BOC International: China Pharmaceutical's 1-8 batches of domestic procurement rules or sufficient mild short-term catalysts

The Zhitong Finance App learned that BOC International released a research report saying that the Hang Seng Healthcare Index rose 0.5% this week, outperforming the market. Among them, the biopharmaceuticals, prescription drugs and devices sectors performed better than other sectors. This week, domestic investment is defensive, and tends to end profitably, mainly increasing traditional and undervalued innovative pharmaceutical companies with stable endogenous growth. Foreign investment, on the other hand, is more active, focusing on leaders in the main innovation line and upstream of the industrial chain, including innovative drugs and CXO targets.

The 1-8 batch procurement continuous procurement rules were changed to an inquiry model. BOC International believes that the overall price reduction under this rule may be limited, and the impact on Hong Kong stock prescription drug manufacturers may be less than expected. In December, the industry still had sufficient catalysts, including various academic conferences, the announcement of the results of health insurance negotiations, and potential interest rate cuts by the Federal Reserve, etc., and sector investment sentiment is expected to rise steadily.

The bank continues to recommend focusing on the following segments: 1) Innovative drugs: short-term catalysts such as Sansheng Pharmaceutical (01530), Deqi Pharmaceutical-B (06996), and Baiji Shenzhou (06160) are abundant, and the valuation still does not reflect the value of the core single product; Xiansheng Pharmaceutical (02096), Hehuang Pharmaceutical (00013), and Legendary Biotech (LEGN.US) are significantly underestimated, and the long-term growth logic is clear; 2) CXO: Segment leaders that benefit from high downstream prosperity and a return in financing margins, such as track leaders Pharmaceutical Federation (02268); 3) Regulatory uncertainty gradually released , sub-sectors such as hospitals, equipment, and diagnostics where there is an opportunity for reversal.