In 2025, CITIC Construction Investment will continue to be optimistic about high-quality innovative pharmaceutical companies and actively pay attention to cutting-edge pharmaceutical device technology.
The Zhitong Finance App learned that CITIC Construction Investment released a research report saying that looking ahead to 2025, it will continue to be optimistic about high-quality innovative pharmaceutical companies and actively pay attention to cutting-edge pharmaceutical technology. Global liquidity is expected to continue to improve, national policies encourage industrial innovation, and the bank continues to be optimistic about high-quality innovative pharmaceutical companies with global competitiveness. Main line of going out to sea: Focus on the long term, not afraid of short-term fluctuations. In the long run, the pharmaceutical industry is expected to break out of large global companies, but investors also need to fully anticipate the challenges posed by going overseas. The main line of marginal change: Focus on policies and opportunities to improve supply and demand relationships. Main line of integration: Focus on the equipment, traditional Chinese medicine, pharmaceutical sectors and central state-owned enterprises. The proposal focuses on the device and traditional Chinese medicine industry, some pharmaceutical companies, and central state-owned enterprises.
CITIC Construction Investment's main views are as follows:
Industry review and outlook
Reforms have entered the deep-water zone, and high-quality growth has become the norm. Judging from the various industry policies that have been introduced in the past few years, various reform measures in the design of the “Three Medicines Linkage” top-level system have been gradually implemented. Reform policies in the pharmaceutical sector have entered the normalization stage. The most noteworthy incremental policy in the health insurance field is the reform of establishing diversified and complex medical insurance payment methods. The medical sector is about to usher in “deep-water” reforms such as the remuneration system and hierarchical diagnosis and treatment. Overall it was in line with expectations. The bank is optimistic about investment opportunities in the pharmaceutical industry in 2025, and suggests focusing on new volume (innovation, overseas expansion, marginal changes) and industry integration opportunities.
Horizontal comparison: Looking ahead to 2025, moderate growth is expected
Before 2022, the pharmaceutical manufacturing industry ranked among downstream industries with statistics from the National Bureau of Statistics. The growth rate fluctuated somewhat in the past two years due to base figures and the impact of public health events on medical demand. In terms of revenue side performance, the pharmaceutical manufacturing industry's revenue growth rate in 2020 and 2021 was 4.5% and 20.1%, respectively, leading the revenue growth rate of industrial enterprises and the growth rate of manufacturing revenue during the same period. The profit side fluctuated more than the revenue side. The performance in 2020 and 2021 was significantly better than the overall level of industrial enterprises. Under the base effect, profit side growth fluctuated greatly from 2022 to 2023. In a situation where the industry base is digested, demand-side certainty and policy expectations are stable, the bank expects the industry to achieve moderate growth in 2025 and move towards high-quality development as a whole.
Valuation is at the bottom, and institutional holdings are below the historical average
The industry valuation center increased significantly in 2019-2021. Since 2021, the industry valuation level has been adjusted. Since 2022, the valuation has entered the historical bottom range. The latest valuation historical fraction is 27%. Although it has recently been repaired, it is still at an all-time low. As of 24Q4, the pharmaceutical holding ratio of public funds was 8.18%, and the shareholding ratio after excluding index funds and pharmaceutical funds was 2.77%. The holding ratio declined slightly from month to month. Looking at the longer term, after excluding index funds and pharmaceutical funds in 2011Q1-2024Q4, the average pharmaceutical holding ratio was 7.58%. Currently, the non-pharmaceutical fund holding ratio is lower than the historical average. The shareholding funds of some innovative drugs and CXO companies increased significantly in 24Q4, and the proportion of public fund holdings in segments related to the boom in the pharmaceutical industry, innovation and transformation, and policy inclination is expected to increase in the future.
