It is worth mentioning that in recent days, large consumption segmentation, analysts focus on a relatively low attention - health care products industry.
China Merchants Securities believes that the health care product market is expected to meet the new opportunities after the epidemic, the industry direction for a better certainty is strong, the sector has a margin of safety and excess income space.
Zhongyuan Securities believes that in the post-epidemic period, China's health products market is expected to maintain a high growth level under the circumstance of intensified social and environmental pressures such as germs and aging.
Demand is temporarily suppressed
China Merchants Securities resumed the historical development of Chinese health products. The year 2003 was an important demarcating point. The sudden outbreak of SARS in 2003 accelerated Chinese consumers' cognition of health products, and the market sales scale of Chinese health products in that year exceeded 30 billion.
In 2022, the continuous mutation of the novel coronavirus continues to escalate the difficulty of prevention and control, and the spread of the epidemic across the country has depressed the consumption scene this year.
For example, areas with outbreaks often implement relatively strict lockdown policies, stopping drugstores from buying and selling drugs only at the window. In addition, the offline publicity and promotion of health products nationwide cannot be carried out normally, which has caused a huge impact on the health products market in the early stage of development.
Another factor weighing on the consumption of health products in 2022 is consumption power. Health care products are affected by economy and consumption power to some extent.
The market is expected to grow after the epidemic
Data showed that the compound growth rate of the VDS market in the US was only 3.6% in the first five years of the epidemic, and recovered to 5.9% in the three years after the epidemic, with a double digit growth rate of 11.6% in 2020.
China Merchants Securities believes that under the catalyst of multiple factors, the domestic health care product market is expected to meet the new opportunities after the epidemic, the industry direction for a better certainty is strong, the sector has the safety margin and excess return space.
First, in the early stage of the outbreak, the virus was more pathogenic and consumers had a certain degree of panic buying, which led to inventory hoarding by consumers, terminals and channels. However, the current epidemic is a catalyst for the increase of health demand. The short-term rigid nature of health care products can hedge against economic fluctuations. From the perspective of longer cycle, the industry is expected to further penetrate.
Second, with the recent optimization of epidemic prevention and control policies, although it still takes time for consumption power to recover and the sector is still on the left side, China Merchants Securities said that the direction of a better certainty. In the medium term, economic growth is an important driving factor for the development of health care products.
Third, against the mature market, our country still has several times of development space.
Data show that in 2021, China's VDS (dietary nutritional supplements) market size reached 26.7 billion US dollars, second only to the US, but the per capita consumption was only 20.1 US dollars, compared with the US (104 US dollars), Japan (91 US dollars), Australia (76 US dollars), and New Zealand (49 US dollars) are several times more room for improvement.
Fourthly, in the past, the middle-aged and the elderly were the main consumer groups in China's health care products market. In the future, the penetration rate of all age groups will be improved.
According to the data of the National Health and Nutrition Survey (NHANES) of the United States, the overall penetration rate of the health care product market in the United States is more than 50%, while the overall market in China is only about 20%. In the past, middle-aged and elderly consumers were the main consumer groups in the health care product market in China.
China Merchants Securities believes that with the development of China's economy, residents' health awareness continues to improve, and the aging of the population and the trend of younger diseases, it is expected that the penetration rate of China's health products consumption in all age groups will have obvious room for improvement.
Fifth, historical factors and policy concerns constitute valuation suppression, and the sector actually has the space of safety margin and excess returns.
Since 2018, Quanjian, medical insurance fee control and other events have had a great impact on the industry, and the overall attention of the capital market is low, leading to the suppression of the valuation of the sector. However, from the perspective of individual stock net interest rate, ROE and cash flow, the overall is high. China Merchants Securities said that the sector has the margin of safety and space for excess returns.
Zhongyuan Securities also believed that in the post-epidemic period, under the circumstance of the aggravation of social and environmental pressures such as germs and aging, China's health products market is expected to maintain a high growth level, and the growth of health products market after the epidemic is more expected.
VDS attracts more attention
According to the data, health care products are a kind of food, with the common characteristics of general food, can regulate the function of the human body, suitable for specific people to eat, but not for the purpose of treatment, consumption attributes between food and medicine.
In terms of classification, health products can be divided into four categories. The first category of dietary nutritional supplements, referred to as VDS, simply means that the body has no or insufficient, need to rely on external supplement, such as B vitamins, calcium tablets, etc.; The second type of sports nutrition; Third, weight management; The fourth type of traditional tonic.
According to Euromonitor data, the domestic VDS market size in 2021 is 189.2 billion yuan, with a compound growth rate of 4.3% in the past four years; Comparing with Japan, our population structure is similar to that of Japan in the early 1990s. With the increase of users' health awareness and the aging of the population, domestic VDS is expected to maintain a growth rate higher than GDP in the next few years.
In terms of market space, according to Zhongyuan Securities Research report, the size of the global health products market in 2021 is more than 150 billion US dollars, or nearly 950 billion yuan. The growth level of China's health care product consumption market is higher than that of the world, and it is an emerging consumer market. In 2021, China's health care product market scale reached 150 billion yuan.
China's health care products market is expected to grow from 211.3 billion yuan in 2022 to 286.7 billion yuan in 2027, with a compound annual growth rate of 6.3 percent, according to the China Commerce Industry Research Institute.
Related industrial chain and company
In terms of industrial chain, health care products have more raw materials in the upstream, more dosage forms and SKUs in the downstream, and complex sales channels. Consumers' needs are diversified according to different age groups, and the industrial chain composition is relatively complex.
In terms of companies, the division of production and marketing is the development trend of the health product industry. The health product production and the brand market in our country are from dispersing to centralized, and the head enterprise leads the development of the industry.
At present, large scale health products manufacturers in China include: Guangdong Xianle Health and Tomson Bihealth, Jiangsu Alander, Shandong Weicrinolis; Large global producers include AYANDA in Europe, LIPA in Australia, Pharmavite in the US and GNC in the US.
The market share of the top ten brands in the domestic market is only 30%, and there is still potential for further concentration of the market. At present, the top 10 brands occupying the domestic market include: Unlimited, Amway, Perfect, Dong-e-E-Jiao, Tomson Bihealth, Herbalife, China Resources, Pfizer, New Era and Johnson & Johnson, with a total share of 29.7%, and the remaining 70.3% market share is occupied by other brands.