At the end of 2021, the A-share traditional Chinese medicine sector rose quietly, and the "trading pioneer" Gansu Longshenrongfa Pharmaceutical Industry Co.Ltd(300534) , Kunming Longjin Pharmaceutical Co.Ltd(002750) has doubled. From the market start-up node, the current general rise in the traditional Chinese medicine sector is mainly boosted by the moderate price reduction news of 19 provincial alliance. In addition, many Chinese medicine enterprises have recently issued price increase notices and accelerated the approval and listing of innovative Chinese medicine, which has attracted wide attention.
how far can this round of market go? Zhang long (a pseudonym), a senior investor in the pharmaceutical industry, told the securities times that after the general rise in the market, individual stocks will certainly move towards differentiation. The price increase of traditional Chinese medicine products is mainly due to the rise in the price of raw materials, so it does not mean that the profits of enterprises will increase. in the long run, although some provincial centralized mining of traditional Chinese medicine is bad, the national mining has not yet started. In the future, the probability of traditional Chinese medicine will also be moved to the negotiation table, which will be good for the development of head enterprises that can exchange price for quantity, but small and medium-sized enterprises may be eliminated in the shuffle.
the Chinese medicine sector rose sharply, and the two business departments appeared on the dragon and tiger list
Since November 2021 (as of December 30), the traditional Chinese medicine index has increased by 12.38%. During this period, 74 of the 79 constituent stocks in the sector rose, with an average increase of 25%. In terms of stocks, Gansu Longshenrongfa Pharmaceutical Industry Co.Ltd(300534) , Kunming Longjin Pharmaceutical Co.Ltd(002750) doubled, Jinghua Pharmaceutical Group Co.Ltd(002349) , Jianmin Pharmaceutical Group Co.Ltd(600976) , Tianjin Chase Sun Pharmaceutical Co.Ltd(300026) , Hubei Jumpcan Pharmaceutical Co.Ltd(600566) , Datang pharmaceutical, Yabao Pharmaceutical Group Co.Ltd(600351) and other stocks rose by more than 50%.
"Rising pioneer" Gansu Longshenrongfa Pharmaceutical Industry Co.Ltd(300534) is an enterprise integrating new drug R & D, traditional Chinese medicine processing, production and operation. Its main product is Yuanhu Zhitong dropping pills, a national protected variety of traditional Chinese medicine. Gansu Longshenrongfa Pharmaceutical Industry Co.Ltd(300534) in the nine trading days since December 20, five 20% trading boards were harvested, with a cumulative increase of 139.74%. Due to the serious abnormal fluctuation of the stock price, the trading of the stock has been suspended for verification since the opening of the market on December 31.
According to the dragon and tiger list data, in the range of Gansu Longshenrongfa Pharmaceutical Industry Co.Ltd(300534) soaring, small and medium-sized investors are the main force of transactions, accounting for more than 80%. Through the business departments of East Money Information Co.Ltd(300059) securities such as the second Tuanjie road in Lhasa, the first East Ring Road in Lhasa and the second East Ring Road in Lhasa, as well as the business departments of East Asia Qianhai securities Shenzhen Branch, Zhongtai Securities Co.Ltd(600918) Hangzhou Hushu South Road, CICC Fortune Securities Wuxi Renmin middle road and Huaxin Securities Shanghai Branch.
The surging Kunming Longjin Pharmaceutical Co.Ltd(002750) has achieved seven consecutive boards, with a cumulative increase of 94.69% from December 22 to December 30. The Kunming Longjin Pharmaceutical Co.Ltd(002750) two inspections show that the company's recent operation is normal, the internal and external business environment has not changed significantly, and there are no major events that should be disclosed but not disclosed at present.
The reporter analyzed the data of the dragon and tiger list and found that among the main funds of Kunming Longjin Pharmaceutical Co.Ltd(002750) , business departments such as East Asia Qianhai securities Shenzhen Branch and Huaxin Securities Shanghai branch also appeared on the list at the same time as Gansu Longshenrongfa Pharmaceutical Industry Co.Ltd(300534) . This means that the main hype behind the two may overlap. It is worth noting that Huaxin Securities Shanghai branch also appeared on the list of Jinghua Pharmaceutical Group Co.Ltd(002349) , Tianjin Chase Sun Pharmaceutical Co.Ltd(300026) and other stocks that have soared recently.
Wang Jun (a pseudonym), a senior analyst in the pharmaceutical industry, told reporters that from the point of view of the start-up of the market of traditional Chinese medicine, this round of sharp rise was mainly due to the comprehensive impact of three good news: first, the centralized purchase and landing of Chinese patent medicines; second, many companies in the industry announced price increases; Third, the incentive policy of traditional Chinese medicine is overweight.
centralized purchase is implemented gently, and the policy continues to increase
On December 21, the centralized procurement of Chinese patent medicines of 19 provincial and regional alliances, including Hubei, Hebei and Shanxi, was opened. The negative volume of Chinese patent medicine procurement started to rise after the landing of boots, mainly because the price reduction of this centralized purchase was better than the market expectation.
In this round of inter provincial alliance centralized procurement, a total of 193 enterprises passed the examination and participated in the election, and 111 products of 97 enterprises were selected. The price of most drugs decreased by 30% - 50%, and the price of some drugs decreased by less than 30%, with an average decrease of only 42%, lower than the price reduction of the previous rounds of national centralized procurement. The decline was relatively mild, and the next day (December 22) there was a general rise in the traditional Chinese medicine sector.
For Kunming Longjin Pharmaceutical Co.Ltd(002750) with the daily limit rising for seven consecutive days, the announcement on participating in the planned selection of centralized belt procurement of inter provincial alliance of Chinese patent medicine was issued the night before the market launch, announcing that the breviscapine for injection of the company's products is planned to be selected by inter provincial alliance, and the winning price is 75.31 yuan / box. This is the core product of Kunming Longjin Pharmaceutical Co.Ltd(002750) . In 2020, the revenue accounted for 87.74% of the company's operating revenue, nearly half of which came from the areas covered by the inter provincial alliance.
Wang Jun told reporters that in order to carry forward and inherit the culture of traditional Chinese medicine, traditional Chinese medicine is an industry that the state has been supporting in recent years. Relevant policies such as improving the quality evaluation system of traditional Chinese medicine and promoting industrial development have been issued one after another. The negotiation of centralized procurement will also take into account the profit space of the enterprise and will not press the price very low.
Xiangcai securities research report pointed out that policy support is the most favorable factor for the development of traditional Chinese medicine industry. On the policy side, the state vigorously supports and promotes the development of traditional Chinese medicine, promotes the inheritance and innovation of traditional Chinese medicine, and adheres to the equal emphasis on traditional Chinese and Western medicine, which has brought policy dividends and new demand to the traditional Chinese medicine industry. The unique advantage of "preventing disease" has brought development opportunities to the traditional Chinese medicine industry.
After a brief review, we can find that there are not many heavy supporting documents on traditional Chinese medicine since this year: in February, the State Council issued several policies and measures on accelerating the development of characteristics of traditional Chinese medicine; At the end of June, the National Health Commission and others jointly formulated the opinions on Further Strengthening the work of traditional Chinese medicine in general hospitals and promoting the coordinated development of traditional Chinese and Western medicine; In early July, the five departments jointly formulated the implementation plan for the dissemination of traditional Chinese medicine culture (2021-2025).
Not long ago, Guangdong Provincial Bureau of traditional Chinese medicine formulated and released the "14th five year plan" for the development of traditional Chinese medicine in Guangdong Province. The plan puts forward a number of development indicators within five years, including setting up TCM clinical departments and TCM clinics in 100% of secondary and above public general hospitals in 2025; The number of TCM medical institutions reached 25300; 203 Institutes of traditional Chinese medicine with 100 million yuan; The number of TCM beds per 1000 population is 0.71.
The release of the plan will help promote the development of traditional Chinese medicine industry in Guangdong Province and even Dawan district. Haitong Securities Company Limited(600837) the research report points out that Guangdong's policy support and encouragement for the traditional Chinese medicine industry in the planning is an epitome of the state's encouragement of the high-quality development of the traditional Chinese medicine industry.
In addition, the state's support and encouragement for the development of traditional Chinese medicine is also reflected in accelerating the listing of innovative traditional Chinese medicine. According to relevant statistics, in 2021, there were more than 1200 TCM acceptance numbers, three times that of 2020 (more than 400); In addition, the approval of innovative Chinese traditional medicine has been accelerated. Since 2021, 11 innovative Chinese patent medicines have been approved, covering many fields such as respiration, nerves, digestion and so on. The number of innovative traditional Chinese medicines, whether declared for registration or approved, reached a new high this year.
the price of raw materials continued to rise, and many companies announced price increases
Another important reason for the popularity of traditional Chinese medicine is that many companies in the industry have recently issued product price increase notices. Since December, Beijing Tongrentang Co.Ltd(600085) , Chongqing Taiji Industry (Group) Co.Ltd(600129) , China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) and other listed companies have announced price increases of 10% - 20%.
In early December, Beijing Tongrentang Co.Ltd(600085) announced that it would raise the price of Angong Niuhuang Pill to 860 yuan / box, an increase of nearly 10%, driving Beijing Tongrentang Co.Ltd(600085) share price to new highs. At that time, an insider also exclaimed to the reporter, "I feel that these time-honored traditional Chinese medicine will become a luxury".
Soon after, China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) said on the interactive platform that due to the rising overall cost in recent years, the ex factory price of Angong Niuhuang Pill has increased this year.
Chongqing Taiji Industry (Group) Co.Ltd(600129) also said on the interactive platform that due to the continuous rise in the costs of main raw materials, auxiliary materials and energy, in order to alleviate the rising pressure of costs, the ex factory price of Huoxiang Zhengqi oral liquid has been adjusted recently, with an average increase of 12%.
Jiuzhitang Co.Ltd(000989) said during the investigation by the organization that the company will adopt different pricing strategies in due time according to different products, comprehensively considering cost changes, policies, product audience and market environment.
Due to the comprehensive influence of multiple factors such as climate, epidemic situation, labor, logistics and supervision, the price of raw materials of traditional Chinese medicine has continued to increase in recent two years, especially the rare and precious medicinal materials with scarcity.
The Research Report of Capital Securities pointed out that due to the supply constraints of natural Chinese herbal medicines, it is impossible to increase production on a large scale to form an effective supply. In addition, the people's demand for valuable Chinese patent medicines with natural ingredients is rising, and the contradiction between supply and demand leads to the long-term price increase of valuable Chinese patent medicines.
In addition to precious medicinal materials, the prices of common medicinal materials have also increased significantly this year. According to the statistics of Chinese herbal medicine tiandi.com, of the 1445 product specifications this year, 343 have increased the price, accounting for 23%. Many Chinese herbal medicines increased by more than 100% this year. For example, the quotation of Rehmannia glutinosa (345 mixed grade, Henan) on November 25 was 42 yuan / ton, with a year-on-year increase of 320%; In some areas, Chinese herbal medicines such as Cortex Phellodendri, plantain, Alisma orientalis and chuanqiong also rose significantly.
industry: product price increase ≠ thickening profit
On the whole, the scale and development speed of the traditional Chinese medicine market are obvious to all, and the industry deserves attention. According to the Euromonitor report, China's Chinese patent medicine market grew rapidly from 2015 to 2019, and the market scale increased from about 625.2 billion yuan in 2015 to about 814.9 billion yuan in 2019, with a compound annual growth rate of about 6.8%.
But it was a university that asked. The recent increase in the attention of the traditional Chinese medicine sector has triggered a heated discussion on the investment value of traditional Chinese medicine enterprises in the industry. Many brokerage analysts believe that with the continuous overweight of favorable policies and product prices, the valuation of traditional Chinese medicine is expected to be repaired. Insiders also said that the rise in product prices does not mean that the profitability of enterprises has improved, and the industry remains to be observed.
Minsheng securities analysts believe that traditional Chinese medicine varieties, brands and patent barriers are high, and exclusive products are scarce. In recent years, the internal operation and management of many traditional Chinese medicine enterprises have been improved, and the retail marketing reform and channel improvement have increased product sales performance. In 2020, many listed traditional Chinese medicine companies have issued equity incentive and employee stock ownership plans. The annual growth rate of performance is required to be concentrated at 10% - 20%. The development speed of the industry has been guaranteed, the upward space has been fully opened, and the valuation is expected to continue to improve.
Zhang Long believes that traditional Chinese medicine products have both consumer and pharmaceutical attributes. In theory, the pressure of rising prices of raw materials can be transferred to end consumers. Therefore, in the context of the sharp rise in raw materials, increasing the ex factory price of traditional Chinese medicine products can reduce losses for enterprises, but the enterprise profit does not necessarily increase, which still needs to compare the gap between the price rise of raw materials and the price rise of products. At present, the price increase of drugs announced recently is mostly about 10%, but the increase of raw materials may be much more than that.
in addition, Zhang long also analyzed that after the centralized collection and landing of multiple inter provincial alliances of traditional Chinese medicine, the national collection of traditional Chinese medicine may also follow. At that time, traditional Chinese medicine products will also face a new round of price reduction negotiations, so it is difficult to be optimistic about the whole industry. In addition, the traditional Chinese medicine industry is currently relatively scattered, and centralized procurement is expected to accelerate the industry reshuffle. Under this background, the leading enterprises with price for quantity qualification and innovative product R & D capability deserve attention, and the small and medium-sized enterprises will be passively eliminated. Therefore, it is expected that the individual stocks in the industry will soon be divided after the general rise.
What kind of organization is suitable for traditional Chinese medicine? Soochow Securities Co.Ltd(601555) the research report believes that the targets such as relatively clear pharmacodynamic value, rapid endogenous increase, relatively cheap valuation and possible price increase of products deserve attention.
(E company)
