At present, we are clearly optimistic about the opportunities of traditional Chinese medicine. Based on the following reasons: 1) heavy support policies continue to be implemented to improve confidence. For example, at the end of 2021, the guidance on medical insurance supporting the inheritance, innovation and development of traditional Chinese medicine was issued to enhance the support of medical insurance for traditional Chinese medicine. The attitude of medical insurance towards traditional Chinese medicine has changed from previous restrictions to support, which has greatly improved market confidence. 2) Traditional Chinese medicine has played a positive role in the prevention and treatment of covid-19, which we believe is one of the reasons why the state strongly supports the development of traditional Chinese medicine. 3) Brand OTC Chinese medicine has independent pricing power. It is basically not affected by the control of medical insurance fees. Recently, a number of enterprises have raised the price of products and improved their profit expectations. In 2021 alone, about 13 traditional Chinese medicine enterprises issued equity incentive plans, demonstrating the confidence of industry development. 4) The price of Chinese patent medicine is moderate.
The average decline of centralized purchase of Chinese patent medicine in Hubei alliance was 42.27%, which was less than that of centralized purchase of chemical medicine. 5) The valuation of traditional Chinese medicine industry is cost-effective. Taking March 4, 2022 as an example, the overall valuation of Shenwan traditional Chinese medicine sector is only 29.66 times (lower if the maximum weight Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) is excluded), which is lower than the mainstream CXO, medical services, medical equipment, blood products, APIs and other sectors in the market, and the valuation of some high-quality targets is less than 20 times.
Grasp the investment opportunities of traditional Chinese medicine around five main lines. 1) Innovative traditional Chinese medicine. The new registration classification is clearly guided by clinical value, and the “Three Combinations” evaluation system clarifies the ideas of R & D, while medical insurance supports the large amount of innovative drugs. 2) Brand OTC traditional Chinese medicine. It mainly focuses on the off-site market and is less affected by the cost control of medical insurance. Benefiting from consumption upgrading, compared with ordinary OTC products, it has stronger cost transfer ability and can maintain high profitability. 3) Traditional Chinese medicine formula granules. The traditional Chinese medicine sector has a high growth track. After the pilot, it will enter the stage of simultaneous rise in volume and price, which is expected to reach a scale of more than 100 billion. At the same time, the industry will still focus on leading enterprises with first mover advantage. 4) Short term focus on traditional Chinese medicine injections with relaxed medical insurance restrictions. The relaxation of injections benefits from the spontaneous safety and effectiveness evaluation of enterprises. The verified traditional Chinese medicine injections are expected to gradually lift the restrictions and bring performance flexibility in the short term. 5) TCM medical services Wuxi Online Offline Communication Information Technology Co.Ltd(300959) combination mode solves the problems of insufficient supply and structural mismatch of traditional Chinese medicine medical services.
The\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\, Guangyuyuan Chinese Herbal Medicine Co.Ltd(600771) , Chinese traditional medicine, Tianjin Chase Sun Pharmaceutical Co.Ltd(300026) , Guangxi Wuzhou Zhongheng Group Co.Ltd(600252) , Guizhou Yibai Pharmaceutical Co.Ltd(600594) , Guizhou Sanli Pharmaceutical Co.Ltd(603439) etc.
Risk tips: 1) policy and regulatory risks; 2) Medical insurance support is less than expected; 3) R & D risk.
