Before talking about the "innovative drug duo" focusing on A-shares and Hong Kong stocks, let's take a lookBased on the perspective of the underlying asset**Classification:
It can be seen that the "innovative drug duo" focusing on A-shares and Hong Kong stocks: A-share innovative drugs and Hong Kong stock innovative drugs belong to the index category in the "sword" of the eighteen **, and in the index**, they belong to the "biomedicine" long-term bull track of the "long-term bottom position" investment style. In recent years, the overall valuation of the pharmaceutical industry has been under pressure due to volume procurement, and the overall decline in the pharmaceutical sector has also been larger, but there are still relatively high-quality tracks worth paying attention to in the pharmaceutical sector, among which the innovative drug subdivision track can be regarded as the first track in the pharmaceutical industry. Let's do some specific analysis of the two indices**.
Part 1: Analysis of A-share innovative drugs
A-share innovative drugs (innovative drug ETF SZ159992) tracks the "CS Innovative Drugs" 931152 index:
i.aSample space of the stock innovative drug index
the same sample space as the CSI All-Share Index;
ii.aSampling method of stock innovative drug index
Note: **The content is from the official website of CSI.
Quantum Salted Fish Analysis:
Step 1 excludes the last 20% of the rankings, this step is a routine operation, and the ** with too poor liquidity is removed;
Step 2 emphasizes one of the three conditions of high R&D investment intensity, innovative drug listing, and being in the R&D industry chain of innovative drugs in stock selection. Innovative drugs are relative to APIs and generic drugs in the chemical drug sector, and the classification of innovative drugs is generally divided into four categories according to the degree of innovation: me too, me better, best in class, and first in class.
If the enterprises in the innovative drug industry are divided by type, there are generally three types of enterprises: big pharma large pharmaceutical companies (such as Hengrui Pharmaceutical and Fosun Pharma and other high-R&D large pharmaceutical companies), biopharma biopharmaceutical companies (generally the leader in the subdivision field in terms of volume), biotech biotechnology companies (usually biotechnology companies that have not yet achieved profitability, usually listed on the Hong Kong stock market through the 18A rules), and pharmaceutical outsourcing CXO companies in the innovative drug R&D industry chain.
Step 2 also selects three types of companies in stock selection, large pharmaceutical companies have a strong moat, Matthew effect is very obvious in the pharmaceutical industry, R&D risks block the entry of competitors, for large pharmaceutical companies with high R&D such as Hengrui Pharmaceutical and Fosun Pharma have enough strength to carry out the layout research and development of innovative drugs, and some companies that rely on generic drugs must transform into innovative drug R&D, in order to pursue R&D efficiency, it will bring opportunities to the CXO industry. Therefore, there are many CXO companies in the CS Innovative Drug Index.
Step 3 uses the market capitalization weighting strategy in stock selection, which to a certain extent also reflects the characteristics of the strong Hengqiang in the pharmaceutical industry, the pharmaceutical industry is a big industry, the water is big, and only those companies with strong competitiveness can be recognized by the market and give birth to companies with large market capitalization.
iii.aAllocation of innovative drug weights
Note: **The content is from the official website of CSI.
Quantum Salted Fish Analysis: The index weight allocation is still a standard market capitalization-weighted strategy, and the upper limit of the constituent weights is 10%, so CS innovative drugs are a typical market capitalization-weighted index, which does not involve the SmartBeta strategy, and the constituent stocks are adjusted every six months.
iv.aTop 10 holdings in the stock innovative drug index
Note: **The content is from the official website of CSI.
Quantum Salted Fish Analysis: It can be seen that in addition to Hengrui Pharmaceutical, the total pharmaceutical leader, there are also high-R&D large pharmaceutical companies such as Fosun Pharma, as well as CXO companies such as WuXi AppTec and Tigermed, and of course, other biopharmaceutical companies such as Zhifei Biotechnology and Walvax Biotech, etc., and the overall performance of the constituent stocks is still good.
Part 2: Analysis of innovative drugs in Hong Kong stocks
Hong Kong Stock Innovative Drugs (Hong Kong Stock Innovative Drugs ETF SZ159567) tracks the "CNI Hong Kong Stock Connect Innovative Drug Index" 987018 index:
The sample space of the Hong Kong stock innovative drug index
Note: **The content is from the official website of the CNI Index.
Quantum Salted Fish Analysis: The constituent stocks come from enterprises whose business involves the R&D and production of innovative drugs in the Hong Kong Stock Connect.
ii.Sampling method of Hong Kong stock innovative drug index
Note: **The content is from the official website of the CNI Index.
Quantum Salted Fish Analysis: The removal of constituent stocks with an average daily turnover of less than HK$10 million in the past year is mainly for liquidity considerations, and the liquidity of constituent stocks is very important for a less liquid market like Hong Kong stocks. The top 50 market capitalization is still considered to be market capitalization-weighted, which is a classic market capitalization-weighted index like CS innovative drugs.
iii.Analysis of Hong Kong Innovative Drug Index Heavy Stocks
Note: **The content is from the official website of the CNI Index.
Quantum Salted Fish Analysis: It can be seen that in terms of index constituents, other similar Hong Kong stock biomedical indexes such as the "Hang Seng Hong Kong Listed Biotechnology Index" covers medical devices, biotechnology, CXO, innovative drugs, Internet medical care, pharmaceutical circulation and other sub-industries, while the positioning of the Hong Kong Stock Connect Innovative Drug Index is more specific, focusing on innovative drugs and industrial chain enterprises listed on Hong Kong stocks
The CXO of the innovative drug and innovative drug R&D industry chain belongs to the first track in the pharmaceutical industry, let's take a look at the situation of these two subdivisions
a.Innovative drug ** track
From 2020 to 2025, China's innovative drug industry will remain at 18With a compound annual growth rate of 5%, the market size of innovative drugs is expected to reach 254.9 billion yuan in 2023.
Note: The above data comes from the brokerage research report.
Note: **The content comes from brokerage research reports and online information.
At present, China's innovative drug market is showing a rapid growth trend, and the centralized procurement of pharmaceuticals has promoted the upgrading of the pharmaceutical industry while controlling costs, and the funds released can be used to support the development of innovative drugs.
b.CXO** tracks
CXO can be simply divided into CRO (light assets, from screening compounds to clinical phase III, including preclinical CRO + clinical CRO), CDMO CMO (relatively heavy assets), and CSO
Note**Content from Caixin**.
In 2020, the global CDMO scale was US$55.4 billion, China's CDMO scale was US$4.6 billion, and the global CDMO scale is expected to reach US$106.6 billion in 2026, with a compound growth rate of 1374%, China's CDMO scale will reach 19.5 billion US dollars in 2026, with a compound growth rate of 3003%；
Note: The above data is quoted from the brokerage research report.
Note**Content from Guoxin**.
China's CRO industry is expected to reach US$22.1 billion in 2024, with a compound growth rate of 265%；
Note: The above data is quoted from the brokerage research report.
China's CXO market is expected to maintain a high growth rate in the future, both CRO and CDMO are expected to maintain a high growth rate in the future, China's pharmaceutical industry will accelerate the transformation and upgrading to innovative drugs in the context of centralized procurement, for the development of innovative drugs, cooperation with CXO companies with a high degree of division of labor can accelerate the speed of innovative drug research and development and reduce costs, and will provide new momentum for the development of the CXO industry in the future.
Part3: Hong Kong stock innovative drugs vs A-share innovative drugs
Many start-up biotech companies may only have core products and may not even have revenue, and the Hong Kong Stock 18A listing rules can allow such companies to be listed, the main conditions are:
a.Biotech companies must have at least one core product that has passed the concept stage;
b.Have engaged in the research and development of core products for at least 12 months prior to listing;
c.Received a significant amount of third-party investment from at least one sophisticated investor 6 months prior to listing;
d.Market capitalization of over HK$1.5 billion at the time of listing;
Compared with the A-share innovative drug index, the Hong Kong stock innovative drug index can cover more such "biotech biotechnology companies", and for the innovative drug industry, the Hong Kong stock innovative drug index covers a wider range.
Valuation Analysis:
Let's take a look at the valuation of the Innovative Drugs Index:
Note: **Content from choice
Quantum Salted Fish Analysis: It can be seen that the PE quantile of the CS Innovative Drug Index has been below 25% in the past 5 years, and the index valuation is currently at a low level.
Tracking Target:
A-share innovative drug tracking**: innovative drug ETF (SZ159992), with a current scale of 874.4 billion, with better liquidity, and at the same time, it is an on-site ETF with lower transaction fees.
Hong Kong Stock Innovative Drug Tracking**: Hong Kong Stock Innovative Drug ETF (SZ159567) currently has a scale of 23.6 billion, which is also an on-exchange ETF, which is more flexible and has lower transaction fees.