Hong Kong stock market concept tracking | Eight departments issued documents! Promoting the high-quality development of the traditional Chinese medicine industry, the traditional Chinese medicine industry welcomes a wave of performance recovery (with concept stocks)

On February 5, the Ministry of Industry and Information Technology, among other eight departments, jointly issued the "Implementation Plan for the High-Quality Development of Traditional Chinese Medicine Industry (2026-2030)", setting a "roadmap" for the development of the Chinese medicine industry for the next five years from a full industry chain perspective. The plan sets quantitative targets around dimensions such as raw material supply, innovation capability, and manufacturing level: by 2030, cultivate 60 high-standard traditional Chinese medicine raw material production bases, establish 5 traditional Chinese medicine industry innovation centers, nurture 10 major varieties of traditional Chinese medicinal products, promote the transformation of traditional Chinese medicine preparations in a number of medical institutions into innovative Chinese medicines, formulate or revise 10 industry standards related to digital technology in the traditional Chinese medicine industry, release 20 typical cases of digital transformation and upgrading, establish 20 smart factories, and nurture 10 green factories. The plan also mentions, on the raw material front, the implementation of the "quality improvement and stable supply action", aiming not only to establish high-standard production bases but also to promote the fresh-cut processing technology of traditional Chinese medicinal materials, addressing the problem of "small, scattered, and chaotic" initial processing in production areas. In terms of innovation, the plan proposes the construction of a knowledge map of classic formulas and promotes the transformation of formulations in medical institutions, solving the problem of long development cycles and high costs in the research and development of new traditional Chinese medicines. In terms of enhancing manufacturing capabilities, the plan specifically speeds up the formulation of national standards for the processing of traditional Chinese medicinal herbs into pieces and the formulation of granules, while also promoting the construction of smart factories to achieve full-process data monitoring from raw material traceability to product release. From a performance perspective, listed companies in the traditional Chinese medicinal products industry have seen a long-awaited recovery in their performances. According to the 2025 performance report released by Jiangzhong Pharmaceutical, the company achieved a net profit attributable to shareholders of 906 million yuan for the full year, an increase of 14.96% year-on-year, surpassing market expectations. Shijiazhuang Yiling Pharmaceutical achieved a major turnaround in performance in 2025, with an estimated net profit attributable to shareholders of 1.2 billion to 1.3 billion yuan for the full year, turning around from a loss of 725 million yuan in 2024, with the highest profit increase reaching 279.43%. Teyi Pharmaceutical Group is expected to achieve a net profit attributable to shareholders of 70 to 90 million yuan in 2025, a year-on-year increase of 241.55% to 339.13%, with a higher increase in non-GAAP net profit of 263.83% to 371.64%. The sales recovery of its core product Zhi Ke Bao tablets has become the core engine driving performance growth, with sales of the product reaching 435 million tablets in the first three quarters of 2025, representing a recovery to 64% of the sales in the same period in 2023. Analysis suggests that since 2025, the traditional Chinese medicine industry has seen a triple boost in costs, policies, and demand, becoming the underlying support for enterprises' profit recovery. In terms of costs, the comprehensive price index of traditional Chinese medicinal materials fell from nearly 3600 points in July 2024 to 2556 points in January 2026, with prices of over 75% of traditional Chinese medicinal material varieties declining, entering a downward trend for raw material costs that make up 60%-70% of production costs of traditional Chinese medicinal products, resulting in a significant recovery in gross profit margins for leading enterprises. Looking ahead to 2026, the domestic traditional Chinese medicinal material market is expected to see a turnaround driven by three factors: policy guidance, demand upgrades, and industrial transformation. The "Special Regulations for Supervision and Management of Traditional Chinese Medicine Production" issued by the National Medical Products Administration will officially come into effect on March 1, 2026, forming a "three-in-one" regulatory framework together with the previously implemented "Special Regulations for Traditional Chinese Medicine Registration Management" and "Special Regulations for Traditional Chinese Medicine Standards Management", further promoting the standardization and high-quality development of the industry. Structural differentiation will become the core feature of the traditional Chinese medicinal material market in 2026. On the one hand, the issue of depletion of wild traditional Chinese medicinal resources is becoming increasingly prominent, leading to the rising value of cultivated varieties, such as shortages in supply and demand for certain varieties like North Bupleurum and Guang Fang Feng, which are expected to steadily increase in price. On the other hand, against the backdrop of upgraded health consumption, the demand for varieties of medicinal and edible origin is showing a resilient growth trend, with application scenarios for varieties like goji berries and astragalus expanding continuously, driving an increase in demand for raw materials. Sinolink indicates that the traditional Chinese medicine industry has gone through continuous destocking and digestion of performance bases since 2024-2025, with the expiration of the high peak shipment period, combined with a significant increase in flu incidence rates in the fourth quarter of 2025, which is expected to further drive the digestion of channel inventory. Outside hospitals, the post-performance of OTC traditional Chinese medicinal products related to flu is expected to improve, and companies with light inventory pressures are expected to return to a normal shipping pace, with performance showing signs of an early rebound. Within hospitals, the National Essential Medicine Catalog is expected to be updated, and with reference to the subsequent performance of exclusive traditional Chinese medicinal products added to the 2018 version of the national Essential Medicine Catalog, companies with potential for inclusion in the new version of the Essential Medicine Catalog are worth paying attention to. EB SECURITIES Pharmaceuticals predicts that the investment logic for the traditional Chinese medicine industry in 2026 will shift from "cost recovery" to "value growth", driven by the continued release of policy dividends and the improvement in operational efficiency of enterprises, leading to a steady improvement in industry profitability. With the acceleration of the internationalization of traditional Chinese medicine products as part of the "go-global" strategy for traditional Chinese medicine, companies with advantages in products and capabilities for internationalization are expected to gain new growth opportunities in the global market. Related concept stocks: TRAD CHI MED(00570): TRAD CHI MED gathers the essence of traditional Chinese medicine, inheriting ancient brands such as "Liang Zhonghong Laoguan", "Feng Liexing", "Tongjitang", "Yuanyilin", and owning the Chinese famous brands of "Feng Liexing", "Anning", and "Tongjitang", among others. TONGRENTANGCM(03613): Beijing Tongrentang Group is expected to add a new A-share listed company. Cachet Pharmaceutical recently announced that on February 2, the company's shareholders signed a share transfer agreement with China Beijing Tongrentang (Group) Co., Ltd., agreeing to transfer the shares held by Guangda Shiye and Guangda Health to Beijing Tongrentang Group for 1.46 billion yuan. After this transaction is completed, the controlling shareholder of Cachet Pharmaceutical will change to Beijing Tongrentang Group, and the actual controller will change to Beijing State-owned Assets Supervision and Administration Commission. GUSHENGTANG(02273): On January 23, GUSHENGTANG officially launched the "GUSHENGTANG Traditional Chinese Medicine Education and Research Project" with Nanyang Technological University in Singapore, aiming to promote the development of traditional Chinese medicine talent training and evidence-based research in Singapore, and support the construction of the local medical ecosystem. This cooperation marks the systematic formation of GUSHENGTANG's "academic + technology + capital" three-dimensional go-global model, forming a mutually supportive strategic triangle. Guangzhou Baiyunshan Pharmaceutical Holdings(00874): In 2025, Guangzhou Baiyunshan Pharmaceutical Holdings increased its investment in research and development, expanded its research and development pipeline layout, tackled key core technologies, and saw periodic achievements emerge continuously. In the field of developing innovative drugs: the company's pipeline covers traditional Chinese medicines such as Yin-Nourishing Liver-Soothing Granules for the treatment of early ovarian insufficiency, Bone Numbness Granules for the treatment of osteoarthritis, and LBZ-18 for the treatment of fatigue caused by cancer. The company's Amoxicillin and Clavulanate Potassium Dry Syrup was awarded in the 11th batch of national centralized procurement.