Prospects for the future of traditional Chinese medicine industry: the microstructure will be cold and warm differentiation

[market analysis of chinapharma.com] in 2016, the market scale of Chinese herbal pieces was close to 200 billion yuan, and the last round of growth driven by the expansion of the base drug catalog (compound growth rate of 24% in 2009-16) was coming to an end However, the current round of policy expansion (1h17 YY 21%) just started: the implementation of zero drug addition and the maintenance of 25% of the added pieces were in line with the interests of doctors The market structure has been gradually improved It is expected that small-scale decoction pieces factories will withdraw from the market in the next 8-10 years, and the market scale of large and medium-sized decoction pieces factories will increase by about 24% in 2016-20e Industry Outlook: we are cautious and optimistic about the industry It is expected that the growth rate of proprietary Chinese medicine will rise to 10-12% in 2018, and the growth rate of herbal pieces will rise to 18-20% in 2018 due to the expansion of demand The macro benefits of traditional Chinese medicine industry seem to be various, but they have not infiltrated into supporting measures We expect that the micro structure will show cold and warm differentiation: medical insurance control fees, two vote system will have a negative impact on the industry, while the classic prescription free clinical, formula particles to be liberalized will bring new hope to the enterprise In terms of thematic opportunities, it is suggested to pay attention to classic famous prescriptions, consumption upgrading, traditional Chinese medicine formula granules In terms of investment targets, it is recommended to pay attention to Kangmei pharmaceutical, Pianzihuang, Yunnan Baiyao and traditional Chinese medicine Chinese patent medicine: the growth rate of Chinese patent medicine industry has been below 10% for two consecutive years since 2015, and the income end of 1h17 has recovered to 11% due to the low opening to high opening We expect the industry to remain weak due to the pressure of sharp decline in new drugs, medical insurance control fees, sales compliance and so on We put forward a six factor evaluation model, and propose to use six indicators, namely brand value, management mechanism, cultural marketing, R & D capability, M & a capability and academic marketing, to evaluate Chinese patent medicine enterprises On thematic opportunities, we focus on the classic famous formula and consumption upgrading The former is similar to the evaluation of chemical medicine consistency, the policy implementation is stronger than expected, and leads to the reconstruction of industry pattern The latter is in line with the transfer trend of Chinese patent medicine payment subject (from medical insurance to individual), promoting personalized consumption and quality consumption Where is the way: classic famous formula and consumption upgrading we are optimistic about two opportunities for the Chinese patent medicine industry: 1) classic famous formula: we believe that the classic famous formula can evaluate the consistency of standardized drugs, although the progress is slightly behind, but they all come from the top level and orderly implementation At present, the first batch of catalogue has not been published, but its regulatory thinking is similar to the consistency evaluation We expect that the implementation will be stronger than expected and may overturn the pattern of Chinese patent medicine We make three conjectures: a) the disease has great market potential; b) the actual sales enterprises are few; c) the supporting measures are gradually implemented, and it is suggested to pay attention to Kangmei pharmaceutical industry and Tongrentang 2) Consumption upgrading: we expect that the payment subject of Chinese patent medicine will gradually shift from medical insurance to individual, and the urban residents who have just entered the stage of affluence will gradually pay attention to the treatment effect / use quality, and accept the products with higher price level It is suggested to pay attention to Pianzihuang and Yunnan Baiyao Chinese Herbal Pieces: demand expansion, pattern differentiation Chinese Herbal Pieces Market scale is close to 200 billion yuan in 2016, the last round of growth (2009-16 compound growth rate of 24%) driven by the expansion of the base drug catalog is close to the end, while the current round of expansion (1h17 YY 21%) of the policy just started: the implementation of zero drug addition, maintaining 25% of the added pieces is in line with the interests of doctors We believe that the market structure will gradually improve, and it is expected that small-scale decoction pieces factories will withdraw from the market in the next 8-10 years The market scale of large and medium-sized decoction pieces factories in 2016-20e will grow at a compound rate of about 24%, and Kangmei pharmaceutical industry is recommended Traditional Chinese medicine formula granules: the administrative monopoly is to be broken, and the demand for traditional Chinese medicine formula granules is to be speeded up and incorporated into the decoction piece management, but the production and marketing links are subject to administrative control (production restrictions on 6 national enterprises, use restrictions on hospitals above level II) We expect the new policy to be launched in 2018, which will lift the production restrictions but maintain the use restrictions We estimate that in 2015, about 140 billion yuan (about 100 billion yuan from the factory) of pieces of Chinese herbal medicine will be sold in the hospital channel, with a peak substitution rate of 40-60% In 2015, the market space will be 40-60 billion yuan (the actual market model is less than 10 billion yuan), thanks to the increase of the proportion of hospital channels and the substitution rate of individual hospitals We expect that in 2016-20e market The compound growth rate of scale is nearly 40%, focusing on Chinese traditional medicine Risk tip: the implementation of the policy is not up to the expectation, and the operation of the enterprise is not up to the expectation Original title: [Huatai pharmaceutical team] annual strategy: medical biology: things are changing