The traditional Chinese medicine industry has the ability to determine the performance growth and valuation cost performance, which is covered for the first time and given a “optimistic” rating
In terms of policy, traditional Chinese medicine, as a kind of drugs with Chinese characteristics, has always been supported by national policies; From the perspective of the volume procurement of Chinese patent medicine that has been implemented, the centralized purchase price is not expected to decline like a cliff, but to ensure that traditional Chinese medicine enterprises have a certain profit space based on its cost, and the main sales channel of brand traditional Chinese medicine OTC is at the retail end rather than public medical institutions, which has a high price maintenance ability. In terms of fundamentals, most brand OTC enterprises of traditional Chinese medicine have maintained a stable growth of revenue of 10% – 20% in the past few years, and are expected to usher in the second growth curve through category expansion and marketing channel reform. In terms of performance, in 2021, many brand Chinese medicine OTC enterprises formulated equity incentive plans to fully motivate core employees and have great certainty of performance growth. In terms of valuation, according to Wande’s unanimous expectation, as of December 22, 2021, the 2022epe of traditional Chinese medicine sector was 33.7 times, lower than 34.3 times of the overall pharmaceutical and biological industry, which has the valuation cost performance. On the whole, supported by policies, the traditional Chinese medicine industry has the ability to determine the performance growth and valuation cost performance. It is covered for the first time and given a “optimistic” rating.
The Chinese patent medicine industry has experienced rapid growth, adjusted and optimized, and gradually moved towards high quality development.
After experiencing rapid growth in the early stage, the Chinese patent medicine industry has now entered a period of adjustment and optimization. However, with the increase of national policy support, the continuous improvement of industrial policies and standards, and the acceleration of the approval of new products after 2019, Chinese patent medicines with higher clinical value and stronger safety will eliminate unqualified categories in the industry, optimize the product structure of the industry, and enhance market acceptance and use intention, Boost the long-term high-quality development of Chinese patent medicine industry.
With the aggressive management, innovative products and improved marketing quality and efficiency, many companies have ushered in rapid development
Throughout the development process of most brand Chinese medicine OTC enterprises, we believe that six factors are important driving forces to promote the development of brand Chinese medicine OTC: management, raw materials, categories, brand strength, production capacity and channels. The management is the core factor in the development of OTC enterprises of brand traditional Chinese medicine. In recent years, Yunnan Baiyao Group Co.Ltd(000538) mixed reform has achieved remarkable results, Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) the implementation of the “one core and two wings” strategy has achieved significant results, Beijing Tongrentang Co.Ltd(600085) launched marketing reform to create a “4 + 2” business model, Dong-E-E-Jiao Co.Ltd(000423) rapidly promoted the transformation of digital strategy, Zhejiang Shouxiangu Pharmaceutical Co.Ltd(603896) promoted tablets to the national market, Hubei Jumpcan Pharmaceutical Co.Ltd(600566) cooperated with Tianjing biology to strengthen the advantageous field of Pediatrics, Henan Lingrui Pharmaceutical Co.Ltd(600285) , Jianmin group, Inner Mongolia Furui Medical Science Co.Ltd(300049) , China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) all carried out equity incentive in 2021, set positive assessment objectives, and reflected their confidence in future performance growth. Category is an important factor determining the future development of OTC enterprises of traditional Chinese medicine. In recent years, many companies have achieved sustained growth of endogenous extension by upgrading endogenous products and developing extension products, and achieved remarkable results. In addition, after rapid development in the early stage, many companies pay attention to marketing efficiency, integrate channels, improve quality and efficiency, and vigorously expand OTC terminal to improve policy immunity and profitability.
Recommended and beneficial objects
Considering policy immunity, valuation cost performance and performance certainty, recommended targets: Henan Lingrui Pharmaceutical Co.Ltd(600285) , Tasly Pharmaceutical Group Co.Ltd(600535) ; Beneficiary objects: Yunnan Baiyao Group Co.Ltd(000538) , Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) , Dong-E-E-Jiao Co.Ltd(000423) , Beijing Tongrentang Co.Ltd(600085) , Jianmin Pharmaceutical Group Co.Ltd(600976) , Zhejiang Shouxiangu Pharmaceutical Co.Ltd(603896) , China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) , Furui pharmaceutical, Hubei Jumpcan Pharmaceutical Co.Ltd(600566) (the above rankings are in no order).
Risk tip: policy fluctuation risk, product promotion is less than expected risk, and marketing integration is less than expected risk.
