TCM Formula Granules

The Group is the only modern Chinese medicine company that fully applies Chinese medicine injection production technology (which represents the highest technical merit of modern TCM) and the related quality control philosophy, to the research and development and production processes of TCM formula granules. Leveraging state-of-the-art production techniques, the Group ensures a consistent material basis of our TCM formula granules.

During 2020, sales of the TCM formula granules increased by 10.8% as compared to last year, constituting for about 20.9% of total turnover of the Group. Apart from the impact of the pandemic, the main reason why their sales did not achieve a higher growth in 2020 was due to the reduction in ex-factory prices of TCM formula granules upon negotiations between the Group and medical insurance regulators at the end of 2019. The adjusted ex-factory prices of the Group’s TCM formula granules then became a lot closer to those of Chinese medicine decoctions sold at hospitals. Patients have then become more incline to take TCM formula granules, resulting in greater demand and boosting market competitiveness.

In February 2021, four ministries including the National Medical Product Administration jointly issued the “Announcements on Ending the Pilot Trial on TCM Formula Granules” to regulate the production of TCM formula granules and to guide the healthy development of the industry for better fulfillment of clinical needs. This new policy has brought about the opening of the nationwide TCM formula granule market by officially allowing manufacturers to sell TCM formula granules across provinces after filing with the respective local provincial drug regulatory authorities upon the effective date of 1 November 2021. This policy has served to affirm the direction and opportunity of development for TCM formula granules.

The Group is now expediting the strategic positioning of nationwide market, accelerating the registration of our TCM formula granules with targeted provinces while formulating a nationwide grass-root market development blueprint. The Group is also accelerating our market development in Yunnan and further expanding the production capacity of TCM formula granules with an expected annual production value to reach RMB4 billion upon completion, adding stronger momentum to the strategic positioning of the Group’s TCM formula granules.