Anbang raises Tongrentang brand for the second time, and there are hidden worries in the traditional Chinese medicine industry

　　Insurance-funded listed Chinese medicine companies may have sent a clear signal: the Chinese medicine industry has become a new hot spot, but the industry’s hidden concerns should not be underestimated.

　　Tu Youyou won the Nobel Prize, and traditional Chinese medicine has gradually become a hot topic in the capital market. As the battle for insurance investment placards intensified in December, Tongrentang was prominently listed and was cited for the second time.

　　According to Shi Lichen, the head of Beijing Dingchen Pharmaceutical Management Consulting Center, the reason why many insurance companies such as Anbang Insurance and Qianhai Life Insurance favor traditional Chinese medicine is because traditional Chinese medicine can play a great role in preventing diseases. Commercial insurance can design relevant insurance types to organically cooperate with disease prevention, health care and elderly care through the industry. In the future, it is not ruled out that insurance funds will continue to invest in listed companies of traditional Chinese medicine.

　　However, many industry insiders, including Shi Lichen, believe that the development of traditional Chinese medicine does not happen overnight. Judging from the performance in 2015, the overall performance of the 65 A-share Chinese patent medicine companies is not optimistic, and the approval rate for new Chinese medicines is low. For example, in 2014, among the drugs approved for marketing, there were 227 chemical drugs and only 17 traditional Chinese medicines.

　　Anbang raised its name to Tong Ren Tang for the second time

　　Tongrentang announced on the evening of December 22 that as of December 22, 2015, Anbang Insurance had increased its holdings of the company's shares through the Shanghai Stock Exchange stock trading system to a total of 137.1471 million shares, accounting for 10.000002% of the company's total share capital. This is also the second time Anbang Insurance has raised its flag.

　　Two weeks before this announcement, as of December 8, 2015, Anbang Life Insurance, Anbang Property Insurance, Harmony Health Insurance and Anbang Pension Insurance held a total of 68.5736 million shares of Tongrentang, accounting for 5.000005% of the company's total share capital.

　　According to public information statistics, in addition to Tongrentang, Anbao Insurance also launched 11 placards against six companies including Dashang Co., Ltd. (600694.SH) in December, and many companies such as Tongrentang, Dashang Co., Ltd. and Eurasia Group were raised placards twice in January.

　　Anbang has raised Tongrentang twice, and the market generally believes that its investment intentions are more obvious. Although Anbang Health Insurance cannot be ruled out from cooperating with Tongrentang in business in the future, the probability of seeking controlling rights is extremely small, because the actual controlling shareholder of Tongrentang, the Beijing State-owned Assets Supervision and Administration Commission, directly holds 52.45% of the shares of the listed company, and is in an absolute controlling position.

　　Tongrentang told the 21st Century Business Herald reporter that although the Anbang Group is the second largest shareholder of Tongrentang, it has only raised its name in the secondary market, and the two parties have not had further in-depth contact.

　　CICC's research report stated that Anbang's brand-name traditional Chinese medicine value investment has been highlighted. First-line varieties such as Tongrentang Angong Niuhuang Pills have seen steady growth, while second- and third-tier varieties have grown relatively quickly, and are expected to be between 10% and 20%, which will have a greater role in promoting the company's overall revenue growth. Tongrentang's exclusive variety resources are rich, and some large varieties have independent pricing capabilities and strong growth potential. It is expected to maintain steady growth throughout the year.

　　Chen Guo, a strategy researcher at GF Securities, believes that the rise of insurance funds is mainly due to the loose monetary policy of "investment pressure" and "asset shortage". The decline in the yield of fixed income products has forced some insurance funds with greater pressure on the investment side to start paying attention to equity assets. This is the underlying reason for the recent frequent promotion of insurance funds.

　　A senior person in the insurance industry who wished to remain anonymous pointed out that with the rapid growth of premiums in recent years, for example, Harmony Health Insurance Co., Ltd., a subsidiary of Anbang, achieved original insurance premium income of 8.915 billion yuan in the first half of 2015, a year-on-year increase of 59875.72%. Insurance companies are under greater allocation pressure, and universal insurance and other insurance companies require higher yields. Compared with fixed-income and non-standard investments, the advantages of equity assets are gradually emerging.

　　“Moreover, most insurance companies choose to raise their cards at the end of the year, mainly because in the context of the year-end solvency assessment, most of the stocks invested can be included in available-for-sale accounts, which will help increase the fair value of net assets and thus enhance solvency. ”Said the above-mentioned insurance industry veteran.

　　Is Chinese medicine at the forefront?

　　Anbang Insurance raised Tongrentang for the second time. Shi Lichen analyzed that in addition to the good performance of Tongrentang itself, there is another important background, that is, since Tu Youyou won the Nobel Prize, capital's interest in traditional Chinese medicine has increased, and more importantly, my country's first traditional Chinese medicine law is about to be released.

　　Since the State Council's executive meeting passed the "Traditional Chinese Medicine Law (Draft)" (hereinafter referred to as the "Draft") on December 9, the capital market has become more popular, and related traditional Chinese medicine concept stocks have continued to gain strength. Pien Tze Huang (600436.SH), Baiyunshan (6 Leading traditional Chinese medicine stocks such as 00332.SH), Qizheng Tibetan Medicine (002287.SZ), and Dong'e Ejiao (000423.SZ) even reached their daily limit on December 21, the day the "Draft" was submitted to the National People's Congress Standing Committee for review for the first time.

　　In addition to elevating the development of the traditional Chinese medicine industry to the national level, the Draft also clarified for the first time the legal status of traditional Chinese medicine medical services. “Behind the introduction of relevant regulations, there is actually a clear plan for the future development path of traditional Chinese medicine. The Healthy China written into the 13th Five-Year Plan emphasizes "prevention first" and gradually reverses the transformation of the medical model. The "Draft" of the Traditional Chinese Medicine Law clarifies the role of traditional Chinese medicine in the prevention and treatment of major diseases, preventive health services and grassroots service capabilities. ” A brokerage analyst who has been engaged in pharmaceutical research for many years told a reporter from the 21st Century Business Herald.

　　The insurance capital's move is obviously optimistic about the country's future layout in disease prevention and other major health aspects. Shi Lichen also expressed a similar view and pointed out that traditional Chinese medicine can play a big role in the prevention of chronic diseases, cancer and other diseases. Commercial insurance can design relevant insurance products to organically cooperate with disease prevention, health care and elderly care through the industry. In the future, it is not ruled out that insurance funds will continue to invest in listed traditional Chinese medicine companies, such as Conba, Yunnan Baiyao, Tasly, etc.

　　However, many industry insiders, including Shi Lichen and the above-mentioned brokerage analysts, said that although the "Traditional Chinese Medicine Law" will eventually be passed, the development of traditional Chinese medicine will not happen overnight. “At present, the overall R&D investment in the traditional Chinese medicine industry is low, there are few major achievements, and the market attention of listed Chinese patent medicine companies is not high. The current status of the industry cannot be changed in a short period of time. For example, among the drugs approved for marketing in 2014, there were 227 chemical drugs and only 17 traditional Chinese medicines. ”An official from the State Food and Drug Administration told a reporter from the 21st Century Business Herald.

　　Judging from the performance in 2015, the overall performance of the 65 A-share Chinese patent medicine companies (according to Shenwan classification standards) is not optimistic. Especially in the third quarter, their quarter-on-quarter revenue and net profit both experienced negative growth of about 60%.

　　Yu Mingde, president of the China Pharmaceutical Enterprise Management Association, said frankly that as the country's development growth slows down, the next one or two years may be the most difficult period for pharmaceutical companies. The growth rate of the pharmaceutical industry has been declining year by year since 2011 in most years, from 20% to 18%, 13%, 9%, and this year it has dropped to 6.9%.