The investment logic of the four traditional Chinese medicine industries: 1) the State Council, the State Food and Drug Administration and the medical insurance bureau issued documents strongly supporting the traditional Chinese medicine industry, and the traditional Chinese medicine industry is facing a golden development period; 2) Traditional Chinese medicine has natural advantages in the treatment of chronic diseases and no diseases. Under the background of aging and consumption upgrading, the consumption attribute of traditional Chinese medicine promotes its rapid and large-scale consumption; 3) The promotion of national standards, the rise of the price of traditional Chinese medicine decoction pieces, and the increase of the price of traditional Chinese medicine formula granules and OTC products led to the increase of gross profit margin; 4) The sector has not risen for many years, which is characterized by low valuation, low position and good chip structure. It is suggested to pay attention to: 1) traditional Chinese medicine formula particles, and it is suggested to pay attention to Chinese traditional Chinese medicine, China Resources Sanjiu Medical & Pharmaceutical Co.Ltd(000999) , Tianjin Chase Sun Pharmaceutical Co.Ltd(300026) ; 2) OTC traditional Chinese medicine, it is recommended to pay attention to Beijing Tongrentang Co.Ltd(600085) , Chongqing Taiji Industry (Group) Co.Ltd(600129) , Hubei Jumpcan Pharmaceutical Co.Ltd(600566) , Zhejiang Conba Pharmaceutical Co.Ltd(600572) , Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) ; 3) Innovative prescription drugs, it is recommended to pay attention to Zhejiang Jolly Pharmaceutical Co.Ltd(300181) , Shijiazhuang Yiling Pharmaceutical Co.Ltd(002603) , Jiangsu Kanion Pharmaceutical Co.Ltd(600557) , etc.
The State Council, the State Food and Drug Administration and the medical insurance bureau have successively issued strong policy support: since the 18th CPC National Congress, the Party Central Committee with Comrade Xi Jinping as the core has put the work of traditional Chinese medicine in a prominent position and made important instructions and instructions for many times, pointing out the direction and providing guidance for the inheritance, innovation and development of traditional Chinese medicine in the new era:
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, and put forward 20 opinions from six aspects: promoting the inheritance, opening, innovation and development of traditional Chinese medicine, so as to promote the inheritance, innovation and development of traditional Chinese medicine; In 2021, the State Council again issued the notice on several policies and measures to accelerate the development of characteristics of traditional Chinese medicine, and put forward 28 policies and measures from seven aspects, such as improving the development efficiency of traditional Chinese medicine. From the perspective of the overall situation, the State Council coordinates all departments, which fully shows that the state attaches importance to and supports the inheritance, innovation and development of traditional Chinese medicine.
In December 2020, the food and Drug Administration issued the implementation opinions of the State Food and Drug Administration on promoting the inheritance, innovation and development of traditional Chinese medicine, proposing to reform the registration classification of traditional Chinese medicine (traditional Chinese medicine is divided into four categories: innovative traditional Chinese medicine, improved traditional Chinese medicine, ancient classic prescription compound and the same prescription), and build a review evidence system of “Three Combinations” (focusing on human experience, clinical trials and traditional Chinese medicine theory), Reform and improve the review and approval system of traditional Chinese medicine. The new standard emphasizes curative effect and desalinates ingredients. Since 2021, the review of innovative traditional Chinese medicine has been significantly accelerated. As of December 31, 2021, 12 new traditional Chinese medicine drugs have been approved, while only 2.6 innovative traditional Chinese medicine have been approved every year from 2016 to 2020;
In December 2021, the medical insurance bureau issued the guiding opinions on medical insurance supporting the inheritance, innovation and development of traditional Chinese medicine, emphasizing that medical insurance departments at all levels and competent departments of traditional Chinese medicine should effectively improve their political position. Further expand the coverage of traditional Chinese medicine medical insurance, and include qualified traditional Chinese medicine medical institutions and traditional Chinese medicine retail stores into the designated medical insurance; The appropriate Chinese herbal pieces, Chinese patent medicines and Chinese herbal preparations of medical institutions shall be included in the catalogue of Medicare drugs; Appropriate TCM medical service items will be included in the scope of medical insurance payment.
The “986” policy stimulates the large-scale production of Chinese patent medicine and the traditional Chinese medicine formula granule industry to enter a new stage of development: in the first half of 2020, the total number of basic drugs used by sample hospitals was 1119, accounting for 51.58%, which is still far from the “986” goal; In November 2021, the notice on standardizing the clinical use of traditional Chinese medicine formula granules in medical institutions was issued, announcing that the pilot work of traditional Chinese medicine formula granules has been completed, the industry has entered a new stage of development, and the growth rate of traditional Chinese medicine formula granules industry will increase in the future.
The price of OTC products will be increased or the volume and price will be increased simultaneously: the price of Angong Niuhuang Pill and Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) main raw materials such as natural bezoar and musk has increased to varying degrees. From 2005 to 2021, Zhangzhou Pientzehuang Pharmaceutical Co.Ltd(600436) China raised the price 11 times, from 125 yuan to 590 yuan, an increase of 372%; Beijing Tongrentang Co.Ltd(600085) the price was raised three times, and the unit price was raised from 350 yuan to 860 yuan, an increase of 145.71%.
Risk tips: the price reduction of centralized purchase of Chinese patent medicines exceeds the expected risk, the risk of intensified market competition, the risk of insufficient supply of raw materials, the risk of product market promotion less than the expected risk, and the risk of repeated epidemic.
