Matters:
On March 29, 2022, the general office of the State Council issued the notice on printing and distributing the development plan of traditional Chinese medicine in the 14th five year plan, which comprehensively considered the key areas of traditional Chinese medicine development such as medical treatment, scientific research, industry, education, culture and international cooperation, and put forward ten key tasks and 15 main development indicators.
Ping An View:
The 14th five year plan of traditional Chinese medicine was issued in the name of the general office of the State Council to improve the position of the industry. Unlike the 13th five year plan issued by the State Administration of traditional Chinese medicine, the 14th five year plan of traditional Chinese medicine is the first Five-Year Plan of traditional Chinese Medicine issued in the name of the general office of the State Council, with a significant increase in the position of the industry. In October 2019, the CPC Central Committee and the State Council issued the opinions on promoting the inheritance, innovation and development of traditional Chinese medicine; In February 2021, the State Council further launched several policies and measures on accelerating the development of characteristics of traditional Chinese medicine, and the traditional Chinese medicine industry continued to receive policy support from the perspective of top-level design. In terms of organization and guarantee, the inter ministerial joint meeting of the State Council on traditional Chinese medicine is responsible for overall coordination. At the same time, it requires all provinces to include the promotion of traditional Chinese medicine related work in the government performance assessment, and encourages financial institutions to provide financial support for qualified projects in the field of traditional Chinese medicine in accordance with the law and regulations.
The 14th five year plan of traditional Chinese medicine is more detailed and more operable. The 14th five year plan of traditional Chinese medicine is a medium and long-term programmatic document for the traditional Chinese medicine industry, which puts forward ten key tasks. Compared with the 13th five year plan, the task of the 14th five year plan of traditional Chinese medicine is more practical and feasible. For example, with regard to the prevention of diseases by traditional Chinese medicine, the 14th five year plan proposes to “carry out the prevention and treatment of children and adolescents’ myopia, scoliosis, obesity and other appropriate traditional Chinese medicine technologies”; In terms of registration and approval, it innovatively proposed to “establish a traditional Chinese medicine registration and evaluation evidence system combining traditional Chinese medicine theory, human experience and clinical trials”; In terms of payment, it is proposed to “realize independent pricing of traditional Chinese medicine decoction pieces and traditional Chinese medicine preparations processed and used by medical institutions”, and “bring qualified traditional Chinese medicine medical service items and traditional Chinese medicine into the payment scope of basic medical insurance according to procedures”; In terms of internationalization one is “one belt, one road development fund” and the other is “guiding and encouraging social capital to establish a Chinese medicine belt.” The introduction of the 14th five year plan of traditional Chinese medicine will promote the development of the industry and usher in qualitative changes.
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. It is suggested to pay attention to Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) , Guiyang Xintian Pharmaceutical Co.Ltd(002873) , Jiangsu Kanion Pharmaceutical Co.Ltd(600557) , etc. 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. It is suggested to pay attention to China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) , Guizhou Sanli Pharmaceutical Co.Ltd(603439) , Beijing Tongrentang Co.Ltd(600085) , Henan Lingrui Pharmaceutical Co.Ltd(600285) , Jianmin Pharmaceutical Group Co.Ltd(600976) , Chongqing Taiji Industry (Group) Co.Ltd(600129) , etc. 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. It is suggested to pay attention to Chinese traditional medicine, Tianjin Chase Sun Pharmaceutical Co.Ltd(300026) etc. 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. It is suggested to pay attention to Kpc Pharmaceuticals Inc(600422) , Shandong Buchang Pharmaceuticals Co.Ltd(603858) , etc. 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. It is suggested to pay attention to GUSHENG hall, etc.
Risk tips: 1) policy and regulatory risks: the scale of centralized purchase and price reduction of Chinese patent medicine are higher than expected, and the progress of application, review and approval of innovative traditional Chinese medicine is lower than expected. 2) Medical insurance support is not as strong as expected: innovative traditional Chinese medicine is sold in large quantities through medical insurance negotiation. If the negotiation fails or the price reduction is too large, the profit expectation will be reduced. Traditional Chinese medicine formula granules and traditional Chinese medicine injections benefit from medical insurance support and relaxation of restrictions, and the support may be less than expected. 3) R & D risk: the “Three Combinations” theory of traditional Chinese medicine innovation needs to accept the process, and there is the possibility of R & D failure of innovative drugs. There is a possibility that the progress of formulating the national standard of traditional Chinese medicine formula granules may be lower than expected.
