Zhitong Financial APP learned that Guolian Securities issued a research report saying that on the afternoon of February 1, with the approval of the State Drug Administration, the fourth batch (48) of national drug standards for traditional Chinese medicine formula granules were published on the website of the State Pharmacopoeia Commission. Benefiting from favorable policies, the traditional Chinese medicine formulation granule industry may usher in rapid expansion. Considering that the formulation granule is not restricted by the proportion of drugs and can implement drug addition, the industry will be given a "stronger than the market" rating. The bank believes that the recovery of hospital diagnosis and treatment after the epidemic, the increase in the number of GB, superimposed by the low base performance in 2022, traditional Chinese medicine formula particles are expected to grow at a high growth rate in 2023.
Investment advice:With years of accumulation, leading enterprises have strong advantages in product quality, cost control and sales channels. Maintain the "buy" ratings of Chinese traditional medicine (00570), China Resources Sanjiu (000999.SZ) and Red Sun Pharmaceutical (300026.SZ).
The main points of Guolian Securities are as follows:
Under the favorable policy, the formula particles are expected to maintain high magnificence.
During the pilot period, relying on the advantages of instant consumption and addition or subtraction with certificates, China's traditional Chinese medicine formula granule industry has maintained rapid growth in recent years. According to the data of Huajing Industrial Research Institute, the CAGR reached 23.91% from 2017 to 2021, and the market scale increased from 10.8 billion in 2017 to 25.2 billion in 2021. Under license access management, the industry is highly concentrated. In 2020, pilot enterprises such as Chinese traditional Chinese medicine, Hongri Pharmaceutical, China Resources Sanjiu and other domestic market share totaled about 78.97%. After the end of the pilot, the production enterprises will be managed according to the record system, and more enterprises will be able to participate in the market competition. at the same time, the scope of sales will also sink from secondary or above medical institutions to grass-roots medical institutions that can provide traditional Chinese medicine services. it is conducive to promoting the market penetration of formula particles and accelerating the expansion of the industry scale.
Short-term performance is declining, the industry is expected to return to rapid growth
Before the end of the pilot, there were more than 600 enterprise standard varieties of formula granules, and the new policy required the industry to switch from enterprise standards to national standards. By the end of 2022, only 200 national standards had been published and effective. Due to the lack of varieties of national standards, the number of clinical groups was limited, the volume of diagnosis and treatment in hospitals in superimposed epidemic control decreased, and the business income of formula granules in the industry declined significantly. With the increase in the number of national standards combined with local provincial standards, the number of national formula granules can reach more than 300, and most clinical formulations will be resumed. the bank believes that the recovery of diagnosis and treatment in hospitals after the epidemic, the increase in the number of national standards, and the superimposed low base performance in 2022, traditional Chinese medicine formula granules are expected to grow at a high growth rate in 2023.
With the improvement of industry standards, the leading enterprises have significant advantages.
The supervision of the industry has been continuously strengthened, and the conditions of access have risen both explicitly and indirectly. Leading enterprises have the following advantages: (1) participating in the drafting of national standards, ensuring the stability of product quality; (2) obvious scale effect, conducive to upstream bargaining, outstanding production cost control; (3) high brand value, wide sales channels and perfect supporting services. The bank judged that after the implementation of the national standard, the difficulty of entering the industry has increased, the latter entrants are more difficult to catch up, and the competition pattern of the industry is more difficult to change greatly.
Risk Tips:Policy and regulation risk; product quality risk; raw material supply and price fluctuation risk; industry competition intensification risk; industry development is not as expected.