In April 2021, the Ministry of Industry and Information Technology, together with relevant departments, drafted the "14th Five-Year Plan for Intelligent Manufacturing Development" for soliciting opinions. The document proposes that by 2025, manufacturing enterprises above designated size will basically popularize digitalization, and key enterprises in key industries will initially realize intelligent transformation. By 2035, manufacturing enterprises above designated size will fully popularize digitalization, and backbone enterprises will basically realize intelligent transformation. This document undoubtedly released a big signal: the digitization of the manufacturing industry will be supported. As an important part of the manufacturing industry, the digital transformation of the pharmaceutical equipment industry is also imminent.

The farewell bell rings, looking back at 2021, the new coronary pneumonia epidemic continues to ravage the world, China's pharmaceutical industry also ushered in earth-shaking changes, and in the change to find new opportunities to explore new roads.

Some data analysis shows that China's pharmaceutical economy rebounded more sharply in 2021 after experiencing the low tide of the impact of the 2020 epidemic. According to the National Bureau of Statistics, from January to October 2021, the operating income of China's pharmaceutical industry was 2352.98 billion billion yuan, up 22.8 percent year-on-year, and the total profit of the pharmaceutical manufacturing industry increased 76.7 percent year-on-year. However, the main driving force of the high growth is the decline in sales of hospitals affected by the epidemic in 2020, and after the normalization of epidemic prevention and control, chemical preparations, traditional Chinese medicine and biological products all rebounded sharply. Overall, the pharmaceutical economy continued to recover in 2021, with a steady slowdown in growth. PHT Pharmaceutical Industry combs the current situation of the industry in 2021 and looks forward to the future development trend of the pharmaceutical industry.

1. centralized volume procurement into normalization

Volume procurement, known as "super group purchase", in the form of volume for price, while ensuring the quality of drugs, promotes the further decline of drug prices, squeezes out unreasonable prices in circulation, and breaks the old pattern of interests. National-level band procurement began in the second half of 2018, and so far, China has carried out six batches of drug band procurement and two batches of high-value medical consumables band procurement, and the institutional framework for centralized band procurement has been basically formed. Wherever the collection went, the prices of the winning products were "halved". The price of the largest drug dropped by more than 99%, and the collection of two batches of high-value consumables, coronary stents and artificial joints, was reduced by 92% and 82% respectively, setting a record in the past 20 years. Under the banner of national centralized procurement, various forms of procurement organizations such as inter-provincial and regional alliance VBP and provincial "group buying" have also emerged. At the same time, the category of collection has also expanded from chemical drugs to biological drugs, Chinese patent medicines, high-value medical supplies and so on. With the volume of procurement has become the baton of enterprise action, under the collection, generic drugs into the era of meager profits, how to break through the transformation of enterprises has become a life and death problem in front of us.

2. innovative drugs, generics continue to grow

After decades of development, China's innovative drug achievements have emerged one after another, gradually moving forward to create a pharmaceutical power, greatly reducing drug prices, and making great contributions to saving health insurance expenses and reducing the burden on patients; at the same time, the gap between China and the global pharmaceutical powers is gradually narrowing, and China's pharmaceutical innovation has almost jumped to the second echelon in the world. In 2021, the overall trend of the development of China's pharmaceutical enterprises is growing rapidly. From January to September 2021, the operating income of China's pharmaceutical enterprises above designated size reached 2129.1 billion billion yuan, up 24.4 percent year-on-year; the total profit reached 452.53 billion billion yuan, up 80.6 percent year-on-year. In 2022, the country will continue to help the pharmaceutical industry grow steadily. Since 2015, the State Administration of Food and Drug Administration and the State Council have continuously introduced new policies involving innovative drug research and development, review, registration, production and post-market payment. These include the opening of a green channel for new drug approval, priority review and approval of clinically urgently needed new drugs and rare disease drugs, IND application acquiescence system, conditions to speed up the review of breakthrough treatment drugs, etc., to help local innovative drugs quickly approved for listing. Not only is the development of innovative drugs, in the long run, with a large number of global heavy drug patents concentrated expiration, domestic pharmaceutical enterprises will also usher in a huge development opportunities, in this period, whether to participate in the collection or enter the medical insurance, pharmaceutical enterprises to improve the speed of approval is beneficial and harmless.

3. pharmaceutical equipment industry is steadily developing towards digitalization, domestic substitution, green and internationalization.

The development of the pharmaceutical equipment industry in 2021 can be interpreted by the four keywords of digitalization, domestic substitution, green development, and internationalization.

In April 2021, the Ministry of Industry and Information Technology, together with relevant departments, drafted the "14th Five-Year Plan for Intelligent Manufacturing Development" for soliciting opinions. The document proposes that by 2025, manufacturing enterprises above designated size will basically popularize digitalization, and key enterprises in key industries will initially realize intelligent transformation. By 2035, manufacturing enterprises above designated size will fully popularize digitalization, and backbone enterprises will basically realize intelligent transformation. This document undoubtedly released a big signal: the digitization of the manufacturing industry will be supported. As an important part of the manufacturing industry, the digital transformation of the pharmaceutical equipment industry is also imminent. Since 2021, many pharmaceutical companies are actively embracing digitalization and accelerating their investment in digital upgrading. For example, a pharmaceutical enterprise uses digital chromatography system to shorten the manufacturing cycle of pharmaceutical equipment hardware; there are also pharmaceutical equipment enterprises deep into the intelligent manufacturing of pharmaceutical equipment, through the acquisition and establishment of subsidiaries, multiple layout to build "intelligent intelligent pharmaceutical factory", accelerate the entry into the "pharmaceutical industry 4.0 era". Through digital transformation, it is beneficial for enterprises to improve management efficiency, reduce costs, and at the same time ensure the quality and safety of drugs, and promote the development of the entire industry with higher quality.

2021 is the first year of the "14th Five-Year Plan". According to the 14th Five-Year Plan and the 2035 long-term goal outline, innovation is an important content. Since the beginning of this year, pharmaceutical equipment companies are accelerating innovation, gradually upgrading from low-end to high-end, from single equipment suppliers to overall solutions. At the same time, domestic pharmaceutical companies have accelerated the process of domestic substitution of imports by strengthening innovative research and development in the case of delayed delivery of imported equipment. A research report released by an institution during the year pointed out that after ten years of industrial chain development, domestic pharmaceutical equipment enterprises have gradually become China's high-end manufacturing segments, domestic substitution accelerated, export overseas business growth is rapid, the industry has gradually faded cyclical attributes ushered in long-term growth.

The upstream of pharmaceutical equipment belongs to one of the high pollution industries, the green and low-carbon requirements for production equipment are constantly improving, forcing pharmaceutical enterprises to continue to improve and upgrade equipment to meet the environmental protection production needs of pharmaceutical enterprises. For example, this year, some pharmaceutical companies have specially developed a new combined multi-effect distilled water machine that can provide sterile pharmaceuticals, injections, large infusions, and biopharmaceuticals for the pharmaceutical industry. The equipment can be continuously operated for 240 days, saving water, saving industrial steam, reducing enterprise sewage pressure on the comprehensive energy saving 65%. In November 2021, the two ministries and commissions issued the ''Notice on Promoting the Implementation Plan for the High-quality Development of the Industry'', proposing to develop a batch of high-value-added and high-growth varieties by 2025, break through a batch of green and low-carbon technology equipment, and break through the industry. Development bottlenecks restrict and improve the level of independent supporting of the industrial chain. With the release of this plan, the importance of green development has become more prominent. It is expected that relevant pharmaceutical companies will further seize the opportunity to build energy-saving, efficiency-enhancing and environmentally friendly pharmaceutical equipment.

Relevant data show that in recent years, the domestic pharmaceutical equipment industry exports continued to grow, about 20 to 3 billion yuan. At present, internationalization has become a major trend in the development of domestic pharmaceutical equipment enterprises, and is also regarded as a new growth point of performance by enterprises.

4. biopharmaceuticals to flourish, upstream equipment and consumables products will be promising

According to incomplete statistics, as of December 25, the State Drug Administration issued a total of 23 innovative drugs approved in 2021, including 9 biopharmaceuticals, 3 vaccines, and nearly half of the innovation of biopharmaceuticals. There are many bright spots in the new drugs approved by the State Food and Drug Administration in 2021, not only in terms of quantity compared with previous years, but also in the field of treatment, the distribution of innovative drugs approved this year is also very rich, such as tumor, respiratory system, nervous system, digestive tract and metabolic and immune system diseases. In addition to anti-tumor drugs, it also includes new drugs for diseases such as systemic lupus erythematosus and rare diseases.

With the steady progress of medical reform, domestic pharmaceutical companies have officially entered the innovation transition period. From 2016 to 2020, the research and development investment of biopharmaceutical listed companies has been expanding. In 2020, the R & D expenditure of China's listed biomedical companies reached 11.534 billion billion yuan, up 37.10 percent year-on-year. Some data show that in the first half of 2021, the R & D expenditure of China's biomedical listed companies has reached 6.978 billion billion yuan. On the whole, the increase of R & D investment will help to accelerate the transformation of research results of biomedical products.

From the perspective of the entire biopharmaceutical market, the global biopharmaceutical market space will increase from US $286 billion in 2019 to US $768 billion in 2030; my country's biopharmaceutical market space will increase from US $312 billion in 2019 to US $1303 billion in 2030; In 2019, the proportion of global and Chinese biopharmaceuticals will be 22% and 19% respectively, and will reach 37% and 41% respectively in 2030. The main cost of biopharmaceuticals is composed of equipment and consumables, with the vigorous development of biopharmaceuticals, its upstream equipment and consumables products will also have a bright future.

The overall market size of the global biopharmaceutical equipment and consumables is about US $20 billion, with a growth rate of more than 10%, of which equipment accounts for about 46% and consumables for about 54% (excluding the new crown vaccine). According to China's biopharmaceutical market size of about 18% of the world's estimates, China's biopharmaceutical equipment and supplies market about 25 billion yuan, of which supplies about 13.5 billion yuan (not taking into account the new crown vaccine).

However, most of the domestic biopharmaceutical upstream equipment and consumables still rely on imports. As a key link in the biopharmaceutical supply chain, for the domestic market, disposable consumables and equipment also belong to the "stuck neck" field. At present, there are two alternative trends in the industry: first, disposable consumables systems are replacing traditional stainless steel equipment; in addition, the supply chain, which is heavily dependent on imports, may accelerate the process of domestic substitution in the current international environment. Domestic main biopharmaceutical disposable consumables enterprises were established in 2005, the whole industry is in a relatively young stage, there is considerable room for growth. With the continuous improvement of the quality of the domestic industrial chain, the broadening of the layout and other factors, the upstream equipment of the biopharmaceutical industry chain and the domestic substitution of consumables will certainly have a lot to do.

5. Traditional Chinese Medicine Equipment Industry Ushers New Opportunities

Traditional Chinese medicine is a treasure of the Chinese nation. Since 2020, due to its prominent advantages, it has been further supported by favorable policies. At the same time, with the development of new technologies such as big data, cloud computing, and artificial intelligence, the Chinese medicine industry has ushered in considerable market prospects. Some data predict that the scale of China's traditional Chinese medicine pharmaceutical market will increase from 73.7 billion yuan in 2020 to 75.3 billion yuan in 2021, and show a continuous growth trend. 2021 is the first year of the 14th Five-Year Plan. Based on a new starting point, national and local favorable policies have been continuously introduced to support the innovation and development of the Chinese medicine industry, and the documents issued in many places also mentioned the key supporting role of Chinese medicine equipment. Target planning has been made in terms of supporting the development of market-competitive Chinese medicine equipment, building research and development platforms, gathering and cultivating talents, and transforming innovative achievements. In this context, it is expected that the Chinese medicine equipment industry will also usher in new opportunities.

Many places to support the development of Chinese medicine equipment. For example, recently, the "14th Five-Year Plan for the High-Quality Development of Traditional Chinese Medicine in Sichuan Province" issued by Sichuan Province clearly stated that it is necessary to innovate and develop the Chinese medicine equipment industry. Actively strive to undertake the national pilot construction of key technical equipment of traditional Chinese medicine, focus on supporting the development of traditional Chinese medicine diagnosis and treatment equipment, rehabilitation aids, new pharmaceutical equipment, traditional Chinese medicine testing equipment, etc., and cultivate traditional Chinese medicine equipment industrial clusters. Seize the golden opportunity period for the development of intelligent equipment of traditional Chinese medicine, and promote the listing of intelligent equipment of traditional Chinese medicine with market competitiveness. On November 29, the "14th Five-Year Plan for the Development of Traditional Chinese Medicine in Shanghai" issued by the Shanghai Municipal Health Commission and the Shanghai Administration of Traditional Chinese Medicine proposed to strengthen the cross-integration of multiple disciplines in basic research, clinical evaluation, new Chinese medicine, A group of collaborative innovation teams have been formed in the key technologies of modern equipment, international standardization research, and service trade to cultivate high-level compound innovative talents of traditional Chinese medicine. At the same time, we will build a high-level technology transformation center with traditional Chinese medicine characteristics in the "five new cities", build a number of bases for traditional Chinese medicine research and incubation and transformation of scientific and technological achievements representing the national level, and formulate a number of diagnosis and treatment plans with traditional Chinese medicine characteristics. into a number of advanced equipment and new traditional Chinese medicine. At the end of November, the "14th Five-Year Plan" for the development of traditional Chinese medicine in Hunan Province proposed to accelerate the construction of a platform for scientific research and innovation in traditional Chinese medicine. Among them, it is mentioned that it is necessary to lay out and build a provincial TCM clinical medicine research center, a TCM intelligent equipment research and development center, a Chinese herbal medicine breeding research center, a Hunan Chinese medicine industrialization research center, a Chinese medicine engineering research center, and a Chinese medicine enterprise technology center. From the planning of the above provinces and cities, it is mainly to promote the development of traditional Chinese medicine equipment industry by encouraging the development of traditional Chinese medicine equipment with market competitiveness, building R & D platform, gathering and cultivating talents, and transforming innovative achievements.

According to statistics, there are currently thousands of medical equipment companies in my country, including Chinese medicine equipment. The Chinese medicine equipment on the market includes shredders, extractors, thickeners, dryers, etc., with continuously enriched varieties and complete specifications. It can basically guarantee the production needs of Chinese medicine companies. However, from the perspective of challenges, at present, there are still some problems in the traditional Chinese medicine equipment industry, such as backward enterprise management, lack of key technologies, low level of research and development, and lack of talents, which also leads to the low overall level of traditional Chinese medicine equipment, high energy consumption, low operational efficiency, and lack of durability in terms of equipment performance, which can not meet the requirements of high-quality development of modern traditional Chinese medicine. With the support of a series of favorable national and local policies, some of the above-mentioned bottleneck problems are expected to be gradually solved, and the entire Chinese medicine equipment industry will also usher in new opportunities. From the trend point of view, high efficiency and energy saving, low-carbon environmental protection, automation and high level of intelligent Chinese medicine equipment will become the future development direction of the industry, and the active layout of pharmaceutical machine enterprises is expected to get a good opportunity for development.

6. China's CXO industry will enter the stage of differentiation

The global CXO industry is growing steadily, and biopharmaceutical CDMO services show greater growth potential. Global pharmaceutical market revenue and research and development investment continued to grow steadily small and medium-sized pharmaceutical enterprises outsourcing demand continues, pharmaceutical enterprises need to carry out cost control. The new crown outbreak has brought some new orders to CXO companies around the world, including chemical small molecule drugs, antibodies and vaccines. After the global leading companies reached a certain scale of revenue, the growth rate of traditional small molecule business slowed down, and the main performance growth was contributed by biopharmaceutical-related business. Biopharmaceuticals showed good growth potential in terms of sales revenue, and corresponding Bio-CDMO services showed greater growth potential. At present, Bio-CDMO production capacity is still in the hands of a small number of leading enterprises, and the Bio-CDMO business of leading enterprises will show excellent performance growth in 2021.

China's CXO industry will show a high degree of performance in 2021 and will enter a stage of differentiation in the future. Q1-Q3 2021, China CXO enterprises showed excellent year-on-year growth in revenue and profit, and the inventory level and contract liability level as of the end of Q3 also increased compared with the same period last year, laying the foundation for the 2022 performance boom. Both Kellein and Botten (rights) have received large orders from overseas pharmaceutical companies, helping to grow their performance in 2022. Chinese CXO companies are actively building capacity and team building in 2021 to release capacity to improve order taking capacity. After China's CXO industry reaches a certain scale of revenue, the overall CXO industry is expected to enter a stage of differentiation. Leading companies with technology and core competencies are expected to take on more orders and more complex businesses in the chemical small molecule business, as well as grow in emerging businesses such as biomacromolecules. Companies that are less competitive in the industry will face lower overall growth rates. Investment is expected to enter the "carefully selected" period, the need to select the core competitiveness of CXO enterprises to invest.

Biopharmaceuticals and cell and gene research and development heat brings the corresponding CXO demand, China CXO enterprises actively carry out the corresponding layout. The number of biopharmaceuticals and the number of biopharmaceutical clinical trials in the number of new drug IND approvals for CDE in China showed an upward trend, and the growth potential of biopharmaceutical-related CDMO services was greater than that of the overall CDMO market. As China's biopharmaceutical CDMO service leading enterprises, master WuXiUP, WuXiBody, WuXiDAR4 and other advantages of the platform, performance showed high business climate growth, and actively carry out production capacity construction traditional chemical small molecule leading CXO enterprises are also actively in the emerging field layout.