arcadepc| Medicine suddenly spread heavily! Will the Yao Ming Department welcome a turning point? US pharmaceutical companies 'contract immunity may be extended for 8 years

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Source: brokerage China author: Shi Qian

All of a sudden, big news came from the pharmaceutical industry!

Just over the weekend, the sound of adding pharmaceutical stocks suddenly grew louder! So what happened? Judging from the incident, a big piece of news suddenly came from overseas. The US legislature has amended the Act restricting Yao Ming Kant and Chinese biotechnology companies to give more time to sever ties between biological companies, Reuters reported. the bill would require American companies to end their cooperation with these companies by 2032.

According to a U.S. Congressional aide, the U.S. House of Representatives Committee (not the plenary session of the House of Representatives) targeted China's Biosafety Act (H.Arcadepc.RArcadepc. 7085) the vote is scheduled to be held in the House of Representatives on May 15. Industry insiders believe that eight years is enough for the relevant companies to respond, and the landing of this greatest uncertainty can also have a positive impact on the relevant companies.

It is worth noting that the 23rd China Biological products Annual meeting (CBioPC2024) will be held in Guangzhou from May 15th to 18th (Wednesday to Saturday). The high-level meeting included Zhong Nanshan, academician of the Chinese Academy of Engineering, Ivana Knezevic, secretary general of the World Health Organization (WHO) Biological products Standardization Committee, Xu Tao, academician of the Chinese Academy of Sciences, and Tian Zhigang, academician of the Chinese Academy of Engineering.

A heavy load came from me.

The new congressional bill, which will restrict the United States from doing business with some Chinese biotech companies, including Yao Ming Kant and BGI, will require American companies to end their cooperation with these companies by 2032, thus extending the time it takes to find new partners. The biosafety bill (H.R.7085) against China, which is not the full session of the House of Representatives, is scheduled to vote in the House of Representatives on May 15, according to a congressional aide.

On January 25, 2024, House China Special Committee Chairman Mike Gallagher (Mike Gallagher) and senior member Raja Krishnamurthy (Raja Krishnamoorthi, Democrat of Illinois) introduced the Biosafety Act. Biomedical giants such as Yao Ming Kant have fallen sharply because of the Biosafety Act.

It is worth noting that, according to the New York Times, Yao Ming Kant is far more involved in the field of health care in the United States than is discussed in Congress. Some senior executives of the country's biotechnology industry have explicitly opposed the bill.ArcadepcThey are trying to make Congress aware that sudden decoupling could delay the development of some drugs for years. This may be an important reason for the amendment of the bill by the United States Congress.

This weekend, many people in the medical industry believe that compared with the previous plan, the eight years set aside is enough for the CRO giants to make room and time to deal with it. However, some market participants believe that although there is a respite, this also makes the bill more practical, and the pressure on the long-term development of the domestic pharmaceutical industry may increase.

The bulls are rising gradually

It is worth mentioning that after the above news came out, the voice of the industry singing more medicine began to increase.

After the April earnings report, pharmaceutical stocks entered a cooling-off period, but recently, the two major themes of "synthetic biology" and "stem cells" have risen sharply, and the overall trading heat of the pharmaceutical sector has increased.

Huafu Securities believes that the performance of AH Medicine the week before the festival is extremely eye-catching, with Hong Kong stocks stronger than A-shares, during which A-shares generally rise, synthetic biology, stem cell therapy and other theme concepts are prominent, the rotation phenomenon is more obvious. After communicating with the market in the past two weeks, the sustained or better-than-expected pharmaceutical market mainly lies in three points: first, there are real advantages among industries, and there should be new themes for pharmaceutical growth; second, the short-term performance of medicine is strong, but the market is still divided. Medicine has fallen for three years in a row, many investors are still in bear market thinking, the most pessimistic time has passed, can be optimistic. Third, the fundamentals are the most important, and the follow-up improvement in pharmaceutical performance will give sufficient fundamental support.

Zheshang Securities believes that the introduction of full-chain support documents in Beijing and Guangzhou reflects the beginning of policy support for innovative drugs, and expects more provinces and cities to launch innovative drug support policies under the policy dividend.ArcadepcThe high-quality development of innovative drugs and its industrial chain in China is expected to be accelerated.

Judging from the overall performance of the sector in the first quarter of 2024, although the year-on-year growth rate at the revenue end is still under pressure (about + 0.5% year-on-year), the growth rate at the home net profit end has significantly picked up (about + 1% year-on-year). The inflection point for the industry to get rid of the inertia effects of the epidemic and various related policies has emerged, superimposing the demand of the industry and the engineer dividend effect, and the high certainty of industry growth will continue. From the perspective of public offering fund positions in the first quarter of 2024, there has been a significant decline in three consecutive quarters since the second half of 2023, and the overall pharmaceutical position has also reached an all-time low. Citic Securities believes that the second quarter of 2024 is the best opportunity to lay out excellent tracks and enterprises in the pharmaceutical industry at the bottom.

Citic Securities said that after considering the deepening and normalization of anti-corruption, the deepening of industrial reform will inevitably lead to a substantial change in the overall business model of medicine and a substantial increase in concentration. It is suggested that the layout should be based on three main lines: first, go out to sea to break the game and strengthen the new growth space model out of domestic competition. Second, in the post-anti-corruption era of the industry, enterprises with core product competitiveness and business model benefit from the accelerated reshuffle (state-owned enterprise reform and integrated mergers and acquisitions); third, breakthroughs have been made around "popular style products". A truly innovative enterprise (innovative pharmaceutical products) that enters the payback period.

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