2022 inventory: A-share medicine and equipment fell top 30! CanSino, Gan & Lee Pharmaceutical, Kailaiying...

Chunjiang plumbing "stock" prophet, stock volatility has always been the wind vane of the market.

Since July last year, the pharmaceutical sector has been bearish in the primary and secondary markets, and the spreading cold has been full of mourning.

The confidence of the primary and secondary markets has collapsed, and the pharmaceutical industry has ushered in the pain of supply-side reform.

Since the beginning of 2022, the pharmaceutical industry has fallen by more than 21%, and the industry has fallen out of the top 20.

From the perspective of the pharmaceutical sub-industry, all sub-industry sectors fell across the board, and none of them were spared.

What are the top 30 declines?

The "sword of Damocles" hanging above the heads of enterprises with "centralized procurement" + "medical insurance negotiation", coupled with the deepening trend of domestic involution, and the frequently frustrated journey to the sea, many enterprises have bitterness to say.

As of December 27, the A-share market accounted for the majority of companies that declined.

In the decline ranking, the top 30 companies have basically fallen by around 50% year-to-date, which can be described as a slash, far exceeding the average decline in the pharmaceutical industry.

If calculated by the circulating market value, the cumulative decline market of these 30 enterprises this year reached 196.4 billion yuan, with an average decline of 6.5 billion yuan each.

Among the top 30, there are 10 biotechnology companies, 8 western medicine companies, 3 traditional Chinese medicine companies, and 9 healthcare equipment.

In the past few years, the rise of various emerging therapies such as PD-1, PD-L1, biantibody, ADC, and CAR-T has once made biomedicine stand in the spotlight.

Nowadays, how fierce it is at high tide, how deserted it is when it is low tide. The biomedical sector is left in the limelight.

The same is true of healthcare equipment, which was thought to be a value depression, and after the collective procurement pierced the bubble, it came and went in a hurry.

It seems that on the whole, only the sub-section of traditional Chinese medicine has slightly less damage, thanks to the support of policies, but whether the future of traditional Chinese medicine can support the sky depends on whether the "modernization" and "internationalization" of traditional Chinese medicine can be achieved.

Table 1 Summary of the top 30 A-share declines in 2022

Once a king, life is not good

Among these 30 companies, there are some well-known "star enterprises", such as CanSino, Gan & Lee Pharmaceutical, Kailaiying and so on.

CanSino, once a shining "red star" of the new crown vaccine, once hit a new high since its listing during the session, and its stock price reached 798 yuan per share. Compared to its all-time high, the stock is down nearly eighty percent in price.

Since the beginning of this year, although the stimulation of the third and fourth doses of the new crown vaccine has come out of a small climax, it is always difficult to hide the decline.

The slowdown in global vaccination rate, reduced demand for vaccines, price adjustments of vaccine products and signs of impairment led to a sharp decline in performance.

The risk of being highly dependent on a single product is vividly expressed in CanSino.

On the other hand, the adenovirus vector technology used by CanSino has gradually lagged behind competitors in research and development, and the capacity to expand the production capacity of various vaccines has also been limited.

Single product overdraft, stock price plummeting, and technical doubts have become CanSino's intertwined stories, can it achieve "vaccine first" in the future? It depends on their choice.

The second, typical case is Gan&Lee Pharmaceutical.

As the boss of domestic insulin and the "pancreas" of the capital market, Gan&Lee Pharmaceutical's stock price performance this year is not ideal.

What's more, after more than 20 months of such a downward momentum, the stock price still shows no obvious signs of rebounding.

On the one hand, subject to the rise in the cost of sales ratio, Gan&Lee Pharmaceutical has always been proud, which is comparable to Moutai's high profitability has fallen sharply this year, on the other hand, the centralized procurement of insulin "big killer" has strangled the imagination of profitability.

High valuations are either supported by high-growth earnings, or stimulated market nerves by telling "stories" and speculating concepts, while low growth rates and no new stories, this "real hammer" will break the investment mood.

Performance, valuation, logic, this line, interlinked, without a link, it is difficult to unblock.

The third typical case is Kaileying.

Kaileying is the leader of domestic small molecule CDMO, and it seems that several orders of more than 1 billion yuan in succession cannot "save" Kaileying's stock price.

It is rumored that Kaileying relies on large orders to get out of the circle, but because of Gülen, he fell off the altar, but the more important reason is that the valuation is too high and CXO competition is becoming increasingly fierce.

Under the background of drug policy reform gradually entering the "deep water area", pharmaceutical companies continue to increase innovation and development, and gradually realize that the path of relying solely on CXO will not work, while CXO continues to increase investment in the early stage, but the input-output ratio is a little confused, and there will be a collective killing and falling as soon as there is a wind.

How to consolidate the leading position in the industry and realize the dual circulation at home and abroad in the context of the unstable international environment is what Kailaiying must think about and solve.

Where will pharmaceutical companies with falling stock prices go?

Short-term stock prices rise and fall by sentiment, but long-term trends are generally supported by fundamentals.

The fundamentals of a company are sales performance and profit expectations.

In the current policy environment, the decline in drug prices caused by a variety of factors has a direct impact on enterprises is a decline in sales revenue growth or even negative growth.

Drug prices have repeatedly declined, and in the absence of a significant increase in sales, the company's operating income is bound to decline.

With the rise of labor costs, raw materials and other costs, can pharmaceutical companies only rely on compressing costs to achieve continuous growth in net profit?

From an intuitive point of view, in the face of price reduction pressure, the most direct response for pharmaceutical companies is to reduce costs. However, in doing so, the quality and yield of the product cannot be guaranteed, which will only form a vicious circle. This is not the fundamental solution to the problem.

From the similar development history and development experience of the US pharmaceutical industry, not only to reduce costs, but more importantly, to increase the drug research and development investment of pharmaceutical companies, and obtain higher revenue and profits by accelerating the continuous listing of new varieties, which is the cure for pharmaceutical companies to solve the declining drug prices.

As the Queen of Hearts in Alice in Wonderland says: You have to run hard to stay where you are.

That's the game pharmaceutical companies have to face.