1. Valuation fell and policy margin eased
1.1. The pharmaceutical sector performed in the middle, and the epidemic benefit performance was excellent

In 2022, the overall performance of the pharmaceutical sector was affected by factors such as policy repression and the downward trend of industry fundamentals caused by the epidemic situation. As of December 18, 2022, the pharmaceutical and biological industry closed at 9439.72 points, down 21.50%. Compared with the annual rise and fall of all primary industries, it ranked 19th in the whole industry according to the growth rate from large to small, ranking the middle, outperforming the Shanghai and Shenzhen 300 Index by 1.00 pct. Medical services closed at 9572.29, down 33.14%, underperforming the Shanghai and Shenzhen 300 Index by 10.65%.

The pharmaceutical sub-sector is highly differentiated, with the largest decline in medical services. In 2022, under the background of the control of epidemic situation and the new medical reform and medical insurance expenditure - "cage for bird", the differentiation of the medical micromolecule sector is still obvious. In terms of the characteristics of the rise and fall, the pharmaceutical business (+0.36%) and the traditional Chinese medicine (- 12.65%) were among the top gainers, mainly because the demand for anti-epidemic drugs and equipment increased significantly after the optimization of the anti-epidemic policy, and the performance of relevant pharmacies, pharmaceutical distribution enterprises and traditional Chinese medicine anti-epidemic drugs benefited; Medical services (- 33.14%) and biological products (- 30.06%) fell significantly, of which the decline in medical services was the first, mainly due to the decline in pharmaceutical investment and financing and the impact on business development under the epidemic of the companies related to pharmaceutical outsourcing services in the sector, and the strict epidemic prevention and control policies of private hospital companies throughout the year, and the greater impact on hospital visits.

1.2. The performance of listed companies is better than that of the pharmaceutical industry, and the industry segments are now divided
1.2.1. The pharmaceutical industry suffered from the impact of the epidemic, and its revenue and profit fell

Under the complex and volatile economic situation and the increasingly competitive market environment, with the deepening of the medical reform, the acceleration of policy measures such as the zero mark-up of medical insurance fee-controlled drugs, the centralized purchase of drugs, the two-ticket system, and the deepening of the restructuring and upgrading of the pharmaceutical industry, China's pharmaceutical industry has entered a new normal of overall slowdown. In 2020, the revenue and profit of the industry affected by the COVID-19 showed a negative growth at the beginning of the year, and then gradually recovered. In 2022, the epidemic in many places in China repeated, which had a great impact on the pharmaceutical industry. According to the data of the National Bureau of Statistics, the cumulative revenue of the pharmaceutical industry in China in Q1 to Q3 of 2022 was 2097.05 billion yuan, a decline of 2.2% over the same period, 10.4 percentage points lower than the growth rate of the overall revenue of the national industry; The total profit was 320.38 billion yuan, down 29.3% year on year, and the growth rate was 27.0 percentage points lower than the overall profit growth of the national industry. Although the overall growth rate of the pharmaceutical industry has declined due to the impact of the epidemic, it is expected that with the optimization of epidemic prevention policies for COVID-19, medical demand is expected to recover rapidly.


1.2.2 The performance of the pharmaceutical sector has grown steadily, and the performance of medical services and medical devices has been outstanding