The traditional Chinese medicine sector will continue to strengthen, and the long-term development in these areas is also promising

In recent years, while continuously encouraging the innovation of traditional Chinese medicines and accelerating the review and approval, domestic policies are also further focusing on the quality, clinical safety and effectiveness of traditional Chinese medicines, pointing out the R&D mode and innovation path for traditional Chinese medicine innovation, making the innovation of traditional Chinese medicines smoother
.
It is worth noting that affected by favorable policies, while the prospects of the Chinese medicine market are good, Chinese medicine stocks have also ushered in a sharp rise
.
It is understood that since the beginning of this year, the growth rate of the A-share traditional Chinese medicine sector has been very obvious
.
The traditional Chinese medicine sector will continue to strengthen, and the long-term development in these fields is optimistic (Image source: Pharmaceutical Network) For example, on January 11, the traditional Chinese medicine sector fluctuated to the upside, with Huasen Pharmaceutical rising by more than 5%, and Zhongsheng Pharmaceutical, Tongrentang, Taiji Group, Kangyuan Pharmaceutical, Yiling Pharmaceutical, etc.
following suit
.
On January 13, affected by the news of the acceleration of the listing process of new traditional Chinese medicines, the A-share traditional Chinese medicine sector continued to strengthen, as of press time, Baili Tianheng rose by more than 14%, He's Ophthalmology rose by more than 10%, Sinopharm Hyundai, Jianmin Group, Darentang, Tonghua Jinma, Sunflower Pharmaceutical and other stocks rose
.
Then on January 16, traditional Chinese medicine concept stocks continued to strengthen, among which Luoxin Pharmaceutical touched the limit at 9:38 a.
m.
, with a price of 8.
55, up 10.
04%.

Industry analysts believe that in terms of policy, traditional Chinese medicine has risen to the national strategic level, so in the future, with the intensive increase of favorable policies of traditional Chinese medicine and the improvement of enterprise operation, the traditional Chinese medicine sector will usher in a double repair of valuation and performance, and will continue to strengthen
。 It is understood that in recent years, traditional Chinese medicine has been continuously beneficial at the policy level, the "Opinions on Promoting the Inheritance and Innovation and Development of Traditional Chinese Medicine" was released in 2019, the State Food and Drug Administration issued the "Implementation Opinions of the State Food and Drug Administration on Promoting the Inheritance and Innovation and Development of Traditional Chinese Medicine" in 2020, and on December 30, 2021, the National Medical Insurance Administration and the State Administration of Traditional Chinese Medicine jointly issued the "Guiding Opinions on Medical Insurance to Support the Inheritance and Innovation and Development of Traditional Chinese Medicine", the "National Procurement Announcement of the National Alliance of Proprietary Chinese Medicines" and the " Healthy China Action Traditional Chinese Medicine Health Promotion Special Activity Implementation Plan".
.
.
.
.
.
Among them, especially the "14th Five-Year Plan" for Chinese medicine released in 2022, while laying the tone for the high-quality development of the industry in the next five years, it fully shows that the policy dividends of traditional Chinese medicine will continue to be released
.
In the future, low valuation + strong policy support is expected to become an important basis for the continuous upward trend of the Chinese medicine market, and it is recommended to pay attention to the direction of Chinese medicine innovation, brand OTC Chinese medicine, and Chinese medicine formula granules
.
Innovation in traditional Chinese medicine In terms of innovation in traditional Chinese medicine, in fact, many companies have already said that their performance has increased by adhering to innovative research and development, as well as making efforts to innovate core products of traditional Chinese medicine
.
For example, Fangsheng Pharmaceutical said in its third-quarter performance report released last year that it benefited from its continuous focus on the main business of innovative Chinese medicine in recent years, and its performance reached a record high
.
Wellcome Pharmaceutical has also said that it attaches great importance to the R&D and innovation of traditional Chinese medicine, and achieved operating income of 474 million yuan in the first three quarters of 2022, and net profit attributable to the parent of 94 million yuan, a year-on-year increase of 1.
31%.

With the deep integration and innovation of new technologies and traditional Chinese medicine, the traditional Chinese medicine industry believes that "old trees will blossom into new flowers", usher in more innovative achievements, and enter a stage of higher quality development
.
It is worth mentioning that at the same time, China's pharmaceutical equipment industry may also usher in more opportunities, and through continuous research and development, production of more efficient, automated and modern instruments and equipment to meet the needs of innovative R&D and production of
traditional Chinese medicine.
Brand OTC This field actually has the ability to continuously raise prices, and compared with general OTC products, the cost pass-through ability is stronger, which can maintain high profitability
.
It is understood that since December 2021, brand OTC companies have successively raised prices, mainly due to the obvious price increase of upstream Chinese medicinal materials, and the comprehensive 200, wild 99 and domestic 100 in the price index of Chinese medicinal materials in December 2021 increased by 20%, 24% and 21%
respectively.
In addition, branded OTC Chinese medicines have two attributes: treatment (health) and consumption, and there is also more
room for valuation improvement.
It is recommended that you pay attention to Tongrentang, Pian Zixi, Taiji Group, etc
.
in the brand Chinese medicine OTC.
Traditional Chinese Medicine Formula Granules The market size of traditional Chinese medicine formula granules has grown from 10.
7 billion yuan in 2016 to 25.
5 billion yuan
in 2020.
From the perspective of the long-term development of the industry, with the landing of national standards and provincial standards, as well as the continuous release of a series of policies favorable to traditional Chinese medicine formula granules such as exemption from "zero addition" and comprehensive liberalization, the traditional Chinese medicine formula granules market will continue to expand, and the industry expects that by 2030, the market size of traditional Chinese medicine formula granules will reach 100 billion yuan
。 Under the background of the continuous expansion of the current market scale and the good competition pattern of the traditional Chinese medicine formula granule industry, the analysis believes that the head enterprises with strong technical strength and obvious first-mover advantages in the traceability of the traditional Chinese medicine industry chain, the control of the amount of traditional Chinese medicine materials, production capacity and sales channels are expected to become the beneficiaries of the expansion of the industry in the future
.
Among them, Yiling Pharmaceutical, Yibai Pharmaceutical, etc.
deserve special attention
.
Conclusion In general, "policy + rigidity of pharmaceutical consumption + stable performance + valuation advantage" will jointly build the long-term development and investment opportunities of the traditional Chinese medicine industry, and the industry will enter the wind
of development.
However, it should be noted that the huge market will also attract more new competitors
.
In this context, relevant enterprises can only gain more competitive advantages
if they continue to invest a lot of costs and time to improve their technical level and ensure that their products meet national standards.
Disclaimer: Under no circumstances does the information or opinions expressed herein constitute investment advice
to anyone.