In recent years, with the more and more extensive application of traditional Chinese medicine in daily life, consumers' awareness and recognition of traditional Chinese medicine have stepped onto a new level, and the performance of the traditional Chinese medicine sector has continued to grow. In the first half of this year, the overall performance of traditional Chinese medicine enterprises is still a touch of bright color in the pharmaceutical sector. According to incomplete statistics, at least 70% of the 58 traditional Chinese medicine enterprises that have disclosed their semi-annual results have achieved performance growth.

Among them, the performance of Jinhuo Medicine, which has been cultivated in the field of traditional Chinese medicine for many years, has increased significantly. According to the financial report, in the first half of this year, the revenue of Jinhuo Pharmaceutical reached 553 million yuan, an increase of 31.8 percent over the same period last year; the profit during the period was 48 million yuan, an increase of 35.9 percent over the same period last year; and the profit attributable to the owners of the company was 38 million yuan, an increase of 55.8 percent over the same period last year.

Behind the good performance of Jinhuo Pharmaceutical, its business strategy of "conforming to the 'general trend' and striving for the 'small trend' can not be ignored.

Conform to the "general trend" and highlight the advantages

The growth of the performance of Jinhuo Pharmaceutical is inseparable from the rise of the industry environment and the blessing of policies.

According to data from the National Bureau of Statistics, by the end of 2022, the number of people aged 60 and above in China had reached 280 million, accounting for 19.8 percent of the country's total population, of which 210 million were aged 65 and above, accounting for nearly 15 percent of the country's total population. has gradually approached the severely aging society.

Figure 1: changes in the data of population aging in China

Source: national Bureau of Statistics, Debon Research Institute, Gronghui collation

The deepening degree of aging in China has given rise to a strong demand for chronic disease treatment and health care for the elderly. Thanks to the core advantages of traditional Chinese medicine in the fields of chronic disease, health care and health preservation, the long-term demand for traditional Chinese medicine has gradually increased with the deepening of aging in recent years, resulting in the continuous improvement of the prosperity of the traditional Chinese medicine industry.

On the other side of the strong market demand, the government has introduced a number of support policies, the traditional Chinese medicine industry continues to usher in positive.

In February this year, the State Council issued the implementation Plan of the Major Project for the Revitalization and Development of traditional Chinese Medicine, which focuses on supporting the inheritance and innovation of traditional Chinese medicine, accelerating the construction of the traditional Chinese medicine service system, tilting medical insurance payments, and bringing them into hospital assessment.

In July, the Health and Health Commission and other six departments jointly issued the key tasks of medical reform in the second half of the year, proposing to "promote the inheritance and innovative development of traditional Chinese medicine." it is clear that it is necessary to speed up the construction of the National inheritance and Innovation Center of traditional Chinese Medicine, promote the research and development of ancient classical prescription preparations, and speed up the release of key information textual research and the examination and approval of new drugs.

Earlier, the relevant departments have also issued policy documents such as "implementation opinions of the State Drug Administration on promoting the inheritance and innovative Development of traditional Chinese Medicine", "guiding principles for Clinical Research and Development of compound preparations of traditional Chinese Medicine based on Human experience (trial)", based on "three combinations" guidelines for communication under the evidence system of registration and evaluation (trial), to provide strong policy support for improving the innovation environment of traditional Chinese medicine. To promote the rapid development of traditional Chinese medicine industry.

From the two dimensions of market demand and policy, it is not difficult to find that the revitalization of traditional Chinese medicine is the trend of the future.

As a "senior player" in the field of health, Jinhuo Pharmaceutical has long focused on the management of traditional Chinese medicine products, accurately stepped on the tuyere of the development of the industry, and has the basic conditions to benefit from the general trend of the industry. What is more rare is that, no matter in terms of market share or consumer popularity, Jinhuo pharmaceutical star products Jingdu Mianmianlian Chuanbei loquat ointment, trumpet brand Zhenglu pills and Jinhuo Yima Dazheng safflower oil are all leaders in the field of proprietary Chinese medicine, fully highlighting the company's competitive advantage in the field of proprietary Chinese medicine.

With the help of strong market demand, strong policy support, strong competitiveness and other factors, in the past three years, the sales of Jinhuo pharmaceutical products have increased from 284 million yuan to 594 million yuan (annual sales from 2020 to 2022). In the first half of this year, the sales of pharmaceutical products continued to rise, reaching 366 million yuan, showing that the company's traditional Chinese medicine business has a steady growth ability.

With the aggravation of the aging population and the gradual landing of the superimposed traditional Chinese medicine support policy, the growth soil of the traditional Chinese medicine industry is becoming more fertile and the development space is more abundant. It is not difficult to predict that the traditional Chinese medicine business of Jinhuo Pharmaceutical has the possibility of continuous breakthrough in performance in the future.

Strive for "small trend" and seize the opportunity

In addition to complying with the general trend, Jinhuo Pharmaceutical can achieve a double increase in revenue and net profit, which also depends on its struggle for a "small trend", that is, the company follows the market changes and makes a fine layout in its business strategy.

At the beginning of this year, there were a large number of "Yangkang" people who had a strong demand for cough, breathing and other products. Jinhuo Pharmaceutical sees the right time, seizes the opportunity, quickly stores the goods in Beijing to read Ciyi Chuanbei loquat ointment, supplemented by accurate marketing, timely delineation of target groups, meet the needs of target consumers, and drive the revenue growth of the product. During the reporting period, the revenue of Chuan Bei Loquat paste increased significantly in Beijing.

With the liberalization of land and Hong Kong, the number of visitors to Hong Kong rebounded in the first half of this year, leading to a pick-up in local consumption in Hong Kong. Jinhuo Pharmaceutical also seizes the opportunity to strengthen the sales force in time to maintain and consolidate the existing Hong Kong and Macao market channels (distributors, chains, wholesalers, supermarkets, distributors, pharmacies), so as to improve consumer coverage and boost the company's health products business. thus ushering in growth. In the first half of this year, sales of Jinhuo medical and health products business increased by 34.56% to 77.85 million yuan compared with the same period last year, of which life's DHA increased by 42.2% year-on-year, and Kangzele probiotics increased by 68.1%.

At the same time, the optimization of offline and online channels of Jinhuo Pharmaceutical during the period also contributed to the company's revenue growth.

In terms of offline channels, since the first half of this year, Jinhuo Pharmaceutical has made many efforts to strengthen customer cooperation, including, but not limited to, special projects for major customers, special personnel to follow up, and senior executives to visit customers in person. collect customer feedback, opinions and needs on the market. With the efforts of Jinhuo Pharmaceutical, as of June 30 this year, the company has covered nearly 150000 chain drugstores and single drugstores, nearly 20, 000 primary health care institutions, more than 10, 000 hospitals and clinics, as well as some convenience stores and merchant supermarkets. The increasingly powerful offline channels allow Jinhuo Pharmaceutical products to have more opportunities to be seen by consumers, and continue to bring the possibility of performance growth for the company.

In terms of online channels, Jinhuo Pharmaceutical began to try out the quasi-business department of e-commerce last year to vigorously expand its e-commerce business. In the first half of this year, Jinhuo Pharmaceutical continued to promote the implementation of the quasi-business department, while continuing to optimize the promotion methods of the platform and conducting publicity and promotion around accurate customers, while cooperating with the sound ensemble of the hit film and TV drama "Wind" and Hunan Satellite TV "I want to sing with you" on Douyin, Kuaishou Technology and other short video platforms, to further consolidate and expand consumers' attention to the company's products. With the help of the above marketing promotion, in the first half of this year, the link to individual items of Jinhuo Health House ranked first in sales on the Tmall platform, and the monthly gross profit of the store exceeded 40% at one point. The company's core channels such as JD.com self-management and TDI increased the unit price by about 15% year on year, and the business volume increased by more than 160%. In addition, the company's Life's DHA was also selected by JD.com 6.18Dark Horse Brand list.

In addition to the "big" trend, the management's accurate grasp of the "small" changes in the market is also the strength for Jinhuo Pharmaceutical to achieve high performance growth.

Take advantage of the situation to consolidate the foundation

It is worth mentioning that in the face of the promising traditional Chinese medicine market, Jinhuo Pharmaceutical, which has stepped on the tuyere, is taking advantage of the situation, and the company continues to enrich its product line and consolidate the business foundation of traditional Chinese medicine through independent development, acquisition, self-construction of industrial parks and other actions. continue to enhance the competitive advantage in the field of traditional Chinese medicine and provide support for future performance growth.

On the one hand, Jinhuo Pharmaceutical continues to increase the development of its own brand (at present, its own brand products such as American ginseng capsule and Zhuangyaojianshen tablet are about to be launched), and at the same time, through the opportunity of buying shares in Hong Kong, the next step plans to cooperate closely with Foci in Lanzhou to launch Foci-Jinhuo dual-brand products according to market demand, so as to build the company's independent product matrix and broaden the product line. Strengthen the competitiveness of its products in the field of traditional Chinese medicine.

On the other hand, Jinhuo Longde Life and Health Industrial Park, a key project to help the company move towards the industrialization and internationalization of traditional Chinese medicine, is about to be completed, and it has entered the stage of attracting investment. The landing of the project will further enhance the research and development capacity of proprietary Chinese medicine and logistics and transportation capacity of Jinhuo Medicine.

In addition to the traditional Chinese medicine business, Jinhuo Pharmaceutical continues to optimize other businesses and channels to enhance the company's overall competitiveness.

In terms of health products, in the first half of this year, Jinhuo Pharmaceutical and Shanghai Golden partner Biotechnology Co., Ltd. reached a strategic cooperation, the two sides jointly launched the golden partner-Jinhuo double brand aminosugar white peony calcium capsule. According to Jinhuo Pharmaceutical, the products of the company's French innovative pharmaceutical company Innopharm will also be introduced to the market in the second half of this year.

In terms of medical devices, through active marketing and promotion, the market share of Dongdixin's main products under Jinhuo Pharmaceutical increased significantly in the first half of this year compared with the same period last year, raising the gross profit margin. During the reporting period, Dongdixin also obtained two practical patent authorizations and was awarded the honor of Shenzhen specialized, special and new small and medium-sized enterprises.

In terms of channel layout, follow-up Jinhuo Pharmaceutical will further expand offline channels and improve offline distribution network, while continuing to explore e-commerce business and improve online marketing games.

With the continuous enrichment of the product line and the continuous strengthening of the channel layout, the commercial territory of Jinhuo Medicine is expected to be further developed.

Summary

In recent years, the state has issued a large number of policies to support the traditional Chinese medicine industry, giving China's traditional Chinese medicine industry a huge potential development space. Fertile soil is both an opportunity and a challenge for traditional Chinese medicine enterprises. once the opportunity is seized, the advantages of enterprises will become more and more obvious.

For now, Jinhuo Pharmaceutical has seized the opportunity. Under the premise that proprietary Chinese medicine products occupy the market advantage, the company continues to increase self-research and development, work with established pharmaceutical companies to create gold products, and continue to make efforts to expand the advantages of proprietary Chinese medicine. In addition to proprietary Chinese medicine, Jinhuo Medicine always revolves around the development idea of "outstanding main industry and related diversity", from many aspects such as enriching product lines and strengthening channel layout to enhance the core competitiveness of health products and medical devices.

The development of any industry will not be a happy situation, and the future of the traditional Chinese medicine industry will be the survival of the fittest. With the exit of low-quality traditional Chinese medicine enterprises, the investment value of some traditional Chinese medicine enterprises with sustainable core competitive advantages such as Jinhuo Pharmaceuticals will gradually become clear.