德意志银行中国医疗7月月度数据跟踪20170809DeutscheBankChinaHealthca

9August2017Pharmaceuticals/BiotechnologyChinaHealthcareHealthCarePharmaceuticals/BiotechnologyIndustryUpdateAsiaChinaHongKongMalaysiaIndustryChinaHealthcareDate9August2017DeutscheBankMarketsResearchMonthlydatatracker:July2017Monthlydatatracker:July2017Recentdatasuggestthat:1)drugconsumptiongrew12.1%YoYin1H17vs.12%in2016;2)inpatientandoutpatienttrafficincreased4.0%and1.0%,respectively,inYTDApril2017;3)growthingovernmentspendingonhealthcarereached20%YoYin1H17,vs.10%in2016;4)vitaminCpricesremainedhigh;5)thepriceof6-APAincreasedmoderately,whilethatof7-ACAdroppedinJuly;6)TCMrawmaterialpricesweremixed;and7)cornpricedecreasedtoRMB1,680/toninJuly.Governmentspending,drugconsumption,patienttrafficandinsuranceGrowthingovernmentspendinginhealthcareincreasedto22%YoYinJune2017(toRMB217bn);YTD1H17growthreached20%comparedwith10%YoYin2016.Meanwhile,growthindrugconsumptionfluctuatedandreached13.6%YoYinJune2017;YTD1H17growthwas12.1%vs.12.0%and14.2%YoYin2016and2015,respectively.Inpatienttrafficcontinuedtooutpaceoutpatientflow,withtheformerup4.0%YoYandthelatterrising1.0%inYTDApril2017.InApril,urbanbasicmedicalinsuranceinflowrose42%andoutflowincreased28%.Forcommercialinsurance,theinflowofhealthcareinsurancedeclined12%YoYinMay2017,thefirsttimesince2012,whiletheoutflowofhealthcareinsurancecontinuedtogrowat26%YoY.However,onaYTDbasis,inflowstillgrew17%vs.23%foroutflow.VitaminCpricesremainedhigh;6-APApriceincreased,7-ACApricedroppedDomesticvitaminCpricesremainedhighwithanASPofRMB70/kginJuly2017,whileimportedvitaminCpricesweredown1%toUSD5.8/kginJune.Thepriceof6-APAincreased11%toRMB210/kginJuly2017.TheASPof7-ACAwasRMB370/kg,down23%fromthepreviousmonth.Weremindinvestorsthatthemainmanufacturershadresumedtheproductionof7-ACAinSeptember2015ata16%pricecutfromRMB630/kginJune2015.TCMrawmaterialpricesweremixedTheTCMrawmaterialpriceindexcontinuedonitsrecentuptrendandclimbedup0.5%MoMto1,284.TheASPsofhoneysuckleandindigowoadrootdecreasedinJuly2017.HoneysuckleandindigowoadarethemainingredientsinShineway’sflagshipproduct,QingKaiLing.Ophiopogonrootpriceincreased6%,whilethepriceofradixginsengwasdown9%inJuly–thesearethemainingredientsinShenMai.JackHu,PhDResearchAnalyst+852-22036208ToppicksHengruiMedicine(600276.SS),CNY50.75BuySinoBiopharmaceutical(1177.HK),HKD6.98BuyUniversalMedical(2666.HK),HKD6.37BuySource:DeutscheBankDeutscheBankAG/HongKongDeutscheBankdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Thus,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.DISCLOSURESANDANALYSTCERTIFICATIONSARELOCATEDINAPPENDIX1.MCI(P)083/04/2017.Distributedon:09/08/201714:18:09GMT0bed7b6cf11c9August2017Pharmaceuticals/BiotechnologyChinaHealthcareDrugconsumptiongrowthpickedupDrugsalesup14%YoYinJune2017and12.0%inFY16ThesalesoftraditionalChineseandWesternmedicineamountedtoRMB82bninJune2017,up13.6%YoYvs.10.5%YoYinJune2016.Onaquarterlybasis,retaildrugconsumptiongrew14.8%YoYin2Q17,comparedwith10.7%,10.6%,11.1%,11.6%and15.1%in1Q17,4Q16,3Q16,2Q16and1Q16,respectively.ForFY16,salesgrew12.0%vs.14.2%in2015and15.0%in2014.Weremindinvestorsthatdrugconsumptiondatacorrelatestronglywithhospitaldrugsalesdata.Figure1:YoYgrowthrateintotaltraditionalChineseandWesternmedicineconsumptionrevenue(March2013–June2017)0%5%10%15%20%25%YoYgrowthofdrugconsumptionSource:DeutscheBank,NBSThelow-tomid-teengrowthindrugconsumption(mainlyretail)appearstobethenewnorm,consistentwiththefeedbackfromcompanyexecutives.For2017,weexpectgrowthinthedrugsectortomoderateonslowerGDPgrowth,reimbursementcontrolandpricecuts.Page2DeutscheBankAG/HongKong9August2017Pharmaceuticals/BiotechnologyChinaHealthcareInpatientandoutpatientgrowthYTDApril2017,inpatientandoutpatientup4.0%and1.0%,respectivelyDemandforhealthcareservicesandinfrastructurebuild-updrovethegrowthininpatientandoutpatientvolumeandvaluefrom2006to2010.Theslowdowningrowthin2010canbeattributedtotheimplementationofthenewhealthcarereformsandcostcontroloverhealthcareinChina.Figure2showsthatfrom2011toYTDApril2017,growthdeceleratedfrom7.4%to1.0%foroutpatientvolumeandfrom7.9%to4.0%forinpatientvolume.Growthinaveragespendingperhospitalvisithasbeenrelativelystablesince2011.TheYoYgrowthratesweremaintainedbetween6.3%and7.8%foroutpatientsandbetween5.2%and7.1%forinpatients.Figure2:InpatientandoutpatientvolumegrowthratesinChina(2006–YTDApril2017)0%5%10%15%20%25%30%OutpatientsYoYInpatientsYoYSource:DeutscheBank,HNFPCFigure3:Inpatientandoutpatientvalue(costpervisit)growthratesinChina(2006–2015)0%2%4%6%8%10%12%2006200720082009201020112012201320142015OutpatientInpatientSource:DeutscheBank,HNFPCDeutscheBankAG/HongKongPage39August2017Pharmaceuticals/BiotechnologyChinaHealthcareGrowthingovernmenthealthcarespendingGovernmentspendinggrew22%YoYinJune2017vs.32%inMay2016TotalgovernmentspendingonhealthcareincreasedtoRMB217bninJune,up22%YoY,comparedwithRMB177bn(up32%YoY)inJune2016,andRMB134bn(up25%YoY)inJune2015.Wehighlightthattheannualgrowthratewas10.4%in2016vs.