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

After analyzing the capital expenditure situation of listed companies, we found that the fixed asset investment situation in different segments has a certain differentiation.

The "cash paid for the purchase and construction of fixed assets, intangible assets and other long-term assets" of companies in the chemical and pharmaceutical industry (preparations + apis) grew steadily, but the growth rate fell after the implementation of the collection policy in 2018. The amount of fixed assets maintained rapid growth before 2018, but the growth rate also declined after that, reflecting the decline in the profitability of post-mining chemical preparations and the more cautious investment of enterprises. However, capital expenditure, fixed assets and construction in progress still increased to a certain extent, which is expected to be mainly due to: (1) there is still a natural increase in the demand for chemical drugs, there is a need to expand production; (2) The market size of complex preparations such as microspheres, liposomes, drug-loaded fat milk, etc., has grown rapidly, thus driving the demand for equipment to increase; (3) The collection of generic drugs continues to advance, and pharmaceutical and API companies have the power to improve their own industrial chain upstream and downstream, hoping to cover the entire supply chain, better control costs and expand production capacity.

The amount of fixed assets of A-share listed companies in the Chinese medicine industry is relatively stable, but they still maintain A certain intensity of capital expenditure. We believe that the main reasons include: (1) The traditional Chinese medicine industry has undergone structural changes in recent years. Due to the unclear clinical value of some Chinese medicine injections and the high incidence of adverse reactions, various restrictive policies have been introduced successively (limited medical insurance reimbursement indications, medical institutions applicable to reimbursement policies, inclusion in the auxiliary drug monitoring catalogue, etc.), the market size has declined, and enterprises are less willing to invest. The demand for oral dosage forms is relatively stable, the market size increases slightly, and enterprises still have the willingness to increase investment; (2) The original production line has automation.