Summary
[Everbright Securities: The top-level design of traditional Chinese medicine boosts the rise of traditional Chinese medicine at the right time]Upstream: Control the source, stick to the bottom line, and strengthen the quality control of the whole process. Midstream: Restrict and standardize the registration and use of traditional Chinese medicine injections, focus on the centralized procurement and development of traditional Chinese medicines, and focus on supporting traditional Chinese medicine formula granules and innovative traditional Chinese medicines. Downstream: Strengthen the construction of TCM departments and personnel training, promote the development of TCM medical services, promote cultural dissemination and overseas Chinese medicine, and boost the overall situation with medical insurance support policies. We are optimistic about the 4 major sub-tracks: OTC of branded Chinese patent medicines benefits from the clearing of industry production capacity and the increase in terminal prices, the advantages of leading companies are prominent, and the industry concentration is improved. The pilot program of traditional Chinese medicine formula granules has ended, the tens of billions market is ready to expand by 1-2 times, and the filing system and the new national standard have built high industry barriers. The inflection point of new traditional Chinese medicine drugs has come, and the pace of registration review has accelerated, and it is expected to be included in the medical insurance as a priority to achieve high volume. The new crown epidemic prevention has achieved remarkable results, and the process of Chinese medicine going overseas/internationalization is expected to shift from the integration into the international medical system to the actual harvest period.
The top-level design of traditional Chinese medicine boosts the overall situation, and the industry enters high-quality development
Traditional Chinese medicine is a national treasure and an important resource. During the “13th Five-Year Plan” period, the development of traditional Chinese medicine has become a national strategy. The “Traditional Chinese Medicine Law” and opinions and policy measures to promote the inheritance, innovation and development have been successively issued. Supporting policies, the state has made coherent top-level design and planning for the entire upstream and downstream industry chains, various policies have been steadily advanced, and the cause of traditional Chinese medicine has flourished. Since 2015, the proportion of TCM hospitals and beds has increased year by year, and the number of TCM practitioners and colleges has increased steadily. From 2015 to 2020, the market size of TCM diagnosis and treatment services has a compound annual growth rate of 25.5%.traditional Chinese medicineThe industry prospered from 2008 to 2013, and with the deepening of medical reform, the growth rate of the industry slowed down. National remediation since 2017traditional Chinese medicineThe chaos in the industry, the stricter control of medical insurance fees and the stricter export restrictions,traditional Chinese medicineThe quality of decoction pieces and environmental protection supervision are increased, and the owners of Chinese patent medicine manufacturing enterprises in 2018-2020Operating incomeYear-on-year -19%/-1%/ -4%, the main business income of Chinese herbal decoction pieces processing is -21%/+13%/-8% year-on-year. Considering the impact of the epidemic in 2020, the industry actually bottomed out and rebounded in 2019. The traditional Chinese medicine industry experienced pain and ushered in the upgrading of the industrial structure. With the establishment and improvement of industry standards, mechanisms and service systems, the traditional Chinese medicine industry has shown a good situation in which both Chinese and Western medicine, support and regulation, inheritance and innovation go hand in hand, and the industry has entered a high-quality development.
Sorting out the development context of the whole industry chain of traditional Chinese medicine, 4 major sub-tracks of the Nuggets
Upstream: control the source, stick to the bottom line, and strengthen the quality control of the whole process. Midstream: Restrict and standardize the registration and use of traditional Chinese medicine injections, focus on the centralized procurement and development of traditional Chinese medicines, and focus on supporting traditional Chinese medicine formula granules and innovative traditional Chinese medicines.Downstream: Strengthen the construction of TCM departments and personnel training, and promote TCMmedical serviceDevelopment, promote cultural dissemination and Chinese medicine overseas, and medical insurance support policies boost the overall situation. We are optimistic about the 4 major sub-tracks: OTC of branded Chinese patent medicines benefits from the clearing of industry production capacity and the increase in terminal prices, the advantages of leading companies are prominent, and the industry concentration is improved. The pilot program of traditional Chinese medicine formula granules has ended, the tens of billions market is ready to expand by 1-2 times, and the filing system and the new national standard have built high industry barriers. The inflection point of new traditional Chinese medicine drugs has come, and the pace of registration review has accelerated, and it is expected to be included in the medical insurance as a priority to achieve high volume. The new crown epidemic prevention has achieved remarkable results, and the process of Chinese medicine going overseas/internationalization is expected to shift from the integration into the international medical system to the actual harvest period.
Risk Analysis:The price reduction of the centralized procurement of proprietary Chinese medicines exceeds expectations; the price increase of traditional Chinese medicine formula granules fails or the progress of centralized procurement exceeds expectations; the risk of failure of new drug research and development.
(Article Source:Everbright SecuritiesResearch)