德银中国医疗保健行业中国医疗保健行业9月月度数据追踪20170925DeutscheBankChin

25September2017HealthCareChinaHealthcareHealthCareHealthCareIndustryUpdateAsiaJapanNorthAmericaIndustryChinaHealthcareDate25September2017DeutscheBankMarketsResearchMonthlydatatracker:September2017Monthlydatatracker:September2017Recentdatasuggestthat:1)drugconsumptiongrew11.4%YoYinAugustvs.12.2%inYTD7m17;2)inpatientandoutpatienttrafficincreased5.5%and1.9%,respectively,in1H2017;3)growthingovernmentspendingonhealthcarereached17%YoYinYTD7m2017,vs.10%in2016;4)vitaminCpricesremainedhigh;5)thepriceof6-APAand7-ACAremainedflatinSeptember;6)TCMrawmaterialpricesweremixed;and7)thecornpriceincreasedtoRMB1,726/toninSeptember.Governmentspending,drugconsumption,patienttrafficandinsuranceGrowthingovernmentspendingonhealthcarewasup6%YoYinAugust2017atRMB93bn;YTD7m17growthreached19%comparedwith10%YoYin2016.Meanwhile,growthindrugconsumptionfluctuatedandreached11.4%YoYinAugust2017;YTD7m17growthwas12.2%vs.12.0%and14.2%YoYin2016and2015,respectively.Inpatienttrafficcontinuedtooutpaceoutpatientflow,withtheformerup5.5%YoYandthelatterrising1.9%in1H2017.InJuly,urbanbasicmedicalinsuranceinflowrose54%andoutflowincreased50%.Forcommercialinsurance,theinflowofhealthcareinsurancedeclined30%YoYinJuly2017,whiletheoutflowofhealthcareinsurancecontinuedtogrowat32%YoY.However,onaYTDbasis,inflowgrew5%vs.26%foroutflow.VitaminCpricesremainedhigh;6-APAand7-ACApricesstayedflatDomesticvitaminCpricesremainedhighwithanASPofRMB70/kginSeptember2017,whileimportedvitaminCpriceswereup6%toUSD6.2/kginJuly.Thepriceof6-APAwasstableataroundRMB210/kginSeptember2017.TheASPof7-ACAwasatRMB360/kg,unchangedMoM.Weremindinvestorsthatthemainmanufacturershadresumedtheproductionof7-ACAinSeptember2015ata16%pricecutfromRMB630/kginJune2015.TCMrawmaterialpricesweremixedTheTCMrawmaterialpriceindexturnedonitsrecentuptrendandwasdown0.11%MoMto1,295.TheASPofhoneysuckleincreased15%whilethatofindigowoadrootwasstableinSeptember2017.HoneysuckleandindigowoadarethemainingredientsinShineway’sflagshipproduct,QingKaiLing.Theophiopogonrootpriceincreased5%,whilethepriceofradixginsengwasdown9%inSeptember–thesearethemainingredientsinShenMai.JackHu,PhDResearchAnalyst+852-22036208MeganXuResearchAssociate+852-22035928KeyChangesCompanyTargetPriceRating600998.SS25.10to27.30-600196.SS26.40to27.50-600079.SS23.00to22.10-3600.HK4.20to4.00-3933.HK5.40to5.90-2196.HK30.90to32.10-Source:DeutscheSecuritiesInc.ToppicksSinoBiopharmaceutical(1177.HK),HKD8.26BuyUniversalMedical(2666.HK),HKD6.36BuyHengruiMedicine(600276.SS),CNY58.14BuySource:DeutscheSecuritiesInc.DeutscheBankAG/HongKongDeutscheBankdoesandseekstodobusinesswithcompaniescoveredinitsresearchreports.Thus,investorsshouldbeawarethatthefirmmayhaveaconflictofinterestthatcouldaffecttheobjectivityofthisreport.Investorsshouldconsiderthisreportasonlyasinglefactorinmakingtheirinvestmentdecision.DISCLOSURESANDANALYSTCERTIFICATIONSARELOCATEDINAPPENDIX1.MCI(P)083/04/2017.Distributedon:25/09/201713:51:10GMT0bed7b6cf11c25September2017HealthCareChinaHealthcareDrugconsumptiongrowthpickedupDrugsalesup11.4%YoYinAugust2017and12.0%inFY16ThesalesoftraditionalChineseandWesternmedicineamountedtoRMB79bninAugust2017,up11.4%YoYvs.13.9%YoYinAugust2016.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(May2013–August2017)0%5%10%15%20%25%YoYgrowthofdrugconsumptionSource:DeutscheBank,NBSThelow-tomid-teengrowthindrugconsumption(mainlyretail)appearstobethenewnorm,consistentwiththefeedbackfromcompanyexecutives.For2017,weexpectgrowthinthedrugsectortomoderateonslowerGDPgrowth,reimbursementcontrolandpricecuts.Page2DeutscheBankAG/HongKong25September2017HealthCareChinaHealthcareInpatientandoutpatientgrowthYTDJune2017,inpatientandoutpatientup5.5%and1.9%,respectivelyDemandforhealthcareservicesandinfrastructurebuild-updrovethegrowthininpatientandoutpatientvolumeandvaluefrom2006to2010.Theslowdowningrowthin2010canbeattributedtotheimplementationofthenewhealthcarereformsandcostcontroloverhealthcareinChina.Figure2showsthatfrom2011toYTDJune2017,growthdeceleratedfrom7.4%to1.9%foroutpatientvolumeandfrom7.9%to5.5%forinpatientvolume.Growthinaveragespendingperhospitalvisithasbeenrelativelystablesince2011.TheYoYgrowthratesweremaintainedbetween6.3%and7.8%foroutpatientsandbetween5.2%and7.1%forinpatients.Figure2:InpatientandoutpatientvolumegrowthratesinChina(2006–YTDJune2017)Figure3:Inpatientandoutpatientvalue(costpervisit)growthratesinChina(2006–2015)0%5%10%15%20%25%30%OutpatientsYoYInpatientsYoY0%2%4%6%8%10%12%2006200720082009201020112012201320142015OutpatientInpatientSource:DeutscheBank,HNFPCSource:DeutscheBank,HNFPCDeutscheBankAG/HongKongPage325September2017HealthCareChinaHealthcareGrowthingovernmenthealthcarespendingGovernmentspendinggrew6%YoYinAugust2017vs.19%inYTDJul2017TotalgovernmentspendingonhealthcareincreasedtoRMB