Under the epidemic situation in 2020, the pharmaceutical industry has obvious comparative advantages, and its financial performance and market income are in the forefront. As a rigid demand in domestic demand, medicine is "the industry under the spotlight". In 2021, we propose to pay attention to the post-harvest "medical devices", "medical services + self-expense consumption", "innovative drug industry chain" and other races.

Review of 2020: medical year, ups and downs

Affected by the epidemic in 2020, operating income in the first three quarters increased by 3.55% compared with the same period last year, net profit belonging to shareholders of listed companies increased by 26.53%, non-net profit increased by 29.53% over the same period last year, and the endogenous growth of most traditional white horse companies remained robust.

Since the beginning of 2020, the pharmaceutical sector index has risen 46%, outperforming the Shanghai and Shenzhen 300 index by 25 percentage points, ranking fifth among 29 first-tier industries.

After the drug reform in 2015, the share prices of enterprises represented by innovative drugs and medical devices have been singing all the way, rising much higher than the CSI 300 index in 2020. However, the pharmaceutical sector has gradually entered a period of adjustment since August.

From a fundamental point of view, the pullback of the pharmaceutical industry since August has nothing to do with fundamentals, there is no substantial negative policy, and the performance and fundamentals in the second and third quarters are good. The essential reason for the medical pullback is the high valuation and the large impact of the first medical device consumables collection policy. But we know that the difficulty of medical device collection is much higher than that of drug collection, and the stock price affected by medical device collection policy is much lower than that of drug collection, and the rise in the pharmaceutical market next year may be dominated by market repair.

Looking forward to 2021: looking for opportunities for differentiation

Medicine is a "rigid demand in domestic demand". We believe that medicine involves the danger of human life and becomes a demand that cannot be delayed for too long. Q4 and next year will continue to rebound, and the performance recovery is expected to be further clear. outstanding comparative advantages in the consumer industry.

There is a better chance that the pharmaceutical sector will be "bottomed out" + "structural market" in 2021-there is still room for a small correction in valuation after just experiencing a wave of large-scale market.It is suggested that we should pay attention to "medical service + self-expense consumption", "innovative drug industry chain", "medical device" and "vaccine".

（1）Medical Services +At one's own expense

The consumer medical sector is the health insurance and immune sector, and most varieties are negatively affected by the epidemic in the first half of this year, and the high performance growth next year is determined.The bargain-hunting layout includes not only Ayre Ophthalmology, Hagia Medical, Jinxin Reproduction in medical services, but also Internet medicine JD Health, Alibaba Health Information Technology and Ping An Healthcare And Technology.

Pay attention to out-of-insurance varieties in out-of-pocket medical care, such as our military biology, self-paid vaccine CANSINOBIO, Changchun high-tech and so on.

（2）Create new drugs and industry chain

Create new drug "water sellers"-although many of these enterprises suffered the impact of the epidemic in the first quarter, the long-term development trend remained unchanged, and the performance accelerated obviously in the second half of the year. It is recommended to pay attention to the large market capitalization leaders (such as Wuxi Apptec, Tigermed, Wuxi Biologics) and companies with outstanding performance in the subdivided track, such as Pharmaron Beijing Co., Ltd.* and Kellein.

Big Pharma-- Hengrui Pharmaceutical, Sino Biopharmaceutical and CSPC Pharmaceutical, which have systematic advantages in R & D, market access, sales and other aspects, are gradually showing the advantages of the whole industry chain, opening the gap with the follow-up enterprises. This kind of company is still the allocation variety of investor bottom position type. Emerging Biotech company-some products are expected to have the best of its kind, such as INNOVENT BIO, Junshi Bio, Nuocheng Jianhua, Kang Fang Bio and so on.

（3）Medical equipment of high-growth track

In share An over the past decade, the medical device subsector has outperformed the SW pharmaceutical biology sector and the chemical pharmaceutical subsector. In addition, despite the impact of the epidemic in 2020, medical device companies' income in the first half of the year grew by 48%, net profit by 122%, and non-return by 143%, making it the best performance of all sub-industries.

Compared with drugs, medical device products have faster iteration, shorter R & D cycle, slower change of original technology, mainly improved innovation, pay more attention to the engineering and medical application of mature technology, and the patent cliff phenomenon is not prominent.Mature medical device products not only need profound technology accumulation, but also need long-term market education. The use of new instruments not only requires doctors to understand and apply, but also requires doctors to have the corresponding level of diagnosis and surgical operation to ensure the effect of product application. It is also recognized that medical devices are easy to produce 10-fold bulls in 10 years, and now domestic medical device innovation belongs to the first half of development and reform, which will replicate the road of innovative drugs in the past five years.

The national collection policy was carried out in the field of coronary stent in 2020, the stock price of domestic medical device sector overreacted, and the stock price will be repaired gradually in 2021. In the coming year, orthopedic consumables, balloons, staplers and other consumables are expected to gradually carry out nationwide collection of consumables.

In 2021, we should lay out the immune track collected by medical devices, medical and American consumables, domestic low-consumption materials such as biodegradable stent advanced technology, aorta, peripheral consumables, minimally invasive medicine in the field of electrophysiology, cardiac care, Huitai medical, etc.; Qiming Medical, Peijia Medical, etc., in the field of TAVR

Summary

1. Under the epidemic situation, the advantage of the pharmaceutical industry is relatively obvious, and the financial performance and market income are in the forefront. As a rigid demand in domestic demand, medicine has become a "industry in the spotlight".

2. Looking to the future, 2021 may be the medical sector "bottom" + "structural market", medical devices, some medical services and other areas may have a better year-on-year growth in 2021.