One year after the end of the pilot, the traditional Chinese medicine formula granule industry is moving towards high standards

On November 1, the pilot of traditional Chinese medicine formula granules ended for a full year - in February 2021, the State Food and Drug Administration and other four departments jointly issued the "Announcement on Ending the Pilot Work of Traditional Chinese Medicine Formula Granules", deciding to officially end the pilot work
of traditional Chinese medicine formula granules for more than 20 years from November 1, 2021.
The market for traditional Chinese medicine formula granules has been fully liberalized
.

 

Under the high threshold and high standard, in the past year, the market pattern of the traditional Chinese medicine formula granule industry has been adjusted steadily: those who have entered the game have made efforts to improve core competitiveness such as product quality, and those who intend to enter the game carefully observe and do
what they can.
Further accelerating the formulation of national drug standards for traditional Chinese medicine formula granules has become the biggest expectation
of the industry.

 

The market landscape has changed

 

According to the data, Jiangyin Tianjiang Pharmaceutical Co.
, Ltd.
(hereinafter referred to as Jiangyin Tianjiang Pharmaceutical), Guangdong Yifang Pharmaceutical Co.
, Ltd.
(hereinafter referred to as Guangdong Yifang), Peili (Nanning) Pharmaceutical Co.
, Ltd.
, China Resources Sanjiu Pharmaceutical Co.
, Ltd.
(hereinafter referred to as China Resources Sanjiu), Sichuan New Green Pharmaceutical Technology Development Co.
, Ltd.
and Beijing Kangrentang Pharmaceutical Co.
, Ltd.
(later acquired by Tianjin Hongri Pharmaceutical Co.
, Ltd.
, hereinafter referred to as Beijing Kangrentang) 6 enterprises (hereinafter referred to as "National 6") has successively become a national pilot enterprise
of traditional Chinese medicine formula granules.
Since then, some enterprises have entered the field
through the provincial pilot work of traditional Chinese medicine formula granules.

 

Due to the promising prospects, the traditional Chinese medicine formula granules market has become an area
that many traditional Chinese medicine companies are looking forward to entering.
According to the relevant research report of Southwest Securities, the market size of traditional Chinese medicine formula granules has increased from 10.
7 billion yuan in 2016 to 25.
5 billion yuan in 2020, and it is expected to open a market
of 100 billion yuan in the future.

 

"The liberalization of the national market means more opportunities
for traditional Chinese medicine formula granule enterprises.
" Zhang Teli, vice president of Sunway Pharmaceutical Group Co.
, Ltd.
(hereinafter referred to as Sunway Pharmaceutical), said that the expansion of market areas and the relaxation of the use of traditional Chinese medicine formula granules from secondary and above traditional Chinese medicine hospitals to eligible medical institutions have enabled the expansion of sales channels
.
"These two points jointly promote the further expansion of the Chinese medicine formula granule market
.
" Zhang Teli said
.

 

In the past year, the market pattern of traditional Chinese medicine formula granules has quietly changed
.

 

The market share of the "6 countries" has shrunk
.
Data show that in the original traditional Chinese medicine formula granule market, the "national 6" accounted for more than 80% of the market share, and after the market was liberalized, the growth rate of traditional Chinese medicine formula granule business of many of them slowed down or even fell
sharply.
According to the 2022 half-year report of China Resources Sanjiu, the traditional Chinese medicine formula granule business in the first half of the year was in the transition period of the new national standard, and the growth rate declined
.
According to the 2022 half-year report of Red Sun Pharmaceutical, the business of traditional Chinese medicine formula granules and traditional Chinese medicine pieces achieved revenue of 1.
629 billion yuan in the first half of the year, and the operating income decreased by 9.
50%
compared with the same period last year.

 

China Traditional Chinese Medicine Holdings Co.
, Ltd.
(hereinafter referred to as China Traditional Chinese Medicine) owns two national pilot enterprises of traditional Chinese medicine formula granules, Jiangyin Tianjiang Pharmaceutical and Guangdong Yifang, with a market share of more than 50%
in 2020.
However, its 2022 interim report shows that the traditional Chinese medicine formula granule business contributed about 2.
762 billion yuan in turnover, down 49.
1%
from the same period last year.

 

At the same time, the performance of some latecomers showed a rapid growth trend
.
Shenwei Pharmaceutical, which became a pilot enterprise of traditional Chinese medicine formula granules in Hebei Province in 2013, reported in its interim report in 2022 that the sales of traditional Chinese medicine formula granules reached 469 million yuan, an increase of 46.
0% over the same period last year, of which sales in Yunnan Province increased by 186.
3%
over the same period last year.
According to the 2022 half-year report of Zhejiang Zuoli Pharmaceutical Co.
, Ltd.
, the operating income of traditional Chinese medicine pieces and traditional Chinese medicine formula granules was 217 million yuan, an increase of 50.
49%
over the same period last year.

 

In addition, some pharmaceutical companies that were originally eager to enter the Chinese medicine formula granule market have now calmed down
.
Jiangsu Kangyuan Pharmaceutical Co.
, Ltd.
has completed the filing of some products and said that it is "still preparing"; Good Doctor Pharmaceutical Group Co.
, Ltd.
and Yabao Pharmaceutical Group Co.
, Ltd.
have contracted their traditional Chinese medicine formula granule business
.

 

The threshold standard is raised

 

"Getting into the TCM formula granule track is not an easy task
.
" According to Zhang Xiaodong, a veteran in the industry, the full liberalization of the market does not mean that standards and thresholds are lowered
.

 

Taking the announcement issued by the State Food and Drug Administration and other four departments as an example, the relevant departments have put forward requirements for traditional Chinese medicine formula granule manufacturers, such as having complete production capacity and corresponding production scale, self-concocting Chinese medicine pieces for the production of traditional Chinese medicine formula granules, implementing whole-process management of production, establishing a traceability system, and advocating the use of authentic medicinal materials
.

 

Not only that, traditional Chinese medicine formula granules should also be produced in accordance with the recorded production process and meet national drug standards; Where there are no provisions in the national drug standards, the standards formulated by the provincial drug regulatory department shall be complied with; Chinese medicine formula granules that do not have relevant standards shall not be marketed
.

 

From the 200 national standards for traditional Chinese medicine formula granules that have been promulgated, in order to ensure product quality, the characteristic map, extract and content determination of traditional Chinese medicine formula granules are all required
.
High standards make enterprises face great technical challenges
.

 

At the same time, all localities are also accelerating the formulation of
provincial standards for traditional Chinese medicine formula granules.
The Shanghai Municipal and Hainan Provincial Food and Drug Administration have issued more than 340 quality standards for traditional Chinese medicine formula granules, and the Guangxi Zhuang Autonomous Region, Shandong Province and Jiangsu Provincial Food and Drug Administration have issued more than 200 quality standards
for traditional Chinese medicine formula granules.
According to relevant national regulations, if traditional Chinese medicine formula granules are sold across provinces, the manufacturer shall report to the provincial drug regulatory department of the place of use for the record; Where traditional Chinese medicine formula granules without national drug standards are used across provinces, they shall comply with the standards formulated by the provincial drug regulatory department of the
place of use.

 

"This means that enterprises either produce according to national standards or provincial standards, but the number and content of provincial standards issued by different provinces are different, and it is difficult to file across provinces
.
" If the variety of enterprises is incomplete, it will directly affect the sales
in medical institutions.
Zhang Xiaodong said
.

 

According to reports, there are at least 400 varieties of traditional Chinese medicine formula granules commonly used in clinical use in a medical institution, and up to 2 to 3 suppliers are selected, so the more varieties of enterprises, the more advantageous
.
It is reported that the decline in the market share of the "national 6" is mostly due to the insufficient
supply of varieties caused by the standard conversion of traditional Chinese medicine formula granules.

 

For new entrants, in addition to technical thresholds, they also face multiple tests
such as market development ability and channel ability.
An industry insider believes that to enter the traditional Chinese medicine formula granule market, enterprises must have high-standard plant equipment, perfect process technology and corresponding talent reserves, as well as the ability to
develop sales channels such as medical institutions.

 

Core competitiveness becomes the focus

 

High threshold and high standards enable powerful people to enter the Chinese medicine formula granule market
.
According to the information released by the State Food and Drug Administration, as of the end of June this year, a total of 62 enterprises across the country have completed the corresponding production and sales filings, showing an overall stable and orderly trend
.
These entrants continue to make efforts
to enhance their core competitiveness.

 

"Sunway Pharmaceutical has invested more than 1 billion yuan in the preparation process and quality standards, pharmacodynamics and clinical application of traditional Chinese medicine formula granules, and will accelerate the pace
of entering the national market in the future by expanding the production capacity of traditional Chinese medicine formula granules and stepping up the expansion of sales teams.
" Zhang Teli said
.
It is reported that the enterprise has basically completed the listing and filing of national standard varieties, and the cross-province filing has reached 29 provinces
.

 

Gao Song, deputy general manager of Zhongjing Wanxi Pharmaceutical Co.
, Ltd.
, which obtained the GMP certificate of traditional Chinese medicine formula granules in November 2019, believes that the variety and quantity of traditional Chinese medicine formula granules are large, the production organization is complex, and the construction of a traceability system for the whole process and all factors requires a large number of advanced digital technology support, which poses challenges
to new entrants.
"We have competitive advantages
in the construction of Chinese herbal medicine planting bases, quality standard control, terminal channel capabilities and other aspects.
" Takamatsu said
.

 

The "6 countries" are also actively consolidating their core advantages
.
China Resources Sanjiu said in its 2022 half-year report that enterprises actively respond to the changes in the industry brought about by the end of the pilot, strive to build a competitive advantage of the whole industry chain, and continue to increase the intensity of standard research.

Red Sun Pharmaceutical's 2022 half-year report shows that relying on new technologies and equipment such as intelligent manufacturing, enterprises have rapidly improved production efficiency, further consolidated their advantages in scale, and provided a solid foundation
for improving the existing market penetration rate and incremental market coverage.

 

"A firm grasp of product quality is a constant rule for dealing with external challenges
.
We carry out quality management based on the whole process and the whole process, and establish a quality management system
of design, production and testing 'trinity'.
Zhang Zhiqiang, R&D director of Beijing Kangrentang, introduced that Hongri Pharmaceutical, to which the company belongs, has laid out production bases in Hubei Province, Gansu Province, Sichuan Province and other regions rich in medicinal materials, established a whole-process traceability system, and realized the traceability
of all varieties of traditional Chinese medicine formula granules.

 

Almost all the interviewed companies support the high threshold and high standards of the traditional Chinese medicine formula granule industry, believing that this can not only ensure the "safe, effective, stable and controllable" clinical use of traditional Chinese medicine formula granules, but also contribute to the healthy and orderly development of
the industry.
However, with the gradual introduction of provincial standards, problems such as incompatibility of provincial standards have also attracted much attention
from the industry.
Enterprises expect to accelerate the formulation of national drug standards for traditional Chinese medicine formula granules, accelerate the construction of a unified national market, and reduce the cost and waste of resources in the process of provincial standard formulation and provincial filing
.

 

To the satisfaction of the industry, the State Food and Drug Administration clarified in its response to Recommendation No.
4781 of the Fifth Session of the 13th National People's Congress that in addition to the 200 national drug standards for traditional Chinese medicine formula granules that have been released, there are 190 research materials of 112 varieties in the process of approval, and the formulation of other commonly used national drug standards
for traditional Chinese medicine formula granules will be organized in the future.