Tasly Holdings' Li Sirui: TCM E-commerce Must Address Traceability and Quality Control
At the “Top 100 Future Healthcare Companies” forum hosted by VCBeat (WeChat ID: vcbeat), healthcare startups, listed companies, and prominent investors gathered to discuss future trends in healthcare and analyze current hot topics in the medical industry.
Li Sirui, General Manager of the Strategic Development Department at Tasly Holding Group, shared his insights on the modernization of Traditional Chinese Medicine (TCM) and TCM e-commerce. He argued that standardization is the primary issue that must be addressed to achieve TCM modernization. Furthermore, as TCM e-commerce remains a hot spot for entrepreneurship, it will fail to achieve qualitative breakthroughs unless it strengthens efforts in product traceability and quality control.
On December 25, China’s first Law of the People’s Republic of China on Traditional Chinese Medicine (hereinafter referred to as the “TCM Law”) was promulgated and will come into force on July 1, 2017. The TCM Law covers multiple aspects, including TCM services, protection and development of TCM, training of TCM professionals, scientific research in TCM, inheritance and cultural dissemination of TCM, safeguard measures, and legal liabilities. It also sets forth clear provisions on establishing and improving the TCM administrative system, protecting intellectual property rights related to TCM, encouraging social forces to establish TCM medical institutions, and implementing whole-process supervision over the quality of Chinese herbal medicines.
Amid Favorable Policies, the Modernization of Traditional Chinese Medicine Is on the AgendaLi Sirui stated in an interview, “Traditional Chinese Medicine (TCM) and its pharmacotherapy are essentially a summary of empirical experience, which is, to some extent, insufficiently standardized. The modernization of TCM involves establishing a systematic theoretical framework and re-evaluating Chinese herbal medicines. This encompasses the entire value chain, from scientific breeding, cultivation, harvesting and storage, distribution, extraction, and formulation, to clinical application.”
In Li Sirui’s view, the modernization of Traditional Chinese Medicine (TCM) is also a crucial step toward its internationalization. “Although the path to TCM standardization is complex, the core competitive advantage lies in the establishment of standards. If we can ensure that every stage—from upstream agricultural cultivation to the design of final clinical protocols—meets Western standards, then it is achievable for TCM to go global and gain recognition from the mainstream medical community.”
The TCM Law also states, “The State supports scientific research and technological development in traditional Chinese medicine (TCM), encourages scientific and technological innovation in TCM, promotes the application of scientific and technological achievements in TCM, protects intellectual property rights in TCM, and enhances the level of science and technology in TCM.” This wording indicates that standardization of TCM is likely to accelerate, and the modernization of TCM has been placed on the agenda.
In the process of modernizing traditional Chinese medicine (TCM), many enterprises have made active attempts, including e-commerce platforms for TCM decoction pieces and proprietary Chinese medicines, information platforms providing online TCM consultations and appointment registration services, and digital management tools for TCM clinics.
In the realm of traditional Chinese medicine (TCM) e-commerce, the TCM Law states: “The State encourages the development of a modern distribution system for TCM medicinal materials, enhances technical standards for packaging and storage, and establishes a traceability system for the circulation of TCM medicinal materials. Pharmaceutical manufacturing enterprises shall establish a system for recording incoming inspection when purchasing TCM medicinal materials. Operators dealing in TCM medicinal materials shall establish systems for incoming inspection as well as purchase and sales records, and clearly indicate the place of origin of the TCM medicinal materials.”
The pain points in TCM e-commerce mentioned in this article include product traceability and quality control. Li Sirui pointed out that e-commerce for Chinese herbal decoction pieces and proprietary Chinese medicines should be viewed separately. From the perspective of Chinese herbal decoction pieces, the supply chain for medicinal materials is lengthy, spanning from basic agricultural cultivation to primary processing and then to informatization, involving many uncontrollable factors. Currently, many industry leaders and capital investors have begun to layout and explore business models on medicinal material e-commerce platforms. However, overall trading volumes remain insufficient, and these business models have not fundamentally disrupted the traditional trading mechanisms of Chinese medicinal materials. Platform activity and user retention still require further improvement.
For e-commerce platforms specializing in traditional Chinese medicinal (TCM) materials to thrive, they must prioritize quality control by addressing key challenges: standardization of TCM materials, authentication of product authenticity, product grading, and traceability of supply chain flows.
“From the perspective of national legislation, health consumer products are subject to both process control and workflow management; therefore, the requirement put forth is a pharmaceutical traceability system. In the realm of traditional Chinese medicine (TCM) e-commerce, the internet itself provides a certain degree of distribution tracking. However, an end-to-end traceability system, spanning from the fields all the way to consumers’ hands, has not yet been established.” Li Sirui believes that the key for TCM e-commerce lies in resolving the issue of full-process traceability.
Li Sirui revealed that Tasly Holding has internally incubated an e-commerce project for traditional Chinese medicinal (TCM) materials, leveraging Tasly’s expertise in TCM raw materials and proprietary Chinese medicines to establish a comprehensive TCM e-commerce mechanism. The project’s core features include a traceability system that maintains complete records from raw material sourcing to consumer purchase, and a testing system. While testing agencies currently exist in the market, there remains a gap in large-scale, low-cost third-party testing services, which this e-commerce platform aims to fill.
“I believe that with the implementation of the TCM Law, quality process control and the establishment of traceability systems for ‘TCM + Internet’ will certainly be further enhanced. Those who strategically position themselves in this area ahead of time will gain a competitive edge in the future market,” Li Sirui concluded.