Main points:
The policy is favorable, and the track of traditional Chinese medicine medical service is evergreen; Private traditional Chinese medicine hospitals with high-quality physician resources and replicable business model ushered in the golden period of development. We found that medical services were greatly impacted in 2021, which was mainly affected by policy uncertainty and the overall setback of the pharmaceutical and biological sector. In 2022, we believe that TCM medical services will usher in major development opportunities. 1) demand: the aging of population, the increase of incidence rate of chronic diseases, and the increase of per capita consumption of medical expenditure, etc., and the promotion of public health management needs. With its unique diagnosis and treatment system and preventive effect, traditional Chinese medicine is increasingly accepted by the people. 2) Supply: a. the TCM service market is scattered, small and chaotic. There are more than 60000 TCM clinics in China, most of which are private regional private small institutions. The industry concentration is very low and needs to be integrated urgently; b. The policy clearly supports the development of traditional Chinese medicine industry. The guidance on medical insurance supporting the inheritance, innovation and development of traditional Chinese medicine promotes the development of traditional Chinese medicine to the national strategic level from top to bottom. We believe that the substantive policies at the provincial and municipal levels will be implemented soon in the future; c. The stock increment of traditional Chinese medicine reservoir in China is both low, which is a scarce resource. In the future, private traditional Chinese medicine hospitals with abundant doctor resources will usher in a golden period of development. 3) Gushengtang is one of the largest private TCM medical service providers in China. We are optimistic about the company’s ability to integrate Wuxi Online Offline Communication Information Technology Co.Ltd(300959) business and recommend attention.
Companies in transition but still focusing on traditional Chinese Medicine
We sorted out the companies in transition but with large proportion of traditional Chinese medicine, among which Youcare Pharmaceutical Group Co.Ltd(688658) , Livzon Pharmaceutical Group Inc(000513) , Heilongjiang Zbd Pharmaceutical Co.Ltd(603567) are more representative. (1) Youcare Pharmaceutical Group Co.Ltd(688658) has rich product pipelines. It has been deeply cultivated in traditional Chinese medicine for more than 10 years. It has rich traditional Chinese medicine product pipelines, covering many fields such as cardio cerebrovascular, respiratory system, digestive system and reproductive health. There are many traditional Chinese medicine pipelines under research, such as hydroxysafflower yellow a. The goal of equity incentive is to take the net profit of 2021 as the base, with a growth rate of no less than 30% / 69% / 119%.
(2) the business structure of Livzon Pharmaceutical Group Inc(000513) is clear, and the main products of the two main products are the antiviral particles and Shenqi Fuzheng injection, and the traditional classical Chinese medicine compound new medicine and She Xiangshu spirit gel (improved dosage form) are focused on the research and development of Chinese medicine products. Research and development progress of new products such as xfdx granules (traditional Chinese medicine compound new drug derived from clinical experience). In addition, the company transferred 40% shares of Tianjin Beijing Tongrentang Co.Ltd(600085) pharmaceutical industry to further promote the development of traditional Chinese medicine.
(3) Heilongjiang Zbd Pharmaceutical Co.Ltd(603567) as an enterprise that continues to invest in the research and development of traditional Chinese medicine, it has 49 traditional Chinese medicine projects and more than 550 kinds of formula particles. It has established a traditional Chinese medicine trading center at the head of the “four drug capitals” and built a complete modern medicine market circulation system through the Internet mode.
Market Review
This week, the pharmaceutical and biological index rose by about 2.41%, outperforming the Shanghai and Shenzhen 300 index by 4.40 percentage points, ranking the first in the industry. As of Friday this week, the PE (TTM) of the pharmaceutical industry was 34.48 times. Among the pharmaceutical level III sub industries, 10 sub industry sectors rose and 3 sub industry sectors fell this week. In vitro diagnosis was the sub industry with the largest increase, up 13.07%. Hospitals were the sub industry with the largest decline, down 6.42%. The sub industry with the highest valuation this week is hospital, and PE (TTM) is 80.12 times.
