Policy Tailwinds Drive TCM Industry Into Its Golden Era

The “5th International Science and Technology Conference on the Modernization of Traditional Chinese Medicine,” co-hosted by 14 ministries and commissions—including the Ministry of Science and Technology, the Ministry of Industry and Information Technology, the National Health and Family Planning Commission, the China Food and Drug Administration, and the State Administration of Traditional Chinese Medicine—and the People’s Government of Sichuan Province, will be held in Chengdu, Sichuan, on October 24–25, 2016. Preparations for the conference are now in their final countdown. It is reported that the 13th Five-Year Plan for Science and Technology Development of Traditional Chinese Medicine is scheduled to be released at this conference.

13th Five-Year Plan for Science and Technology in Traditional Chinese Medicine to Be Released, Expected to Boost Industry Development

According to the Ministry of Science and Technology, this year’s conference, themed “Technological Innovation in Traditional Chinese Medicine (TCM) and the Big Health Industry,” will host 13 thematic sub-forums focusing on areas such as TCM resources, TCM theories, traditional Chinese drug research and development, acupuncture, preventive treatment of disease, and ethnic medicine. In close alignment with industrial development, the conference will also organize three special events, including innovation and entrepreneurship initiatives in TCM and biopharmaceuticals within the big health sector.

The conference is co-chaired by Academicians Zhang Boli and Chen Kaixian as the Chinese Co-Chairs of the Academic Committee, and by Professor Rudolf Bauer, President of the International Society for Ethnopharmacology, as the Foreign Co-Chair. Distinguished guests from more than 20 countries and regions have been invited, with approximately 750 delegates expected to attend. The conference will provide attendees with the latest information on the development of traditional medicine both domestically and internationally, as well as on the modernization and globalization of Traditional Chinese Medicine (TCM). It aims to establish a platform for strengthening exchanges, enhancing mutual understanding, and fostering collaboration. Planned outcomes include the issuance of the Declaration on International Scientific and Technological Cooperation in TCM (Traditional Medicine), the release of major achievements in TCM modernization over the past 20 years, the publication of the 13th Five-Year Plan for Scientific and Technological Development of TCM, the signing of a batch of cooperation projects in TCM and biomedicine, and the promotion of exchanges and cooperation in TCM and biomedicine to drive the development of these industries.

Fang Wei, an analyst at Guolian Securities, pointed out that China’s traditional Chinese medicine (TCM) industry is benefiting from the dual tailwinds of rigid demand and supportive policies. Meanwhile, driven by new technologies, both innovation and heritage preservation in TCM are ushering in favorable development opportunities. Currently, the valuation of the TCM sector remains below its historical average, and given the positive growth trajectories of certain enterprises, it presents considerable investment value.

A Wave of Policy Releases: Traditional Chinese Medicine Enters Its Golden Age

On August 11, the "13th Five-Year Plan for the Development of Traditional Chinese Medicine" was officially released. This Plan elevates the traditional Chinese medicine (TCM) industry to the status of a "key pillar industry in the national economy" for the first time. The Plan states that during the "12th Five-Year Plan" period, the main business revenue of TCM enterprises above designated size grew from RMB 317.2 billion to RMB 786.7 billion, representing an average annual growth rate of 19.92%. It is projected that during the "13th Five-Year Plan" period, the main business revenue of TCM enterprises above designated size will continue to maintain rapid growth, with the scale of revenue expected to reach RMB 1.5823 trillion by 2020, surpassing the trillion-yuan mark, and achieving an average annual growth rate of 15%.

Industry insiders stated that the release of the "Plan" will incentivize branded traditional Chinese medicine (TCM) enterprises to increase their investment in innovating herbal formulations, dosage forms, and manufacturing processes, thereby opening up new opportunities in the TCM-related health supplement market. Furthermore, the specialization and clinic-based development of the TCM service sector are expected to become major trends.

Coincidentally, on July 29, it was learned from the National Administration of Traditional Chinese Medicine that the National Administration of Traditional Chinese Medicine and the China National Tourism Administration had recently jointly issued the "Notice on Launching the Creation of National Demonstration Zones (Bases and Projects) for Traditional Chinese Medicine Health Tourism." The plan aims to establish 10 national demonstration zones, 100 demonstration bases, and 1,000 demonstration projects across China over the next three years.

In February this year, the State Council issued the Outline of the Strategic Plan for the Development of Traditional Chinese Medicine (TCM), which proposed reforming the qualification access, scope of practice, and practice management systems for TCM medical practitioners. It aims to support qualified TCM professionals, particularly renowned and experienced senior TCM doctors, in establishing TCM outpatient departments and clinics, and encourages pharmaceutical trading enterprises to set up TCM in-clinic physician services.

In late August this year, the draft Traditional Chinese Medicine Law underwent its second review. The draft proposed that for the production of traditional Chinese medicine (TCM) compound preparations derived from ancient classic prescriptions that meet specified conditions, only non-clinical safety study data need to be submitted when applying for drug approval numbers. The specific catalog shall be formulated by the TCM administrative department of the State Council in conjunction with the drug regulatory authority.

Data show that the output value of the Chinese herbal medicine industry reached RMB 164.2 billion by the end of 2014. According to data from Zhongyan Puhua, China’s demand for Chinese herbal medicines was 2.9 million metric tons in 2014 and is projected to reach 6.7 million metric tons by 2020. Industry insiders note that the recent intensive rollout of policies supporting traditional Chinese medicine (TCM) signals that the TCM industry is poised to enter its most favorable period of development.

Source: China Securities Network