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光大证券:中药产业加速转型升级 四大优势价值重估

Everbright Securities: Four Advantages of Accelerating Transformation and Upgrading of the Traditional Chinese Medicine Industry, Value Revaluation

Zhitong Finance ·  11/24/2023 15:19

Revitalizing and developing traditional Chinese medicine is an important national strategy

The Zhitong Finance app learned that Everbright Securities published a research report saying that traditional Chinese medicine has rich clinical positioning and broad market space. Under medical reform policies and industry standards, quality, safety, and efficacy have continued to improve. Benefiting from an aging population and support policies for traditional Chinese medicine, the industry ushered in a golden period of transformation and upgrading. In the context of Xinshida, compared with chemicals and biopharmaceuticals, traditional Chinese medicine has obvious advantages: 1) In the industrialization stage, R&D investment and time costs of innovative traditional Chinese medicine drugs are lower, and with the support of traditional Chinese medicine theory and human use experience, R&D risk is lower; 2) In the commercialization stage, sales of innovative traditional Chinese medicine drugs peak slowly, but have a longer life cycle; 3) Benefiting from traditional Chinese medicine type protection and patent protection policies, the competitive pattern of exclusive products is relatively good; 4) There is less pressure on health insurance negotiations and drug collection to reduce prices. Leading proprietary Chinese medicines can achieve sustainable sales and scale growth through solid post-marketing research and academic brand building.

▍ The main views of Everbright Securities are as follows:

Revitalizing and developing traditional Chinese medicine is an important national strategy. Policies promote the expansion of traditional Chinese medicine resources and increase the penetration rate

The “14th Five-Year Plan for the Development of Traditional Chinese Medicine” and the “Implementation Plan for Major Projects for the Revitalization and Development of Traditional Chinese Medicine” indicate the goals, tasks and action roadmap for the development of the industry, promote the revitalization and development of traditional Chinese medicine in all aspects of health care, education, scientific research, industry, culture, internationalization, etc., increase investment and institutional innovation, consolidate the responsibilities of all parties, ensure implementation, and the prosperity of industry and culture. As medical resources continue to expand, the penetration rate of traditional Chinese medicine is expected to increase, and the industry will usher in significant development.

The industry accelerates transformation and upgrading, and the revaluation of the four major advantages

Traditional Chinese medicines have rich clinical positions and broad market space. Under medical reform policies and industry standards, quality, safety and efficacy have continued to improve. Benefiting from an aging population and support policies for traditional Chinese medicine, the industry ushered in a golden period of transformation and upgrading. In the context of Xinshida, compared with chemicals and biopharmaceuticals, traditional Chinese medicine has obvious advantages:

1) In the industrialization stage, R&D investment and time costs of innovative traditional Chinese medicine drugs are low, and with the support of traditional Chinese medicine theory and human use experience, R&D risk is lower; 2) In the commercialization stage, sales of innovative traditional Chinese medicine drugs peak slowly, but the life cycle is longer; 3) Benefiting from traditional Chinese medicine type protection and patent protection policies, the competitive pattern of exclusive products is better; 4) there is less pressure on health insurance negotiations and drug collection to reduce prices. Leading proprietary Chinese medicines can achieve sustainable sales and scale growth through solid post-marketing research and academic brand building.

In the long run, in the context of population aging, changes in the disease spectrum, policy support at the national level, and promotion of internationalization, etc., there is huge room for growth in the traditional Chinese medicine industry. Traditional Chinese medicine enterprises inherit innovation, improve quality and efficiency, transform and upgrade innovative traditional Chinese medicine drugs, accelerate approval for inclusion in health insurance, and promote internal and external markets to create high-quality development. It is recommended to focus on 3 types of investment opportunities:

1) OTC for Chinese medicine brands: State-owned enterprise reform continues to advance, and asset quality and operating efficiency continue to improve. Given that leading OTC Chinese medicine companies are mainly state-owned enterprises, in the context of the era of state-owned enterprise reform, business fundamentals have generally improved, and brand value has increased, showing a trend of concentration of leaders.

2) Innovative traditional Chinese medicines: After the registration classification and evaluation evidence system was reshaped, the number of applications for new traditional Chinese medicines increased, reviews and marketing were accelerated, and priority was given to health insurance. The quality on the supply side will continue to improve. Against the backdrop of policy inclination on the payment side and anti-corruption medical treatment, the transformation and upgrading of the proprietary Chinese medicine market in hospitals can be expected.

3) Traditional Chinese medicine diagnosis and treatment: The “Three Medicines” joint reform has deepened, the country has promoted collaboration between traditional Chinese and Western medicine, encouraged the training of traditional Chinese medicine talents, and widely promoted traditional Chinese medicine culture. The traditional Chinese medicine diagnosis and treatment industry has ushered in a golden period of development.

Risk warning:

Pharmaceutical industry policy risk; drug collection and price reduction risk; risk of failure in new drug development; risk of price increases for Chinese herbal medicines.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
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