We participated in the reverse roadshow held by Shenwei in Shijiazhuang, Hebei Province on October 23, 2018. We visited the pharmacy, Hebei Provincial Hospital of traditional Chinese Medicine, Loudi Town Health Center and Shenwei Factory in Luancheng District. Main points of investment: 1) traditional Chinese medicine formula particles are gradually replacing traditional Chinese medicine pieces and maintaining strong growth. 2) although the use of traditional Chinese medicine injection in secondary and tertiary hospitals is limited, the demand for traditional Chinese medicine injection in primary health care institutions is still strong. 3) due to the increase in unit price and benefit graded diagnosis and prescription outflow, soft capsules and granules maintained steady growth.
Sales list of traditional Chinese medicine formula granules. Hebei Provincial Hospital of traditional Chinese Medicine is one of the hospitals selling Shenwei Chinese medicine formula granules, which contributed income of about 40 million to 50 million yuan last year. At present, traditional Chinese medicine formula granules are replacing decoction, and patients prefer traditional Chinese medicine formula granules compared to patients with prepared slices. The ratio of sales of traditional Chinese medicine formula granules to prepared pieces of traditional Chinese medicine in the hospital is almost close to 1:1, and we see that the demand for traditional Chinese medicine formula granules is very strong. In addition, due to the hospital's zero fare increase policy and drug proportion control, traditional Chinese medicine formula granules also get more prescriptions from the sale of proprietary Chinese medicines. With regard to the new factory in Yunnan, it will be put into operation in early November. Shenwei is fully prepared for the upcoming opening of the traditional Chinese medicine formula granule market, and its production capacity will increase by about 3 billion bags by the end of 2018.
Traditional Chinese medicine injection is growing steadily in grass-roots hospitals. We visited the grass-roots medical institutions, Loudi Town Health Center, Luancheng District. Qingkailing injection is favored by patients because of its fast efficacy and low price. Management said that the ex-factory price of Qingkailing injection has increased in the past six months, but there is still a lot of room for price increase. Driven by graded diagnosis and treatment, grass-roots sales of injections, soft capsules and granules remain strong. For the coming re-evaluation of traditional Chinese medicine injection, the market competition pattern will change. In view of Shenwei's leading position in the traditional Chinese medicine injection industry and the proven product quality, we believe that Shenwei may gain more market share in the future.
OTC line of business. Up to now, the prices of some soft capsules and granules have been raised, such as Wufuxinnaoqing soft capsule and Huoxiang Zhengqi soft capsule. As a result of the continued outflow of prescription drugs from public hospitals, drugstore sales remain robust. On October 25, 2018, two exclusive products of Shenwei, Qingkailing soft capsule and synovitis granule, were included in the 2018 national base drug catalogue. We expect the sales of soft capsules and granules to maintain steady growth in pharmacies and primary health care institutions in the future.
Results continued to recover in the third quarter. Shenwei released its sales results for the first nine months on October 26, 2018. We saw that in the third quarter, revenue increased by 29.9% to 640 million yuan compared with the same period last year, including 25.5% for injections, 3.8% for soft capsules, 23.1% for particles, and 85% for traditional Chinese medicine formula granules.
Shenwei maintained its growth trend in the third quarter, which once again confirmed our recovery forecast.
