[China Pharmaceutical Network Industry News] The cycle product market in the past six months is obvious to all. Its internal logic is the event catalysis of supply-side reform, industry automatic clearing and environmental protection inspection. At present, the cyclical sector tends to be weaker, and the market has formed a consensus expectation. The price increase of cyclical products such as coking coal, coke and rebar has slowed down. The cyclical stock market will come to an end, but the direction of the supply-side reform logic will add new recruits, that is, the agricultural and pharmaceutical sectors.

Since the reform of the agricultural supply side was first proposed by the central government at the end of 2015, the relevant policies have been intensively introduced. In 2017, the central “No. 1 Document” focused on the reform of the agricultural supply side, which brought the reform to a new height. The core of future agricultural investment opportunities comes from the reform of agricultural supply side: China's agricultural core contradictions have undergone substantial changes. The current changes in core contradictions are manifested in the past from the lack of total capacity to the effective supply shortage. The future agricultural industry trend is “implementation to promote The supply-side reform of the core of effective supply of agricultural products, from the top down, investment opportunities will be built around this industry trend.

The agricultural industry faces the problem of insufficient efficiency, and the cost of maintaining the current aggregate supply situation is too high: the planting cost is significantly higher than that of the United States. The total cost of planting wheat, corn and soybean in China is 203%, 53%, 80% higher than that of the US; The labor cost is too high. The average land cost of soybean planting in China is 247.7 yuan per mu, while that in the United States is only 160 yuan, and the cost of grain planting in the United States is very small. In addition, there are costs including policy costs and financial pressure brought by the temporary storage policy.

The supply-side reform logic of the livestock and poultry breeding industry is to accelerate the elimination with higher breeding efficiency, more comprehensive and scientific feed formula, better dynamic protection, lower environmental negative external effects, and more reasonable regional layout. The low-efficiency and high-pollution capacity represented by retail investors provides the masses with an effective meat supply that is “cheap, delicious and safe”. This means that the development period of the leading gold industry in the aquaculture industry is coming soon. From the three perspectives of income, profit and valuation, the leading indicators of the aquaculture industry will be favored, and both profit and valuation will come.

The supply-side reform of the current pharmaceutical industry – “Standard Evaluation of Synthetic Drugs” is also in full swing. The consistency evaluation of generic drugs has been carried out for a year and a half. Relevant enterprises have a clear and profound understanding of the importance of this work, rational choices, and concentrated resources for their own rapid progress and the most promising competition for the market. Variety consistency evaluation work. The State Food and Drug Administration has made a heavy attack, and the consistency evaluation has been significantly accelerated. A number of consistent evaluation varieties have entered the review stage of the SFDA, and the theme has gradually increased. According to the latest “Guidelines for Acceptance of Examinations”, the application for the evaluation of generic drug conformity is submitted to the State Food and Drug Administration for unified acceptance. As of September 24, the General Administration has accepted nearly 20 applications for quality regulations. According to the time limit requirements, the review work should generally be completed within 120 working days after acceptance. We expect that the first batch of generic drug conformity evaluation varieties in China is expected to be approved at the end of 2017 or early 2018. This means that the next year will be the key period for the evaluation of the consistency of generic drugs. The varieties will pass the consistency evaluation, the reshuffle of the Chinese pharmaceutical industry will officially begin, and the pharmaceutical industry will enter a new starting point for long-term cycles. . With the advancement of the consistency evaluation of generic drugs, China's chemical pharmaceutical industry will be de-capacity, and the optimization of market competition will accelerate. The “leftovers” will be kings, the spring of supply-side reform will come, and the pharmaceutical industry will enter a new starting point for long-term cycles. An excellent therapeutic pharmaceutical company with a solid industrial foundation, a certain amount of profit, a large number of varieties, and an emphasis on consistency evaluation and smooth evaluation will eventually benefit from the structural opportunities of the industry change. At the same time, benefiting from the consistency evaluation of generic drugs, the demand for BE test is strong, and the CRO industry is picking up. The listed companies engaged in clinical research related consulting services will also bring some certain performance growth. (Author: Guotai Junan Securities)

Original title: Supply side reform market is still in the agricultural and pharmaceutical sectors into focus

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(Source: Securities Times)