Industry Weekly Report: 25-Provincial IVD Reagent Centralized Procurement Plan Implemented, Accelerating Domestic Substitution

Key Investment Points:

Last week (1204-1208), the SSE Composite Index fell by 2.0%, while the SW Pharmaceutical and Biotechnology sector dropped by 2.6%, ranking 19th in terms of change among the first-tier industries of Shenwan. The top three performers in the biopharmaceutical sector were medical devices (-0.3%), chemical preparations (-0.6%), and biologics (-2.4%). The top three gainers in individual stocks were Tonghua Jinma (+35.6%), Alile (+21.3%), and Shanghai Yizhong (+15.3%); the top three losers were Innova (-21.2%), Oulin Bio (-17.7%), and Cai Na Shares (-14.9%).

Implementation of the 25-province in vitro diagnostic reagent procurement plan, with hopes for further acceleration of China-produced alternatives. On December 8, 2023, the Provincial Alliance Procurement Office for In Vitro Diagnostic Reagents released Announcement No. 2 and No. 3 of the "2023 Inter-Provincial Alliance Centralized Volume-based Procurement of In Vitro Diagnostic Reagents in 25 Provinces (Regions, Corps)," disclosing the intended procurement volumes and highest valid bid prices reported by the alliance. For the six sex hormone items (chemiluminescence method), eight companies entered Group A: four foreign manufacturers and four China-produced manufacturers. Based on the intended procurement volume share: Roche 29%, Beckman Coulter 22%, Siemens 10%, Mindray 10%, Abbott 9%, Snibe 6%, Autobio Diagnostics 4%, Maccura Biotechnology 3%. For the eight infectious disease items (chemiluminescence method), nine companies entered Group A: three foreign manufacturers and six China-produced manufacturers. Based on the intended procurement volume share: Autobio Diagnostics 22%, Mindray 16%, Abbott 13%, Maccura Biotechnology 10%, Chemclin Diagnostics 7%, Wantai Kerui 7%, Roche 6%, Snibe 6%, Sysmex 4%. For the two sugar metabolism items (chemiluminescence method), nine companies entered Group A: four foreign manufacturers and five China-produced manufacturers. Roche 28%, Mindray 13%, Snibe 12%, Siemens 11%, Autobio Diagnostics 9%, Abbott 8%, Beckman Coulter 6%, Yhlo 3%, Maccura Biotechnology 3%. Looking back, after Anhui Province implemented a partial chemiluminescence project procurement in November 2021, multiple China-produced manufacturers reported rapid progress in equipment installations and reagent volume growth. Based on the current procurement volume report, among the four chemiluminescence projects, China-produced manufacturers Mindray, Snibe, and Autobio Diagnostics all entered Group A; Maccura Biotechnology entered Group A in three projects, while Yhlo, Chemclin Diagnostics, and Wantai Kerui each entered Group A in one project. Additionally, for the eight infectious disease items (chemiluminescence method), Autobio Diagnostics ranked first in the first-year intended procurement volume, surpassing foreign manufacturers, further enhancing the status of China-produced manufacturers. Regarding pricing, taking the hepatitis B surface antigen detection kit as an example, Roche's listed price is 1659 yuan for 100 tests/box, Siemens' listed price is 4128 yuan for 200 tests/box, Mindray's listed price is 2602 yuan for 200 tests/box, Snibe's listed price is 1300 yuan for 100 tests/box, Yhlo's listed price is 1320 yuan for 2×50 tests/box, and Autobio Diagnostics' listed price is 960 yuan for 96 tests/box. The highest valid bid price for this procurement is 9.2 yuan per test, closer to the prices of foreign manufacturers. Calculating the price reduction based on the same highest valid bid price gives China-produced manufacturers an advantage. Considering both volume and price, we believe that the overall procurement price is moderate, allowing leading China-produced companies to expand their market share through price advantages, with hopes for further acceleration of China-produced alternatives.

Since 2023, the scale of pharmaceutical ETFs has continued to grow, with Huabao CSI Medical ETF gaining high market recognition. As of December 8, the total scale of medical-related thematic ETFs increased to 89.679 billion yuan, a 60% increase from the beginning of the year. In terms of individual fund size, Huabao CSI Medical ETF, E Fund SSE 300 Healthcare ETF, and Bosera Hang Seng Healthcare ETF are significantly larger than other ETF funds. Among them, the scale of Huabao CSI Medical ETF has reached 27 billion yuan, ranking first and enjoying high market recognition.

Haitong Pharmaceutical Portfolio Performance in December 2023. Hengrui Medicine, Aier Eye Hospital, Snibe, Kanghua Biotech, Tiantan Biologic, Tigermed, Yifeng Pharmacy, Mindray, Zhifei Biologic, WuXi AppTec (ranking不分先后). The portfolio has fallen by an average of 3.6% since December, while the overall pharmaceutical index fell by 3.2%, causing the portfolio to underperform the pharmaceutical index by 0.34pct. The top three performers in terms of monthly gains/losses are Snibe (7.8%), Mindray (1.8%), and Tiantan Biologic (-2.5%).

Risk Warning. Risks of policy progress falling short of expectations, intensified risks of medical insurance cost control, valuation fluctuation risks, and risks of continued pandemic development causing global economic turbulence.