The Chinese patent medicine market is showing a trend of polarization!

On December 28 news, most Chinese medicine concept stocks rose.
Among them, China Traditional Chinese Medicine rose by more than 13%, Hyundai Chinese Medicine Group rose nearly 6%, and Tongrentang Sinopharm and Gushengtang also followed the rise
.
New data shows that the overall size of the pharmaceutical market in 2021 is expected to reach 1.
9 trillion yuan, with a growth rate of 12.
20%
.
Among them, the Chinese patent medicine market is expected to grow at a rate of 3% throughout the year in 2021, but the market is showing a trend of polarization
.
On the one hand, Chinese medicine injections account for nearly 30% of the entire Chinese patent medicine market
.
However, in recent years, traditional Chinese medicine injections have been continuously affected by policies such as medical insurance control fees, strict management of auxiliary drugs, restrictions on outpatient infusions, and revision of Chinese medicine injection instructions.
The overall market size has continued to decline
.
Data show that the growth rate of Chinese medicine injections in 2019 has reached -11.
36%
.
Many large varieties of Chinese medicine injections with more than 1 billion yuan have declined to varying degrees.
For example, in 2018, the sales data of public medical institutions in China showed that Xiyanping injection dropped by as much as 24.
32%, and Shengmai injection and Shenmai injection Liquid, Xingnaojing injection, etc.
have also decreased by more than 10%
.
On the other hand, as a representative variety of modern Chinese medicine, the market for Chinese medicine formula granules is growing rapidly
.
From 2017 to 2019, the market size of traditional Chinese medicine formula granules has increased from 16.
1 billion yuan to more than 25 billion yuan
.
The trial of traditional Chinese medicine formula granules ended on November 1, 2021.
Many provinces included them in medical insurance and implemented the national standard formula granule price increase.
This will bring new opportunities to enterprises in the traditional Chinese medicine formula granule industry, especially giants
.
Since the beginning of this year, many Chinese medicine formula granule companies have seen significant performance growth
.
Take China Traditional Chinese Medicine, a giant of traditional Chinese medicine formula granules, as an example.
In the first half of this year, the company's revenue increased by 22.
4% year-on-year to 8.
15 billion yuan, and shareholder net profit increased by 27.
0% year-on-year to approximately 930 million yuan
.
China Resources Sanjiu’s 2021 third quarter report showed that the company’s main operating income was 11.
099 billion yuan, a year-on-year increase of 19.
17%; net profit attributable to the parent company was 1.
741 billion yuan, a year-on-year increase of 10.
13%
.
For another example, on October 28, 2021, Red Sun Pharmaceuticals released its third quarterly report
.
Operating income in the first three quarters was 5.
5 billion, a year-on-year increase of 17%; net profit attributable to shareholders of listed companies was 640 million, a year-on-year increase of 6%
.
During the reporting period, Hongri Pharmaceutical's various business plan targets were basically achieved, and the business of Chinese medicine formula granules and finished medicine continued to grow steadily
.
In the long run, as China’s population ageing intensifies, the base of chronic disease patients continues to expand, and the rigid demand for traditional Chinese medicine continues to grow.
In addition, the state and local governments have successively promulgated relevant policies for the development of the traditional Chinese medicine industry in recent years, and the Chinese medicine industry will usher in new Opportunity
.
Everbright Securities believes that the Chinese medicine sector has the logic of steady growth in domestic consumption, policies to encourage high-quality development, and continuous price increases.
At present, the Chinese medicine industry has entered a stage of high-quality development
.
CITIC Securities Research Report pointed out that the current valuation of the Chinese medicine sector is at the bottom of history
.
At the end of the year in the pharmaceutical sector, when high valuation sectors such as CXO continued to pull back, the Chinese medicine sector, as a safe haven for undervalued valuations, highlighted its value
.
Judging the short-term Chinese medicine sector depends on the logic of drug price increases, and the medium and long-term will continue to benefit from policy promotion, innovative research and development, and consumption upgrades
.
Of course, the industry also pointed out that the problems in each link of the traditional Chinese medicine industry chain are still relatively prominent, such as the incomplete innovation system of the traditional Chinese medicine industry, weak basic research, and low controllability of clinical effects, which require further breakthroughs
.