The top-level design of traditional Chinese medicine has boosted the overall situation and the industry has entered high-quality development. Traditional Chinese medicine is a national treasure and an important resource. During the 13th Five Year Plan period, the development of traditional Chinese medicine has become a national strategy. The law of traditional Chinese medicine and opinions and policy measures to promote inheritance, innovation and development have been successively issued. Heavy medical insurance support policies have been launched at the end of 2021. The state has made coherent top-level design and planning for the whole upstream and downstream industrial chain, and various policies have been steadily promoted, The cause of traditional Chinese medicine is booming. Since 2015, the proportion of TCM hospitals and beds has increased year by year, and the enrollment of TCM practitioners and colleges has increased steadily. From 2015 to 2020, the scale of TCM diagnosis and treatment service market has a compound annual growth rate of 25.5%. The traditional Chinese medicine industry flourished from 2008 to 2013. With the deepening of medical reform, the growth rate of the industry slowed down. Since 2017, the state has rectified the chaos in the traditional Chinese medicine industry, tightened the medical insurance fee control and transportation restriction orders, and increased the supervision of the quality and environmental protection of traditional Chinese medicine decoction pieces. From 2018 to 2020, the main operating income of Chinese patent medicine manufacturing enterprises was - 19% / - 1% / - 4% year-on-year, and the main business income of traditional Chinese medicine decoction pieces processing was - 21% / + 13% / - 8% year-on-year. Considering the impact of the epidemic in 2020, the industry actually bottomed out and rebounded in 2019. The traditional Chinese medicine industry experienced pain and ushered in the upgrading of industrial structure. With the establishment and improvement of industry standards, mechanism and service system, the traditional Chinese medicine industry has shown a good situation of paying equal attention to both Chinese and Western medicine, supporting and standardizing, inheriting and innovating, and the industry has stepped into high-quality development.
Sort out the development context of the whole industrial chain of traditional Chinese medicine and nuggets four sub tracks. Upstream: control the source, stick to the bottom line and strengthen the whole process quality control. Midstream: restrict and standardize the registration and use of traditional Chinese medicine injections, promote the centralized collection and development of traditional Chinese medicine, and focus on supporting traditional Chinese medicine formula granules and innovative traditional Chinese medicine. Downstream: strengthen the construction of TCM departments and personnel training, promote the development of TCM medical services, promote cultural communication and TCM going to sea, and boost the overall situation with medical insurance support policies. We are optimistic about the four major segments: brand proprietary Chinese medicine OTC benefits from industry capacity clearing and terminal price increase, highlighting the advantages of leading enterprises and increasing industry concentration. The pilot of traditional Chinese medicine formula granules has been completed, the 10 billion market will meet the 1-2-fold expansion, and the filing system and the new national standard will build high industrial barriers. The inflection point of new traditional Chinese medicine has arrived, and the pace of registration and evaluation has accelerated. It is expected to give priority to medical insurance and realize large-scale production. Covid-19 has made remarkable achievements in epidemic prevention, and the process of going to sea / internationalization of traditional Chinese medicine is expected to change from integration into Xi'An International Medical Investment Company Limited(000516) system to actual harvest period.
Investment suggestion: the traditional Chinese medicine industry has ushered in a golden period of development and investment opportunities in the Nuggets industry chain. In the long run, under the development background of population aging, disease spectrum change, national top-level policy support and internationalization, the growth space of traditional Chinese medicine industry is huge. We judge that in 2022, with the support of policies and medical insurance, the traditional Chinese medicine industry is expected to usher in an upward turning point, the inheritance and development of traditional Chinese medicine enterprises, the traditional Chinese medicine formula granule industry embraces market expansion and standard and quality improvement, the innovative traditional Chinese medicine is accelerated to be approved into medical insurance, and the traditional Chinese medicine goes to sea at the right time, waiting for performance fulfillment and value revaluation. It is suggested to pay attention to five types of investment opportunities of traditional Chinese medicine: 1) brand Chinese patent medicine: Beijing Tongrentang Co.Ltd(600085) , Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) , Chongqing Taiji Industry (Group) Co.Ltd(600129) , Tianjin Zhongxin Pharmaceutical Group Corporation Limited(600329) , Henan Lingrui Pharmaceutical Co.Ltd(600285) , Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) , Jianmin Pharmaceutical Group Co.Ltd(600976) , Yunnan Baiyao Group Co.Ltd(000538) , etc; 2) Traditional Chinese medicine formula granules: Chinese traditional medicine (H) ( Chongqing Taiji Industry (Group) Co.Ltd(600129) parent company), Tianjin Chase Sun Pharmaceutical Co.Ltd(300026) , China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) etc; 3) Innovative traditional Chinese medicine: Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) , Tasly Pharmaceutical Group Co.Ltd(600535) , Jiangsu Kanion Pharmaceutical Co.Ltd(600557) , Guiyang Xintian Pharmaceutical Co.Ltd(002873) , etc; 4) Chinese medicine going to sea / Internationalization: Beijing Tongrentang Co.Ltd(600085) , Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) , Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) , Tasly Pharmaceutical Group Co.Ltd(600535) etc; 5) TCM diagnosis and treatment: gushengtang (H), Beijing Tongrentang Co.Ltd(600085) .
Risk analysis: the centralized purchase and price reduction of Chinese patent medicine exceeded expectations; Failed to raise the price of traditional Chinese medicine formula granules or the progress of centralized purchase exceeded expectations; Risk of failure in new drug research and development.
