Red Sun, Yiling, Taiji and other "rising" sounds sounded!

On January 6, the official WeChat account of the Shandong Provincial Medical Insurance Bureau announced that the first joint procurement of the national provincial-level Chinese medicine (materials) procurement alliance was launched in Shandong
.
The first joint procurement will focus on Chinese herbal decoction pieces (including formula granules), and the cumulative reported amount will exceed 10 billion yuan
.
Some analysts believe that after the implementation of the first batch of alliance procurement, it is expected that the prices of related products will be stable with some declines
.
For the capital market, in the medium and long term, high-quality traditional Chinese medicine companies will stand out
.
In fact, due to favorable policies, the Chinese medicine sector has been the strongest voice in the capital market in recent times
.
On the first trading day of this year, the traditional Chinese medicine sector rose 5.
24%, ranking first in the industry sector
.
64 of the 70 listed Chinese medicine companies rose, and 13 stocks including Taiji Group, China Resources Sanjiu, Wohua Medicine, Tongrentang, Jiuzhitang, Qianjin Pharmaceutical, Zixin Pharmaceutical, and Jianmin Group rose by the daily limit
.
On the last trading day of 2021, with the favorable policies issued on the previous day's "Guiding Opinions on Medical Insurance Supporting the Inheritance and Innovation of Traditional Chinese Medicine", the traditional Chinese medicine sector rose by 4.
96% as a whole on that day
.
According to data from Oriental Fortune.
com, the traditional Chinese medicine sector has increased by 34.
82% in the past three months
.
Judging from the changes in the past 10 days, Longjin Pharmaceuticals, Hongri Pharmaceuticals, and Essence Pharmaceuticals rose by more than 70%, and 13 companies including Yiling Pharmaceuticals, China Resources Sanjiu, Taiji Group, and Xinguang Pharmaceuticals rose by 20%.
Above, the traditional Chinese medicine sector has become a beautiful landscape for the New Year's market in 2021-2022
.
Behind the prosperity of the New Year, Chinese patent medicine is moving towards high-quality development, and the direction of innovation and transformation has become a realistic test question that the industry needs to think about and face
.
Policies catalyze new changes For the recent overall performance of the traditional Chinese medicine sector, some securities companies interpret it as "the new changes ushered in by the industry under the catalysis of policies"
.
In fact, whether it was the release of the "Several Policies and Measures on Accelerating the Development of Traditional Chinese Medicine Characteristics" early last year, or the recently issued "Guiding Opinions on Medical Insurance Supporting the Inheritance, Innovation and Development of Traditional Chinese Medicine" (hereinafter referred to as the "Guiding Opinions"), the policy is in line with China's Encouragement from the pharmaceutical industry has continued
.
In particular, the "Guiding Opinions" proposes to greatly expand the designated scope of TCM medical insurance, including grassroots medical institutions, health care institutions, and TCM stores, which is expected to further promote the "silver economy"
.
According to statistics, at present, most of the 70 listed Chinese medicine companies are involved in the field of frequently-occurring diseases in the elderly, such as China Resources Sanjiu, Tongrentang, Tasly, and Buchang Pharmaceutical
.
Taking Tongrentang as an example, its representative cardiovascular and cerebrovascular varieties include Angong Bezoar series, Tongren Bezoar Qingxin series, Tongren Dahuoluo series, Yufeng Ningxin Dropping Pill, Hemiplegia Recovery Pill, etc.
, which are mainly used for stroke, coma, meningitis, and poisoning.
Encephalopathy and cerebral hemorrhage will achieve operating income of 3.
004 billion yuan in 2020, accounting for 23.
42% of total revenue
.
According to data from Minet.
com, in 2020, the amount of drugs used for cardiovascular and cerebrovascular diseases in the Chinese patent medicine market in urban physical pharmacies in China will reach 11.
6 billion yuan, with an annual growth rate of 5.
45%
.
It can be seen that the medical and health market, which is a just-needed industry in the "silver economy", has attracted much attention
.
In addition, many documents have been published to promote the development of traditional Chinese medicine from the top-level design
.
For example, the "14th Five-Year Plan for the Development of Traditional Chinese Medicine in Guangdong Province" mentioned that the service rates of traditional Chinese medicine health management services for the elderly aged 65 and above and children aged 0-36 months were 59.
8% and 70.
42% respectively
.
Zhejiang Province, in the "14th Five-Year Plan" for the development of traditional Chinese medicine, proposed 115 major projects such as traditional Chinese medicine medical services, traditional Chinese medicine industry, and scientific research innovation for the overall development of traditional Chinese medicine and the industry
.
It is foreseeable that, driven by the favorable policies of the country and localities, the Chinese medicine market is expected to usher in expansion
.
Although the market space of the traditional Chinese medicine industry will be stimulated under the guidance of policies, the uncertainty of the market is also increasing
.
On December 24, 2021, the results of the 19-provincial Chinese patent medicine inter-provincial alliance led by Hubei were announced.
Through on-site competition, 97 companies and 111 products were selected, with a selection rate of 62%, an average decrease of 42.
27 %, with the largest drop of 82.
63%
.
From the perspective of the industry, with the normalization of the centralized procurement of proprietary Chinese medicines, the business model of relying on traditional large single products, high profitability, and gold sales in the past will become a thing of the past
.
At the same time, centralized procurement also forces traditional Chinese medicine companies to shift more energy to innovative research and development, strengthen investment in scientific research, academic and evidence-based medicine for new products, and pay more attention to the development of innovative traditional Chinese medicine drugs with real clinical value
.
Emphasis on R&D and sales is still a hidden concern Due to the excellent performance of traditional Chinese medicine in epidemic prevention and control, the overall improvement of traditional Chinese medicine quality standards, and the improvement of people's awareness of products, in recent years, the response of Chinese patent medicines in the terminal market has been more enthusiastic than before
.
According to data from Minet.
com, in 2020, the terminal sales of proprietary Chinese medicines in China's public medical institutions will be close to 240 billion yuan
.
Figure 1 Sales of Chinese patent medicines in public medical institutions in China from 2018 to the first half of 2021 (unit: 100 million yuan) (Data source: Minet) In terms of sales growth rate, the sales of 8 major treatment categories increased by more than 10%
.
Among them, pediatric drug sales increased by 42%, dermatology drugs increased by 23.
7%, and musculoskeletal diseases drugs increased by nearly 16%
.
In 2021, among the TOP20 proprietary Chinese medicine products in Beijing's physical pharmacies, it is expected that the sales of Jichuan Pharmaceutical's Xiaoer Soy Qiao Qingre Granules will reach 73 million yuan, with a growth rate of over 30%
.
Figure 2 The major categories of Chinese patent medicines in public medical institutions in China in the first half of 2021 (Data source: Minet) Under the background of product structure adjustment and industrial transformation and upgrading, the research and development of new Chinese medicines has become an important force for the upgrading and development of Chinese medicine enterprises
.
Data from CDE's official website shows that in 2021, CDE will accept a total of 61 new drug applications for traditional Chinese medicines, a significant increase from 27 in 2020
.
From the perspective of drug use, digestive system, respiratory system, and cardiovascular and cerebrovascular diseases are the top three varieties of new drug applications of traditional Chinese medicine
.
In addition, the number of new drug applications for traditional Chinese medicine in the fields of nervous system, oncology, pediatrics, and urinary system diseases has made a big breakthrough compared with 2020
.
And in 2021, the approval of new Chinese medicine drugs will be accelerated, and a total of 12 new Chinese medicine drugs will be launched, which confirms the policy's support for the Chinese medicine industry
.
Figure 3 2020-2021 CDE New Chinese Medicine Accepted Varieties (Data Source: CDE) Figure 4 2021 CDE New Chinese Medicine Accepted Varieties by Field (Data Source: CDE) Despite this, traditional Chinese medicine companies have been criticized for "high sales costs, research and development costs" The problem of "low investment" still exists, which has become a hidden worry for the long-term development of traditional Chinese medicine enterprises
.
It can be seen from the financial reports of 70 listed Chinese medicine companies that there are only a handful of listed Chinese medicine companies that have invested more than 100 million yuan in research and development, which is in sharp contrast to the proportion of sales expenses that often exceed 10%
.
Therefore, in order to break the bottleneck of performance growth and maintain a long-term stable development trend, Chinese medicine companies urgently need to enhance their awareness of innovation, keep up with changes in policies and industry environments, adjust their strategic layout in a timely manner, increase investment in research and development, and make products more diversified
.
Table 1 R&D and sales expenses of some listed Chinese medicine companies and their proportions in 2020 (Data source: corporate financial reports) New Chinese medicine project approval problems to be solved So, how to break the bottleneck and solve the new medicine project approval problem of Chinese medicine companies? Regarding the feasibility direction of the new Chinese medicine project in 2022, Deng Yong, a researcher at the National Institute of Chinese Medicine Development and Strategy, Beijing University of Traditional Chinese Medicine, believes that first, the research and development of new traditional Chinese medicine drugs for respiratory diseases related to the new crown epidemic is expected to continue the market.
It is a new traditional Chinese medicine drug that enhances human immunity and a new traditional Chinese medicine drug that is used for tumor rehabilitation and has a significant curative effect.
It will have broad market prospects.

.
Deng Yong also emphasized that the establishment of new Chinese medicine drugs should not only meet the national policy orientation in drug research and development, but also be familiar with the policies and regulations of new Chinese medicine research and development
.
He suggested to increase the development and utilization of classic prescriptions, and make corresponding project declarations within the scope of the current Drug Administration Law and related supporting regulations and policies
.
At the same time, the applicant must be able to self-certify the safety, clinical effectiveness and stability of the efficacy of the drug, and should focus on controlling these "three properties"
.
"The combination of the internal brain and the external brain can be adopted, and the applicant's own business decisions should be taken as well as the opinions of external experts in relevant fields to do a good job in the expert demonstration of the new Chinese medicine drug listing, and evaluate the safety of the new traditional Chinese medicine drug.
, curative effect and stability, in order to be valuable and marketable, it cannot be applauded but not popular
.
" Deng Yong pointed out that for the establishment of new traditional Chinese medicine drugs, enterprises should not be very successful, especially if they have not undergone clinical trials, and have not undergone drug toxicity experiments and evaluations.
The classic name of the formula should not be declared rashly
.
Due to the long research and development cycle of new drugs and the large investment in research and development, if the basic work is not done solidly, there is a great risk of being stopped by the regulatory authorities in the future
.
Talking about the financing of traditional Chinese medicine companies, Deng Yong said, "Capital is a double-edged sword, and a large amount of capital investment is required in the process of new Chinese medicine research and development, but financiers cannot blindly pursue financing and be kidnapped or coerced by capital, and deal with financing risks scientifically.
Reasonable judgment and controllable risks
.
In addition, it is necessary to clarify the purpose of the funds obtained from the financing to ensure that the financing funds are used in a planned and dedicated manner
.
Hire a professional team of lawyers to intervene in the financing projects, so as to better handle matters under the gambling agreement prudently.
Performance compensation and share repurchase issues
.
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