Under favorable policies, the growth of innovative traditional Chinese medicine drugs can be expected

The results of the reform of the traditional Chinese medicine review and approval system have been revealed.
From 2017 to 2022, a total of 21 innovative traditional Chinese medicines have been approved, of which 11 innovative traditional Chinese medicines have been approved in 2021, hitting a new high in the past five years
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Huaan Securities expects that the approval and listing of new Chinese medicines will be accelerated in the future, and the number of new Chinese medicines on the market may exceed 20 each year
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Policy support is a major catalyst for the development of the traditional Chinese medicine industry in 2022
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In order to encourage the innovation of traditional Chinese medicine, in recent years, policies on promoting the innovation of traditional Chinese medicine, examination and approval, development of formula granules, medical insurance and payment, and personnel training have been issued frequently
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For example, in terms of approval and review, in the past it took a long time for a pharmaceutical company to launch a drug, some even as long as 10 years.
However, in recent years, the speed of approval of new drugs in China has been significantly improved
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In the "Classification of Traditional Chinese Medicine Registration and Application Data Requirements" formulated by the State Food and Drug Administration in 2020, the document divides the registration of traditional Chinese medicines into four categories, such as innovative traditional Chinese medicines, improved new traditional Chinese medicines, ancient classic traditional Chinese medicine compound preparations, and the same name and same prescription medicine
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In the content of the new version of the registration classification of traditional Chinese medicines by the State Food and Drug Administration, the list of innovative traditional Chinese medicines has been listed as one item
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The "Guiding Opinions on Medical Insurance Supporting the Inheritance, Innovation and Development of Traditional Chinese Medicine" jointly issued by the National Medical Insurance Administration and other two departments proposed that qualified traditional Chinese medicine institutions should be included in the designated medical insurance, and appropriate traditional Chinese medicine and traditional Chinese medical services should be included in the scope of medical insurance payment.
TCM medical institutions may not implement DRG payment for the time being
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It is reported that since the start of the medical insurance negotiation in 2017, a total of 337 drugs have been successfully negotiated, of which traditional Chinese medicine accounts for 18%, including 61 new traditional Chinese medicine drugs
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In addition, the guiding principles based on the "three combinations" (combination of traditional Chinese medicine theory, human experience, and clinical trials) issued by the Drug Evaluation Center of the State Food and Drug Administration have also created a positive environment for the follow-up development of innovative traditional Chinese medicine drugs
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From the above series of favorable policies, it can be seen that the policy side attaches great importance to the innovation and development of the traditional Chinese medicine industry
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Southwest Securities stated in the research report that under the background of standardized review and approval, the number of innovative traditional Chinese medicine drugs on the market has grown steadily.
From the perspective of the number of applications, this trend will continue to be maintained in the future, and the long-term growth of innovative traditional Chinese medicine drugs can be expected..
Affected by the news that the policy continues to encourage the innovation of traditional Chinese medicine, on February 15, the traditional Chinese medicine sector strengthened.
As of 11:06 on February 15, Essence Pharmaceuticals and Yiling Pharmaceuticals rose by the daily limit, Longjin Pharmaceuticals rose by more than 7%, and China Resources Sanjiu , Jianmin Group and other stocks rose
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Some people in the industry believe that funds have been actively concerned about Chinese medicine listed companies in the near future, but the core logic is still driven by drug price increases and the market's expected stock price rise potential under low valuations
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At present, the market does not pay enough attention to the innovation ability and innovative value of traditional Chinese medicine companies.
With the advancement of the new medical reform, listed Chinese medicine companies will also usher in innovation-driven valuation reconstruction
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At present, many traditional Chinese medicine companies have the intention to actively deploy in the field of innovation
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For example, Conba disclosed in its 2021 semi-annual report that the company will actively promote the research and development of innovative drugs, especially major innovative traditional Chinese medicine botanical drug projects; Huluwa said in its 2021 semi-annual report that it will strengthen the company's pediatric traditional Chinese medicine innovative drugs and new varieties of projects.

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Fangsheng Pharmaceutical also told relevant media that it will continue to increase investment in the research and development of innovative Chinese medicines
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As more pharmaceutical companies join the TCM innovative drug track, more innovations will emerge in the market in the future
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Disclaimer: Under no circumstances does the information or opinions expressed in this article constitute investment advice to anyone
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