According to the research report released by Huaxin Securities, with the support and attention of domestic policies, the planning of plasma stations such as the "14th Five-Year Plan" has gradually been implemented, and the construction of plasma stations has accelerated. China's plasma collection scale will continue to increase, and plasma collection in 2023 will exceed 12,079 tons, an increase of more than 18.6% compared to 2022. Blood products are essential drugs and the entire industry is licensed. This determines its natural characteristics of high policy barriers. The core factors are the scale of plasma collection, the comprehensive utilization rate of plasma, and the profitability of plasma, with plasma collection directly determining the size of the enterprise. The number of existing varieties and ongoing products is an important factor in judging the comprehensive utilization rate and profitability of plasma. As the scale effect of leading enterprises gradually becomes prominent, industry consolidation will continue to accelerate, and the concentration of the blood product industry is expected to further increase.
The main viewpoints of Huaxin Securities are as follows:
Blood products have the characteristic of high policy barriers. With the acceleration of industry mergers and acquisitions and the prominent scale effect of leading enterprises, the concentration of the industry is expected to further increase.
Blood products are essential medicines and the entire industry is licensed. This determines its natural characteristics of high policy barriers. In recent years, the merger and acquisition of the blood products industry in China has accelerated, and the concentration of the industry has continued to increase. There are only 28 blood product companies in China. The current competition pattern of the industry is dominated by Tiantan Biological Products, Shanghai RAAS Blood Products, Thai Biological Group, Hualan Biological Engineering, and Pacific Shuanglin Bio-Pharmacy. As the scale effect of leading enterprises gradually becomes prominent, industry consolidation will continue to accelerate, and the concentration of the blood product industry is expected to further increase.
The domestic blood products industry is in a period of stable development, and there is ample room for the growth of blood products in the future.
China's blood products industry is in a period of stable development. According to statistics, the market size of the domestic blood products industry in 2016 was RMB 26.8 billion. Since then, the industry has continued to expand, and by 2022 it will reach RMB 51.2 billion, with a compound annual growth rate (CAGR) of 11.39% during this period. Compared with foreign countries, China's per capita usage of blood products is far lower than that of developed countries. The per capita usage of albumin, immune globulin, and factor VIII is about 50%, 10%, and 7% of that in the United States, respectively. There is still ample room for improvement in the per capita usage of all varieties in China. In addition, foreign countries can produce more than 20 products, while China's main blood product companies can only produce 15 products. There is still a gap with foreign countries in terms of plasma utilization rate, and there is still a market gap for new products. In terms of indications, the application of domestic blood products such as immune globulin is relatively limited, and the scope of indications needs to be expanded. Overall, there is still ample room for the growth of China's blood products industry.
Domestic policy supports the supply side, and the continuous growth of domestic demand driven by the epidemic will drive the long-term development of the industry with the synchronous improvement of supply and demand.
On the supply side, with the support and attention of domestic policies, the planning of plasma stations such as the "14th Five-Year Plan" has gradually been implemented, and the construction of plasma stations has accelerated. China's plasma collection scale will continue to increase, and plasma collection in 2023 will exceed 12,079 tons, an increase of more than 18.6% compared to 2022.
On the demand side, mainstream products such as albumin and immune globulin have long been in short supply in China, and the sales of various products at the hospital end have continued to increase. Sales data from sample hospitals in China show that the sales of albumin, immune globulin, recombinant factor VIII, and fibrinogen during the period from 2019 to 2023 have CAGR respectively reached 12.0%, 13.8%, 15.8%, and 22.4%. After the epidemic, the sales of blood products continue to grow, indicating that the epidemic has made doctors and patients qualitatively leap in their understanding of blood products. The synchronous improvement of the supply and demand sides will drive the long-term development of the blood product industry.
The collection policy is moderate, and the successive approval of high value-added products will help optimize the product structure and enhance business profits.
In terms of terminal prices, although the blood products have the scarcity attribute and the current domestic production capacity is insufficient, the price reduction of blood products has been generally mild despite three rounds of centralized procurement. At the same time, with the successive approval of high-gross margin products such as domestically produced recombinant factor VIII and 10% high-concentration immune globulin, it will help optimize the existing product structure, improve the comprehensive utilization rate of plasma, and enhance business profits.
Recommended targets: Pacific Shuanglin Bio-Pharmacy (000403.SZ), China Resources Boya Bio-Pharmaceutical Group (300294.SZ), and it is recommended to pay close attention to Tian Tan Biological Products (600161.SH), Shanghai RAAS Blood Products (002252.SZ), Hualan Biological Engineering (002007.SZ), Shen Zhen Weiguang Biological Products (002880.SZ), Beijing Bohui Innovation Biotechnology Group (300318.SZ), and Shenzhou Cell (688520.SH).
Risk Warning: Risks of plasma station approval and construction not meeting expectations, risks of blood product sales not meeting expectations, risks of product research and development and listing not meeting expectations, risks of product safety, policy risks such as medical industry centralized procurement, and risks of recommended company performance not meeting expectations.