Key investment points
The new policy of traditional Chinese medicine has been issued continuously, with dual support of approval and encouragement and medical insurance payment. In October 2019, the CPC Central Committee and the State Council issued the opinions on promoting the inheritance, innovation and development of traditional Chinese medicine, and put forward 20 opinions from six aspects, including promoting the inheritance, opening, innovation and development of traditional Chinese medicine, so as to promote the inheritance, innovation and development of traditional Chinese medicine; In February 2021, the State Council again issued the notice on several policies and measures to accelerate the development of characteristics of traditional Chinese medicine, proposing 28 policies and measures from seven aspects, including improving the development efficiency of traditional Chinese medicine. On December 30, 2021, the state medical insurance administration and the administration of traditional Chinese medicine jointly issued the guiding opinions on medical insurance supporting the inheritance, innovation and development of traditional Chinese medicine, aiming to give full play to the advantages of the medical security system and support the inheritance, innovation and development of traditional Chinese medicine. It can be seen that the State Council has coordinated all departments from the overall perspective, which fully shows that the state will give key support to the inheritance, innovation and development of traditional Chinese medicine in the future.
The registration and approval of innovative traditional Chinese medicine were optimized, and the approval of new drugs was accelerated. In December 2020, the FDA proposed to reform the new classification of traditional Chinese medicine registration, and constructed and improved the evidence system of traditional Chinese medicine evaluation. That is, the new approval standard emphasizes clinical efficacy and desalinates ingredients. In addition, it should be emphasized that in the subsequent special provisions on the administration of registration of traditional Chinese medicine (Exposure Draft), 10 relevant contents of Exemption / exemption from registration of traditional Chinese medicine were issued, such as: including evidence of rational use of human experience, exemption from non clinical safety research, introduction of real world research, exemption from phase I and II studies, exemption from some application materials of in-hospital preparations Exemption from the application for changing some materials and other regulations, and the exemption of these clinical trials will greatly improve the approval progress of innovative traditional Chinese medicine, and then accelerate the approval and listing of new drugs as a whole. Finally, it can be seen from the horizontal comparison of the registration and application process of the latest 2020 version of chemical drugs and biological products that the R & D and evaluation cycle of innovative traditional Chinese medicine is greatly shortened, as can be seen from the approval cycle of icariin soft capsule, an innovative traditional Chinese medicine launched in January 2022.
The traditional Chinese medicine industry will show a trend of structural differentiation in the future. From the perspective of stock products, there are disputes over the clinical efficacy and safety of some traditional Chinese medicine injections. At the same time, with the promotion of centralized procurement of Chinese patent medicine alliance, the survival of the fittest will continue to appear at the supply end of existing traditional Chinese medicine. From the perspective of incremental products, since 2021, the review of innovative traditional Chinese medicine has been significantly accelerated. As of December 31, 2021, a total of 12 new traditional Chinese medicine drugs have been approved, while only 2.6 innovative traditional Chinese medicine have been approved every year from 2016 to 2020. On the whole, on the one hand, the policy smoothes out the classification, review and approval system of new traditional Chinese medicine, so as to provide favorable conditions for drug R & D and listing; On the other hand, with the strong support of national policies, the review and approval progress of traditional Chinese medicine will be accelerated, and the priority may be increased. Finally, some enterprises, such as Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) , Guiyang Xintian Pharmaceutical Co.Ltd(002873) , will take advantage of the advantages of traditional exclusive products, seize the favorable opportunities of industry development, make use of the accumulated R & D investment of traditional Chinese medicine and new drugs and the number of declared projects in the early stage, and quickly promote the listing and sales of innovative varieties, so as to drive the improvement of company performance and valuation.
Investment suggestion: since the beginning of 2022, the index of traditional Chinese medicine has fallen by 14.77%, and the correction is slightly larger. At the same time, the valuation level has fallen to the beginning of this round of market again. Looking back, the biggest positive factor of traditional Chinese medicine is that the policy + demand + valuation will show a marginal improvement in 2022. At the same time, we can expect the continuous and stable performance of some leading OTC enterprises, which will drive the market of traditional Chinese medicine again. However, it is expected that the second wave of market in the traditional Chinese medicine industry will show a trend of structural differentiation. Because from the perspective of stock products, with the promotion of centralized procurement of Chinese patent medicine alliance, the survival of the fittest will continue to appear at the supply end of existing traditional Chinese medicine. From the perspective of incremental products, since 2021, the review of innovative traditional Chinese medicine has been significantly accelerated. As of December 31, 2021, a total of 12 new traditional Chinese medicine drugs have been approved, while only 2.6 innovative traditional Chinese medicine have been approved every year from 2016 to 2020. Therefore, with the acceleration of the review and approval progress of traditional Chinese medicine, whenever the clinical progress of new drugs on the market changes, it is good at the industry level. For example, in early 2022, the approval and listing of icariin soft capsule, a new traditional Chinese medicine, also promoted the market of traditional Chinese medicine.
At the same time, the core factor supporting OTC investment in 2022 is the stable performance of OTC enterprises. First of all, on the demand side, the rigid demand characteristics of the pharmaceutical industry and the upgrading of pharmaceutical consumption jointly support the steady growth of the demand of the traditional Chinese medicine industry. On the policy side, a series of favorable policies have been formed to promote the innovation of traditional Chinese medicine, the development of formula particles, the support of medical insurance and payment policies, and the continuous addition of traditional Chinese medicine decoction pieces can not exceed 25%, bringing policy dividends and new demand to the traditional Chinese Medicine industry. The unique advantage of "preventing disease" brings development opportunities to the traditional Chinese medicine industry. On the performance side, the traditional Chinese medicine industry walked out of the low point and showed a marginal improvement trend. On the valuation side, the traditional Chinese medicine industry still has certain valuation advantages after valuation repair, which is lower than the overall valuation level of biomedicine. "Policy + pharmaceutical consumption upgrading + performance improvement + valuation advantage" jointly build investment opportunities in the traditional Chinese medicine industry. Therefore, we can pay appropriate attention to the areas of policy encouragement and policy haven, such as leading enterprises of innovative traditional Chinese medicine and resource-based traditional Chinese medicine enterprises with more preparations in the hospital.
Risk factors: the price reduction of centralized purchase of Chinese patent medicine exceeded expectations; The performance of the enterprise is less than expected; The risk of intensified industry competition; Hospital side epidemic prevention and control exacerbated the risk.
