinical Value-Oriented Clinical Research and Development of Anti-tumor Drugs", proposing to "carry out clinical value-oriented anti-tumor drug research and development".
The industry is generally worried that once the above opinion draft is landed, the number of drug research and development will be reduced, which will directly affect the living space of CRO.
Nevertheless, if the timeline is extended, the close from January 1 to December 24, 2021, from the perspective of stock price performance, the stock price of the medical R&D outsourcing industry will still rise by an average of 28%.
Growth groups
Iv. In Vitro Diagnostics (IVD): 88% increase
There are 39 companies in the in vitro diagnostic industry in A shares, and in the first three quarters of 2021, the total revenue of the industry was 64.854 billion yuan, an increase of 88.51% over the same period in 2020; the total net profit was 22.529 billion yuan, an increase of 87.36%.
In vitro diagnostics industry, the human body fluids, cells and tissues and other samples are tested, and then clinical diagnostic information is obtained to provide a basis for judging diseases.
Guotai Junan Research believes that with the expansion of demand for policies such as graded diagnosis and treatment, coupled with the acceleration of import substitution of domestic enterprises' technology upgrading, the IVD industry is expected to maintain a rapid growth rate of more than 10% in the next 5 years.
After the new crown epidemic, the widely used nucleic acid test is a kind of in vitro diagnosis. According to the regulations of the National Medical Insurance Bureau, before December 15, 2021, the single test for nucleic acid testing in all parts of China will be reduced to 40 yuan. Last year, when the nucleic acid test first came out, the price was 200 yuan, and then it fell all the way down to 180 yuan, 80 yuan and 60 yuan. In the government collection, the supply price of nucleic acid reagents in some enterprises has been as low as about 5 yuan, and the future dividend period of this part of the business has gradually disappeared.
For reference, from the perspective of stock price performance, from January 1 to December 24, 2021, the stock price of the in vitro diagnostic industry fell by an average of 8%.
Fifth, medical consumables: an increase of 53%
In the first three quarters of 2021, the total revenue of the industry was 62.686 billion yuan, an increase of 45.13% over the same period in 2020, and the total net profit was 20.904 billion yuan, an increase of 61.45%.
The medical consumables industry, taking Yingke Medical, which had the highest revenue in the first three quarters of this year, as an example, produced disposable medical gloves, wheelchairs, and also included medical protection, rehabilitation nursing, health care and physiotherapy, and examination consumables. During the epidemic, the sales volume of some medical consumables companies in overseas markets has risen, and the sales channels of domestic hospitals have also been explored.
Shanghai Securities analysis believes that in the context of the repeated changes in the epidemic, in 2022, the demand for medical consumables related to epidemic prevention will usher in a steady growth, rather than the "one-time" benefits of the epidemic that were previously expected.
The long-term problem of medical consumables is still that the investment in research and development is relatively small, and the innovation ability is not strong enough.
For reference, from the perspective of stock price performance, from January 1 to December 24, 2021, the stock price of the medical consumables industry rose by an average of 0.61%, and there was almost no change in one year.
Diagnostic services: 49% increase
There are only 4 companies in A-share diagnostic services. In the first three quarters of 2021, the industry's total revenue was 26.003 billion yuan, an increase of 42.68% over the same period in 2020; the total net profit was 3.408 billion yuan, an increase of 55.6%.
7. Private hospitals: an increase of 46%
In the first three quarters of 2021, the total revenue of the industry was 27.187 billion yuan, an increase of 88.32% over the same period in 2020, and the total net profit was 1.483 billion yuan, an increase of 4.1%.
8. Offline pharmacies: an increase of 26%
Offline pharmacies in the first three quarters of 2021, the total revenue of the industry 53.45 billion yuan, an increase of 32.03% over the same period in 2020; the total net profit of 3.153 billion yuan, an increase of 20.96%.
IX. Blood products: an increase of 23%
The scale of the blood products industry is relatively small, with only 6 companies in A-shares.
In the first three quarters of 2021, the industry's total revenue was 13.196 billion yuan, an increase of 19.91% over the same period in 2020; the total net profit was 3.776 billion yuan, an increase of 25.65%.
Medical equipment: 21% increase
In the first three quarters of 2021, the total revenue of the industry was 53.523 billion yuan, an increase of 25.95% over the same period in 2020; the total net profit was 12.243 billion yuan, an increase of 16.84%.
11. Pharmaceutical circulation: an increase of 17%
Pharmaceutical circulation industry, a total of 28 companies in A shares. In the first three quarters of 2021, the industry's total revenue was 663.513 billion yuan, an increase of 18.39% over the same period in 2020; the total net profit was 18.509 billion yuan, an increase of 15.34%.
12. Chemical agents: an increase of 8%
Of the 12 growth industries in health, the chemicals industry had the weakest growth. Moreover, there are the most A-share companies in this industry, with 100.
In the first three quarters of 2021, the industry's total revenue was 303.768 billion yuan, an increase of 10.73% over the same period in 2020; the total net profit was 32.525 billion yuan, an increase of 5.55%.
The chemical preparation industry, with pharmaceuticals as the main industry, mainly takes generic drugs as the business basis. The growth rate of 100 enterprises is slow, which is affected by the national drug collection.
As of September 2021, China has carried out five batches of drug collection, with a total of 218 varieties collected, and the basic drugs for common diseases, chronic diseases and major diseases will be normalized into the scope of collection.
Liu Hao, founder and CEO of Haoyue Capital, analyzed to "Finance and Economic Health" that for all pharmaceutical companies, the selection of collection is obviously a small probability event that cannot be guaranteed - even if it is selected, it will only retain a stable cash inflow; if you want to restore the income and profit level before the collection, it is almost impossible. Whether it is a winning pharmaceutical company or a non-winning pharmaceutical company, it has undergone great changes due to the collection and procurement.
The company with the highest market capitalization in this industry is Hengrui Pharmaceutical, even though the stock price has fallen by 47% in 2021 (January 1 to December 23, 2021), ranking 13th in the health sector. To a certain extent, Hengrui Pharmaceutical is the epitome of the drastic changes in the pharmaceutical industry: first of all, at the level of collection and procurement, two products in the national drug collection in June this year did not win the bid. Hengrui Pharmaceutical replied to "Finance and Economic Health", the total sales of the two products in 2020 were 1.873 billion yuan, accounting for 6.75% of the company's operating income in 2020 and 7.09% in the first quarter of this year.
Hengrui Pharmaceutical has also experienced the entanglement of intergenerational inheritance of enterprises, which is also a common concern of private pharmaceutical companies at present. The company's founder Sun Piaoyang completed the power transfer of Hengrui Pharmaceutical in January 2020, and Zhou Yunshu took over as chairman, however, only a year and a half later, Sun Piaoyang returned to the line of fire and became chairman again.
In terms of business, on the basis of the transformation of innovative drugs over the years, Hengrui Pharmaceutical has extensively opened cooperation with biotechnology companies this year, expanding outward in a large way, or investing in shares, or introducing core varieties.
Capital Securities analysis believes that in 2022, pharmaceutical companies will continue to adapt to the collection; on the other hand, through medical insurance negotiations, innovative drugs that are urgently needed by more patients and better clinical treatment effects will be included, one drop and one liter, and the cage in the structure of the medical insurance fund will be changed.
Shrink groups
13. Traditional Chinese Medicine: 8% Reduction
There are a large number of Traditional Chinese medicine enterprises, 71 in A shares.
In the first three quarters of 2021, the industry's total revenue was 248.463 billion yuan, a decrease of 28.86% over the same period in 2020; however, the net profit is still growing, totaling 25.203 billion yuan, an increase of 12.44%.
Among them, there are 14 companies, and the revenue in the first three quarters is lower than that of the same period last year; the net profit is 17 down.
Capital Securities believes that the Chinese medicine industry has returned to the level of the normal year in 2019.
The reason for the shrinkage of the Chinese medicine industry is inseparable from the handbook of drug collection. At present, the procurement of inter-provincial alliances has been rolled out, and the varieties have been expanded to traditional Chinese medicines, proprietary Chinese medicines, etc., such as the Guangdong Alliance of Proprietary Chinese Medicines, the Hubei Alliance of Proprietary Chinese Medicines, etc., and the number of procurement varieties is also increasing.
The Chinese medicine business itself has grown weakly. Taking Yunnan Baiyao as an example, the "national secret formula" of Traditional Chinese medicine specializes in treating bruises and injuries, and in recent years, it has found a way out in mass consumer goods, such as Yunnan Baiyao toothpaste. Even so, as of the third quarter, the company increased revenue compared with last year, and began to invest in securities from 2019, and in 2021, the stock speculation was unfavorable to a huge loss of 1.5 billion yuan.
For reference, from the perspective of stock price performance, from January 1 to December 24, 2021, the stock price of the Chinese medicine industry rose by an average of 30%.
14. APIs: 11% reduction
In terms of sub-sectors, in the health sector, the annual scale reduction of the API industry is the most significant.
APIs are the basic raw materials and active ingredients of pharmaceuticals. In the first three quarters of 2021, the total revenue of the industry was 75.079 billion yuan, a decrease of 1.53% over the same period in 2020, and the total net profit was 9.788 billion yuan, down 19.5%.
Among them, there are 13 companies, and the revenue in the first three quarters is lower than that of the same period last year; the net profit is 17 lower.
The shrinkage of the API industry is due to both the lack of innovation and the factors of changes in the industry environment. The decline in the price of API products in some enterprises, the increase in raw material prices, and the continuous increase in environmental protection costs have reduced the profits of API products.
The state's requirements for innovation in production technology and low-carbon environmental protection have forced the adjustment of industrial structure, on the one hand, to increase the proportion of exports of high value-added products, on the other hand, to accelerate the elimination of backward products, technologies and equipment.
For reference, from the perspective of stock price performance, from January 1 to December 24, 2021, the average share price of the API industry rose by 19%.
epilogue
In 2021, the overall growth rate of the health field has maintained a stable growth rate, and more than 80% of the sub-sectors have increased compared with last year, showing their strength. Covid-19, gathering and innovation are the key words of this year, and will continue to have a profound impact on the entire industry in 2022.
For 2022, Hou Xuchao, founding partner of China Insight Consulting, analyzed the "Finance and Economic Health" that innovative medical devices, consumer-grade medical products, assisted reproductive services and related pharmaceutical devices, upstream equipment and consumables of medicine will grow.
Capital Securities called 2022 "the year of pharmaceutical resurgence after policy concerns and desensitization of the epidemic", optimistic about subdivisions such as biological products, innovative drug industry chain, non-pharmaceutical devices, pharmacies and upstream raw materials and packaging materials. Northeast Securities Pharmaceutical Group analysis believes that the core main line of the medical industry in 2022 revolves around the two themes of "deepening medical reform" and "encouraging innovation", and the unmet clinical needs of patients and the demand for high quality of medical services are the core elements of the medical industry, so they are optimistic about the long-term opportunities of the pharmaceutical consumption sector and the technological innovation sector.
In the long run, the scale of the health industry is expected to expand significantly by 2030. The "Healthy China 2030" Planning Outline proposes that by 2030, the goal to be achieved is to establish a healthy industrial system with a complete system and optimized structure, form a group of large-scale enterprises with strong innovation capabilities and international competitiveness, and become pillar industries of the national economy.
The future of health is promising. As Montaigne said, "Health is the fairest and most precious gift that nature can prepare for us", 2022, may this gift, and the accompanying opportunities in the field of health, stay with you for a long time.
Attached: List of companies in 14 industries
1. There are 100 chemical preparations
2. There are 7 offline pharmacies
3. There are 6 blood products
4. There are 39 in vitro diagnoses
5. There are 36 medical consumables
6. 20 medical R&D outsourcing companies
7. There are 28 pharmaceutical circulation companies
8. 29 medical equipment
9. 3 medical beauty companies
10. 4 diagnostic services
11. There are 34 APIs
12. There are 71 traditional Chinese medicines
13. There are 12 hospitals
14. There are 10 vaccines
Source: Finance & Health
Editor-in-charge: Ling Jun
Proofreader: Zang Hengjia
Plate making: Xue Jiao