The Zhitong Finance app learned that the Bank of China Securities published a research report saying that at present, collection in the core segment of orthopedics has been implemented, and the price of trauma collection has been renewed and prices have been raised. It is expected that prices are less likely to be drastically reduced in the future. Prices have stabilized, and the policy side of the orthopedic industry may not be further tightened. As the aging population develops into a social trend, the penetration rate of orthopedic surgery in China is still low. It is expected that the number of orthopedic surgeries in China will maintain a steady upward trend in the future, and the high-value orthopedic consumables market is expected to maintain a relatively rapid growth rate. Based on this, the orthopedic industry will maintain a rapid growth trend in the future. Focus on recommending leading orthopedic companies in the orthopedic industry such as Weigao Orthopedic (688161.SH) and Chunli Medical (688236.SH).

▍ The main views of BOC Securities are as follows:

Price reduction factors have been removed, and prices have stabilized.

In recent years, orthopedic collection has been gradually implemented, and collection rules have been continuously optimized, which has helped increase the share of domestic brands in the market. In the orthopedic segmentation circuit, the joint and spine category national collection, which covers 28 provinces and cities, the Beijing-Tianjin-Hebei “3+N” joint collection covering 28 provinces and cities, and the joint collection of 12 provinces in Henan has already begun. The current trauma renewal rules are relatively moderate, and the pricing is clearly higher than last time. At present, collection in the three core areas has already been implemented. It is expected that the possibility of drastic price cuts in the future is low. Prices have stabilized, and the industry policy side may not be further tightened.

The localization rate of the Chinese orthopedic market has increased significantly in recent years. Among them, medical equipment in the field of trauma has basically replaced imports due to low technical barriers. The localization rate in 2021 was 76%. In the future, it will move in the direction of improving quality; medical equipment in the spine sector has a high technical level, and the domestic start is relatively late; joint devices have a lower market share compared to products in the other two major fields. Therefore, with the implementation of orthopedic collection and the increase in competitiveness of domestic enterprises, there is still plenty of room for import substitution of spinal and joint products in the future.

The “price” has stabilized, the “volume” is expected to continue to grow, and the market space of the industry is vast.

Thanks to rising medical demand, per capita medical expenses and medical insurance coverage expenses due to the worsening aging trend, as well as improvements in the infrastructure of medical institutions and the increase in the number and practice capacity of orthopedic surgeons, the market size of orthopedic implants in China has been growing year by year in recent years. Currently, although the prevalence of orthopedic surgery in China continues to increase, compared to developed countries in Europe and the US, the penetration rate of orthopedic surgery treatment is still low. In particular, the joint field is the biggest gap between the three mature implant fields and developed countries, and there is still plenty of room for development of artificial joints.

Furthermore, domestic products are generally not innovated enough, localized product designs and innovative surgical procedures are insufficient, there are still many unresolved clinical problems in orthopedic diseases, and there is still a pressing need for innovative product expansion, so there is still plenty of room for innovation and development. Overall, the orthopedic implants market is expected to maintain a relatively stable growth trend in the future.

The development of innovative technology in the industry is booming, promoting high-quality development in the field of orthopedics.

In order to cope with the trend in collection, domestic enterprises are continuously speeding up innovative research and development, and successively deploying innovative products with higher technical content, which may become the key to the strategic layout of orthopedic enterprises. The ultrasonic bone knife is expected to become the next generation of gold, and is initially replacing traditional osteotomy tools. Currently, there are relatively few domestic manufacturers with technology. In the future, with technological breakthroughs in domestic brands and falling product prices, ultrasonic bone knives will be more widely used, and the market size is expected to develop rapidly.

The global sports medicine market has developed rapidly in recent years. The market growth rate is significantly higher than the traditional orthopedic consumables market. Combined with the popularity of arthroscopic surgery, the size of the domestic market is growing year by year. Orthopedic robots can accurately treat and solve clinical surgical pain points. The domestic market is developing late, and the market size has great potential. Judging from long-term development, orthopedic surgical robots are an inevitable trend in industrial development, and leading domestic enterprises have also begun to lay out one after another. It is expected that in the future, China's surgical robot industry will gradually shift from relying on imported surgical robots to technological innovation, and the market share of domestic enterprises will increase, and the scale of the industry will grow accordingly.

The main risks faced by ratings

Risk of changes in collection policies, risk of R&D falling short of expectations, risk of asset investment failure, risk of product sales falling short of expectations, etc.