I. recent situation of the industry

This week, the Hang Seng Health Care Index closed down 0.05%, outperforming the Hang Seng Index by 0.66%. However, according to the cumulative income so far from the beginning of the year, the Hang Seng Health Care Index has substantially outperformed the Hang Seng Index by 4.45%.

According to the Fortune Healthcare Index, the top three stocks this week were Sihuan Pharmaceuticals (+ 18.66%), Sinopharm Group (+ 11.64%) and Shanghai Fosun Pharmaceutical (+ 5.70%). The top three stocks that fell were CANSINOBIO-B (- 20.01%), Rongchang Biological-B (- 10.43%) and Yao Ming Juno (- 7.048%).

According to the segment analysis, the medical device segment in the medical and health industry performed well this week, while the individual stocks of innovative drugs and pharmaceutical outsourcing performed differently.

II. Views of the week

On April 12, the Ministry of Finance issued the announcement on the quality Inspection of Accounting Information of the Ministry of Finance of the people's Republic of China (No. 40), which formally announced the results of the quality inspection of accounting information in pharmaceutical enterprises. The results showed that 77 pharmaceutical companies generally used false invoices to obtain funds for external use and other violations, of which 19 medical and pharmaceutical enterprises were subject to administrative penalties ranging from 30,000 yuan to 50,000 yuan.

On April 15, the national fifth batch of collected varieties was notified by the catalogue, involving 60 varieties and 207 standards. Compared with the 45 varieties purchased in the fourth batch before, the scope of drugs involved in this round of volume procurement has been further expanded, with the largest number of varieties and specifications in history. In terms of specific varieties, antibiotics account for a high proportion in this list, involving 30 standards; tumor drugs include gemcitabine, paclitaxel, docetaxel and so on. Among them, AstraZeneca PLC (AZN.L) is the foreign pharmaceutical company with the largest variety of finalists, Zhengda Tianqing of Sino Biopharmaceutical (1177.HK) is still the "big family" of this collection, and Hengrui Pharmaceutical (600276.SH) has 4 injection varieties included in the fifth batch of collection varieties.

Tumor electric field therapy has made positive progress in the treatment of lung cancer. Zai Lab Limited-SB (988.HKterZLAB.O) has rights and interests in Greater China. On April 13, NOVOCURE (NVCR.O) announced that its tumor Electric Field Therapy (TUMOR TREATING FIELDS,TTF) has made positive progress in critical Phase 3 clinical trials for patients with non-small cell lung cancer.

The Independent data Monitoring Commission (DMC) recommended that the clinical trial continue after an interim analysis of data from 210 patients. At the same time, DMC said it is recommended that the number of participants in the control group be reduced to 276 and the follow-up time be reduced to 12 months. At present, Zai Lab Limited-SB has won the development rights of NOVOCURE tumor electric field therapy in Greater China.

The innovative treatment model was also approved by China's State Drug Administration last year, becoming the first approved treatment for glioblastoma in mainland China in 15 years.

III. Investment suggestions

This time, the relevant regulatory authorities of the Ministry of Finance have found out the causes of inflated drug prices, deterred pharmaceutical enterprises from illegal acts such as selling with money and coaxing up drug prices, and ensured the smooth progress of major reforms such as centralized volume procurement of drugs.

The national collection is developing towards normalization and marketization, and the pattern reshaping of generic drugs will continue to be carried out. The collection and mining policy of the national level has been relatively solidified, and the impact on the secondary market has been gradually weakened. Under the premise of the continuous growth of health insuranceWe firmly believe that innovation and demand will still bring new tracks and investment opportunities.

IV. Risk hints

Product research and development failed or went public less than expected; regulatory approval and commercialization were not as expected.

V. Appendix

Medical and health sector segment leader this week's performance and valuation.