德银中国医疗保健行业中国医疗保健行业2017年12月月度数据追踪2018011721页

17January2018HealthCareChinaHealthcareHealthCareHealthCareIndustryUpdateAsiaJapanNorthAmericaIndustryChinaHealthcareDate17January2018DeutscheBankMarketsResearchMonthlydatatracker:December2017Monthlydatatracker:December2017Recentdatasuggestthat1)drugconsumptionwasup11.0%YoYinNovembervs.12.4%inYTD10m17;2)inpatientandoutpatienttrafficincreased7.3%and3.0%,respectively,inYTD10m17;3)governmentspendingonhealthcaredropped16%YoYinNovember2017vs.14%growthinYTD10m17;4)vitaminCpricesremainedhigh;5)6-APAand7-ACApriceswereflatinDecember;6)TCMrawmaterialpricesweremixed;and7)cornpricesremainedthesameatRMB1,690/toninDecembervs.November.Governmentspending,drugconsumption,patienttrafficandinsuranceGovernmentspendingonhealthcaredeclined16%YoYtoRMB99bninNovember2017,whileYTD10m17growthwas14%vs.10%YoYin2016.Meanwhile,drugconsumptiongrew11.0%YoYinNovember2017;YTD10m17growthwas12.4%vs.12.0%YoYin2016andvs.14.2%YoYin2015,respectively.Inpatienttrafficcontinuedtooutpaceoutpatientflow,with7.3%vs.3.0%YoYgrowthinYTD10m17.InNovember,inflowandoutflowofurbanbasicmedicalinsuranceincreased27%and41%YoY,respectively.Forcommercialinsurance,theinflowofhealthcareinsuranceshotup36%YoYinNovember2017,andgrowthofhealthcareinsuranceoutflowacceleratedto32%YoY.OnaYTDbasis,inflowgrew5%andoutflowclimbed29%YoYinYTD10m17.VitaminCpricesremainedhigh;6-APAand7-ACApricesunchangedTheASPofdomesticvitaminCedgeduptoRMB72.5/kginDecember2017,whileexportedvitaminCpriceswerestableatUSD7.0/kginNovember.Bothpricesof6-APAand7-ACAwereflatinDecember2017,recordingRMB230/kgandRMB450/kgrespectively.Weremindinvestorsthatthemainmanufacturersresumedproductionof7-ACAinSeptember2015ata16%pricecutfromRMB630/kginJune2015.TCMrawmaterialpricesmixedValuationandrisksOurvaluationisbasedonP/EorEV/EBITDA,dependingonthesub-sector.Inthisreport,weadjustTPsforAier,CSPCandTopchoice,asspecifiedintheValuationandRiskssection.Risksmayvarybycompanyandincluderawmaterialprices,newproductlaunchesandpipelineprogress,pricecuts,M&A,etc.InDecember2017,theTCMrawmaterialpriceindexturnedfromitspreviousuptrendanddecreased1.32%MoMto1,266.TheASPofhoneysucklewasflat,whilethepriceofindigowoadrootfurtherdropped4%MoMinDecember2017.HoneysuckleandindigowoadarethemainingredientsinShineway’sflagshipproduct,QingKaiLing.ThepriceofophiopogonrootremainedunchangedinDecember,whileASPofradixginsengfell3%MoM.ThesearethemainingredientsinShenMai.JackHu,Ph.D.ResearchAnalyst+852-22036208MeganXuResearchAssociate+852-22035928KeyChangesCompanyTargetPriceRating1093.HK19.10to20.30-300015.SZ35.20to38.10-600763.SS27.20to31.00-Source:DeutscheBankToppicksSinoBiopharmaceutical(1177.HK),HKD14.84BuyUniversalMedical(2666.HK),HKD7.38BuyJointownPharmaceuticals(600998.SS),CNY17.96BuySource:DeutscheBankDeutscheBankAG/HongKongDeutscheBankdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Thus,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.DISCLOSURESANDANALYSTCERTIFICATIONSARELOCATEDINAPPENDIX1.MCI(P)083/04/2017.THECONTENTMAYNOTBEDISTRIBUTEDINTHEPEOPLE’SREPUBLICOFCHINA(“THEPRC”)(EXCEPTINCOMPLIANCEWITHTHEAPPLICABLELAWSANDREGULATIONSOFPRC),EXCLUDINGSPECIALADMINISTRATIVEREGIONSOFHONGKONGANDMACAU.Distributedon:16/01/201816:57:10GMT7T2se3r0Ot6kwoPa17January2018HealthCareChinaHealthcareDrugconsumptiongrowthpickedupDrugsalesup11.0%YoYinNovember2017ThesalesoftraditionalChineseandWesternmedicineincreased11.0%YoYtoRMB89bninNovember2017,vs.11.5%YoYinNovember2016.Onaquarterlybasis,retaildrugconsumptiongrew14.6%YoYin3Q17,comparedwith14.8%,10.7%,10.6%,11.1%and11.6%in2Q17,1Q17,4Q16,3Q16and2Q16,respectively.ForFY16,salesgrew12.0%vs.14.2%in2015and15.0%in2014.Weremindinvestorsthatdrugconsumptiondatacorrelatestronglywithhospitaldrugsalesdata.Figure1:YoYgrowthrateintotaltraditionalChineseandWesternmedicineconsumptionrevenue(May2013–November2017)0%5%10%15%20%25%YoYgrowthofdrugconsumptionSource:DeutscheBank,NBSLow-tomid-teengrowthindrugconsumption(mainlyretail)appearstobethenewnorm,consistentwithfeedbackfromcompanyexecutives.For2018,weremainconstructiveonthehealthcaresectoronthebackofimprovingregulatoryframework,foreseeableNRDLbenefitandreboundofregulatoryapprovalsofdomesticnames.Page2DeutscheBankAG/HongKong17January2018HealthCareChinaHealthcareInpatientandoutpatientgrowthYTDOct2017,inpatientandoutpatientup7.3%and3.0%,respectivelyDemandforhealthcareservicesandaninfrastructurebuild-updrovegrowthininpatientandoutpatientvolumeandvaluefrom2006to2010.Thegrowthslowdownin2010canbeattributedtotheimplementationofthenewhealthcarereformsandcostcontroloverhealthcareinChina.From2011toYTDOct2017,growthofoutpatientvolumedeceleratedfrom7.4%to3.0%,andgrowthofinpatientvolumemoderatedfrom7.9%to7.3%.Growthinaveragespendingperhospitalvisithasbeenrelativelystablesince2011.TheYoYgrowthrateshavebeenmaintainedatbetween6.3%and7.8%foroutpatientsandbetween5.2%and7.1%forinpatients.Figure2:InpatientandoutpatientvolumegrowthratesinChina(2006–YTDOct2017)Figure3:Inpatientandout