Core Viewpoint - The report from Huachuang Securities indicates that while the industry is facing challenges due to increased competition, there is a stabilization and recovery in the prices of veterinary raw materials and vaccines, driven by innovation among successful companies [1] Vaccine Batch Release - In 2025, most vaccine varieties are expected to see year-on-year growth in batch releases, with new vaccines performing particularly well [1] - Specific growth rates for pig vaccines include: foot-and-mouth disease vaccine +6.4%, porcine circovirus vaccine +13.0%, pseudorabies vaccine +5.1%, swine fever vaccine +11.7%, and porcine enterovirus vaccine +21.3% [1] - For poultry vaccines, notable increases include avian influenza trivalent vaccine +22.8%, Newcastle disease vaccine +8.8%, and duck infectious serositis vaccine +17.3% [1] - The brucellosis vaccine for ruminants saw a significant increase of +61.6%, while the small ruminant plague vaccine decreased by -16.2% [1] - In the pet vaccine sector, domestic rabies vaccine and domestic cat trivalent vaccine increased by +22.1% and +32.3% respectively [1] Subspecies Analysis - In 2025, the economic product porcine circovirus vaccine and the mandatory immunization swine fever vaccine are expected to see faster growth due to increased farming profitability and pig output [2] - The rapid growth of the avian influenza trivalent vaccine and duck infectious serositis vaccine is attributed to heightened awareness of poultry diseases [2] - The brucellosis vaccine continues to maintain high growth rates due to the introduction of new products, while the small ruminant plague vaccine has seen a decline due to a high base from the previous year [2] Pet Vaccine Performance - The domestic cat trivalent vaccine, launched in early 2024, continues to show high growth in 2025 due to effective market promotion and consumer education [3] - Different types of vaccines for the same disease show varied performance, with the single foot-and-mouth disease vaccine decreasing by -0.7% and the multi-valent vaccine increasing by +8.9% [3] - The porcine foot-and-mouth disease OA bivalent vaccine saw a growth of +12.3%, while the porcine circovirus vaccine increased by +19.7% [3] Veterinary Raw Material Prices - In 2025, the Veterinary Product Index (VPI) is expected to rise by 7.2% year-on-year, with significant price increases in macrolide products [4] - Specific price increases include: tylosin +29.5%, tiamulin +11.4%, and tilmicosin +22.9% [4] - However, some products like florfenicol and amoxicillin have seen price declines of -5.9% and -21.0% respectively [4] - The market is anticipated to remain weak in the short term due to ongoing pressures in the farming sector and the traditional off-season for veterinary drugs [4]

Core Viewpoint - The vaccine industry is showing significant growth in the first three quarters of the year, with various vaccine types, including circular, diarrhea, brucellosis, and cat trivalent vaccines, continuing to perform well [1][2] Vaccine Batch Issuance - In the first three quarters, most vaccine types have seen substantial year-on-year growth, with specific increases in pig vaccines such as foot-and-mouth disease (+9.1%), circular vaccine (+29.5%), pseudorabies vaccine (+27.0%), and swine fever vaccine (+17.7%) [1] - Poultry vaccines like avian influenza trivalent vaccine (+9.6%) and Newcastle disease vaccine (+12.4%) also showed stable growth, while brucellosis vaccine experienced a remarkable increase of +60.2% [1][2] - Pet vaccines, particularly domestic rabies vaccine (+22.8%) and domestic cat trivalent vaccine (+74.4%), have maintained high growth rates [1] Factors Driving Growth - The growth in pig vaccines is attributed to multiple factors, including farming profitability, increased pig slaughter rates, and the introduction of new products [2] - The poultry vaccine sector continues to grow steadily, while the brucellosis vaccine benefits from the ongoing launch of new products [2] Veterinary Drug Raw Materials - As of October 22, the Veterinary Pharmaceutical Index (VPI) stands at 69.29, reflecting a 0.1% increase from the end of September and a 6.4% increase year-on-year [3] - The VPI index has shown a positive trend in October, with an average of 69.33, marking a 0.9% increase from September [3][4] Price Trends and Market Dynamics - The price of veterinary raw materials has been on the rise due to tightened supply and increased demand from large orders, particularly for products like tylosin [4] - The overall price increase in veterinary raw materials is driven by a combination of cost factors, corporate strategies, and market demand [4] Investment Recommendations - The industry is gradually recovering from a downturn, with a focus on undervalued companies that exhibit both elasticity and certainty [5] - Companies that have shown strong performance typically possess innovative qualities in product development, marketing strategies, or capital operations [6] - Recommended companies for investment include Ruipu Biological (300119.SZ), Kexin Biological (688526.SH), and others [6]

Group 1 - The core viewpoint of the report indicates that the majority of vaccine varieties have experienced significant year-on-year growth from January to August, particularly in the pet vaccine sector, with domestic rabies vaccine and cat trivalent vaccine increasing by 16.8% and 78.9% respectively [1][2] - In the pig vaccine category, the economic product circular vaccine and mandatory vaccines such as pseudorabies and swine fever vaccines have shown rapid growth, attributed to sustained breeding prosperity and increased pig inventory [1][3] - The VPI index for veterinary raw materials has rebounded by approximately 2.1% by the end of September, following a three-month decline, driven by supply-side tightening and large downstream orders [4][5] Group 2 - The report highlights that the growth in vaccine issuance is supported by multiple factors including breeding prosperity, inventory growth, disease prevalence, and the introduction of new products [3][6] - The increase in prices for veterinary raw materials is primarily due to supply-side changes and improved market competition, with specific products like florfenicol benefiting from a more favorable supply environment [5][6] - The industry is gradually emerging from a downturn, with a focus on undervalued companies that exhibit both elasticity and certainty, suggesting a positive outlook for the sector [7]

Investment Rating - The report maintains a "Recommendation" rating for the animal health industry, expecting it to outperform the benchmark index by over 5% in the next 3-6 months [79]. Core Insights - The report highlights significant growth in vaccine approvals for circular, pseudorabies, and diarrhea vaccines, with notable year-on-year increases [7][8]. - The animal drug raw material market shows a continued strong performance in macrolide products, with price indices reflecting a structural differentiation among various products [52][53]. - The overall demand for animal health products is expected to recover, driven by improved profitability in the breeding sector and the introduction of new products [68][69]. Summary by Sections Vaccine Approvals - In April, major vaccine varieties for pigs showed substantial year-on-year growth, with circular vaccine up by 71.2%, pseudorabies vaccine by 73.3%, and diarrhea vaccine by 220% [7][8]. - Cumulative data from January to April indicates most vaccine types experienced significant growth, particularly in pig vaccines, with circular vaccine up by 52.3% and pseudorabies vaccine by 48.2% [8][9]. Raw Material Prices - As of the end of April, the Veterinary Pharmaceutical Index (VPI) was 69.2, reflecting a 5.6% increase from the previous month and a 13.4% increase year-on-year [52][53]. - Prices for macrolide products such as Tylosin, Tylvalosin, and Tilmicosin have shown strong performance, with increases of 10.1%, 17.6%, and 15.4% respectively compared to the end of March [53][54]. Market Outlook - The report anticipates a stable upward trend in the demand for animal health products, supported by a robust breeding sector and ongoing product innovation [68][69]. - The competitive landscape is expected to lead to a dual recovery in performance and valuation for the sector, with a focus on larger companies that can leverage their financial strength and product diversity [69][70]. Investment Recommendations - The report suggests focusing on companies such as Reap Bio, Kexin Bio, and others, which are well-positioned to benefit from the anticipated market recovery [68][70].