The release of the 14th five year plan for traditional Chinese medicine is optimistic about the long-term development prospects of the industry. The State Administration of traditional Chinese medicine announced the notice of the general office of the State Council on printing and distributing the “14th five year plan” for the development of traditional Chinese medicine on March 29. Among the many measures proposed in the document, there are three main aspects that directly affect the clinical demand of traditional Chinese medicine: (1) build a high-quality and efficient service system of traditional Chinese medicine; (2) Improve the ability of traditional Chinese medicine to participate in the prevention and treatment of emerging infectious diseases and public health emergencies; (3) Improve the level of integrated traditional Chinese and Western medicine.
Investment suggestions we believe that the release of the “14th five year plan” for traditional Chinese medicine is conducive to the medium and long-term development of the industry. With the release of the latest version of covid-19 diagnosis and treatment guide, the value of traditional Chinese medicine is expected to be explored by investors. However, the pressure of medical insurance cost control can not be ignored. We need to pay close attention to the results of centralized purchase of traditional Chinese medicine by Guangdong alliance. In terms of investment strategy, we are optimistic about (1) leading brands of traditional Chinese medicine with scarcity attribute and independent pricing power, such as Beijing Tongrentang Co.Ltd(600085) , Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) ; (2) The sales channels are retail terminals, and brand OTC enterprises with low dependence on medical insurance payment, such as China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) , Henan Lingrui Pharmaceutical Co.Ltd(600285) , Jianmin Pharmaceutical Group Co.Ltd(600976) ; (3) Leading enterprises of traditional Chinese medicine with innovative traditional Chinese medicine and epidemic prevention concepts, such as Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) etc.
Risk warning: the pressure of fee control and price reduction is higher than expected; The risk that the price decline and promotion speed of drugs and high-value consumables purchasing with quantity exceed the expectation
