Introduction: The plate severance of the new node.
"Investor.com" Cai Jun
In the past 2023, the pharmaceutical industry stands at a node. Healthcare anti-corruption, new drug research and development, and the new phase of the epidemic are all profoundly changing the industry.
There are many subdivisions in the pharmaceutical industry, and according to the scale of revenue, the listed companies that are mainly engaged in medical circulation are like giants. In 2023, the operating income of Shanghai Pharmaceutical and Jointown will be 260.295 billion yuan and 150.14 billion yuan respectively, a year-on-year increase of 12.21% and 6.92% respectively.
Subdividing each sector, each leader also remained stable. In 2023, the operating income of Zhifei Biotech, Fosun Pharma, WuXi AppTec, Mindray Medical, Hengrui Pharmaceutical, and Aier Ophthalmology will be 52.917 billion yuan, 41.4 billion yuan, 40.34 billion yuan, 34.932 billion yuan, 22.82 billion yuan, and 20.367 billion yuan, respectively, and the net profit attributable to shareholders of listed companies will be 8.07 billion yuan, 2.386 billion yuan, 9.607 billion yuan, 11.582 billion yuan, 4.141 billion yuan, and 3.359 billion yuan respectively. CRO, medical devices, oncology drugs, ophthalmic services and other sectors.
However, the pharmaceutical industry in 2023 will also be eventful, and the market will be in a volatile consolidation. Up to now, there are less than 10 companies with a market value of more than 100 billion yuan, and Mindray Medical and Hengrui Pharmaceutical rank the top two with more than 350 billion yuan and about 300 billion yuan respectively. Non-sector leaders, as well as BeiGene and United Imaging Medical, have corresponding market capitalizations of about 180 billion yuan and more than 100 billion yuan, and their operating income in 2023 will be 17.423 billion yuan and 11.41 billion yuan respectively.
The vaccine sector looks at batch issuance
The vaccine sector, which has given birth to a number of companies with a market value of 100 billion yuan, will suffer a downward adjustment in the market in 2023. The industry landscape is changing dramatically, and even the HPV vaccine, which is known as a high moat, is also in the throes of pain.
In 2023, Wantai Bio's operating income and net profit attributable to shareholders of listed companies will be 5.51 billion yuan and 1.247 billion yuan respectively, a year-on-year decrease of 50.73% and 73.65% respectively. Once upon a time, the company not only made a lot of money with the first domestic bivalent HPV vaccine, but also exceeded the market value of more than 100 billion yuan. Now, the wind has receded, and the labor pain period has come a little unexpectedly.
Wantai Biotech said in its annual report that the reasons for the decline in performance include the impact of the bivalent vaccine due to the nine-valent age expansion and market factors, and the sales were lower than expected. At present, there are bivalent, quadrivalent and nine-valent HPV vaccines on the market in China. The higher the number, the more types of viruses are covered. The bivalent ones are listed and sold by GlaxoSmithKline, Wantai Biotech, and Walvax Biotech, and the quadrivalent and nine-valent only Merck Sharp & Dohme vaccine is monopolized by Zhifei Biotech.
The investment logic of the vaccine sector is mainly to judge the batch issuance volume of varieties to predict the performance prospects of related enterprises. According to Wantai Bio's explanation, the space of the bivalent vaccine is squeezed by the nine-valent vaccine, so Zhifei Biotech is the beneficiary.
In 2023, Zhifei's operating income and net profit attributable to shareholders of listed companies will be 52.917 billion yuan and 8.07 billion yuan respectively, a year-on-year increase of 38.3% and 7.04% respectively. Among them, 36.55 million nine-valent HPV vaccines were issued, a year-on-year increase of 136.16%.
Wantai Bio's words are true, but it needs to be pointed out that because Zhifei Bio is an agent vaccine, it needs to pay high procurement costs every year, so the net profit is squeezed out. In 2023, Zhifei's procurement cost will be 38.435 billion yuan, a year-on-year increase of 54.7%, accounting for 72.63% of operating income.
However, there is no 100-day bonus for flowers, and any product has a bonus period. Domestic manufacturers have long been eyeing the nine-valent HPV vaccine. If the R&D is successful, the value of the investment of the relevant company may be reversed.
Up to now, 9-valent HPV vaccines such as Wantai Biologics, Walvax Biologics, Bowei Biologics, Ruike Biologics, and Kangle Guardian are all in the third phase of clinical trials. In April this year, Wantai Biotech disclosed the progress of the third phase of clinical trials of this type of product, that is, it has completed unblinding and obtained preliminary analysis results of main data. In other words, the pace of approval for listing is getting closer and closer.
Or feeling the potential pressure, Zhifei Biotech made big moves one after another, releasing a "cross-border" signal.
In the second half of 2023, Zhifei Biotech announced the exclusive purchase of vaccines from GlaxoSmithKline and Merck. Among them, the company purchased recombinant herpes zoster vaccine from GlaxoSmithKline, with a total minimum amount of 20.6 billion yuan in the next three years, and purchased more than 100 billion yuan from Merck, of which more than 90 billion yuan is HPV vaccine.
Once upon a time, the market for vaccine varieties was clearly divided. Various companies focus on the research and development of subdivided varieties, such as Hualan Vaccine, Jindike Focus on Influenza Vaccine, Zhifei Biology and Wantai Biology Focus on HPV Vaccine, Kangtai Biology Focus on Pneumonia Vaccine, and Baike Biology Focus on Chickenpox Vaccine.
But the world will be united for a long time, and the distinction between Jing and Wei will begin to become "muddy". On the one hand, the exclusivity period of each subdivision is gradually coming to an end, and it is imperative to find a second growth curve. On the other hand, scientific and technological progress has also lowered the cross-border threshold, and the probability of successful research and development has greatly increased.
For example, Zhifei Bio's purchase of recombinant herpes zoster vaccine is actually a cake for 100 grams of biology. Walvax Biotech not only listed HPV vaccine, but its quadrivalent influenza vaccine also broke into the "sphere of influence" of Hualan Vaccine and Jindike, but the ace product 13-valent pneumococcal polysaccharide conjugate vaccine also encountered competition from Kangtai Biology.
This "mutual rolling" situation has led to a decline in the price of vaccine products. For example, in the 2023 local bidding for HPV vaccines, Walvax Biotech and Wantai Biotech won the bid with a unit price of 246 yuan and 116 yuan respectively, and the unit price of the same type of domestic product was about 330 yuan.
If the price declines, if it does not hit the specific injection peak, it is easy to put pressure on the performance of the enterprise. In 2023, Walvax's operating income and net profit attributable to shareholders of listed companies will be 4.113 billion yuan and 419 million yuan respectively, a year-on-year decrease of 19.12% and 42.44% respectively. The company said that the decline in revenue was caused by the low unit price of product sales.
On the other hand, due to the repeated attacks of influenza in 2023, the scale of batch issuance and vaccination population has increased, and related companies have benefited. During the reporting period, Hualan Vaccine's operating income and net profit attributable to shareholders of listed companies were 2.41 billion yuan and 860 million yuan respectively, a year-on-year increase of 32.03% and 65.49% respectively.
The flu vaccine "depends on the sky and eats", which is more prominent in the first quarter of this year. During the reporting period, Hualan Vaccine's operating income and non-net profit decreased by 76.36% and 79.19% year-on-year respectively. The company said the decline in revenue was mainly due to lower sales of flu vaccines.
Medical "anti-corruption" leads to sales expenses
Anti-corruption is the biggest keyword in the medical industry in 2023.
At the end of July 2023, the official website of the Central Commission for Discipline Inspection announced that a video conference was held in Beijing for the mobilization and deployment of discipline inspection and supervision organs to cooperate with the centralized rectification of corruption in the pharmaceutical field across the country. The focus of this round of industry anti-corruption is on three "alls" - all fields, all chains, and all covers.
The mountains and rains are about to come, and the wind is full of buildings, and the depth, breadth, and intensity of the anti-corruption campaign are unprecedented. According to incomplete statistics, since 2023, more than 150 hospital presidents and party secretaries across the country have been investigated, more than double the number in 2022. Among them, Guangdong Province has achieved results in rectification.
There are two dimensions to the effect. On the one hand, since December 2023, the Secretary of the Party Group and Director of the Guangdong Provincial Bureau of Traditional Chinese Medicine and the Secretary of the Party Group of the Guangdong Provincial Food and Drug Administration have been investigated, that is, the "number one" of the health and drug supervision system. On the other hand, the actual controllers or founders of listed companies such as Weining Health, Dashenlin, Yangpu Medical, and Celun Biotechnology were detained or criminally detained in Guangdong Province.
In this regard, Weining Health announced that it received a telephone notice from the Maoming Municipal Supervision Commission that Zhou Wei, the actual controller and chairman of the board, was placed in custody for bribery. The company is mainly engaged in medical software development, and its customers are mainly tertiary hospitals. In the early years, the China Judgment Document Network disclosed the bribery case of Weining Health, the details of which were sold as a bid-winning hospital project, and bribes were offered to the vice president.
Coincidentally, the place where the Dashenlin incident occurred is also Maoming, Guangdong. In August 2023, its wholly-owned subsidiary, Maoming Dashenlin Chain Pharmacy Co., Ltd., was placed on file for investigation, after which Ke Jinlong, one of the actual controllers, was criminally detained and prosecuted on suspicion of offering bribes by a unit.
The anti-corruption campaign has extended from the state drug regulatory department to the regulatory level of the capital market. Transmitted to the capital market, every anti-corruption will cause the market to be turbulent. Therefore, listed companies that can control the sales expense ratio may be less affected.
For example, the Shenzhen Stock Exchange has issued a document to sort out the indicators of the listed medical companies under its jurisdiction. According to statistics, the average sales rate of the pharmaceutical industry on the Shenzhen Stock Exchange in 2021 was 21.32%. This means that listed companies that are above average are likely to be the subject of attention.
According to wind statistics, the listed pharmaceutical companies with a sales expense ratio of more than 20% in 2023 are mainly concentrated in innovative pharmaceutical companies and traditional Chinese medicine companies. Innovative pharmaceutical companies have particularities, most of them build commercialization teams from scratch, and it is easy to invest heavily in marketing and personnel expansion in the short term, while the listed drugs do not reach the peak of revenue, resulting in a small denominator of the expense ratio.
In terms of traditional Chinese medicine companies, there is a phenomenon of long-term high sales expenses. Wind statistics, in 2023, the data of Poinsettia, Jichuan Pharmaceutical, Kangyuan Pharmaceutical, Dong'e Ejiao, Taiji Group, and Hongri Pharmaceutical will be 44.88%, 41.5%, 39.8%, 31.5%, 33.4%, and 33.2% respectively.
In fact, during the reporting period, the rates of these traditional Chinese medicine companies have been reduced, and the scale of sales personnel has shrunk. At the same time, the launch of the national centralized procurement of Chinese patent medicine is also bound to cut off the gray space of the industry.
Diet pills are real or fake
Affected by various factors, the market of the pharmaceutical sector will fall in 2023, but some concepts will still rise against the trend, such as weight loss drugs.
During the reporting period, a number of listed companies disclosed that they were developing weight loss drugs, and then their stock prices rose but were warned by regulators, including Borui Pharmaceutical, Baihua Pharmaceutical, Kanghui Pharmaceutical, etc.
In fact, weight loss drugs are just a general concept, the target is GLP-1, and the specific products are liraglutide and semaglutide. Up to now, only the drugs of Huadong Medicine in China have weight loss functions. In July 2023, the company's liraglutide injection was approved for marketing for the indication of obesity or overweight.
In contrast, semaglutide has better efficacy and is more convenient to use, so it has become a craze around the world, but the only manufacturer is Novo Nordisk. In 2023, the global sales of semaglutide will be 145.811 billion Danish kroner (about 21.14 billion US dollars, more than 150 billion yuan), especially the weight loss injection Wegovy increased by 407% year-on-year.
It should be pointed out that semaglutide, as an active molecule, catalyzes different drug doses and different drug dosage forms due to multiple mechanisms of action. Semaglutide injection in the domestic market is Novo Nordisk's Novotech, which was approved for marketing in China in 2021. At the beginning of 2024, Novo Nordisk's Novo Xin (semaglutide tablets) was approved, but it has not yet been marketed. The highly anticipated Wegovy, Novo Nordisk, submitted a new drug application in China in May 2023.
Previously, there were a lot of notes abused by Novotech on the Xiaohongshu platform, and the platform cleaned up and limited the flow of them. In this regard, Novo Nordisk told Investor.com that it "has actively communicated with social media platforms on false information and misleading content related to prescription drugs, in the hope that they will take corresponding measures as soon as possible to strengthen supervision to avoid unnecessary confusion and misleading to patients and the public", and "continue to pay attention to and call for the safe and rational use of prescription drugs".
At the same time, Novo Nordisk disclosed that "Novo Nordisk is a prescription drug, and the approved treatment area in China is adult type 2 diabetes", and "the sales of prescription drugs are carried out in strict accordance with the requirements of laws and regulations, and only cooperate with contracted distributors with drug business qualifications, and have established strict sales channel management norms." Up to now, Novo Nordisk China has not signed a contract with any Internet pharmacy platform to cooperate with the sale of Novo Nordisk."
Imported drugs are unbeatable, and we still need to wait for the breakthrough of domestic drugs. Up to now, the fastest manufacturer of semaglutide in China is Jiuyuan Gene, which is in the third phase of clinical trials. The company is owned by Huadong Pharmaceutical and submitted an application for an IPO in Hong Kong stocks earlier this year. (Produced by Thinking Finance)■
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