2022 has experienced the most difficult year for pharmaceutical investment in the past five years. The Fed’s unexpected interest rate hike has compressed liquidity and the equity market. The prevention and control of the epidemic has brought concerns to the economy and the capital market. Most investors have lost confidence in medicine, and the friction between China and the United States has cast a shadow over the development of the global pharmaceutical innovation industry chain.
The emotional pendulum of medicine has been swung from “very expensive” in 2021 to a reasonable position that is difficult to see in five years, and will continue to swing from a reasonable position in 2022 to another extreme position, an undervalued and cheap position that is rarely seen in ten years. Historically, there have always been various reasons for being placed in this extremely low position, always saying “this time is different”, but are these reasons for “walking to the bottom of the water” really different?
It is hopeful that these in-depth medical adjustment issues will begin to change quietly in the last two months of 2022. But are these positive changes a short-lived rebound? Or is it the beginning and rehearsal of the long-term medical slow cow?
It is undeniable that China’s economic situation and industrial development direction in the next few years will still become confusing. Difficulties that are different from the past, as summarized at the 20th National Congress of the Communist Party of China, is that “we are facing new strategic opportunities and risks and challenges coexist.” A split and island-chained world requires an independent and controllable industrial chain, consumer confidence that needs to be restored after the epidemic prevention and control is lifted, a more diverse and complex domestic demand market, and a consumer market where both flattening and upgrading coexist. New unknowable problems, pharmaceutical innovations are facing greater challenges and so on. We all like certainty, but the future world gives us more and more uncertainty.
The penetration rate and development stage of many scientific and technological fields are approaching the end. In addition to division, human society needs more technology and the driving force for progress. During the illness of COVID-19, I saw many elderly people dying of fragility. I began to think about the ultimate pursuit of medical innovation, the pursuit of health and longevity, and a more beautiful and better life. No matter what the surrounding environment or economic situation is, this is all It is the deep pursuit of human nature. When the long cycle of economic slowdown comes, people have become less and less likely to quickly accumulate wealth, and more are looking for a few opportunities in the stock economic structure, seeking breakthroughs in more difficult technological innovation fields, and more People spend more energy improving the health and mind of themselves and their families. Many areas of innovation that seem slow and difficult seem to be the few areas that have long-term opportunities. The mentality of innovative pharmaceutical companies and investors has undergone a cycle of baptism, and they have begun to change from impetuous to rational.
In the difficult economic recovery cycle, we need to find a few, deterministic, slow and difficult areas of innovation, independent and controllable, safe areas of domestic demand growth, and the rare “lipstick economy” in the diversified consumer market, soothe people’s hearts and minds. Healthy consumption just needs the field.
We should not be blindly optimistic to see that the epidemic is going well after the epidemic prevention and control is lifted, and we need to be fully prepared for the complex and severe risks and situations. However, we need to find definite opportunities in these fogs, and those who are still abnormal Excellent pharmaceutical entrepreneurs who work hard and are good at coping with various stress tests.
All kinds of situations have indeed begun to change quietly: the centralized procurement of medicines has begun to be relatively moderate, the innovative drug market has begun to “remain king”, and a few companies have begun to embark on the road of Amgen and Regeneron-style Biopharma. The difficult road to overseas still sees positive The milestone, domestic alternative medical devices and consumables see hope, and the consumer medical market is the “lipstick effect” and a bright spot in the growth of the entire large consumer sector.
It is believed that many of these positive changes may evolve into long-term trends, such as the promotion of a small number of innovative pharmaceutical companies in China, domestic alternative devices and upstream life sciences, and the Chinese medicine industry strongly supported by the state. The road to globalization will start, and the consumer medical market such as medical aesthetics, ophthalmology, and oral cavity has an irresistible rigid demand effect.
But what is even more difficult is that pharmaceutical investment will still be very difficult in the next few years. It will not be like 2019-2020 when you buy the right track and lie down to win. The complexity of individual stock opportunities will exceed imagination, and the performance of individual stocks in the same track will also be abnormal. differentiation. Among the innovative drug companies, some seized a few opportunities to advance successfully, some failed to break the pipeline, some seized the spring breeze of domestic substitution, and some left in the midst of introversion. Moats, some people are still eliminated by the times in the old development ideas, and the few winners in the market segments of the consumer medical market have become invisible champions.
In the face of such a complex pharmaceutical investment market, we should no longer buy a few big tickets and lie on the white horse to win. We should conduct more diligent research and in-depth industrial chain research, and have an in-depth understanding of the multi-dimensional problems in order to respond to the changing industrial environment. Structural opportunities to capture excess returns. What is certain is that after two years of in-depth adjustments, medicine has “walked to the bottom of the water”. In 2023, it seems that it can “sit and watch the clouds rise” amidst various positive factors, but we should not sit still and work harder. Research companies, grasp investment opportunities through industrial depth and specialization in a complex environment, and “see the rising clouds”.
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