Industry policy
In December 2021, a number of policies in the traditional Chinese medicine sector were implemented one after another. On September 9, the Shanghai Municipal Health Commission and the Shanghai Municipal Administration of traditional Chinese Medicine issued a notice on printing and distributing the 14th five year plan for the development of traditional Chinese medicine in Shanghai.
On December 21, 2021, Hubei pharmaceutical price and bidding procurement management service network publicized the proposed winning results of centralized volume procurement of inter provincial alliance of Chinese patent medicines.
On December 23, 2021, Guangdong Provincial Health Commission and Guangdong Provincial Bureau of traditional Chinese medicine jointly issued the “14th five year plan” for the development of traditional Chinese medicine in Guangdong Province.
On December 30, 2021, the State Medical Security Bureau and the State Administration of traditional Chinese Medicine issued the guiding opinions of the State Medical Security Bureau and the State Administration of traditional Chinese medicine on medical insurance supporting the inheritance, innovation and development of traditional Chinese medicine.
make a concise evaluation
The 14th five year plan for the development of traditional Chinese medicine in Shanghai puts forward 19 key tasks from five directions to help the development of traditional Chinese medicine industry. 1) Build a high standard service system of traditional Chinese medicine. Improve the coverage of traditional Chinese medicine services, strengthen the integration of traditional Chinese and Western medicine, promote common development, and enhance the social influence of traditional Chinese medicine; 2) Improve the service capacity of high-quality traditional Chinese medicine. Promote the development of traditional Chinese medicine in key areas such as public health and emergency treatment system, health services, rehabilitation, women and children, enhance the contribution of traditional Chinese medicine, and empower the development of traditional Chinese medicine through digital transformation; 3) Build a high-quality talent team with characteristics of traditional Chinese medicine; 4) Cultivate high-energy health industry of traditional Chinese medicine; 5) Promote the dissemination and open development of high-level traditional Chinese medicine culture.
The price reduction of centralized purchase is relatively mild, accelerating the coverage of Chinese patent medicine, which is conducive to the increase of the share of leading enterprises. This centralized purchase involves 17 groups of products, 157 enterprises and 182 products. Through market competition, a total of 97 enterprises and 111 products were selected. The average price of drugs winning the bid in this centralized purchase decreased by 42.27% and the maximum decreased by 82.63%. We expect that pharmaceutical enterprises with cost and variety advantages will be able to quickly seize the market when the centralized purchase of proprietary drugs is implemented.
The 14th five year plan for the development of traditional Chinese medicine in Guangdong Province adheres to the goal orientation and defines 22 main development indicators of the province’s traditional Chinese medicine medical service system, service capacity and cultural construction during the 14th Five Year Plan period. In addition, the plan also deployed nine key tasks and seven key projects.
The guiding opinions give preference to the policy of traditional Chinese medicine, which is conducive to the inheritance and development of traditional Chinese medicine. The details are as follows: 1) bring qualified traditional Chinese medicine institutions into the designated medical insurance; 2) Strengthen the price management of traditional Chinese medicine services; 3) Bring appropriate traditional Chinese medicine and traditional Chinese medicine medical service items into the scope of medical insurance payment; 4) Improve the payment policy suitable for the characteristics of traditional Chinese medicine; 5) Strengthen the supervision of medical insurance funds.
Investment advice
We expect that the industry will achieve sustained, healthy and high-quality development thanks to the successive implementation of policies in the traditional Chinese medicine sector. The industrial policy encourages the superposition of price increase expectations, and it is recommended to pay attention to investment opportunities in eight segments of traditional Chinese medicine, such as innovative traditional Chinese medicine, formula granules, OTC, brand traditional Chinese medicine, traditional Chinese medicine, proprietary Chinese medicine, traditional Chinese medicine services and relevant supporting supply chains.
It is recommended to pay attention to Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) , Beijing Tongrentang Co.Ltd(600085) , Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) , China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) , GUSHENG hall, etc.
Risk statement
The risk of policy implementation falling short of expectations, the risk of industrial regulatory policies, the risk of intensified market competition, the risk of upstream raw material price rise, and the risk of brand promotion falling short of expectations.
