The following article is from the White Horse Study, by White Horse Soha
Traditional Chinese medicine is a controversial topic, and so is investment. For the Chinese medicine company, some people love it, and some people abandon it.
Putting aside different views, the Shenwan Chinese medicine sector fell 1.32% in 2023, which was much better than the medical services (-24.46%), pharmaceutical business (-8.81%), medical devices (-7.61%) and biological products (-6.46%) sector, and only slightly worse than the chemical drugs (1.29%) sector.
Well-known investors, Forest Garden investment chairman Lin Yuan frequently sing good Chinese medicine stocks, in the public channel until late 2018, he stressed the three chronic disease related investment opportunities.
The so-called three major diseases are hypertension, heart disease and diabetes. According to statistics, in the past 100 years, these three diseases accounted for 70% of pharmaceutical consumption, because there is no way to be completely cured, will need to use drugs to maintain the current state, so the future market space is very large.
In the field of chronic disease treatment, traditional Chinese medicine has unique advantages, and Linyuan bets on traditional Chinese medicine.
How good is the forest? Recently, he had an interview, the following is an excerpt of the original words -
Host: Are you more optimistic about Chinese medicine or Western medicine?
Lin Yuan: Of course I am optimistic about Chinese medicine
Host: Will you choose the track of these three chronic diseases in the future?
Lin Yuan: That's basically it. I don't think about anything else.
Host: Do you think that if a single industry is too concentrated, the investment will have a certain risk?
Lin Yuan: I don't think there's any risk. It's not popular yet
主持人：您更看好中医，还是更看好西医呢？ 林园：我当然看好中医了
"Nothing else." Expressed to this extent, Lin Yuan's attitude need not be said.
Different business models
As a whole,Chinese medicine companies can be divided into three business models: in-hospital Chinese medicine, brand OTC, and consumer Chinese medicine.
Hospital Chinese medicine, mainly in the hospital sales of Chinese medicine products, generally prescription drugs; Brand OTC products mainly sold in retail channels such as pharmacies; Consumption of Chinese medicine refers to consumer goods with Chinese medicine characteristics, such as Wang Laoji of Baiyun Mountain, toothpaste of Yunnan Baiyao, cosmetics and other products launched by Chinese medicine enterprises.
Different business models have different core competitiveness. For example, brand OTC and consumer Chinese medicine pay more attention to brand, and hospital Chinese medicine generally pays more attention to efficacy and influence in doctors and experts.According to the characteristics of the demand side, white Horse is used to dividing traditional Chinese medicine products into high-end consumer goods, ordinary consumer goods and medicines.
High-end consumer products, such as Pien Tze Huang and Dong 'e e-Jiao; Take the route of ordinary consumer goods, such as Baiyun Mountain's Wang Laoji, Yunnan Baiyao's toothpaste; Drugs need no explanation.
The above classification is only for easy understanding of the framework, in fact, Chinese medicine companies may carry out many different businesses at the same time. For example, the revenue of Baiyun Mountain's Great Southern medicine and Great health in 2022 is 10.462 billion and 10.473 billion respectively, which is equal, and there is 49.131 billion yuan of income from the large commercial sector. As a result, Baiyunshan cannot be simply defined as a consumer goods company or a pharmaceutical company.
In addition to the above two classification methods, Chinese medicine companies can also be divided into time-honored and innovative Chinese medicine.
Due to its long heritage, TCM companies have a large number of time-honored brands, such as Tongrentang, Yunnan Baiyao, Pien Tze Huang, etc.
These time-honored brands will have some secret formula products in their hands, with a certain monopoly color, constituting the core competitiveness of these companies.
Innovative Chinese medicine is the development path of innovative drugs, through continuous research and development investment, the development of new drugs, typical companies such as Yiling Pharmaceutical, Tasly, Kangyuan Pharmaceutical and so on.
Three modes of competition barriers
The investment logic of Chinese medicine companies that take the consumer goods route is similar to that of consumer goods, and investors generally focus on brand influence, brand stickiness and the ability to raise prices.
Similar to consumer products, brand influence is the key to influencing consumers' purchasing decisions.
More important is the academic influence of Chinese medicine in the hospital, and the most critical factor is of course the curative effect; At the same time, since the payer includes the medical insurance fund, it is also necessary to consider the economy and affordability. In this regard, traditional Chinese medicine itself has advantages.
Exclusive varieties are one of the sources of competitiveness of Chinese medicine enterprises.
Similarly, in the face of drug collection, the price reduction of exclusive varieties is much smaller.
At present, the exclusive varieties of innovative Chinese medicine leading companies are more than 10.
Innovative Chinese medicine with the help of research and development capabilities, new drugs continue to be marketed, thus incubating new potential varieties.
Status of new Chinese medicine approved for listing in 2021 (Baima Research Collation)
Status of new Chinese medicine approved for listing in 2022 (White Horse Research Collation)
New Chinese medicine approved for market in 2023 (White Horse Research Collation)
From 2021 to 2023, a total of 28 new Chinese medicine drugs were approved for listing, of which two or more new drugs were approved, including Kangyuan Pharmaceutical (4), Yiling Pharmaceutical (3), Jianmin Group (2).
There are more than two first-class innovative drugs approved by the company are Yiling Pharmaceutical (3, Jieyu Jiefen capsule, Yizhen Anshen tablet, Tongluo Mingmu capsule), Jianmin Group (2, Qirui Weishu capsule, children Zibei Xuanfei syrup).
The danger and opportunity of Chinese medicine company
In recent years, traditional Chinese medicine has entered a period of rapid development. Especially after the outbreak of the new coronavirus, when there was no medicine available in the early stage, traditional Chinese medicine played an important role, and it also raised the awareness of the whole society.
In addition, in recent years, the state has increased the top-level design of TCM development, and supportive policies have been frequent.
Chinese Medicine Support Policy since 2022 (Open Source securities)
For example, in February last year, The General Office of the State Council issued the "Implementation Plan for the Major Project of the Revitalization and Development of Traditional Chinese Medicine", which proposed a number of quantitative objectives:
With the focus on prefecture-level Chinese medicine hospitals, we will build about 130 key hospitals with prominent Chinese medicine characteristics, significant clinical efficacy, and obvious demonstration and driving role Strengthen the construction of "two specialties and one center" in county-level traditional Chinese medicine hospitals, and build two specialty specialties of traditional Chinese medicine characteristics and one county-level traditional Chinese medicine appropriate technology promotion center in each county
In the "three districts and three states" to build 64 TCM county medical centers
……
These policies will really promote the popularization of traditional Chinese medicine, and the market for some effective proprietary Chinese medicines is expected to further expand.
For another example, the Opinions on Strengthening the Work of Chinese Medicine Talents in the New Era issued by the State Administration of Traditional Chinese Medicine in June 2022 proposed that by 2025, community health service stations should be equipped with at least one Chinese medicine category physician or clinical category physician capable of providing Chinese medicine services, and more than 80% of village clinics should be equipped with at least one medical staff capable of providing Chinese medicine services.
These policies will really promote the popularization of traditional Chinese medicine, and the market for some effective proprietary Chinese medicines is expected to further expand.
The development of traditional Chinese medicine is not without its troubles. Traditional Chinese medicine theory is difficult to understand, many Chinese medicine products are used by some people but lack of clinical research data, convincing enough, and promotion is difficult.
How to use modern medical language to explain the curative effect of traditional Chinese medicine is a common problem for Chinese medicine scholars and Chinese medicine enterprises.
In this sense, traditional Chinese medicine innovative drug enterprises should pay high attention to the first line. It is they who continue to organize and carry out research work, and there will be more and more Chinese medicine research results.
In fact, the most frequently prescribed PCM is by Western doctors, not Chinese doctors. On the one hand, western doctors do not have the authority to prescribe powder, if you need to prescribe traditional Chinese medicine can only choose proprietary Chinese medicine; On the other hand, TCM doctors are familiar with TCM theory, and many doctors prefer to make their own prescriptions in the case of syndrome differentiation and treatment.
However, proprietary Chinese medicines are an effective way to treat diseases quickly and on a large scale. Traditional Chinese medicine should break the rules and regulations and adapt to the new medical conditions and medical environment under the background of urbanization.
Data from a third party (White Horse Research)
On the whole, the Chinese medicine industry is an investment choice with both robust and growth characteristics.
The contents and views of the article are for reference only and do not constitute investment advice. Investment is risky and decisions need to be made carefully. I am Baima Soha, focus on investment research, welcome to pay attention!
