H1N1 surprise attack triggers the explosion of the AH anti-flu sector, holding the king of flu Canboi's HEC CJ PHARM (01558) is ready to go.

Recently, there has been a high incidence of influenza in many parts of the country. On January 2nd of this year, the Chinese Center for Disease Control and Prevention released the data for the 52nd week of 2024 national acute respiratory infectious disease sentinel surveillance. Data from samples in sentinel hospitals nationwide showed that the positivity rate for influenza viruses is continuously rising, with a 6.2% increase reaching 30.2% during this period. In fact, respiratory infections in the autumn and winter of 2024 differ from previous years. After the COVID-19 epidemic, respiratory infections in China usually present various mixed cross-infection situations. However, during the autumn and winter of 2024-2025, influenza A dominated the respiratory infection market, shining the spotlight again on the anti-influenza targets in the two regions. In the secondary market, the anti-influenza sector has been showing strong growth. From November 11, 2024, the positive rate for influenza virus detection in China has been continuously increasing. The national surveillance of acute respiratory infectious diseases shows that the main pathogens detected in flu-like cases in sentinel hospital emergency departments are influenza viruses, rhinoviruses, and human parainfluenza viruses. The 52nd week flu surveillance report from the National Influenza Center shows a flu detection positivity rate of 24.5% in southern provinces and 32.8% in northern provinces. Among them, influenza A accounts for 99.6%-99.8%. As a result, there has been a temporary surge in demand for anti-influenza drugs. In the anti-infective drug therapy category in the PDB database, there is a subcategory for anti-influenza drug therapy. In 2023, this subcategory included four treatment drugs: oseltamivir, paramivir, baloxavir marboxil, and umifenovir. These four drugs had a total sales amount of 11.405 billion RMB in the domestic drug terminal market, with oseltamivir accounting for 86.48% of the market share. As a classic anti-influenza drug, oseltamivir phosphate is known as the "magic drug for flu." Oseltamivir phosphate is a neuraminidase inhibitor that effectively inhibits the activity of neuraminidase in influenza A and B strains, preventing the release of new virus particles from infected cells, disrupting the virus transmission chain, and reducing the spread of the influenza virus. In China, oseltamivir phosphate is recommended as a first-line antiviral drug for treating influenza in several clinical practice guidelines, including the "Expert Consensus on Antiviral Treatment of Adult Influenza" and the "Expert Consensus on Diagnosis and Treatment of Childhood Influenza (2020 edition)." Recently, there has been a surge in demand for anti-influenza drugs in the market, and this trend has been positively reflected in the secondary market. Taking A-shares as an example, on January 6th, the pharmaceutical sector of A-shares saw a strong opening, with related pharmaceutical concepts showing strength against the market trend, ranking among the top ten on the Tonghuaxin concept sector gainers list. Leading the market were anti-influenza targets such as Shandong Lukang Pharmaceutical, Guangdong Zhongsheng Pharmaceutical, Harbin Pharmaceutical Group, among others. On January 6th, A-shares related to the flu concept opened high and continued to rise, with over 10 stocks including Shandong Lukang Pharmaceutical, Guangdong Zhongsheng Pharmaceutical, Harbin Pharmaceutical Group, Henan Taloph Pharmaceutical Stock, and North China Pharmaceutical hitting the limit-up. Among them, Lukang Pharmaceutical has seen continuous limit-up for two consecutive trading days. At the close on the 6th, the company's stock price closed at 11.63 RMB per share, with a turnover rate of 6.79% and a turnover of 7.1 billion RMB, reaching a total market value of 10.45 billion RMB. In the Hong Kong stock market, HEC CJ PHARM's "Ke Wei" series of products have continuously held the top market share position among companies selling oseltamivir products in China. As the flu epidemic continues to escalate, HEC CJ PHARM, a heavyweight anti-influenza target in the Hong Kong stock market, has also seen its stock price rise. Since the rally in the Hang Seng Index began in late September last year, HEC CJ PHARM's stock price has shown a continuous fluctuating uptrend. From September 24th to December 8th, the stock price of HEC CJ PHARM had a maximum range increase of 33.33%. The upward trend in its stock price did not stop, and even though HEC CJ PHARM's stock price experienced a certain pullback due to the market volatility at the beginning of 2025, on January 3rd, the company's stock price found stable support at the 60-day moving average, and on January 6th it closed with a 6.54% increase and a sudden increase in volume. The trading volume on that day reached 17.1038 million shares, with a turnover of 170 million HKD. According to the MACD indicator, the green bars continued to narrow after January 3rd, and the golden cross trend began to appear. Although on January 7th, HEC CJ PHARM showed a large bearish candlestick on the chart, typically, a giant bearish candlestick washout on the market is often caused by the panic effect generated by the main capital using the large sell volume to drive short-term investors out, leading to an unfavorable short-term trend. This washing-out technique is very fast and effective, allowing the main capital to absorb funds opportunistically, while the overall upward trend remains intact. From a technical perspective, HEC CJ PHARM is currently at the bottom of a range fluctuation and is showing clear buying signals. Considering the current situation in the domestic anti-influenza market and the company's fundamentals, the uptrend of HEC CJ PHARM is relatively certain. According to HEC CJ PHARM's (01558) semi-annual report in 2024, the company achieved a revenue of 2.455 billion HKD during the reporting period, with a net profit attributable to equity shareholders of 685 million HKD. Among them, the sales of the pediatric anti-infection line represented by the core product Ke Wei reached 1.865 billion HKD.The reason why Kewei Medicine can maintain its expected sales performance in the first half of this year, despite the high sales base in the same period last year, is due to the strong brand awareness of the company's "Kewei" series products, as well as its control over the domestic oseltamivir raw material market. Kewei Medicine can flexibly adjust its production and sales arrangements throughout the entire cycle of drug production and sales according to market dynamics, thereby consolidating its competitive advantage.It is worth mentioning that peramivir, as the first-line treatment recommended for children with influenza in the "2020 Pediatric Influenza Diagnosis and Treatment Expert Consensus," has been included in the national medical insurance and essential drug list, and is recommended by the National Health Commission as the first-line treatment for influenza. At the same time, the quality standard of peramivir has refreshed the national drug standard for oseltamivir phosphate raw materials and capsules, with higher dissolution requirements for capsules compared to the original research, making it the highest pharmaceutical standard in the same category. In addition, with the brutal flu season this autumn and winter, the demand for oseltamivir drugs may increase significantly, which may pose a challenge of tight supply for oseltamivir raw materials. Currently, there are few enterprises in the domestic upstream raw material sector capable of achieving short-term scale supply of oseltamivir. The main suppliers of oseltamivir raw materials are HEC CJ PHARM and Brightgene Bio-Medical Technology Co., Ltd., with the former holding a larger market share and having the world's largest production base for oseltamivir phosphate. From the perspective of market accessibility for indications, the demand for pediatric influenza medications in the flu drug market cannot be ignored. Children are more susceptible to flu than adults. Research shows that during the flu season, children have a flu incidence rate of about 20% to 30%, and in some high-incidence seasons, the infection rate can reach around 50%. In terms of anti-flu medications for children, clinical studies have shown that oseltamivir has an advantage in resistance compared to other market competitors. A large prospective, multicenter study showed that the resistance rate of oseltamivir was only 3.56%, indicating that most patients are still sensitive to oseltamivir, and oseltamivir resistance does not affect clinical symptom relief. Due to its extremely low resistance rates globally and domestically, it remains the first choice for patients to fight against the flu. In fact, as early as 2008, HEC CJ PHARM introduced the pediatric peramivir granule product. The company chose to focus on the competitive and price-insensitive pediatric drug market, expanding the market accessibility of peramivir while further solidifying the company's advantages in the field of anti-infection and pediatrics. The systematic advantages in the production and sales field continue to broaden the moat for peramivir. This is why, despite being listed in the seventh batch of drug procurement in July 2023 and being awarded to 10 companies, HEC CJ PHARM can still achieve steady sales performance for peramivir. Therefore, against the backdrop of the influenza epidemic this year, it is expected that peramivir will maintain strong and stable sales performance, with potential reflection in the company's subsequent financial reports.