The two main lines that Debon Securities is bullish on are: improving the proportion of varieties in total medical insurance expenditure; enterprises with global competitiveness in the export chain. The sub-fields include innovative drugs, traditional Chinese medicine, active pharmaceutical ingredients, and some medical instruments.
Intelligence Financial APP learned that Debon Securities released a research report stating that large chain stores are more advantageous in supply chain management and compliance management and benefit from strong supervision. The bank recommends focusing on stocks that have been oversold in the early stage, such as Dashenlin, Yixintang, Jianzhijia, Lbx Pharmacy Chain, etc., and maintaining a focus on industry leaders with strong management and regulatory capabilities, such as Yifeng Pharmacy Chain. With the continuous introduction of policies to encourage innovation and the recovery of corporate performance, the bank is bullish on the structural market of the pharmaceutical industry. The two main lines are: improving the proportion of varieties in total medical insurance expenditure; enterprises with global competitiveness in the export chain. The sub-fields include innovative drugs, traditional Chinese medicine, active pharmaceutical ingredients, and some medical instruments.
Monthly investment portfolio: Hutchmed (China) (00013), Apichope Pharmaceutical (300723.SZ), Pacific Shuanglin Bio-Pharmacy (000403.SZ), United Imaging Medical (688271.SH), Jiangsu Yuyue Medical Equipment & Supply (002223.SZ).
Debon Securities' main points are as follows:
Retail channel price supervision is becoming stricter, and the drug price comparison system has been launched successively.
Since 2023, the National Medical Insurance Bureau has begun to promote the price publicity and monitoring system for designated retail pharmacies, and hospital, retail offline pharmacies and online medical platforms for the same brand and type of drugs under multiple channels to curb the price difference in the market. Many places have launched drug price comparison systems to carry out price management. Only the price comparison but no price limit is expected to promote price transparency in the retail channel and help increase the concentration of industry leaders.
Only price comparison without price limit is expected to promote price transparency in the retail channel and help increase the concentration of industry leaders.
Through combing various local policies, it can be found that there is no clear price limit for the price of retail pharmacies in the current implementation of national and local policies. Instead, the prices are made more transparent through a networked price comparison, which is convenient for patients to choose. Taking the Shenzhen medical insurance price comparison system as an example, the bank can see that the prices of small pharmacies and family pharmacies are generally higher, while the prices of large chain pharmacies are generally lower. The bank believes that due to the strong supply and management capabilities of large chain pharmacies, their prices are lower, and the policy of networked price comparison is expected to have a smaller impact on large chain pharmacies and a greater impact on small pharmacies and family pharmacies.
Retail channels have their unique value, but strengthening supervision is also the general trend.
At the current stage, the proportion of payments from the overall account to pharmacies is relatively low, and clear drug price limits will not significantly reduce the payment pressure on the overall account. Meanwhile, it may affect the drug choices of many patients. Retail channels have their unique value. However, as payments from the overall account to pharmacies gradually increase, the National Medical Insurance Bureau will also strengthen supervision of drugs used within the medical insurance system.
The pharmacy sector has oversold, and its value has been highlighted.
In the past month, the stock prices of Yifeng Pharmacy Chain, Dashenlin, Lbx Pharmacy Chain, Yixintang, Jianzhijia, and Shuyu Pingmin have fallen by 35.0%, 27.9%, 26.4%, 27.7%, 35.9%, and 26.6%, respectively. The valuation of the sector is already at a low level in the past year. The valuation of some pharmacy companies has been at the same level as or lower than that of circulation companies, but the growth potential and profitability of the industry are better than those of circulation industry, and their value has been highlighted.
Risk warnings: policy risks in the industry; increased competition risks from the supply side; risks of market demand falling short of expectations.