Chemical and Pharmaceutical Industry: Game of Growth and Valuation

In the context of the global economic crisis in 2008, the pharmaceutical industry in China maintained a high growth rate. It is expected that annual sales revenue will increase by 25%, net profit will increase by 35%, and the pharmaceutical sector in the capital market will also perform well. The overall yield rate 18% higher than the market as a whole.
The growth rate of the pharmaceutical industry will slow down in 2009, but it will still be able to maintain 15-20% of sales revenue and a growth rate of 25-28% of net profit. The pharmaceutical sector will lead the broader market in 2009, but the relative return rate will be lower than 2008. The level of the year.
From the perspective of China’s current population structure, income level, policy orientation, and consumption concept, China’s drug consumption will maintain rapid growth within 3-5 years, but then there will be a relatively low growth period until 2020. Continue to grow rapidly.
In 2008, the growth rate of investment in fixed assets in the pharmaceutical industry was far higher than the historical growth rate. Foreign capital has also increased its penetration in China. In the future, supply will increase rapidly and competition will further intensify.
From the perspective of Mesoscopic data, the sales growth rate of the pharmaceutical manufacturing industry in October has begun to decline. It is expected that sales growth in 2009 will show a trend of low-end and high-end. The current premium rate of the pharmaceutical sector relative to the broader market has returned to the previous high level. Therefore, the potential for growth in 2009 and the pressure of valuation coexist.
For pharmaceutical listed companies in 2009, the rapid increase in the prices of bulk APIs and the small company's single product volume are unlikely to result in substantial growth. Listed companies are mostly faced with the risks and opportunities of transitioning from small to medium-sized companies. The management capabilities of the company's management will be an important factor in considering the value of the company.
After balancing the company's growth potential and valuation pressures, the companies listed on the right are recommended. Of course, if the valuation of other high-quality pharmaceutical companies returns to a reasonable level, it is also an investment option.

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