The value of the traditional Chinese medicine sector in the capital market is highlighted by the policy of innovation and acceleration

In recent years, the state has vigorously supported the development of traditional Chinese medicine, and has continuously introduced relevant policies to stimulate vitality and potential for the innovation of traditional Chinese medicine
.
From January 2019 to the present, due to the lower-than-expected impact of industry policies and terminal sales data, the traditional Chinese medicine sector in the capital market has significantly underperformed the pharmaceutical index and other sub-sectors, and the current valuation is at the bottom of history
.
At the end of the year and the beginning of the year, when the high-valued sectors of the pharmaceutical sector such as CXO (pharmaceutical research and development services) continue to pull back, the traditional Chinese medicine sector, as a safe haven for low valuations, is expected to continue to usher in allocation needs
.
The traditional Chinese medicine sector will benefit from logic such as drug price increases in the short term, and will continue to benefit from policy promotion, innovative research and development, and consumption upgrades in the medium and long term
.
Innovative achievements have emerged.
A number of listed companies have announced product price increases.
From the point of view of application and registration, according to the statistics released by the Center for Drug Evaluation of the State Food and Drug Administration, the number of new Chinese medicine drug application registrations in 2021 will be 62, an increase of 20% compared to 2020.
129.
6%; and from the perspective of approval, a total of 12 new Chinese medicines have been approved for marketing in 2021 (the above data is modified by the editor based on the latest public information of the State Food and Drug Administration), including Kangyuan Pharmaceutical's Yinqiao Qingre Tablets, Yiling Pharmaceutical's Suxia Jieyu Chufan Capsule, etc.
, has become the most approved new Chinese medicine drug in the past five years
.
Several listed companies have recently announced product price increases
.
For example, Taiji Group (600129.
SH) recently stated on the Shenzhen Stock Exchange that the company has recently adjusted the ex-factory price of Huoxiang Zhengqi Oral Liquid, with an average increase of 12% due to the continuous increase in the cost of main raw materials, auxiliary materials and energy.
, so as to ease the pressure on the company’s rising costs; Tongrentang’s Angong Niuhuang Pills (3 grams * pills/box) have also raised the sales price from 780 yuan to 860 yuan, an increase of about 10%, which will be implemented from December 1, 2021
.
Policies continue to encourage or welcome pattern optimization From a longer-term perspective, the traditional Chinese medicine sector continues to be encouraged by policies
.
"The Suggestions of the Central Committee of the Communist Party of China on Formulating the Fourteenth Five-Year Plan for National Economic and Social Development and the Long-term Goals for 2035" clearly proposes to adhere to both Chinese and Western medicine and vigorously develop the cause of Chinese medicine
.
The "Opinions on Further Strengthening the Work of Traditional Chinese Medicine in General Hospitals to Promote the Coordinated Development of Traditional Chinese and Western Medicine" formulated by the National Health and Health Commission proposed that general hospitals are an important platform for providing traditional Chinese medicine services.
It is of great significance to complement and coordinate development with Western medicine, which will increase the share of traditional Chinese medicine in the domestic pharmaceutical market and benefit the development of traditional Chinese medicine enterprises
.
With the successive promulgation of documents such as "Catalogue of Ancient Classic Famous Prescriptions (First Batch)", "Several Policies and Measures on Accelerating the Development of Traditional Chinese Medicine Characteristics" and "Implementation Opinions of the State Drug Administration on Promoting the Inheritance, Innovation and Development of Traditional Chinese Medicine", The structure of the traditional Chinese medicine industry has been gradually optimized, and the benefits of building a healthy China have become prominent
.
The terminal demand continues to rise, and the industry is in a recovery period.
From the point of view of sales terminals, the traditional Chinese medicine industry is in a continuous recovery period
.
The sales of traditional Chinese medicines in the pharmaceutical circulation market have been increasing year by year.
According to public data, the total circulation sales of Chinese patent medicines and Chinese herbal medicines increased from 279.
1 billion yuan in 2013 to 397 billion yuan in 2020, with a compound annual growth rate of 6.
55%
.
The main business income of traditional Chinese medicine manufacturing showed a fluctuating trend.
From 2013 to 2019, the main business income of the traditional Chinese medicine manufacturing industry fluctuated from 632.
4 billion yuan to 652 billion yuan; due to the impact of the new crown pneumonia epidemic and the impact of strict regulatory control, follow-up income has decreased.
However, with the control of the overall situation of the epidemic, it is expected to show signs of recovery.
If there is no impact of the epidemic, it is expected to continue to rebound in the future
.
Benefiting from the consumption upgrade, the overall demand of the traditional Chinese medicine industry will continue to rise
.
Investment opportunities will be concentrated in some OTC and big health fields
.
With the upgrading of consumption and the improvement of public health awareness, the field of traditional Chinese medicine health is still worthy of focus, especially for companies with strong moats, high product barriers or providing traditional Chinese medicine outpatient services
.
(Author: CITIC Securities)