Event: on March 29, 2022, the general office of the State Council issued the “14th five year plan” for the development of traditional Chinese medicine (hereinafter referred to as the “plan”) and put forward development goals. By 2025, the health service capacity of traditional Chinese medicine will be significantly enhanced, the high-quality development policies and system of traditional Chinese medicine will be further improved, the revitalization and development of traditional Chinese medicine has achieved positive results, and its unique advantages in the construction of a healthy China will be brought into full play. The traditional Chinese medicine industry has ushered in major historical development opportunities.
Comments:
The issuance of the State Council’s plan for the development of traditional Chinese medicine for the first time is of great significance. Since the 18th National Congress, the CPC Central Committee and the State Council have attached great importance to the development of traditional Chinese medicine industry and issued a number of incentive policies. In February 2016, the State Council issued the outline of the strategic planning for the development of traditional Chinese medicine (20162030), marking the official rise of the development of traditional Chinese medicine to a national strategy. In August 2016, the 13th five year plan for the development of traditional Chinese medicine was issued by the State Administration of traditional Chinese medicine, and this plan was issued by the State Council, further improving the strategic height of the development of traditional Chinese medicine. We will establish and improve the system of strategic development and evaluation of traditional Chinese medicine at the national and local levels, and fully mobilize the strength of traditional Chinese medicine at the national and local levels to jointly develop and solve the problems faced by traditional Chinese medicine. It is not only the top-level design, but also the implementation.
Clarify the objectives, tasks, policies and measures, and scientifically and effectively promote the high-quality development of the industry. The plan puts forward development goals in seven aspects: TCM service system, talents, inheritance and innovation, industry, culture, open development and governance ability, and introduces 15 quantitative main development indicators (including the number of TCM medical institutions, TCM hospitals, beds of public TCM hospitals per 1000 population, etc.). On the basis of retaining the core indicators of the 13th five year plan for the development of traditional Chinese medicine, we have highlighted the scientificity, rationality and feasibility of the indicators, deleted the original indicators of traditional Chinese medicine services, traditional Chinese medicine industry and traditional Chinese medicine education, and added indicators of meeting the people’s health needs in the new era, sinking medical services and coordinated development of traditional Chinese and Western medicine, which fully reflects the new requirements for the high-quality development of traditional Chinese medicine. 10 key tasks defined the development direction and focus of work, and 11 construction columns highlighted key policies and measures, including 1) the construction of high-quality traditional Chinese medicine service system; 2) The construction of “promoting excellence, strengthening weakness and making up for weakness” in traditional Chinese medicine services; 3) Capacity building of emergency service of traditional Chinese medicine; 4) Capacity building project of ethnic minority medical hospitals; 5) Project for improving the ability of integrated traditional Chinese and Western medicine; 6) Chinese Medicine Characteristic Talents Training Project (Qihuang project); 7) National Traditional Chinese Medicine Inheritance and innovation platform project; 8) Quality improvement project of traditional Chinese medicine; 9) Chinese medicine culture promotion project and museum construction; 10) Open development project of traditional Chinese medicine; 11) Support and guarantee construction of traditional Chinese medicine.
Included in the government performance appraisal, a number of policies effectively ensure the realization of the objectives, and the penetration rate of traditional Chinese medicine services is expected to increase. The plan has made important arrangements in terms of organization and leadership, investment guarantee, implementation mechanism, publicity and guidance to escort the implementation of the plan. In particular, we will promote the integration of TCM related work into government performance appraisal. Governments at all levels can support the development of TCM through existing capital channels and special bonds of local governments, guide social investment, encourage financial institutions to provide financial support for relevant projects, further compact the implementation of local governments through the establishment of monitoring and evaluation mechanism, and effectively accelerate the supply of TCM services. We expect that during the 14th Five Year Plan period, the supply and service capacity of high-quality traditional Chinese medicine services will be effectively improved, and the penetration rate of traditional Chinese medicine services is expected to be significantly improved.
The price and medical insurance policies are tilted, the registration management is improved, and the innovation of traditional Chinese medicine is promoted. The traditional Chinese medicine industry has ushered in historical opportunities. The plan maintains policy coherence with the guidance on medical insurance supporting the inheritance, innovation and development of traditional Chinese Medicine issued at the end of 2021, and clearly proposes to focus on traditional Chinese medicine medical service items in the dynamic adjustment of medical service prices. Improve the market competition environment and guide the formation of a quality-oriented market price mechanism for Chinese herbal pieces. The qualified medical service items of traditional Chinese medicine and traditional Chinese medicine will be included in the payment scope of medical insurance according to procedures. Select and publish the dominant diseases of traditional Chinese medicine, and encourage the implementation of the same disease, the same effect and the same price of traditional Chinese and Western medicine. In the aspect of traditional Chinese medicine research and development, it is proposed to establish a traditional Chinese medicine registration and evaluation evidence system of “Three Combinations” of traditional Chinese medicine theory, human experience and clinical trials, actively explore and establish a real-world research evidence system of traditional Chinese medicine, and promote the formulation and release of the catalogue of ancient classic prescriptions. By taking a number of measures at the same time, we expect to effectively promote the rapid development of traditional Chinese medicine diagnosis and treatment and traditional Chinese medicine industry, and innovative traditional Chinese medicine will also usher in historical opportunities.
Investment suggestion: the 14th five year plan will fully promote the high-quality development of traditional Chinese medicine, and the traditional Chinese medicine industry will usher in major historical development opportunities. We judge that the Chinese medicine industry is expected to usher in an upward inflection point in 2022 with the support of policies and medical insurance, waiting for performance fulfillment and value revaluation.
It is suggested to pay attention to five types of investment opportunities in traditional Chinese medicine:
1) the OTC of the branded Chinese patent medicine, the OTC of the branded Chinese patent medicine, has benefited from industry capacity clearing and terminal price increases. The dominant advantage of the leading enterprise has been highlighted, and industry concentration has increased. It’s suggested to focus on: the Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) , Yunnan Baiyao Group Co.Ltd(000538) etc;
2) the pilot of traditional Chinese medicine formula granules has been completed, the 10 billion market will meet the 1-2-fold expansion, and the filing system and the new national standard will build high industrial barriers. It is suggested to focus on: Chinese traditional medicine (H), Tianjin Chase Sun Pharmaceutical Co.Ltd(300026) , China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) etc;
3) the inflection point of new traditional Chinese medicine drugs has arrived, and the pace of registration and evaluation has accelerated. It is expected to give priority to medical insurance and realize large-scale production. It is suggested to focus on: Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) , Tasly Pharmaceutical Group Co.Ltd(600535) , Jiangsu Kanion Pharmaceutical Co.Ltd(600557) , Guiyang Xintian Pharmaceutical Co.Ltd(002873) , etc;
4) thanks to the outstanding contribution of covid-19 in the fight against epidemic diseases, traditional Chinese medicine going to sea / internationalization is expected to change from integration into Xi’An International Medical Investment Company Limited(000516) system to actual harvest period. It is suggested to focus on: Beijing Tongrentang Co.Ltd(600085) , Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) , Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) , Tasly Pharmaceutical Group Co.Ltd(600535) , etc;
5) the TCM diagnosis and treatment industry has ushered in a golden period of development. It is suggested to focus on: gushengtang (H), Beijing Tongrentang Co.Ltd(600085) .
Risk warning: the implementation of the policy is not as strong as expected; The price reduction rate of centralized purchase of traditional Chinese medicine exceeded expectations; Risk of failure in new drug research and development.
