The profit growth of the pharmaceutical industry in the second half of the year or continues to decline

On September 23, the National Development and Reform Commission "released an analysis of the economic operation of the pharmaceutical industry from January to July 2011." The report shows that from January to July this year, the pharmaceutical industry achieved an output value of 802.4 billion yuan, an increase of 29.6% year-on-year. However, most industry players are pessimistic about the profit growth of the pharmaceutical industry in the second half of the year.

Government investment to stimulate rapid growth in output value

Since the beginning of this year, under the backdrop of the unstable global economic situation and tight domestic monetary policy, many industries have encountered a "cold cold." From the beginning of this year alone, the pharmaceutical industry has maintained a high growth rate of more than 20% in output value and profit. Industry sources said that this was due to the government’s huge investment.

According to Yu Mingde, president of the China Association of Pharmaceutical Enterprises Management, most pharmaceutical companies in China are still based on generic drugs. Under the new medical reform policy, the government announced in 2009 that it will invest 850 billion yuan in primary care in three years. This year, it was added to 11342 billion yuan. In addition, provinces, especially those with stronger economic strength, have also increased their investment in primary health care.

Yu Deming said that in this situation, domestic companies have increased their production and investment, and thus it is reasonable to continue the high growth of more than 20%. In addition, some analysts believe that the pharmaceutical industry in China is still a very unmarketable “market” that the government will control. Therefore, even if the government’s investment is just a paper document, the multiplier effect in the short-term and medium-term is very significant. Therefore, it has a strong pulling effect on the pharmaceutical industry.

In addition, some experts believe that the current demographic change in China is also one of the reasons for the rapid development of the pharmaceutical industry. According to the data from the sixth national census issued by the National Bureau of Statistics, the population aged 60 and over account for 13.26%, which is 2.93 percentage points higher than the 2000 population census. Among them, the population aged 65 and over accounts for 8.87%, compared to the 2000 census. It rose 1.91 percentage points. The elderly population in China has increased, and the pace of growth has continued to accelerate. China has entered an aging society.

Guo Fanli, a research fellow at China Investment Advisors Co., Ltd., said that the arrival of an aging population has led to rapid growth in anti-tumor, immune-enhanced, and diabetes drug treatment. On the other hand, as population life expectancy increases, more and more people are beginning to pursue quality of life. Emphasis on health care, which also led to the large-scale use of biosimilars, modern Chinese medicine and health products.

Many reasons lead to a decline in corporate profits

For enterprises, the value of production is important, but profit is the fundamental to the survival of the company. The data released last month by the National Development and Reform Commission on “The economic analysis of the pharmaceutical industry in the first half of 2011” showed that the profit growth rate of domestic pharmaceutical companies in the first half of this year was reduced by nearly 15 percentage points to 21.2% compared to the growth rate of 37% in the same period of last year. .

The profit growth rate of pharmaceutical companies in January-July this year was not mentioned in the report. However, according to the survey results of several experts interviewed, the profit growth rate did not increase much compared with the first half of the year.

This kind of profit growth rate is less than the growth rate of output value, which means that the market is somewhat distorted.

The reasons for this market distortion are different. Yu Xiangbing, head of the Huabao Securities Pharmaceutical Biology Research Group, believes that the decline in profit growth in the first half of the year is mainly due to inflation. In the first half of the year, both energy and Chinese herbal medicine prices have risen significantly, and human resources The increase in costs is also more objective. According to the results of his investigations in some enterprises in Guangdong, the person in charge of many pharmaceutical companies in the first half of this year stated that the salaries of employees in the first half of this year rose by more than 20%. The rising energy costs, raw material costs, and labor costs have further reduced the company's profit margins and greatly reduced the growth rate of corporate profits.

Yu Mingde emphasized that the “culprit” that caused a significant decline in the growth rate of corporate profits is the current bid-purchase policy for basic medicines, and in particular, the Anhui model that “only low prices are adopted”. This makes the company to win the bid for the product, desperately lower its price, and even at the loss, "Although this amount has gone up, in fact, the more companies sell more losses, the profits will certainly not go," Yu Mingde said.

Profit growth will not be optimistic in the future

Regarding the trend of the second half of this year, the experts interviewed by the reporter are not optimistic about the growth rate of corporate profits. Yu Mingde directly told reporters that under the current bid-and-purchase procurement system, companies can only further push down prices, and profit growth will continue to decline.

Yu Xiangbing expressed a limited optimism. He believes that the current prices of energy and raw materials have fallen from the previous, and the labor costs of various companies in the second half of the year can not be much change, so if there is no other negative factors, the second half of the company's profit growth can be estimated and Flat in the first half.

In addition, on September 27, the CSI 100 Index closed at 1117.30, down 0.08% from the previous trading day, and this year, following the 1121.27 of June 20, a new low, although this and the current overall economic situation Relevant, but it also reflects the current market's certain pessimism about the pharmaceutical industry.