Recently, the prices of proprietary Chinese medicines of several well-known domestic pharmaceutical companies have increased by 10% to 20%, including some common varieties.
Affected by this, the Chinese medicine sector has continued to heat up recently.
On December 28, some traditional Chinese medicine concept stocks continued to rise. Essence Pharmaceuticals and Longjin Pharmaceuticals rose by their daily limit, while Dali Pharmaceuticals and Yanan Bikang rose by more than 4%.
According to industry insiders, the main reason for the increase in the price of Chinese patent medicines is the increase in the price of Chinese herbal medicines.
Brokerage analysis believes that under the support of policies and the catalyst of price increases, traditional Chinese medicine companies with low valuations and strong brand influence are valued.
In the past two years, a number of incentive policies have been released, and the Chinese medicine industry has ushered in new opportunities for development, and business operations are expected to improve.
Price hikes for some Chinese medicine products
A week ago, when asked by investors whether to increase the price of traditional Chinese medicine varieties, Tai Chi Group responded on the interactive platform that the company's drug Huoxiang Zhengqi Oral Liquid is the company's backbone variety, because the costs of main raw materials, auxiliary materials, and energy continue to rise. In order to alleviate the company's rising cost pressure and promote the sustainable development of the market, the company has recently adjusted the ex-factory price of Huoxiang Zhengqi Oral Liquid, with an average increase of 12%.
In fact, since the beginning of this year, many time-honored brands have announced price increases for common varieties.
On December 13, China Resources Sanjiu responded on the investor interactive platform "whether the company's Angong Niuhuang Pills have increased in price", saying that the company's Angong Niuhuang Pills' ex-factory price has increased this year.
Previously, Tongrentang issued a price adjustment notice, raising the sales price of Angong Niuhuang Pills (3 grams * pills/box) from 780 yuan to 860 yuan, an increase of about 10%, and the price began to be implemented on December 1.
On the evening of December 27, the record form of investor relations activities released by Jiuzhitang showed that the company responded to the recent increase in the price of raw materials of traditional Chinese medicine, saying that the raw materials of traditional Chinese medicine were affected by factors such as climate and planting area, and there was a general price increase, especially Due to the scarcity of superimposed resources of precious and fine raw materials and the impact of the contradiction between supply and demand, the price increase is relatively large.
The company has been monitoring the price fluctuations of traditional Chinese medicine raw materials, making predictions on price trends, and formulating corresponding procurement strategies to deal with the risk of price fluctuations.
The company will adopt different pricing strategies in a timely manner for different products, taking into account changes in costs, policies, product audiences, and market conditions.
On December 28, Weikang Pharmaceutical responded on Interactive Easy that the company has a mature price adjustment mechanism, and will adjust the sales price of products in a timely manner according to factors such as raw material prices and market supply and demand, and the company will continue to strengthen R&D investment and optimize products. quality to ensure the long-term sustainable development of the company.
Since the beginning of this year, the prices of Chinese herbal medicines have generally risen.
In Hebei Anguo, the largest trading center of traditional Chinese medicinal materials in northern my country, since December, nearly 80% of the prices of traditional Chinese medicinal materials have risen.
For example, the prices of common coptis, honeysuckle, and skullcap have risen to varying degrees.
In addition to common varieties, the prices of some expensive medicinal materials have risen more significantly: the prices of saffron, deer antler, bird's nest, American ginseng, cordyceps and other varieties have all risen, ranging from 10% to 50%.
Guohai Securities believes that due to its obvious advantages in the OTC category, traditional Chinese medicine’s main sales channels are concentrated on the retail side, and only a small number of them have been included in the list of centralized purchases. With the attention of market demand and pharmacies, it has high price maintenance capabilities. .
The industry structure is gradually optimized
Since the beginning of this year, heavy support policies have been issued frequently in the Chinese medicine industry.
In February 2021, the State Council issued the "Several Policies and Measures on Accelerating the Development of Traditional Chinese Medicine Characteristics"; on June 30, the National Health Commission and other ministries jointly formulated the "Opinions on Further Strengthening the Work of Traditional Chinese Medicine in General Hospitals to Promote the Coordinated Development of Chinese and Western Medicine";7 On May 7, the five departments jointly formulated the "Traditional Chinese Medicine Cultural Communication Action Implementation Plan (2021-2025)".
According to incomplete statistics, since 2021, the number of innovative traditional Chinese medicines has reached 11, and the approved new drug varieties are widely distributed in the field of disease treatment, covering respiratory, neurological, digestive and other fields.
The state vigorously promotes the inheritance and innovation of traditional Chinese medicine, and the number of innovative traditional Chinese medicines, both for registration and approval, has hit a new high this year.
In addition, traditional Chinese medicine plays an important role in the prevention and control of the epidemic, which helps to improve the market's awareness of the effectiveness and safety of its drugs.
In addition, the centralized procurement of traditional Chinese medicine by local alliances, which has attracted market attention, is relatively mild.
The results of the proposed centralized procurement of proprietary Chinese medicines in 19 provinces and cities led by Hubei have been announced a few days ago.
From the selection list, it mainly involves Shenwei Pharmaceutical, Kun Pharmaceutical Group, Kangyuan Pharmaceutical, Zhenbaodao Pharmaceutical, Tongrentang and other 97 companies, 111 products were selected, the selection rate was 62%, and the average decline was 42.27%. The biggest drop was 82.63%.
Dongguan Securities believes that the price reduction of this centralized purchase is relatively mild, and there is no extreme case of a drop of up to 90% in the centralized purchase group A. Most drug prices have dropped by 30%-50%, and some drugs have dropped by 10%-30%.
Hengtai Securities believes that with the continuous introduction of my country's policies to support traditional Chinese medicine, the structure of the traditional Chinese medicine industry has been gradually optimized, boosting the benefits of building a healthy China.
Traditional Chinese medicine covers "passive treatment + active health management", and the industry chain can be extended to general health and traditional Chinese medicine consumer goods, and the consumption attribute of traditional Chinese medicine is becoming more and more obvious.
Sector valuations are expected to recover
From the perspective of performance, as of the third quarter of 2021, the traditional Chinese medicine sector achieved operating income of 248.85 billion yuan, a year-on-year increase of 11.31%; net profit attributable to the parent was 26.26 billion yuan, a year-on-year increase of 20.79%.
Huaan Securities Research Report believes that from the perspective of operation, the company's confidence in operations can be felt. In 2021 alone, 13 listed traditional Chinese medicine companies will announce equity incentive plans, many of which are central enterprises such as China Resources.
It is expected that under the blessing of incentives in the future, the operation of traditional Chinese medicine companies is expected to usher in an inflection point.
Hengtai Securities believes that companies with stable performance growth in the traditional Chinese medicine sector are cost-effective and have prominent layout advantages.
From January 2019 to the present, the traditional Chinese medicine sector has been significantly underperforming the pharmaceutical index and other sub-sectors due to the impact of lower-than-expected data such as industry policies and terminal sales.
From a valuation perspective, the traditional Chinese medicine sector is at historically low levels.
Minsheng Securities believes that traditional Chinese medicine varieties, brands, and patent barriers are high, and exclusive products are scarce.
In recent years, the internal operation and management of many traditional Chinese medicine companies have been improved, and the retail marketing reform and channel improvement have increased product sales performance.
Starting from 2020, a number of listed Chinese medicine companies have introduced equity incentives and employee stock ownership plans. The annual growth rate of performance is required to be concentrated at 10%-20%. The speed of industry development is guaranteed, the upward space is fully opened, and the valuation is expected to continue to increase.
(Xu Jinzhong and Wang Ke)