Key investment points:
Heavy policies to support the development of traditional Chinese medicine industry have been introduced. Since the 18th CPC National Congress, the CPC Central Committee with Xi Jinping general secretary as the core has emphasized the importance of traditional Chinese medicine to the Chinese nation and put the promotion of the development of traditional Chinese medicine in a more important position. Since the State Council issued the notice on printing and distributing the development plan of traditional Chinese medicine health services (20152020) in April 2015, heavy policies supporting the development of traditional Chinese medicine have been introduced. On October 26, 2019, in order to earnestly implement the important exposition of Xi Jinping general secretary on the work of traditional Chinese medicine, the CPC Central Committee and the State Council issued the opinions on promoting the inheritance, innovation and development of traditional Chinese medicine. On December 30, 2021, the state medical security administration and the State Administration of traditional Chinese Medicine issued the guiding opinions on medical insurance supporting the inheritance, innovation and development of traditional Chinese medicine. One belt, one road, one belt, one road, was launched in January 15, 2022 by the State Administration of traditional Chinese medicine and the leading group office of the “one belt and one road” construction project. The joint development of the “one belt and one way” development plan (20212025 years) was carried out.
The results of centralized procurement of Chinese patent medicines by the inter provincial alliance were relatively mild. Judging from the results of the centralized purchase of Chinese patent medicines led by the inter provincial alliance in Hubei Province, there was no extreme situation of a drop of up to 90% in group A of this centralized purchase. The price of most drugs decreased by 30% – 50%. The average price of the selected drugs in this centralized purchase decreased by 42% and the maximum decreased by 83%. Compared with the centralized purchase of chemical medicines, The price reduction range is relatively moderate (the price reduction ranges of the first five rounds of centralized purchase of chemical drugs are 52%, 53%, 53%, 52% and 56% respectively). The inter provincial Alliance for the centralized purchase of Chinese patent medicines led by Hubei Province covers as many as 19 provinces, involving many varieties of Chinese patent medicines and a purchase amount of nearly 10 billion. It has a very important reference value for the upcoming centralized purchase of Chinese patent medicines led by the six provincial alliance in Guangdong and the 12 provincial Alliance for the centralized purchase of traditional Chinese medicine led by Shandong Province.
There are two main investment lines in the traditional Chinese medicine industry – traditional Chinese medicine formula granules and traditional Chinese medicine innovative drugs. ① Traditional Chinese medicine formula granules: Traditional Chinese medicine formula granules not only retain the effective components, indications and efficacy of traditional Chinese medicine decoction pieces, but also have the advantages of unified standard, stable curative effect, convenient carrying and easy adjustment. With the completion of the pilot work of traditional Chinese medicine formula granules, the industry is expected to enter the next stage of rapid development. ② Innovative drugs of traditional Chinese medicine: the State Food and drug administration has successively issued heavy policies to regulate and support the innovation of traditional Chinese medicine. Stimulated by these policies, the number of new traditional Chinese medicine drugs increased significantly in 2021. A total of 12 new traditional Chinese medicine drugs were approved in 2021, exceeding the total number of new traditional Chinese medicine drugs approved from 2017 to 2020. Traditional Chinese medicine innovative drug enterprises are expected to usher in a development inflection point.
Investment strategy: maintain the overall “prudent recommendation” rating of the traditional Chinese medicine industry. Traditional Chinese medicine originated in China and is a cultural treasure inherited by China for thousands of years. Under the careful care of the policy, the traditional Chinese medicine industry is expected to usher in a new life. It is suggested to pay attention to the leading enterprises of traditional Chinese medicine formula granules with integration and scale advantages, such as Tianjin Chase Sun Pharmaceutical Co.Ltd(300026) ( Tianjin Chase Sun Pharmaceutical Co.Ltd(300026) ) and China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) ( China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) ); Leading enterprises of innovative traditional Chinese medicine with excellent R & D ability, such as Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) ( Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) ), etc.
Risk tips: risk of changes in industrial policies, risk of fluctuations in raw material prices, risk of intensified market competition, etc.
