"Troika" Qifali medical equipment investment opportunities soared

On February 23, the Ministry of Health, in conjunction with five other ministries and commissions, issued the “Guiding Opinions on the Pilot Reform of Public Hospitals”. The Ministry of Health also issued the “Notice on Determining the Pilot City of Relevant Public Hospital Reform and Related Work”. At this point, the reform of public hospitals, which is also a key point in medical reform, has finally begun.

Hu Yuan, an analyst at Jinyuan Securities, told reporters that in the pilot reform of public hospitals, the explanation for strengthening medical services means that medical devices will be one of the key points. The ratio of devices and drugs in the global market is 1:1, while the ratio of devices and drugs in China is about 1:10. The structure of medical and pharmaceutical inputs in medical institutions is unbalanced, and the space for medical devices is very large.

Hu Wei analyzed that under the impetus of the new medical reform of 850 billion government investment and the establishment of a primary health care system, the demand for medical devices in the primary health care market is expected to increase by 100 billion yuan in 2009-2011; in the downturn of the medical device industry in 2009 Exports still maintain positive growth year-on-year. In 2010, medical device exports are expected to return to the level of growth before the financial crisis. In December 2009, the State Food and Drug Administration issued the "Quality Management Regulations for Medical Device Production (Trial)", which will promote the market. Tilting to large-scale competitive enterprises, the 2010 performance of medical devices under the troika is expected to accelerate.

Medical reform and expansion

Compound growth rate is over 25%

The trend of population aging determines that the demand for medical devices will grow rapidly in the next 10-15 years. The domestic population has entered an ageing society, and the cost of health care will continue to grow. It is estimated that between 2010 and 2020, the oldest population will grow the fastest 10 years, and the total number of elderly people will reach a peak around 2035. Older people need more medical expenses. The average per capita expenditure of the elderly in Japan, Canada and other countries is about 2 to 5 times that of other people. The average per capita expenditure of the elderly in China is about three times that of other people.

Relevant data show that medical and health investment increased from 458.7 billion yuan in 2000 to 119 billion yuan in 2007, with a compound annual growth rate of 37%, much higher than GDP growth rate, and is further accelerating.

The trend of population aging, urbanization, and the adjustment trend of medical and pharmaceutical structures (increased proportion of medical equipment and services, and the decline in the proportion of drugs) have locked in the rapid growth of medical device demand in the next 10-15 years. The advancement of science and technology in the upstream industry and the improvement of the level of basic industrial manufacturing have laid the foundation for the development of the medical device industry. Since 2000, the compound annual growth rate of the medical device industry has been 15% to 20%. In 2009, the output value of medical devices may reach 100 billion yuan, and Hu Wei expects a compound growth rate of more than 25% in the next three years.


Still achieving a surplus in the financial crisis

Qi Lu Securities industry analyst Lu Guoqi said that the global tariff barriers of medical devices are low, and the characteristics of advanced technology in the medical device industry are very obvious, which determines that the market competition of medical devices is a global competition. In 2008, the global medical device market sales revenue reached 336 billion US dollars, an increase of 12%.

After years of development, China's medical device manufacturing enterprises have gradually increased their position and market share in international competition. With the rapid improvement of domestic manufacturing level and R&D strength, coupled with the preferential policies of high export tax rebates, Chinese enterprises have already gained competitive advantages in many fields, and their market share has gradually expanded. In 2006, China achieved a trade surplus in medical equipment international trade, and the trade surplus in the following years showed an expanding trend.

After the outbreak of the financial crisis, in the case of a large negative growth in exports, the export of medical device products in 2009 still maintained a positive year-on-year growth. Under the strong expectation of the global economy to recover, medical device exports are expected to take the lead in the downturn and gradually return to the level of growth before the financial crisis.

Policy Support

Demand is expected to be released centrally

Lu Guoqi told reporters that in recent years, the introduction of a series of national guidelines has brought new development opportunities for the medical device industry. In 2006, the National Development and Reform Commission proposed in the "Guidelines for the Eleventh Five-Year Development of the Pharmaceutical Industry" that "the medical device products and their key components should be developed step by step."

While vigorously supporting the development of the industry, the state has proposed a number of policies to regulate the medical device industry, which plays an important role in promoting industry development and industrial structure upgrading. A number of policies have been proposed to regulate the medical device industry, which plays an important role in promoting industry development and industrial structure upgrading. In December 2009, the State Food and Drug Administration issued the "Quality Management Regulations for Medical Device Production (Trial)" to strengthen the supervision and management of medical device production.

In the "Notice on Determining the Pilot City of Public Hospital Reform and Relevant Work in the Public Hospitals" issued by the Ministry of Health this week, it is also explicitly proposed to strengthen the medical services of public hospitals, which means that the medical equipment of hospitals at or below the county level in China will Further improve the package.

Hu Wei believes that the huge investment in new medical reforms will accelerate the release of potential demand in the industry, especially the demand for basic medical device products in primary hospitals.

According to the new medical reform plan, 850 billion yuan will be invested in the three years from 2009 to 2011, of which 2/3 will be invested in primary hospitals. Within three years, the central government will support the construction of about 2000 county-level hospitals (including Chinese medicine hospitals). In 2009, the task of building 29 thousand township hospitals supported by the central planning was completed, and then 5,000 central township hospitals were rebuilt and expanded, with one to three in each county. Achieve health clinics in each administrative village. 3,700 urban community health service centers and 11,000 community health service stations will be built and renovated within three years. The central government supports 2,400 urban community health service centers in difficult areas.

This is a very large primary medical institution project. The first investment is to improve the infrastructure of hospitals/township hospitals/community hospitals, support the upgrading of hospital equipment in large quantities, and add equipment purchases. Among them, fixed assets investment accounts for the main part of equipment procurement, which is a one-time centralized investment, and the promotion effect on the medical device industry will be very direct. According to estimates, the average equipment gap in more than 2,000 county hospitals in China is currently 30%, and even more than 50% in the western region.

Hu Wei told reporters that the medical equipment configuration of the county and below hospitals is mainly medical X-ray machines, ultrasonic diagnostic equipment, CT machines, surgical instruments, In Vitro Diagnostic equipment and reagents (IVD), electrocardiographs and medical monitors. The types of added and configured grassroots hospitals cover the business scope of major listed companies, and listed companies generally benefit. The most prominent benefits are Wandong Medical (CT, X-ray machine), Yuyue Medical (gynecological equipment, Chinese medicine equipment and other basic medical equipment).

Investment Analysis

Industry growth and stability focus on subdivision

Lu Guoqi told reporters that by comparing the year-on-year growth rates of operating income of medical devices, Shenwan pharmaceutical bio-industry and CSI 300 listed companies, it can be found that when the financial crisis came in the fourth quarter of 2008, the growth rate of CSI 300 quickly turned negative and defensive. The growth rate of good pharmaceutical biology has also dropped sharply, but the medical device sub-sector still maintains a steady growth of 20%.

The growth rate of operating profit of the medical device industry has been maintained at around 20% in the past three years. In 2009, there was a rapid increase. It is expected that the profit growth rate in 2009 will reach 30%, and the growth of sales will bring about simultaneous profit growth. Hu Wei believes that 2010 will be the most concentrated year for grassroots hospitals. The medical device industry will continue to accelerate its growth in 2009. The average revenue of listed companies is expected to increase by 30%, and the average profit growth rate is expected to reach 40%.

According to the government budget, 2009 is the fastest growing year for primary health care investment. However, from the current point of view, the actual investment is slower than expected. Hu Wei believes that the specific implementation of the investment is delayed from half a year to one year, so basic medical care The climax of the device market will appear in 2010.

In recent years, the medical device industry has been favored by the capital market, and industrial capital and venture capital are very active. Since the second quarter of 2009, the medical and health industry has received a total of $132 million in venture capital, accounting for 20% of China's total venture capital investment in the same period, with medical devices being the most popular.

Lepu Medical (300003, closing price of 47.16 yuan) and Yangpu Medical (300030, closing price of 30.10 yuan) listed on the GEM are insulted by investors. Yangpu Medical issued a price-earnings ratio of more than 100 times. Analysts believe that the valuation of medical devices in the past two years is higher than that of the pharmaceutical industry and the CSI 300. The high growth of the industry can support a moderate premium in the industry valuation.

The industry believes that the focus is on providing a leading segment of the basic hospital configuration products. In particular, the product or market scale is actively expanding, and the company's products and listed companies that support the main configuration products of medical institutions, such as Wandong Medical, Yuyue Medical, Hongda Warp, Xinhua Medical, Lepu Medical, etc. .

News link

27 provinces completed basic drug bidding procurement

"The price of medicine has come down" is no longer just a slogan. On February 26, at the ventilation meeting on the progress of the implementation of the national essential medicine system held by the Ministry of Health, Zheng Hong, Director of the Department of Drug Policy and Essential Medicines of the Ministry of Health, revealed that in the areas where basic drug bidding was initiated, the tender price dropped by more than half. .

"According to the targets set by the Leading Group for Medical Reform of the State Council, before the end of February this year, the task of implementing the national essential medicine system in 30% of the government's primary health care institutions should be implemented." Zheng Hong said that from the current progress, the basics The progress of the drug system is orderly and sound.

According to statistics from the Ministry of Health, the 31 provinces across the country have identified areas where the basic drug system has been implemented, covering 1020 counties, including county-level cities and municipal districts, accounting for 35.7% of the national total. It involves 18,000 government-run primary health care institutions, accounting for 38.7% of the national total, of which government-run urban community health service agencies account for 92% of the national total.

It is worth noting that “27 provinces initiated and completed the procurement of essential drugs and bidding. In the areas where bidding procurement was initiated, the average price of bidding fell between 25% and 50%. For example, the average decline in Inner Mongolia was 32%, and the average decline in Anhui was 41.32%, Jiangsu average is 47.7%, Hunan is 53%.” Zheng Hong said.

When talking about how to balance the benefits of the people and the enthusiasm of the production, he said that while reducing the burden of medicine for the people, it should also leave a reasonable profit margin for the production enterprises.

Analysts believe that listed companies that win the bidding in bidding will benefit if the price of the drug is in the normal profit range of the company.

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