Photo by Tiago Muraro on Unsplash
First, aging is not a life-saving straw for the pharmaceutical industry
The first thing in industry research is to find industry trends, and the industry trend comes from the long-term and continuous contradiction between supply and demand in this industry.
The contradiction between supply and demand of high-end liquor is the contradiction between “capable of rapidly increasing capacity in the short term” and “continuously expanding high-end consumer demand”; the contradiction between supply and demand in the consumer electronics industry chain is “consumer’s new and old” and “performance upgrade” The contradiction of the huge investment; the contradiction of the new energy industry chain is the contradiction between “very easy to overcapacity” and “downstream demand for price reduction”…
Growth is nothing more than the relationship between quantity and price. What drives quantity and price is the contradiction between supply and demand. Any business logic that can solve or alleviate this contradiction is a general trend; business logic unrelated to this is a small trend.
The chances that a person can seize are limited. If you want to make big money in a limited opportunity, you must grasp the logic. This is the meaning of industry research.
The same is true for research in the pharmaceutical industry. Some people are always staring at Chinese medicine stocks and generic medicines ten times more than PE. They feel cheap, but the question is, do you know what is the general trend of medicine?
In the investment logic of pharmaceutical stocks, it should be said that there is a consensus that the aging trend of China’s aging is deepening, giving the pharmaceutical stocks a lot of room for future development.
The logic seems to be correct. People are old and sick, and the medical expenses are bigger. The problem is that drugs are not the same as general consumer goods. The big part of paying for medical expenses is medical insurance, and the person who uses the medicine is not the one who pays.
In fact, it is not medical insurance, but every person who pays for medical insurance. The main force of medical insurance is the working staff, young and middle-aged, and aging means that this group is decreasing.
The problem wraps around and becomes a dead knot. The demand for no ability to pay is “pseudo-demand”, and “aging” is a fake drug, not a general trend in the pharmaceutical industry.
Japan’s experience also proves that the growth of the elderly population will only push up medical services, not medicines – because children are younger and older people need to buy services.
Under this ability to pay, you expect that “aging” will allow the pharmaceutical industry to have an overall sustained growth that is simply impossible.
But the problem is that medical care is not a general consumption, saving people’s lives, winning the seven-level floating battalion, and believing that the country has no money to make money.
So in the end, is the demand driving the space of the pharmaceutical industry, or is the ability to pay to limit the space of the pharmaceutical industry?
I don’t know. But we can at least get the long-term and continuous contradiction between supply and demand in the pharmaceutical industry: the growing demand for good medicines by the people and the lack of medical insurance funds caused by aging.
Simple one sentence: medical needs are unlimited, and medical insurance supplies are limited. Any business logic that can solve or alleviate this contradiction is a big trend,
To find this big trend, we must first analyze a phenomenon. It is also an ageing country. It is also a heavy burden for the whole people. Why can we “fed” many large pharmaceutical companies?
Second, the difference between Chinese and American health insurance
The medical insurance in the United States is very different from China. Except for the medical insurance of some special populations, most of them are covered by commercial insurance, and there are many, there is fierce competition.
This is the answer to the question. The medical insurance institution wants to make money. The medical insurance income comes from the insured person. The best way to attract the user’s participation is to cover more diseases, especially those who will die. The competition of medical insurance companies has also stimulated large pharmaceutical companies to develop these new drugs. A lot of newThe drug was approved on the first day, and the medical insurance list was taken the next day, and this process often takes several years in China.
Because China’s medical insurance is a government agency, participation is mandatory. Therefore, the most important responsibility of China’s medical insurance is to enable these funds to operate. More importantly, to cover common diseases, there is no strong motivation to introduce them. Expensive special effects, unless the voice of the masses is too high.
But we must think a few more steps to make investments. American medical insurance is highly efficient, so they have problems that are incurable. China’s medical insurance is inefficient, so there is a lot of room for improvement.
The bell is still needed to ring the bell, and the general trend of resolving this contradiction is in it, and it has already appeared.
Third, “Super Medical Insurance Bureau” is more than just “super bargaining group”
The pharmaceutical industry research has to do one thing to find the most pure sub-sector with the most industry characteristics, because many marginal industries are affected by other industries, you must let your research not interfere with external factors.
Many sub-sectors of pharmaceutical stocks, first put the raw materials on one side, attributed to chemical stocks, their logic is more similar, and then the brand OCT drugs are classified as consumer stocks, and medical equipment stocks are classified as high-end manufacturing. CRO/CMO is classified as a business service industry, and pharmaceutical retail and wholesale companies are classified as commercial stocks, and blood products and vaccines are first removed as administrative licensing industry… (emphasize, just temporarily remove, find the core logic, but also come back to analyze)
In this way, the vast pharmaceutical stock team is left with only chemical drugs and biopharmaceuticals, and can also be divided into innovative drugs and generic drugs.
Many people see the pharmaceutical industry as a logic similar to consumer staples because they are all just needed, have no periodicity, and are products that are directly consumed.
This view was right before. The previous development and reform commission management, the People’s Insurance Department’s management catalogue, the Health Planning Commission’s bidding procurement, and medical insurance are just a “big accountant” for payment. The money can’t talk about the price, this is only for consumers. It is a logic to accept prices and not be able to participate in negotiations.
But now, the emergence of the “super medical insurance bureau” with the above powers has completely changed the medical insurance pattern, the most important of which is the price formation mechanism.
You think, if Moutai lets consumers price themselves, how will they decide? Do not pay for water and raw materials, give a little labor, and give a little more to the packaging fee.
Don’t laugh, the current generics are so priced.
If there is only one buyer in an industry, it must be the buyer’s pricing. The buyer’s pricing is the cost plus, such as the military industry, so the military can not produce the bull stock.
The results we also saw, with the amount of procurement. The lowest price won the bid, and the three companies split the market. Anyone who participated in the collection was cut on the heel. The logic of most companies in the pharmaceutical stocks collapsed.
But if you only think of the “super medical insurance bureau” as a “super bargaining group”, you may give up the real industry trend behind it.
Why do generic drugs cut 80%, and pharmaceutical companies still have profits? Because the cuts are marketing expenses, channel costs, this is the root cause of medical insurance can not make ends meet, after all, we are mandatory medical insurance, usually do not pay less, now it is not enough, then how to live in 20 years?
But if it is really an innovative medicine that is “this one alone, no other”, the medical insurance can not cut the price. It’s as if consumers are really pricing Maotai, Maotai must not sell the stalls, and where do you fall in love with where to buy them.
Classic competitive analysis tells us that if buyers and sellers are big, the price depends on the elasticity of demand and the number of potential entrants.
The elasticity of demand is whether the adaptation of the drug is widespread, and whether the consequences of the treatment are serious. If it is a good drug for the new drug that solves the demand gap, the medical insurance must also protect the teeth.
What if the medical insurance has no money? You have to cut the virtual high part of the generic medicine, and cut the “national quintessence medicine” with unclear effect. The main role of cutting is to use the auxiliary medicine for the order, cut the high value consumables, and then change the cage for the birds. The real “magic medicine” that could not be used before.
Therefore, after the collection of the bargaining price, the pharmaceutical stocks fell first and foremost together. After that, everyone slowed down and joined together. It’s not right, the money saved by medical insurance is always used, which is obviously good for innovation. Medicine, so innovative drug stocks reversed the record high, and the big differentiation began.
Some people think this is too ideal, so I call it the big logic big trend, and the only feasible way to solve the main contradiction mentioned above, and the trend is coming out,
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