How to Seize Future Investment Opportunities After the Pharmaceutical Stocks' 'Cold Sweat'?

Recently, the A-share market has experienced significant fluctuations, spreading concerns, and even the pharmaceutical and biological sector, known as a long-term bull market track, has not been spared.

　　Under such fluctuations,How should we view the investment risks of pharmaceutical stocks? Where are the future investment opportunities in pharmaceutical stocks?

　　01

　　How to view

　　the opportunities and risks of pharmaceutical stocks

　　An article published by Xinhua News Agency on July 28 stated: "Whether it is aimed at the platform economy or off-campus training institutions, these regulatory policies are important measures to promote the standardized and healthy development of the industry, maintain network data security, and safeguard the people's livelihood. They are not restrictions or crackdowns on related industries, but are conducive to the long-term development of the economy and society."

　　The Jing Shun Changcheng Investment Research team stated that the policies on the private education and training industry have caused the market to worry that the pharmaceutical sector, especially private medical care, may be restricted. Overall, we believe that investors do not need to worry excessively. The development of private medical services is due to the overflow of demand caused by the inability of public hospitals to meet the public's medical needs. The specialized medical targets we are optimistic about are all developing disciplines marginalized by public hospitals, providing high-quality services to society and further meeting the social demand for specialized medical care/consumer medical care. They have good positive externalities and are less affected by medical insurance cost control and excessive medical checks.

　　From the perspective of policy thinking, as early as the No. 40 document issued by the State Council in 2013, it pointed out that "we must create a diversified medical system with public medical care as the leader and non-public medical care developing together." The 14th Five-Year Plan clearly pointed out "supporting the development of socially-run medical institutions." The pilot program passed at the 5.21 meeting pointed out the need to deepen medical service Price reform. Therefore, we believe that investors do not need to be overly pessimistic. Currently, the valuation of the medical service sector is relatively high. If affected by the K12 incident,the market sentiment triggers a continuous sell-off, which may provide investors with good buying opportunities.。

　　02

　　15 years, 16 times the golden track

　　Future grasp of three main lines, including population aging

　　Pharmaceutical and biological is one of the long-term bull market tracks that have produced many bull stocks. In the past 15 years,the pharmaceutical and biological sector has achieved a 16-fold increase. (Data source: Wind, 2006.01.01-2021.07.28, Shenwan First-Level Industry Index) Against the backdrop of population aging, upgrading of medical needs, and enhanced global competitiveness, the future of this sector is still worth looking forward to.

　　Data from the seventh national population census show that China's aging population is further deepening. It is estimated that by 2030, the proportion of people over 60 in China will exceed 24%.Jing ShunChangcheng Research Department Deputy General Manager Zhan Cheng believes that,the medical needs related to aging and the consumption preferences of the post-80s and 90s generations will become the driving force for demand in the pharmaceutical industry.。

　　"In the future, China's pharmaceutical high-growth period will become the new normal, and medical health will become a super investment track for more than ten years.Pharmaceutical innovation will be the main theme of the pharmaceutical industry in the next 10 years, and excellent Chinese companies will play an increasingly important role in the global pharmaceutical innovation wave; new products, new technologies, and new models will continue to emerge, investment opportunities are diverse, and the industry space is large." Zhan Cheng said.

　　Specifically, Zhan Cheng is optimistic about the following directions:

　　Made in China:Such as CXO, medical devices, and innovative drugs. Innovative medical devices: It is expected that the compound growth rate of China's medical device industry will exceed 10% in the next 10 years, with abundant structural opportunities. At present, domestic medical equipment has gradually broken through many technological barriers and has basically achieved import substitution. In the next 10 years, more innovative medical devices will form industrial resonance based on improved technological maturity and import substitution. Innovative drugs: Domestic innovative drugs have gradually entered the harvest period. CXO can be called the business card of China's manufacturing in the pharmaceutical industry, with strong international competitiveness. From the perspective of global market share, China has huge upward space and the ability to undertake.

　　Consumption and aging:China's medical services have both rigid demand and consumption upgrade characteristics; the sudden COVID-19 epidemic has once again brought the vaccine industry into the public eye, bringing opportunities for excellent companies in this field; the concentration of leading offline pharmacies and online companies is expected to continue to improve, and both will have broad space and opportunities in the future; medical beauty integrates medical and consumption attributes, and is a track with high barriers to entry and high ceilings.

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