Wanlian Securities has released a research report indicating that the blood products sector, supported by long-term barriers such as licenses and plasma station resources, is currently at an inflection point due to supply contraction. In the long term, rigid demand from an aging population, product innovation, and the expansion of DTP and out-of-hospital channels are expected to open up space for profit recovery.
Offline pharmacies are benefiting from prescription outflow and the expansion of dual-channel policies. By relying on high-margin non-pharmaceutical products and chronic disease health services, they continue to elevate their overall gross profit margin. As industry supply rationalizes, market share is increasingly concentrating towards leading chain operators with multiple qualifications and stores near hospitals.
Key Perspectives on Offline Pharmacies
In recent years, against the backdrop of policies such as prescription outflow and stricter medical insurance supervision, the pharmacy industry has shifted from a stage driven by scale expansion to one focused more on quality and efficiency improvement. Following a period of rapid expansion, the industry has entered a phase of stock consolidation, compelling pharmacies to adjust their product structures and transform into "health stations." High-margin non-pharmaceutical categories and paid health services have become the core second growth curve, counteracting the decline in drug margins and boosting overall store gross profit margins. The industry is clearing out inefficient stores, focusing on cost reduction and efficiency gains, leading to a continuous increase in industry concentration. This benefits pharmaceutical enterprises that meet consumer health needs, possess strong professional service capabilities, have significant supply chain advantages, and operate compliantly. Companies with refined operational capabilities and rapid digital transformation are at an advantage, with the industry landscape showing a "Matthew effect" where the strong get stronger.
As China enters a stage of deep aging, health demand will further increase. Driven by a new round of medical reform, the separation of prescribing and dispensing continues to deepen, accelerating the outflow of hospital prescriptions and hastening the upgrade and differentiation of the retail pharmacy sector. The scope of volume-based procurement is continuously expanding, accelerating the shift of more drug varieties to out-of-hospital channels. The outpatient mutual aid scheme presents opportunities for pharmacies included in the outpatient pooling system, potentially allowing them to handle more hospital prescriptions and customer flow. Leading chains are continuously expanding stores near hospitals, obtaining dual-channel qualifications in batches, and building DTP service networks at scale, which is conducive to increasing the proportion of revenue from specialty drug prescriptions and improving overall customer unit price and gross margin. The growth bottleneck for traditional pharmacies relying solely on OTC products is being broken. The industry's growth ceiling is being opened up by the continuous outward flow of in-hospital prescriptions, benefiting leading chain operators with dense networks near hospitals, well-developed DTP operational systems, and sufficient medical insurance qualification reserves.
Factors suppressing the sector's valuation primarily include industry policies, such as regular medical insurance spot checks, pressure on drug purchase-sale price differentials, big data comparisons, and low single-store operating profits due to blind pharmacy expansion. Overall, the current valuation of the pharmacy sector has a sufficient margin of safety. Currently, the offline pharmacy industry is undergoing a transformation from stores solely selling drugs to providing diversified services, such as adding consumer diagnosis and management services, gradually shifting towards "full-cycle health service stations." The overall industry landscape exhibits a "Matthew effect," and companies with refined operational capabilities and speed in digital transformation will occupy advantageous positions in future competition.
Key Perspectives on Blood Products
Supply contraction is expected to drive valuation recovery, with long-term demand remaining rigid. The blood products sector possesses three permanent and scarce barriers: licenses, plasma stations, and raw materials. Long-term demand is supported by an aging population, increased per capita usage, and the expansion of rare disease diagnosis and treatment, with the logic of rigid growth remaining unchanged. The industry is currently at a convergence inflection point following the supply expansion from 2022 to 2025. Leading companies are actively controlling plasma collection, batch issuance continues to contract, and there is a shift of plasma towards high-margin coagulation factors and subcutaneous intravenous immunoglobulins. Combined with volume expansion through DTP and dual-channel out-of-hospital channels, gross profit margins and expense ratios are expected to gradually recover.
Industry consolidation continues to advance, integrating resources and reinforcing the strength of leading players. Since 2021, state-owned capital has entered a peak period for acquiring control. The main line of mergers and acquisitions revolves around seizing existing plasma station resources, improving high-margin coagulation factor pipelines, and achieving nationwide regional layout, which will continue to push industry concentration higher in the long term. Financial data from 2025 to the first quarter of 2026 shows the industry is experiencing a period of adjustment. Leading companies in the blood products sector are expanding resources through mergers and acquisitions to consolidate upstream advantages. Additionally, product structure optimization and R&D investment are key competitive focuses for blood product enterprises.
The R&D pipelines of domestic blood product companies are generally focused on three main areas: immunoglobulin upgrades, innovative recombinant coagulation factors, and process improvements. Core blockbuster varieties include 20% subcutaneous intravenous immunoglobulin, long-acting recombinant coagulation factors, recombinant factor VII, and multivalent specific immunoglobulins.
In recent years, the industry's performance has been collectively under pressure, with valuations at historical lows. The blood products sector has faced collective pressure over the past two years, with revenue growth not translating into profit growth. The main reasons for the performance decline are inventory accumulation due to capacity release and weakening demand, leading to a supply-demand mismatch. This is compounded by factors such as declining product prices and the impact of DRG/DIP payment reforms on in-hospital demand. Consequently, domestic blood product companies heavily reliant on human serum albumin and intravenous immunoglobulin are under performance pressure and vulnerable to price or policy shocks. The industry continued to face pressure in the first quarter of 2026, with increased differentiation among companies. As of mid-year, the sector's five-year P/E (TTM) percentile stands at 17.18%. Overall, price pressure from centralized procurement and DRG cost control in the blood products sector will be the norm going forward. The product structure and operational efficiency of future participants will be key. The report is long-term optimistic about companies that improve plasma utilization and whose R&D pipelines align with high-value-added varieties to break homogeneous competition.