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Is LegiEX good? What is the main line of investment in innovative medical devices

Is LegiEX good? Since the technology started to adjust on February 26, it has been repeatedly exploring the shocks, the market is looking for the main line, and consumption and medicine have begun to take off. Today, we have quietly mixed and added stock funds to make a unified one, all of which are all medicine, and medicine in the subdivided fields of medicine is the most brilliant.

For medical treatment, there are three main lines in the short term and a strategic layout of core assets in the medium and long term. "High-growth track" includes medical devices, chain pharmacies, and testing services that have not been affected in the first quarter; "fast recovery": mainly refers to the core assets of prescription drugs and pharmaceutical consumer products that will be affected by Q1 but will quickly recover after Q2 , Consumables, vaccines; "absolute return": refers to low-value stagflation varieties absolute return varieties with asset revaluation capabilities.

Innovative medical devices are ushering in a golden development period. From the beginning of 2019, LegiEX began to conduct systematic research on the medical device industry. Since this year, the medical device industry is still hot, whether it is a leading company or a high-quality subdivision track. Leading companies, or IVD companies with increasing demand in the New Crown epidemic and emerging companies in the Science and Technology Board, have all achieved quite good performance. What triggered the hot market in the medical device industry this year, this week's LegiEX will discuss the investment logic of medical devices-why the future is the golden development period of innovative devices. From a strategic perspective, this judgment is mainly based on three major reasons. First, new demands and innovative technologies lead the industry. Second, the acceleration of import substitution and the increase in concentration have given birth to leading leaders. Third, a better financing environment and medical policies drive industry innovation. From the perspective of valuation methods, the pipeline of high-quality products in the follow-up medical device segment will also be similar to innovative drugs. The pipeline valuation method has been started. For example, Qiming Medical and Peijia Medical, which have recently been listed, have adopted the pipeline valuation method.

Innovative technologies and new demands lead the development of the industry. From the perspective of demand, the demand for more minimally invasive, more accurate, and earlier diagnostic equipment is gradually increasing. From the perspective of supply, the hospital-based "medicine-supporting" model will gradually dilute under the promotion of medical policies, with medical equipment as an important support New medical technology and medical services will gradually bloom more glory.

From the perspective of the ratio of medicine to equipment, there is still much room for improvement in the global vs China. According to the "China Medical Device Industry Development Report (2017)", as of the end of 2016, the ratio of China's per capita consumption of drugs and medical devices was only 1: 0.35, far below the global average of 1: 0.7 and even lower than that of developed countries1 : 0.98 level.

Looking ahead, innovative technologies and new demands will lead the development of the medical device industry. Import substitution and increased concentration have spawned industry leaders. In addition to the growth in demand, import substitution is another huge dividend for the medical device industry in the future. The critical points for the occurrence of import substitution are the following observation indicators: one is that the talents and technical level are up to the standard, the other is that the user's knowledge is popularized, and the third is that the channels are reached. The best way for domestic enterprises to achieve import substitution is: imported products have undergone key academic promotion, but the market share is relatively low, the concentration of domestic companies is low, import substitution has just begun, and the first echelon in the industry has not yet formed. Domestic-funded enterprises choose to enter at this time and make technically competitive products, supplemented by strong marketing and promotion capabilities, which is expected to create a brand moat. From the perspective of the sector, cardiovascular stents and monitors have been imported and replaced, and leading companies such as Lepu Medical, Minimally Invasive Medical and Mindray Medical have been born. Color ultrasound, chemiluminescence, endoscope consumables or minimally invasive consumables, orthopedic consumables, cardio-cerebrovascular consumables and other sectors, after the technology has been comparable to imported products, are currently being gradually imported and replaced, which is an important subdivision of the birth of bull stocks in the future. Related companies such as Mindray Medical, Antu Biotechnology, and New Industries of Color Doppler Chemiluminescence; Endoscopy Consumables Nanwei Medical; Orthopedics Consumables Weigao, Aikang Medical, Chunli Medical, Sanyou Medical; Qiming Medical, Peijia Medical in TAVR ; Minimally invasive medical treatment of aorta and peripheral consumables, cardiovascular medicine, etc.

Logic beyond import substitution: independent innovation. In addition to import substitution, independent innovation is also an important path for the future. Many of the innovative needs and inspiration of devices come from the clinic. The huge amount of surgery in China helps to continuously discover the innovative needs. At present, domestic independent innovative micro-innovation products are frequent. For example, the genetic testing products of Ad Bio, the intraoperative stent of Xinmai Medical, Jianfan biological blood perfusion device, the tractor of Nanwei Medical, etc.

In the future, the domestic medical device concentration is expected to continue to increase. Before 2017, the global CR20 = 54.5% and China ’s CR20 = 14.18%. With the encouragement of high-end devices in the industry norms and medical policies and the collection of low-end devices, the industry concentration It is expected to gradually improve.

High-quality medical device varieties are expected to achieve pipeline valuation. The R & D cycle of medical devices is relatively fast and the research and development risks are also low. In the future, high-quality medical device varieties may also be similar to innovative drugs and achieve pipeline valuation. For example, Qiming Medical and Peiga For medical treatment, the pipeline valuation method has already been adopted. Changes in the valuation system are expected to promote companies with Biotech attributes in the medical device sector (mainly Hong Kong stocks 18A and emerging companies in the science and technology board) to go out of new valuations, which will also drive the value of existing medical device companies' research varieties Reassess.

The pharmaceutical investment strategy consists of three main lines in the short-term and a strategic layout of core assets in the medium and long-term. From the perspective of the overall pharmaceutical sector, in the short term, investors are on the three main lines of "high growth", "fast recovery" and "absolute return". "High-growth track": mainly medical devices that were not affected by Q1 (Mindray Medical, Wandong Medical, Jianfan Bio, Yuyue Medical, Wanfu Bio), chain pharmacies (Yifeng Pharmacy, Dashenlin, ordinary people) , Yixintang). "Fast recovery": mainly refers to the core assets prescription drugs (Hengrui Pharmaceutical, Shiyao Group, China Biopharmaceuticals, Changchun High-tech) that will be affected by Q1 but will quickly recover after Q2, pharmaceutical consumer products (Panzihuang, Yunnan Baiyao), surgery Related consumables (Lepu Medical, Xinmai Medical, orthopedics related subjects, Ed Bio), vaccines (Kangtai Bio, Kang Xinuo Biological, Zhifei Biological, Hualan Biological, etc.); "absolute income": refers to the low valuation stagnation Rising varieties absolute return varieties with asset revaluation capabilities (Livzon Group, Enhua Pharmaceutical, Sinopharm, Huadong Pharmaceutical, etc.).

In the medium and long term, we need to pay attention to several strategic tracks: innovative medical devices (especially in areas where the market is growing fast and the import substitution rate in the field is still relatively low), innovative drugs (core assets of several large pharmaceutical companies , Core CRO CDMO company, some biotech, innovative vaccines), medical services (the first / largest listed company in each subdivision track), consumption upgrade (pharmacy exclusive Chinese medicine brand enterprise).