Over the next 30 years, pharmaceuticals will be a golden track for investment; currently, the medical device industry is a "diamond".

For pharmaceutical companies, there is no doubt that in the next thirty years of China, if we talk about good tracks and the best tracks, it is undoubtedly pharmaceuticals. Next comes consumption, because pharmaceuticals are in a high-growth period for the entire industry. Note that I'm talking about high growth, at least an industry growth rate of over 20%. Other industries, such as large consumption and liquor, do not represent the growth of the entire industry, but the growth of some sub-sectors. This is still different compared to the pharmaceutical industry.

However, this industry is very complex, and it is currently in a period of high uncertainty. If we subdivide the pharmaceutical industry, the three major sub-sectors are pharmaceuticals, medical devices, and commercialization.

Generally speaking, the deep moat of the pharmaceutical industry mainly refers to the two major fields of pharmaceuticals and medical devices, with pharmaceuticals having the deepest moat. Generally, the moat of the pharmaceutical industry is mainly reflected in its R&D system, sales system, and production system.
 

From the perspective of medical devices, domestic medical devices have actually developed rapidly in recent years, giving rise to a series of companies, such as Mindray Medical, with a market capitalization exceeding 300 billion yuan.

Looking at the development path of medical devices in China, there are basically three paths: one is starting with agency, then conducting independent R&D, building a brand, and developing high-end products, such as Mindray Medical; the second is leveraging overseas R&D resources, including talent, to develop domestic substitutes; and the third is independent R&D in China.

If I had to choose between the pharmaceutical sub-sector and the medical device sub-sector today, I would choose medicaldevices.

The reasons are simply as follows:

1. Compared to the policy impact on the pharmaceutical industry, the impact on medical devices is relatively smaller;

2. Compared to pharmaceuticals, the life cycle of newly developed medical devices is longer than that of drugs;

3. Medical devices require iteration; there is no best, only better, while pharmaceuticals may be subject to disruptive development. Moreover, the first-mover experience of medical device companies is richer and more important;

4. Medical devices, especially high-value consumables, have established usage habits among doctors;

From the perspective of China, based on the approval rate in previous years, cardiovascular devices, molecular diagnostics, and imaging are relatively more common. Therefore, generally speaking, from the current situation, the development potential is pharmaceuticals > medical devices > commercialization, but from the perspective of current relative certainty, medical devices are greater than pharmaceuticals.

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