Challenges and Opportunities of 'Internet + Traditional Chinese Medicinal Materials': Insights from Li Sirui of Tasly

Li Sirui

In the development of Traditional Chinese Medicine (TCM), a core issue is the standardization and inheritance of TCM. Since TCM is passed down as an empirical science, the efficiency is relatively low.

When discussing Traditional Chinese Medicine (TCM), Chinese herbal medicine is invariably central. In the process of syndrome differentiation and treatment, traditional TCM relies heavily on TCM decoction pieces. Many Chinese herbal products are manufactured by extracting multiple active components; however, standardization is difficult to control during the extraction of various medicinal materials. This challenge represents a major obstacle hindering the internationalization of TCM.

If traditional Chinese medicine (TCM) is interpreted according to Western medical standards, corresponding standards should be established across the entire industrial chain, including cultivation, processing, and extraction by pharmaceutical manufacturers. Through more than 20 years of development and exploration, Tasly has accumulated extensive experience in standardizing the global TCM industrial chain.

Li Sirui stated that a major challenge in Tasly’s internationalization efforts stems from the standardization of upstream Chinese herbal materials. While the process from extraction to formulation can be standardized through advanced equipment and technological innovation—enabling Compound Danshen Dripping Pills to reach Phase III clinical trials under the U.S. FDA—the persistent difficulty in standardizing upstream raw herbs remains unresolved. This issue also poses a significant barrier to expanding the market for Chinese herbal materials via e-commerce models.

Li Sirui stated that demand for Traditional Chinese Medicine (TCM) is actually increasing overseas. In particular, there is substantial demand for botanical extracts, TCM decoction pieces, and TCM granules in Chinese communities across Southeast Asia, as well as in Europe and Australia.

Over the past two years, Tasly has invested in a general practitioner (GP) clinic group in Australia. “A key demand from this GP clinic group in our collaboration is for Tasly to introduce traditional Chinese medicine (TCM) diagnostic and therapeutic methods to Australia, thereby establishing an integrated model of TCM and Western medicine.”

Second, from the perspective of supply and demand, China’s share in the global market for traditional Chinese medicine (TCM) material exports remains relatively low. This is partly because overseas markets impose stringent quality standards on medicinal materials, and partly because many endangered medicinal species are difficult to cultivate at scale. Technological breakthroughs are needed to enable artificial cultivation of these materials.

Therefore, Li Sirui believes that, in the long term, Chinese herbal medicines are in a state of supply-demand imbalance, with supply failing to keep pace with growing demand.

However, if the issues of standardization and quality control of Chinese herbal medicines can be resolved, ensuring clear and reliable sourcing throughout the distribution process, and if pricing power for these products can be secured in the international market, domestic Chinese herbal medicines are poised to gain a significant foothold globally.

Furthermore, as domestic enterprises have yet to establish their own marketing channels in overseas markets, expanding cross-border e-commerce for Chinese herbal medicine decoction pieces via the Internet is also an emerging trend.

Due to information asymmetry, farmers cultivating Chinese herbal medicines struggle to generate profits. Although the supply chain—from trading and processing to final sales—spans multiple sectors including agriculture, industry, and information technology, the traditional market model for Chinese herbal medicines has remained largely unchanged despite being passed down over millennia.

Furthermore, the trade in medicinal herbs operates within a circle of acquaintances, where distributors build their marketing networks through personal connections—a form of relationship-based economy that amounts to monopolistic practices. Meanwhile, farmers lack access to comprehensive information on end-user demand, resulting in severe short-term imbalances between supply and demand, which cause drastic price fluctuations for certain herbs.

In the entire traditional Chinese medicine (TCM) materials trading market, TCM materials reach end users through multiple layers of resale. Of these, 60% are supplied to pharmaceutical manufacturers for the production of TCM formulations or health supplements; 10% are used for health preservation or dietary purposes, entering retail food outlets or pharmacies; and the remaining 30% are distributed to hospitals.

So, can the internet resolve the many issues inherent in the traditional trading model for Chinese herbal medicines?

There are many B2B e-commerce platforms for traditional Chinese medicinal (TCM) materials, such as TCMCn.com, which attract customers and facilitate transactions by further categorizing integrated information. However, while these platforms exhibit high user activity, their conversion rates remain low. Moreover, although 60% of TCM materials are supplied to pharmaceutical and health supplement manufacturers, the primary online purchasers are individual buyers, small hospitals, or pharmacies.

To secure key accounts, it is essential to address the standardization of Chinese herbal medicines, as well as issues concerning product authenticity and grading. These are the critical areas that current B2B e-commerce platforms for Chinese herbal medicines must break through.

Tasly’s strength lies in the internationalization of traditional Chinese medicine, coupled with a barrier to entry established through standard-setting.

In addition to the U.S. regulatory filing for Compound Danshen Dripping Pills, Tasly has actually been selling products overseas for more than a decade, having started its international sales ten years ago, thereby accumulating valuable experience. Consequently, in developing its own e-commerce platform, Tasly focuses on two key areas: First, it addresses core issues for industrial clients directly; for small-scale retailers, it provides solutions through platform infrastructure, although the resulting traffic and conversion rates are expected to remain relatively niche. Tasly’s Anguo Digital Medicine Capital platform is a B2B e-commerce platform for traditional Chinese medicinal materials, leveraging offline active users from the Anguo herbal market to implement an O2O (Online-to-Offline) model. Second, as an online B2B platform, it connects industrial clients with overseas traders to facilitate cross-border e-commerce.

Overall, the characteristics of traditional Chinese medicine (TCM) material trading include a long value chain, cross-industry involvement, low standardization, and information opacity. Therefore, B2B e-commerce platforms must prioritize informatization and digitalization. The ability to provide value-added services—such as industry insights, cultivation data, and price guidance for TCM materials to buyers and sellers on the platform, as well as future price forecasting for specific product categories—will significantly enhance the platform’s activity and effectiveness.

Furthermore, the trade of traditional Chinese medicinal materials suffers from relatively low capital turnover efficiency, which has constrained the growth of many herbal distributors. Therefore, B2B platforms can leverage big data analytics to alleviate suppliers’ financial pressures.

Li Sirui stated that Tasly’s establishment of a B2B e-commerce platform for Chinese herbal medicines aims to facilitate the global expansion of domestic products and drive the industry’s transformation from traditional agriculture toward scientific and digital modernization.