Pharmaceutical equipment industry: across the cyclical, to meet the new momentum

1. Basic situation and development trend of pharmaceutical equipment industry

1.1 Intelligence and digitalization are the development trend, and the demand for overall solutions continues to increase

Pharmaceutical equipment refers to the mechanical equipment and packaging materials used for drug production, testing, packaging and other process purposes. The pharmaceutical equipment industry mainly provides various types of production equipment for pharmaceutical manufacturing enterprises (including drug manufacturers and CMO/CDMO enterprises). According to the classification method of China Pharmaceutical Equipment Industry Association, pharmaceutical equipment can be divided into raw material machinery and equipment, preparation machinery and equipment, pharmaceutical crushing machinery, decoction machinery, pharmaceutical water, gas (steam) equipment, pharmaceutical packaging machinery, drug testing equipment, other pharmaceutical machinery and equipment (such as conveying devices and auxiliary machinery), etc. A total of more than 3,000 specifications, respectively, are used in all aspects of the production of traditional Chinese medicine, chemical drugs and biological agents. In practice, it is usually classified according to the use of equipment, such as raw material equipment, preparation equipment (solid preparations, injections, etc.), packaging equipment, etc., of which raw material equipment and preparation equipment are the two most core types of pharmaceutical equipment in the production process of chemical drugs and biological drugs. Different product and dosage form requirements correspond to different equipment and production lines, such as biological drug production needs to be equipped with cell incubators, bioreactors, chromatographic columns, ultrafiltration membranes, freeze-drying machines, isolators and a large number of complex equipment and integrated systems.

The upstream of the pharmaceutical equipment industry is mainly for steel, machinery, parts, control systems and membrane materials and other raw material suppliers, involving the steel industry, electronic components and automation control system industry. Downstream is the pharmaceutical manufacturing industry, including chemical drugs, biological drugs, traditional Chinese medicine, raw material drug manufacturers and CMO/CDMO enterprises. The development of the pharmaceutical industry directly affects the demand for pharmaceutical equipment, and the two have a strong correlation. On the one hand, the growth of the output value of the pharmaceutical industry and the increase of fixed asset investment will bring about the improvement of the demand for pharmaceutical equipment; On the other hand, pharmaceutical enterprises have increasingly strict requirements for the stability, continuity, accuracy, integration, automation level and intelligence of pharmaceutical equipment, which also prompts pharmaceutical equipment enterprises to continuously increase R&D investment and carry out technological innovation.

Pharmaceutical equipment plays an important role in drug production. The setting of quality and process route parameters not only directly affects the quality and efficacy of drugs, but also affects the energy consumption, cost and economic benefits of pharmaceutical enterprises, and pharmaceutical enterprises need more technical equipment. The structure of the drug market is also changing, and pharmaceutical equipment companies must also follow the needs of drugs and adjust the product structure in time to meet the market demand.

From the perspective of the development trend of pharmaceutical equipment, automation, intelligence, digitalization and continuous production represent the future development direction of the industry. Leading enterprises in the pharmaceutical equipment industry have also accelerated the improvement of system design and integrated delivery capabilities in recent years from the original provision of stand-alone or system equipment, and gradually upgraded to provide overall engineering solutions.

In January 2022, the China Pharmaceutical Equipment Industry Association issued the "14th Five-Year Plan" Technology Development Outline for Pharmaceutical equipment, during the "14th Five-Year Plan" period, the pharmaceutical equipment industry will focus on the "deep integration of information and pharmaceutical equipment", and innovate and develop high-efficiency, low-energy, low-carbon, automated and intelligent pharmaceutical equipment. The development direction of traditional Chinese medicine pharmaceutical equipment and biological drug making equipment is put forward. We believe that the demand upgrade and product iteration of pharmaceutical equipment help leading enterprises with strong technical capabilities and complete product categories to stand out.

1.2 Domestic pharmaceutical equipment market space of more than 80 billion yuan, high-end products have import substitution space; Overseas market expansion will open the growth ceiling of domestic enterprises

The market size of China's pharmaceutical equipment industry has a variety of statistical calibers. According to the industry data of "Pharmaceutical professional equipment manufacturing" released by the National Bureau of Statistics (the main statistical scope is pharmaceutical equipment enterprises above designated size), the revenue of pharmaceutical professional equipment manufacturing industry in 2021 is 27.690 billion yuan, an increase of 39.94%. Among them, the export delivery value of the "pharmaceutical special equipment manufacturing" industry from 2018 to 2021 was 2.011 billion yuan, 1.696 billion yuan, 1.83 billion yuan, 2.185 billion yuan, accounting for 12.47%, 9.82%, 9.26% and 7.89% of the total industry revenue in the same period, respectively. Since the export delivery value from 2015 to 2017 has not been released, we calculated the proportion of export delivery value in the total industry revenue of the year from 2008 to 2014, with an average of about 7%. It can be seen that the export proportion of the pharmaceutical equipment industry is basically stable, and domestic demand is still the main factor leading the industry performance at this stage.