The semi-annual reports of the A-share two cities have been announced, and the medical device industry has become the biggest winner.

Data show that affected by the epidemic, as of August 31, 3,972 A-share listed companies achieved total revenue of 23.52 trillion yuan, a year-on-year decrease of 2.65%; a total of 1.85 trillion yuan in net profit, a year-on-year decrease of 17.78%.

But in the case of the overall market decline, the medical device sector has skyrocketed against the trend. According to statistics, only 4 of the 71 medical device companies have suffered losses, and all the others have achieved profitability, and 26 companies have increased their net profit by more than 100%. The total revenue of the industry sector increased by 43.86% year-on-year, and the total net profit increased by 340.53 year-on-year. %.

But behind the rapid growth, there is a crisis in the international supply chain of medical devices.

Cai Tianzhi, deputy secretary-general of the China Chamber of Commerce for Import and Export of Medicines and Health Products, recently stated at the 2020 China Medical Device Industry Development Forum that certain core parts of my country’s medical device manufacturing still rely on imports. This epidemic has also exposed some Chinese medical devices. Weaknesses in the equipment supply chain.

Medical device industry becomes the biggest winner

According to the statistics of Zhongcheng Medical Devices Research Institute, from the perspective of quarterly performance, the growth of the medical device industry in the second quarter is still accelerating. In 2020, the total revenue of A-share medical device companies increased by 5.15% year-on-year in the first quarter and 43.86% year-on-year in the second quarter; total net profit increased by 120.02% year-on-year in the first quarter, and increased by 340.53% year-on-year in the second quarter.

As for the reasons for the growth in performance, many medical device companies all agreed that they were “affected by the epidemic”.

The outbreak of the new crown epidemic has turned medical device products such as masks, testing reagents, and ventilators that are not very present in daily life into the most sought-after "hard currency". As long as the concept of epidemic prevention is contaminated, the stock price can skyrocket.

According to Wind data, as of the close of September 3, the mask index has increased by 88.63% year-to-date. Among them, Intech Medical (300677.SZ), which is the leader in the increase, was only an unknown medical care product manufacturer before the epidemic, but in With the support of concepts such as masks and protective gloves, the total market value has now easily crossed the 30 billion threshold, with a year-to-date increase of 725.23%. In the first half of the year, Intech Medical achieved revenue of 4.45 billion yuan, an increase of 352.09% year-on-year, and realized a net profit of 1.921 billion yuan, an increase of 2611.87% year-on-year. The profit scale reached nearly three times the sum of the past seven years.

The increase in net profit is even more amazing than Incorporated Medical's Shengxiang Bio (688289.SH), which officially launched on the Sci-tech Innovation Board a week ago. In the first half of 2020, Shengxiang Biotechnology achieved revenue of 2.1 billion yuan, a year-on-year increase of 1159.39%; realized net profit of 1.232 billion yuan, becoming the "king of net profit growth rate" in the first half of the A-share market with an increase of 147 times.

Daan Gene (002030.SZ) and Oriental Bio (688298.SH), both of which are on the same in-vitro diagnostic (IVD) circuit with Shengxiang Bio, also increased their net profits in the first half of the year by more than 1,000%.

Mindray Medical (300760.SZ), which has the most complete product line in the industry, is still the "stronger Hengqiang", leading the medical device sector with 10.564 billion yuan in revenue and 3.454 billion yuan in net profit, and is the only half-year revenue in the industry Enterprises with a scale of over 10 billion.

The core parts are "jammed"

Riding on the east wind of the epidemic, my country's medical device industry has been advancing all the way in the first half of the year. The spread of overseas epidemics has caused the export volume of related epidemic prevention products to rise sharply. According to relevant customs data, as of July 14, my country’s total export volume of medical masks has reached 107.9 billion, 387 million sets of new coronavirus detection kits, 161,000 ventilators, and the export value of major epidemic prevention materials reached 288.79 billion yuan.

However, medical and health researcher Yang Li told Times Finance and Economics on September 3 that the domestic medical device industry as a whole is facing problems such as weak technology and homogenization of product competition. Coupled with the restrictions on technology transfer from the United States to China, the "stuck neck" problem is once again Therefore, it is urgent to accelerate independent innovation and realize the import substitution of high-end medical equipment such as high-end medical imaging and surgical robots.

"Whether the ventilator or ECMO is good, the key core parts are all in Europe and America, which also blocked the temporary ventilator demand of some domestic enterprises." Cai Tianzhi said.

ECMO (Extracorporeal Membrane Oxygenation), known as the "life-saving artifact", is mainly used to provide continuous external breathing and circulation for patients with severe cardiopulmonary failure to maintain the life of the patient. It can be said to be the last line between the patient and the death. barrier.

Generally speaking, domestic tertiary hospitals usually only have 1-2 ECMO machines, but the demand for ECMO has suddenly increased during the epidemic. However, there is currently no domestic company capable of producing ECMO equipment. Foreign manufacturers such as Medtronic, Microvail, and Renofa almost dominate the global ECMO market.

Although domestic brand ventilators such as Mindray Medical and Yuyue Medical have achieved a large number of exports, core components such as turbofans, sensors, and chips still rely on imports. According to data from the China Medical Device Industry Association in 2019, foreign brand ventilators account for more than 75% of the domestic market. In particular, invasive ventilators that are difficult to produce are mainly imported brands.

Cai Tianzhi further pointed out that in terms of detection reagents, the raw materials required for the reagents for the automatic immunoassay analyzer accounted for a relatively large proportion. The antigen and antibody purchased from Germany and the United States accounted for 30% of the reagent cost, and the magnetic beads were mainly imported from Japan. , At present, the stability of domestic magnetic beads cannot meet the requirements.

is forcing high-end equipment research and development

The manufacturing of medical devices involves multiple industries such as medicine, machinery, electronics, etc. It is a multi-disciplinary, knowledge-intensive, capital-intensive high-tech industry. The difficulty of imitation is greater than that of drugs. Therefore, the cascading effect of leading companies will be more obvious. It is prone to a situation where "the strong are always strong".

my country's medical device industry started relatively late, and there is still a long way to go compared with developed countries such as Europe and the United States. According to the "China Medical Device Industry Development Report (2017)", as of the end of 2016, the ratio of per capita consumption of medicines and medical devices in my country was only 1:0.35, which was far lower than the global average of 1:0.7 and even lower than developed countries1 : 0.98 level.

Customs data shows that in 2018, my country’s medical device imports amounted to US$22.165 billion, a year-on-year increase of 8.89%, and exports amounted to US$23.63 billion, a year-on-year increase of 8.88%.

However, among the medical device products exported by my country, low-value consumables are mainly used. The import value of high-tech medical equipment is 15.126 billion U.S. dollars, and the export value is 10.077 billion U.S. dollars, which is the only one among all medical equipment import and export commodities. Categories of trade deficit.

This reliance on imports in high-end equipment and core technology makes the international supply chain of medical devices even more precarious against the backdrop of the Sino-US trade war.

Yang Li pointed out that the list of products that the two sides of the Sino-US trade war imposed tariffs on each other included medical device products such as magnetic resonance imaging and patient monitors.

"From the perspective of exports, under the combined influence of the current rising labor costs in China and other factors, the international low-end medical device industry chain is likely to withdraw, and China's exports of low-end medical devices with low added value and high consumption will bear certain pressure; from the perspective of imports In the short term, the constraints of key raw materials and components will lead to the lack of the industrial chain, and local companies will inevitably enter the relevant industrial chain, which will force China to accelerate the development of high-performance medical devices in the long term.” Yang Li said.