"Western medicine has lost miserably, but fortunately there are still Chinese medicine stocks." Some investors summed up the ups and downs of pharmaceutical stocks in the past few weeks, and told Eight Point Health News.
And just yesterday, on an investor relations platform, some investors suggested that BeiGene, which has always been the leader of domestic innovative drugs, said: "As soon as possible, set up an 'alchemy' department to speed up the procurement of various 'alchemy furnaces', complete the refining of Shendan as soon as possible to benefit the people, and must not blindly worship Western medicine." ”
Since November 2021, Western medicine stocks, which include chemical drugs and biological drugs, have been in stark contrast to the performance of Chinese medicine stocks in the secondary market, comparable to the double heaven of ice and fire. In mid-December 2021, the National Medical Insurance Bureau and the State Administration of Traditional Chinese Medicine jointly issued a document supporting the innovative development of traditional Chinese medicine inheritance, which pushed the trend to one peak after another.
In the past six months, chemical and biological drug innovative pharmaceutical companies and traditional Chinese medicine enterprises have made a 180-degree reversal in their policy situation.
In the two weeks around New Year's Day, the net value of the main inflow of chemical drugs was only 1.483 billion yuan; the inflow of funds in the biological products field was even less. More than half of the stock prices of chemical pharmaceutical and biological products companies have fallen to varying degrees. Even Beida Pharmaceutical, Fosun Pharma, BeiGene, Junshi Biotech, etc., which are known for their innovation, are also "falling and falling".
In stark contrast, the field of traditional Chinese medicine, which has been clinically restricted for a long time and has been questioned for a long time with an unclear mechanism of action, has continued to have good news.
According to the data of Oriental Wealth Network, in the two weeks before and after New Year's Day, the net inflow of the main funds of the Chinese medicine sector totaled 2.5 billion yuan; of all 71 Chinese medicine stocks in A shares, 63 were rising, and 37 were up more than 10%.
In December last year, the stock price increased by TOP15 (excluding individual stocks and ST stocks within 1 month of listing), there were 9 Chinese medicine companies, accounting for 2/3.
Due to the overzealous secondary market, the stock price rose by more than 100% in 10 trading days, and the transaction was abnormal, longshen Rongfa had to apply for trading suspension on December 31, 2021. Before the suspension, its price-to-earnings ratio, that is, the ratio of stock price to earnings per share, had broken through 600.
In the context of the overall downturn in pharmaceutical stocks, the high-profile growth of chinese medicine stocks in this round has triggered various voices.
In the secondary market, major investment institutions have issued research reports to demonstrate the medium- and long-term investment value of Chinese medicine, however, even shareholders who invest in Chinese medicine stocks believe that the growth of Chinese medicine enterprises is limited: "Some well-known Chinese medicine enterprises have been collected by the State-owned Assets Supervision and Administration Commission, and the stock has risen several times, but the performance has not increased equally." Now there is a policy vision to support, so the valuation has come up, but what the future holds remains to be seen. ”
On the other side of the industry, in the field of innovative drugs, a well-known founder of an innovative pharmaceutical company forwarded an industry insider to comment: "The efforts of generations (of new drug research and development) will be abolished by this tendency." ”
Another founder of a pharmaceutical company who has been engaged in the research and development of new drugs in China for nearly 20 years said bluntly to Eight Points Jianwen, "Now no matter what you do, you must talk about science, either the ancestors have passed it down or it is good, it must be proved by evidence-based medicine!" ”
Is this investment boom in Chinese medicine a new round of "god-making movement" or a return to value? How is the "color" of today's Chinese medicine industry? The future of Chinese medicine, whether to go to the great health of the consumer market, or to fight the hospital market, what do the practitioners of Chinese medicine think?
Who's up, exactly?
The current round of Chinese medicine rally can be traced back to the end of October, since then, the BK1040 index, which reflects the overall situation of the Chinese medicine sector, has taken more than a month to slowly rise from the low of 1099.3 to about 1220. After December 20, this upward curve suddenly became steep, rushing to the high of 1594.02 in 10 days, an increase of more than 25%.
From the perspective of the China Securities Chinese Medicine Index, from the beginning of 2021 to the middle of 2021, the yield of Chinese medicine and the comparative benchmark yield were basically the same, after that, the growth of the China Securities Chinese Medicine Index accelerated, gradually pulling away from the benchmark, and by January 2022, the difference between the two has reached about 8%.
In the meantime, major securities companies have announced research and development reports, in the announcement, although they are emphasizing the favorable policies, but in the list of enterprises recommended by them, they are not Chinese medicine enterprises that can eat policy dividends, but are still enterprises that focus on the consumer market such as Katazai, Tongrentang, and Jianmin Group.
In the meantime, there can be little logical rifts. "Katazai and Tongrentang have also risen for a long time, and their investment logic is completely different." A senior analyst told Eight Points.
From the perspective of industry, drugs such as Katazai have long been separated from the ranks of ordinary drugs, and have been given more special meanings such as luxury goods and financial products, and do not belong to the list of New Deal restrictions or support. Companies that have really been "loosened" by recent policies have not been recommended.
This logic of investment in Chinese medicine almost contradicts the logic of crazy investment in "research projects" and new tracks in China's pharmaceutical industry in recent years.
Since 2018, China's pharmaceutical market has undergone subversive changes, the era of "sales is king" has come to an end, and innovation has become the only recognized way out.
In this difficult transformation, both funds and enterprises have significantly increased their annual investment in research and development. It is not uncommon for head innovative pharmaceutical companies to throw hundreds of millions of yuan, or even billions, in research and development, and more and more companies account for more than 10% of revenue.
However, the investment of Chinese medicine enterprises in research and development has hardly changed from the past. According to the industry's public WeChat account "Pharmaceutical Affairs Vertical" statistics, in the 1-3 quarters of 2021, only 8 R & D investment of more than 100 million yuan; R & D investment accounted for more than 5% of the total revenue, only 10; Jianmin Group, Panlong Pharmaceutical, Taiji Group, Yunnan Baiyao and other nearly 10 well-known Chinese medicine enterprises, R & D investment is less than 1%.
These Chinese medicine companies tend to choose the "lying win" strategy with low R&D investment, because for Chinese medicine, the secondary market pays more attention to inheritance, which is the right to speak in the industrial chain brought by its scarcity characteristics. Grasping the scarcity and discourse power, Chinese medicine products want to improve profits, what they have to do is not innovation, but simply price increases.
On December 1, 2021, the sales price of Angong Niuhuang Pill per pill in Tongrentang rose from 780 yuan to 860 yuan, an increase of 10%. Since then, the factory price of Tai Chi Group's Huoxiang Zhengqi has increased by an average of 12%; on New Year's Day, Jiuzhitang also announced price adjustments to customers, involving 21 product specifications, with a price increase of up to 30%.
The reason for the price adjustment, it is said, is mainly the increase in the cost of raw materials and so on.
According to Hexun Network, since the epidemic, the price of Chinese herbal medicines has been rising, of which more than 50 kinds of medicinal materials will double in price in 2021, some medicinal materials such as ground yellow, dry lotus grass increased by more than 300%, and white lentils rose by 800%. And it is predicted that the price increase will continue until the first half of 2022.
"This shows that the source price is transmitted upstream." Some investors have said publicly. Tongrentang, Dong'e Ejiao, Katazai, etc., the stock price has risen sharply.
From the perspective of market value, Katazai and Yunnan Baiyao are already more than 100 billion, and the market value of Tongrentang is also approaching 100 billion. According to kanjian financial statistics, in the past 10 years, Tongrentang's stock price in the secondary market has risen by more than 230%, and the price of Katazai has increased by more than 3000%!
Under the fluctuation of raw material prices, the price of precious drugs and OTC (over-the-counter drugs) has risen more smoothly, and in the case of continuous advancement of medical reform, it seems more secure to invest in consumer goods and luxury Chinese medicine products that can be won despite not much innovation.
It is precisely for this reason that major securities companies are emphasizing the favorable policies of medical insurance and collective procurement in the research reports, but in the list of recommended enterprises, they are still the main consumer market enterprises such as Katazai, Tongrentang and Jianmin Group.
"Cultural self-confidence" on the one hand, "policy landing" on the other hand
However, even if the recommendations of Chinese medicine companies in the recommended lists of major securities companies often come from the optimism of consumer medical treatment, rather than pure optimism about Chinese medicine. One fact that cannot be denied is that the attitude towards TCM at the national level has always been protective and encouraging.
Since 2015, the Law of the People's Republic of China on Traditional Chinese Medicine has been promulgated and implemented; documents such as the Outline of the Strategic Plan for the Development of Traditional Chinese Medicine (2016-2030) and the Opinions of the State Council on Promoting the Inheritance and Innovative Development of Traditional Chinese Medicine have set the tone for the development of traditional Chinese medicine.
A number of industry insiders and investors stressed to Eight Points That Chinese medicine self-confidence is also part of cultural self-confidence. This actually points to the inevitability of the development of the Chinese medicine industry being supported by policies.
However, for a long time, although Chinese medicine is encouraged on the macro level, due to the lack of documents that are effectively implemented, in the investment market, Chinese medicine stocks have been growing weakly and tepidly. The aforementioned BK1040 index has been growing slowly in the months after the beginning of 2021. After November, the growth trend began to steepen, and by December, the weekly increase exceeded 11%.
The primary market is even more uninterested in Chinese medicine stocks, and there is very little investment in Chinese medicine.
"Chinese medicine is relatively not as large as Western medicine. Western medicine can be sold globally, and Chinese medicine can be sold in China at most. An industry veteran told Eight Points.
Entering the second half of 2021, the long-term tightening policy has suddenly relaxed. According to the research report released by the securities company, in the national medical insurance negotiations and the results of the collection of hubei proprietary Chinese medicines, the price reduction of proprietary Chinese medicines is relatively mild, and the innovative chinese medicine drugs approved in 2021 have also reached a record high, reaching 11, and some enterprises have actively adjusted themselves, bringing performance growth or growth expectations, which are key stimuli.
The most important "fire" comes from the last day of 2021, when the National Medical Insurance Bureau and the State Administration of Traditional Chinese Medicine jointly issued the Guiding Opinions on Medical Insurance Supporting the Inheritance and Innovative Development of Traditional Chinese Medicine.
From this document, it can be seen that although the drugs in public hospitals have been sold at a "zero difference rate", Chinese medicine tablets can still be sold at a price increase of 20% to 25%; drRG and DIP reforms that cause headaches for hospitals and enterprises can also be temporarily not implemented in some areas of traditional Chinese medicine.
"This is the first time that the medical insurance department has issued a document to make a commitment to the medical insurance payment of traditional Chinese medicine." In the past, the favorable policies were all hanging, and this is the first time it has landed." The senior analyst told Eight Points.
In February 2021, 4 departments jointly issued a document announcing that the Chinese medicine formula granules ended more than 20 years of pilots, after which the formula granules will enter a period of larger-scale growth. According to the relevant regulations, the formula granules are managed according to the traditional Chinese medicine tablets, that is to say, they can be added to the price, and in Zhejiang, Yunnan, Beijing and other places, this category has also been included in the medical insurance payment.
The new document has achieved a surge in Chinese medicine after New Year's Day, and the logic of this time is slightly different from the logic of the past Chinese medicine boom.
"The main force of this wave is Chinese medicine tablets and formula granules." A senior analyst told Eight Points Jianwen, "The state's policy of encouraging the development of traditional Chinese medicine has finally landed. ”
In the nearly 10 trading days after the release of the new document, Hongri Pharmaceutical (80.04%), Jingjing Pharmaceutical (76.42%) and China Resources Sanjiu (33.44%) with large stock price increases were all related to formula granules.
Previously, although the policy's attitude towards Chinese medicine formula granules was unclear, and there were disputes about such products in the field of traditional Chinese medicine, after the shrinkage of the Chinese medicine injection market, formula granules, as a new profit growth point, have become a hot spot for pharmaceutical companies to compete for layout. According to the data of the head leopard, at present, more than 60 enterprises have entered the game across the country.
Under the policy implementation expectations, the Head Leopard analysis report predicts that by 2024, the total size of China's traditional Chinese medicine formula granule market will be close to 50 billion yuan, compared with the sales scale growth rate of nearly 100% in 2019, and the compound annual growth rate is expected to reach 14%.
"Public hospitals have been affected by the cancellation of drugs, consumables bonuses, collection and other factors, the income has been greatly reduced, and the granules of Traditional Chinese medicine formulas are indeed a huge temptation, which is likely to change the clinical drug ecology." A clinical pharmacy expert at a public hospital told Eight Point Health News.
Behind the sharp rise, what is the "color" of Chinese medicine enterprises?
From the logic of investment, the current round of Chinese medicine stock surge is a product of the past supplement and future expectations. However, such expectations do not seem to be stable. In the sharp rise of Chinese medicine stocks, there is always a hidden worry of a sharp fall, and if there is a slight wind and grass, this fear in people's hearts will flood, and the big fall of the Chinese medicine version last Friday is an example.
Just last Friday (January 7), the stock price of Longjin Pharmaceutical, which had previously recorded 10 consecutive up and down boards, had fallen off a cliff, and the decline on the day exceeded 10%.
At the same time, 71 traditional Chinese medicine enterprises 58 fell sharply, and the formula granule-related enterprises such as Hongri Pharmaceutical, Shanghai Kaibao and Jingjing Pharmaceutical, which were favored in the past, were also the main objects of abandonment, with a decline of 13.66%, 10.12% and 10.02% respectively.
As far as the decline of Chinese medicine stocks is concerned, in addition to the cash-out doubts of major shareholders, the previous day's Shandong Alliance's collection of drinking tablets and granules was also an important influencing factor. This is not only a policy reaction to the growth trend of Chinese medicine, but also shows the fragility of people's confidence in Chinese medicine.
From Katazai Zhen and Angong Niuhuang Pill to Kangmei Pharmaceutical, Kang Enbei and Guangyuyuan, there is no shortage of "myths" in the field of Chinese medicine, nor is there a lack of lessons from falling off the altar.
In clinical use, for a long time, chinese people have been quite controversial about traditional Chinese medicine, and there have even been calls for abolition in history. Many key links related to life and death need more research support.
"Chinese medicine must be modernized, otherwise it will be eliminated sooner or later." Shi Lin, director of the Zhejiang Provincial Engineering Research Center for the Modernization of Traditional Chinese Medicine Compound Preparations, told Eight Points Jianwen.
Practitioners in the field of Traditional Chinese medicine have to face the reality that there are still many places in Traditional Chinese medicine that are difficult to explain with modern science; in clinical use, proprietary Chinese medicines have also been criticized for the lack of evidence-based medical evidence for safety and effectiveness, especially Chinese medicine injections, post-marketing re-evaluation and the shadow of allergy problems caused by pyrogens.
At the beginning of the 2017 version of the national medical insurance directory, there are at least 26 varieties of traditional Chinese medicine injections, and the scope of medical insurance payment is limited to second-level and above hospitals, and by the 2020 version of the national medical insurance directory, the scope of restricted varieties has increased to more than 40.
On July 1, 2019, after the National Health Commission officially announced the national version of the key monitoring catalogue, the exclusive large variety of proprietary Chinese medicines, DanshenChuan Qiongzin Injection, was included, and then the variety was kicked out of the national medical insurance catalogue.
A series of changes dealt a heavy blow to Conn Bay, and the first year's revenue shrank by more than 10% year-on-year. By the beginning of 2021, the approval of the former large variety of salvia Sichuan azine injection was cancelled and the production was stopped. In August of that year, ConnBei simply sold its subsidiary, Guizhou Beite, a pharmaceutical company located in the southwest hinterland, with annual sales of more than 1.7 billion yuan at its peak, contributing nearly 50% of Kangbei's net profit.
In the end, even Kang Enbei himself was taken over by the Zhejiang State-owned Assets Supervision and Administration Commission.
The future of Chinese medicine is still innovative medicine
Part of the "dividend" of Chinese medicine stocks comes from the weakness of the chemical medicine and biomedical sectors.
"Innovative drugs, especially CXO, which used to be where funds were more concentrated, fell very badly this time, so everyone withdrew to buy something else." Analysts told Eight Point Kenwen.
For the industry, Katazai, Dong'e Ejiao, etc. are not the way out. A number of respondents told Eight Points Jianwen: "Great health is just better to cut in, but the threshold is too low, and the competition is too encouraging", and the development path of the "pieces of zai" is also difficult to copy, "How many pieces of zai are there in the country?" ”
Even the Chinese medicine formula granules that are expected by everyone today are not necessarily the way out for the industry.
Although it does not conform to the traditional Chinese medicine theory, this new variety is widely welcomed in the clinic because of its advantages of convenient use and controllable ingredient content. Not only that, but the formula granules from the exploration stage to the release of use are indeed attractive to public hospitals that start to live too tightly.
However, under the general trend of cost control, clinical use of Traditional Chinese medicine formula granules is also limited.
According to Eight Points, some hospitals in Beijing have made strict limits on the total amount of formula granules - "can not exceed the tablets". The 25% markup is not actually a new rule, "no substantial change".
Innovation is the only way out.
"People have no self, and people have me." The innovation of traditional Chinese medicine must have characteristics, and there must be irreplaceable places for chemical drugs and biological drugs. Stone Forest said to Yatsuki, "All I can say is that it will always be on the road." However, it is certainly not possible not to do it. ”
In 2021, 11 innovative chinese medicine drugs were approved, a new high in the calendar year, exceeding the total number of new Chinese medicine drugs approved in 2015. This is also one of the reasons why Chinese medicine stocks have gained favor.
However, in the face of the reality that "in the past 6 years, 21 new Chinese medicine drugs have been approved", an industry insider can't help but ask: "Is this too much?" ”
Shi Forest has experienced the promulgation by the State Food and Drug Administration of the Measures for the Approval of New Drugs of Chinese Medicines (1999) to the 2020 edition of the Measures for the Administration of Drug Registration, as well as the changes in the registration and management of new Drugs of Chinese medicines in previous versions. "Now it is said that the approval of new Chinese medicine drugs has reached a new high of 5 years, in fact, it is not high at all, and it is normal to reach about 1/3 of the total number of approved new drugs (Chinese medicines, chemical drugs, biological drugs)."
According to the industry report released by China Food and Drug Network, from 2016 to 2020, China approved the listing of a total of 200 innovative drugs. This means that the number of approved innovative chinese medicines should reach 50 to 60. "In fact, most Chinese medicine companies are waiting and seeing." Shi Lin concluded to Eight Points, "For the development of innovative Chinese medicine drugs, it is still early spring, and it is warm and cold at first. ”
The Measures for the Administration of Drug Registration, which came into effect on 1 July 2020, have played an important role. In the new regulations, the classification of new Chinese medicine drugs has undergone great changes, and new Chinese medicine drugs are divided into four categories: innovative drugs, improved new drugs of Chinese medicine, compound preparations of ancient classic Chinese medicines and drugs with the same name. As the original six types of new drugs, the New Chinese Medicine Compound New Drug is now class 1.1 of the Chinese Medicine Innovative Drug, which shows that the "clinically oriented, efficacy as the key" Chinese medicine new drug innovation model has begun to enter the main road," Shi Forest told Eight Points Jianwen.
In fact, the clinical application of Traditional Chinese medicine is mainly compound decoction, that is, a decoction composed of more than two flavors of Traditional Chinese medicine. In the previous classification of new Chinese medicine drugs, Chinese medicine registration classification 1 is a single effective classification of new drugs, which is considered to be the most innovative new Chinese medicine drugs.
Innovative chinese medicine drugs are also difficult to escape the fate of chemical drugs and innovative drugs
And even if these problems are solved, more and more innovative drugs are approved, Chinese medicine and Western medicine will face the same dilemma.
"Difficulty in entering the hospital" is also the first of the three major problems faced by traditional Chinese medicine. The other two major problems are the difficulty of increasing sales and the risk of price reduction in collection and procurement.
"The general direction is definitely good, but in the actual operation, there are still many card points", the person in charge of Chinese medicine marketing revealed in the industry exchange.
An industry veteran also confirmed to Eight Points Jianwen, "A new Chinese medicine drug wants to enter the hospital, the first will ask whether it is a basic drug, and the second will ask whether it is a medical insurance catalog product." There are 685 varieties of basic drug catalogs, nearly 3,000 drugs in the medical insurance catalog, and about 1,200 commonly used drugs in hospitals. ”
Many large hospitals also do not recognize Chinese medicine. West China Hospital, West China Second Hospital of Sichuan University, Xiangya Second Hospital, etc. have all excluded proprietary Chinese medicines from the inclusion of new drugs. There have also been cases where the hospital pharmaceutical affairs management committee has cleared a large number of proprietary Chinese medicines out of the hospital drug list.
This means that many innovative Chinese medicine drugs cannot enter the hospital even if they enter the medical insurance directory; even if they enter the hospital, it is difficult to increase sales. "For example, if a hospital sells for 150,000 yuan, it will be monitored, then we will achieve 100,000 yuan." The marketing leader said.
The above-mentioned industry veteran revealed that "a chinese medicine innovative drug has entered the medical insurance directory, with sales of tens of millions in one year, and it will be renegotiated the next year." If you want to develop 1 billion yuan in 10 years like Western medicine, it will take 25 years to return the cost! "And hospitals and nursing homes that are recognized as slow to return to the capital only need 7 to 12 years."
In this situation, innovative drugs in traditional Chinese medicine will become similar to chemical drugs and innovative drugs, and there is also not much room for imagination. And companies, too, have no incentive to do more research — "If you understand it, the cost will come up." "If you encounter another collection and price reduction, it will be even more useless."
Just two days ago (January 11), the traditional Chinese medicine injection Lianbizhi injection was issued by the State Food and Drug Administration to announce the cancellation of the document number. This decision was made after the re-evaluation after the market, which also indicates that it is becoming more and more urgent for proprietary Chinese medicines to verify their safety and effectiveness.
"In the long run, policy encouragement is conducive to increasing the valuation of chinese medicine, but the problem is that its growth cannot be so fast." For the sharp rise in chinese medicine stocks in this round, Liu Haijun, general manager of Beijing JunHe TEDA Investment, said, "Many Chinese medicine stocks are relatively cheap in valuation, and the superimposed policy effect has been sought after by funds." From an industrial point of view, to truly revive Chinese medicine, it is still necessary to put it in a very important position, and the process will be relatively long. ”
Written by Chen Guangjing and Yu Huanhuan
Li Shanshan | responsible editor
This article was first published on the WeChat public account "Eight Points Health" (ID: HealthInsight)
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