Highlight: 3 major trends in the special raw material medicine industry report

This report selects 9 specialty APIs with the highest market attention, including Stellite, Xianju Pharmaceutical, Huahai Pharmaceutical, Tianyu, Minova, Prologue, Aoxiang Pharmaceutical, Tonghe Pharmaceutical, and Fuxiang Pharmaceutical. As representatives of enterprises, we can see the performance and development trend of characteristic APIs from the 2020 semi-annual report.

The profitability of specialty API companies continued to improve. The average revenue growth rate of the 9 companies reached 24.42%, far exceeding the growth rate of chemical preparations (-10.88%) and the overall pharmaceutical (-2.29%) industry; the average net profit growth rate reached 53.97%, which was much higher than chemical preparations (-8.89%) ) And the overall pharmaceutical industry (10.62%). The boom in the specialty API industry is mainly due to the increase in industry concentration and the continuous growth of downstream demand. 2015-2020H1 average gross profit margin was 38.91%, 42.05%, 43.08%, 41.69%, 46.14% and 46.64%, and average net profit margin was 12.66%, 14.94%, 12.85%, 10.66%, 15.43% and 19.76%, respectively Capability shows a trend of continuous improvement.

Featured API companies continue to promote the integration of API+ preparations. In 2020H1, Xianju Pharmaceutical, Huahai Pharmaceutical, and Puluo Pharmaceutical will account for 50%, 48%, and 9% of the preparation revenue respectively. However, due to the impact of the epidemic in the first half of the year, sales of some preparations declined, and the preparation revenue of Xianju Pharmaceutical and Prologue fell by 6% and 37%, respectively. However, Huahai Pharmaceutical benefited from the increased volume of domestic bid-winning products, and its preparation revenue increased by 27%. We believe that the "Huahai Model" will lead specialty API companies to continue to promote the integration of API + preparations. Under the background of volume procurement, the bargaining power of specialty API companies has improved, and they have the initiative to extend downstream. Priority should be given to companies that have a leading formulation layout and have obvious synergies with original specialty API varieties.

The transformation of specialty API companies to the CMO/CDMO industry is another major trend. From the perspective of 2020H1, the characteristic API companies that have clearly laid out their CMO/CDMO business include Tianyu Co., Ltd., Minova, Prologue Pharmaceutical, Aoxiang Pharmaceutical, Tonghe Pharmaceutical, etc. Among them, Prologue Pharmaceutical, Aoxiang Pharmaceutical, and Mei Novartis's revenue is relatively large, with 552 million yuan, 50.74 million yuan and 50 million yuan respectively, all of which maintained rapid growth. In the context of the continuous expansion of the global CMO/CDMO market and the continuous transfer of industries to the country. The long-term accumulation of technology, production capacity, and EHS management capabilities of specialty API companies are their transformation advantages. It should be noted that the transformation of specialty API companies to CMO/CDMO business is a transformation from a purely product-oriented company to a service-oriented company, and higher requirements for its management capabilities will be put forward. We suggest paying attention to specialty API companies with abundant technical reserves and strong management capabilities.

Continue to be optimistic about investment opportunities in the specialty API industry. In the long run, aging, global industrial chain transfer, patent cliffs, etc. have ensured stable demand growth, and domestic high-quality enterprises will deeply participate in global market competition; in the short- and medium-term, high environmental protection pressure and improvement in quality standards are accelerating industry concentration. Policies such as mass procurement and MAH are conducive to the transformation of specialty API companies into preparations and CMO/CDMO business. Stellite and Fuxiang Pharmaceutical are recommended, and Huahai Pharmaceutical, Xianju Pharmaceutical, Prologue, Minova, Tianyu, Tonghe Pharmaceutical, Aoxiang Pharmaceutical, etc. are recommended.


risk warning

1) R&D risks: R&D itself is affected by various factors such as funds, policies, capabilities, etc., and there may be less than expected.

2) Risk of deterioration of the competitive landscape: Featured API companies usually have a good competitive landscape, but with the prolonged product life cycle, they may face the emergence of new competitors, which will worsen the competitive landscape and reduce profitability.

3) Safety and environmental risks: The specialty API industry is a highly polluting industry. With the continuous improvement of national environmental protection standards, related companies may suspend production due to environmental issues; in addition, APIs may be dangerous in the production process Sex, there is the possibility of a safety accident.