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

China Pharmaceutical Equipment Industry Association also carried out statistics on the market size of the domestic pharmaceutical equipment industry, and the data source is the statistical report reported by the member units. In 2018, the sales revenue of pharmaceutical machinery products was 33.7 billion yuan, assuming that the growth rate of member units from 2018 to 2021 is the same as that of the "pharmaceutical professional equipment manufacturing" industry released by the National Bureau of Statistics, the total revenue of domestic pharmaceutical equipment enterprises in 2021 is 57.9 billion yuan.

We can calculate the demand scale of the pharmaceutical equipment industry according to the proportion of "equipment purchase amount" in the fixed assets investment completed in the pharmaceutical manufacturing industry. According to the industry division, the pharmaceutical manufacturing industry is composed of seven sub-industries: chemical raw material manufacturing, chemical preparation manufacturing, Chinese herbal medicine processing, Chinese patent medicine production, veterinary medicine manufacturing, biological medicine manufacturing and health materials and medical supplies manufacturing. After eliminating veterinary medicine manufacturing and health materials and medical supplies manufacturing, The total investment in fixed assets of the five sub-industries related to pharmaceuticals accounted for about 85-90%.

Since the National Bureau of Statistics no longer disclosed the completed amount of fixed asset investment in sub-industries after 2017, we calculated on the basis of 85% of the completed amount of fixed asset investment in five sub-industries related to pharmaceuticals in 2017. In 2021, the fixed asset investment in China's pharmaceutical manufacturing industry will be 958.4 billion yuan, and the fixed asset investment in the pharmaceutical field will be 814.6 billion yuan in 2021.

In 2017, the proportion of fixed asset investment completed in the biopharmaceutical industry accounted for 25% of the pharmaceutical field, considering that the growth rate of biopharmaceutical is faster than the average level of the drug market, it is expected that the proportion is continuing to rise. We assume that the proportion of completed fixed asset investment in the biologic pharmaceutical industry in 2021 is 35%(taking into account the investment in COVID-19 vaccine production capacity), then the completed fixed asset investment in the biologic pharmaceutical industry in the year will be 285.1 billion yuan. In 2017, the proportion of "equipment purchase" in the completed investment in fixed assets of the biopharmaceutical industry accounted for about 30%, and according to this proportion, the purchase amount of various types of equipment in China's biopharmaceutical industry will be 85.5 billion yuan in 2021.

We further analyzed the fixed assets of some biological drug enterprises. Generally speaking, the company's fixed assets are mainly composed of houses and buildings, machinery and equipment, transportation equipment, etc., in addition, the company will also disclose the original value of the assets of the main equipment. We analyzed the original value of major machinery and equipment (including pharmaceutical equipment, research and development equipment, infrastructure and other equipment, etc.) of some biopharmaceutical enterprises, and calculated the proportion of the original value of major pharmaceutical equipment assets to the original value of machinery and equipment assets. It can be seen that the proportion of different companies is quite different. We believe that on the one hand, it is related to the disclosure caliber of the company, and on the other hand, due to the characteristics of non-standard customization of pharmaceutical equipment, the pricing difference between different customers and projects is quite large. According to the average level of 33%, the market size of China's biopharmaceutical pharmaceutical equipment in 2021 will be 28.2 billion yuan (85.5 billion yuan *33%). At the same time, we calculated that the market size of biopharmaceutical pharmaceutical equipment accounted for 35%, and the market size of China's pharmaceutical equipment was about 80.6 billion yuan.

Previously, we have calculated that the total revenue of the domestic pharmaceutical equipment industry in 2021 will be 57.9 billion yuan. According to incomplete statistics, by the end of 2019, there are more than 1,000 specialized and part-time pharmaceutical machinery enterprises in the pharmaceutical equipment industry, of which 469 are members of the China Pharmaceutical Equipment Industry Association. Considering that the statistical scope only includes member units, it is expected that the actual income of domestic pharmaceutical equipment industry enterprises is between 65-70 billion yuan. Compared with the estimated demand, there is a gap of 10-15 billion yuan, we believe that it is mainly concentrated in the field of biological drug equipment such as vaccines and monoclonal antibodies, and there is a greater opportunity for domestic substitution in the future.