This week, the performance of the pharmaceutical sector was weaker than the overall market, and the pharmaceutical business sector led the decline. This week, all A-shares fell 0.09% (weighted average of total market value), CSI 300 fell 0.91%, SME board index rose 0.88%, GEM index rose 0.58%, biomedical sector fell 0.75% as a whole, and the performance of biomedical sector was weaker than the overall market. In the molecular sector, chemical pharmaceuticals rose 0.33%, biological products fell 0.01%, medical services rose 0.68%, medical devices fell 0.65%, pharmaceutical businesses fell 5.78%, and traditional Chinese medicine fell 2.84%. The price to earnings ratio (TTM) of pharmaceutical and biological products is 31.78x, which is 32.80% of the historical valuation in the past five years.
The cochlear implant opens information maintenance, which is expected to further realize import substitution through national procurement. On June 6, 2024, the Joint Procurement Office of High value Medical Consumables, a national organization, issued a notice to carry out the centralized maintenance of information on medical consumables of cochlear implant. Cochlear implant may become a new national high consumption product. At present, there are 6 enterprises producing cochlear implant products in China, 3 import enterprises Collier, Medic Medical, and Leading Bionics, 3 domestic Norcom, Lishengte, and Hongdingkang Medical. The online price of products ranges from 80000 to 270000, and it is expected to further reduce the price through centralized purchase. Referring to the price reduction of the first four high consumption national procurement, there are fewer participants in the market of superimposed cochlear implants, and the price reduction is expected to become reasonable. Domestic enterprises are expected to promote import substitution through intensive procurement.
The equipment renewal policy enters the project application stage. At present, the medical equipment update policy is at the stage of project application/approval in all provinces. As of the middle of June, projects in Anhui, Guangdong and Guangxi had been publicized/released with feasibility study reports. The total investment is expected to be 5.4 billion yuan, 3.4 billion yuan and 0.7 billion yuan respectively, involving CT, ultrasound, magnetic resonance, DSA, endoscope, ventilator and other equipment. With reference to this volume, it is assumed that the average provincial investment of 10 economically developed provinces is 3 billion to 4 billion yuan, and the average provincial investment of other provinces is 1 billion to 1.5 billion yuan. The total demand scale is expected to reach tens of billions. In terms of project cycle, Guangxi Province has given the expected project implementation cycle of 6 months. The project will enter the bidding stage from July to September 2024, and the equipment installation, delivery and acceptance will be completed from September to December.
Risk tip: R&D failure risk; Risk that commercialization is less than expected; Geopolitical risk; Risk of policy exceeding expectations.
