February 2020 Monthly Tracking Report of Pharmaceutical Biological APIs

In February 2021, the cost-effectiveness of the pharmaceutical and biological raw materials sector will be highlighted. In the short term, it is recommended to pay attention to the vitamin replenishment cycle and the continuation of the heparin boom.

Bulk APIs: The prices of various vitamins have bottomed out, ushering in opportunities for replenishment of stocks. The prices of intermediates such as 6-APA, 7-ACA and sulphur red in Antibiotics all rebounded last year, and are now basically back to the previous average; the market quotations of various vitamins are generally stable and strong, with varying degrees of increase , Mainly due to the market driven by replenishment in the new year. Among them, large varieties such as VA and VE are worthy of attention. Due to a supply gap in the expansion of BASF's production line, VE prices have rebounded; antipyretic and analgesic and hormones and other bulk APIs are not significant Variety.

Featured raw materials: the heparin boom cycle is expected to continue. From the known data, the price of sartan has returned to the average price of the industry before the impurity incident. At present, as some manufacturers are still actively expanding their production capacity, follow-up price trends still need to continue to pay attention to the actual supply of the industry and channel inventory; the price of heparin is basically It was the same as last month. Since the second half of last year, the overall oscillation has been upwards. The main reason is that the pig cycle has recovered. The impact of vaccine toxicity and other factors is lower than market expectations. It will bring a new round of investment opportunities and will further extend the prosperity of heparin. Heparin prices are still expected to hover at a high level.

The forecast season of the first quarter is coming, and the market of the API sector is expected to continue. In February 2021, the sector rose and fell by 6.3%, which significantly outperformed the Shenwan Pharmaceutical Index. Due to the extreme deduction of the “core asset” market a year ago, the price-performance ratio of raw materials has gradually become prominent, the proportion of market allocation has increased, and the sector’s valuation has Moving upward, the valuation of the API sector (price-earnings ratio, TTM overall method, excluding negative values) was 37.3 times, and the valuation increased by about 5%.

In the short term, we will pay attention to vitamin supplement inventory and the continuation of the heparin boom. In the long term, we are optimistic about the significant growth of raw materials as a major country's high-end manufacturing. Davis is expected to usher in a double-click. Through monthly tracking, in the short term, we suggest to pay attention to two opportunities in the vitamin replenishment cycle and the continuation of the heparin boom. Related targets such as Zhejiang Medicine and Jianyou Co., Ltd.; in the long run, China's API industry is one of the core directions of China's new pharmaceutical manufacturing. It has the dual growth potential of upgrading itself and undertaking the transfer of the global industrial chain. The logic of the iterative development of the higher-end innovative drug CDMO is clear. The moat is constantly improving, and the transition from a cyclical industry to a growth industry, and 2020 is a new development in the API industry. During the intensive landing period of production capacity construction, 2021 is expected to start to contribute profits. Therefore, we are optimistic that the API industry will usher in Davis Double-click, and give industry recommendation ratings. It is recommended to pay attention to the related targets of API New Manufacturing Upgrade (CDMO) logic such as Tianyu Shares, Minova, Prologue Pharmaceutical, Aoxiang Pharmaceutical, Jiuzhou Pharmaceutical, etc.

Risk warning: risk of raw material drug price fluctuations, less than expected profits, risks of sudden suspension of production and rectification, industry policy risks, and systemic risks.