1. Development history and policy background of the traditional Chinese medicine industry

Traditional Chinese medicine refers to medicines used to prevent and treat diseases under the guidance of traditional Chinese medicine theory. Its sources include botanicals, animal medicines and mineral medicines, of which botanicals account for the vast majority. In addition, there are a large number of herbal medicines used by the people. In addition, in a broad sense, it should also include ethnic medicines with a history of traditional application. The classification of traditional Chinese medicine has different types according to different methods. Generally, natural attribute classification and functional classification are the main ones.

The development history of Chinese medicine in my country can be divided into three stages: ancient Chinese medicine, modern Chinese medicine and modern Chinese medicine. Ancient Chinese medicine refers to the development stage of Chinese medicine from ancient times to the late Qing Dynasty, which is the basis for the formation and development of traditional Chinese medicine. Modern Chinese medicine refers to the development stage of Chinese medicine from the late Qing Dynasty to the eve of the founding of the People's Republic of my country in 1949, which is the process of exchange and integration between traditional Chinese medicine and Western medicine. Modern Chinese medicine refers to the development stage of Chinese medicine from the founding of the People's Republic of my country in 1949 to the present, which is the result of the combination of traditional Chinese medicine and modern technology.

In recent years, the state has attached great importance to the development of the traditional Chinese medicine industry. The promulgation of a series of strategic policies such as the Outline of the Strategic Planning for the Development of Traditional Chinese Medicine (2016-2030), the Outline of the Healthy China Planning (2016-2030), and the Traditional Chinese Medicine Law of the People's Republic of China has laid a good foundation for the sustainable development of the pharmaceutical industry. In addition, the Opinions on Promoting the Inheritance and Innovation of Traditional Chinese Medicine has pointed out the direction for the development of traditional Chinese medicine.

2022On March 3, 2019, the General Office of the State Council issued the "14th Five-Year Plan for the Development of Traditional Chinese Medicine", proposing that by 2025, the health service capacity of traditional Chinese medicine will be significantly enhanced, the policies and systems for the high-quality development of traditional Chinese medicine will be further improved, the revitalization and development of traditional Chinese medicine will achieve positive results, and its unique advantages in the construction of a healthy China will be fully utilized. The high-quality development of the traditional Chinese medicine industry and health service industry has achieved positive results. The quality level of Chinese medicinal materials has continued to improve, the supply guarantee capacity has gradually improved, the registration management of traditional Chinese medicine has been continuously optimized, and the vitality of the creation of new Chinese medicines has been enhanced. Traditional Chinese medicine health care services have developed in an orderly manner, and traditional Chinese medicine and related formats have continued to integrate and develop.

2. Development status and market size of the traditional Chinese medicine industry

2022is the second year of the implementation of the "14th Five-Year Plan" for the development of the pharmaceutical industry. The country has introduced a series of favorable policies to promote the high-quality development of the traditional Chinese medicine industry. The overall scale of China's traditional Chinese medicine market has approached 1 trillion yuan in 2022. Among them, the market scale of Chinese herbal medicines has reached 191.62 billion yuan, a year-on-year increase of 6.59%; the market scale of Chinese patent medicines has reached 79.8 billion yuan, a year-on-year increase of 6%; the market scale of Chinese herbal medicine pieces has reached 180.9 billion yuan, a year-on-year increase of 13.6%. 2023 is a critical year for the implementation of the 14th Five-Year Plan for the Development of the Pharmaceutical Industry. It is also the year when the development of the traditional Chinese medicine industry in the post-epidemic prevention and control era has entered a new era. According to the forecast of Shangpu Consulting, the overall scale of China's traditional Chinese medicine market will stabilize at more than 1 trillion yuan after 2023. Among them, the market scale of Chinese herbal medicines will exceed 200 billion yuan; the market scale of Chinese patent medicines will stabilize at more than 500 billion yuan; and the market scale of Chinese herbal medicine slices will stabilize at more than 300 billion yuan.

From the demand side, the aging of the population, changes in lifestyle, environmental pollution and other factors in my country have led to increasingly prominent problems such as chronic diseases and sub-health, and the demand for traditional Chinese medicine has continued to increase. At the same time, with the impact and prevention and control of the new crown epidemic, traditional Chinese medicine has played an important role in fighting the epidemic, improving immunity, and preventing and treating complications, which has enhanced the public's understanding and trust in traditional Chinese medicine. In addition, with the improvement of national health awareness and living standards, more and more people choose traditional Chinese medicine as one of the means of health care, conditioning and disease prevention.

From the supply side, the Chinese government has given strong support and assistance to the traditional Chinese medicine industry, and has introduced a series of policies and measures to promote the standardization, standardization and modernization of the planting, processing, circulation and quality supervision of Chinese medicinal materials, promote the optimization, simplification and incentives of the research and development, innovation, registration and listing of new Chinese medicines, encourage the integrated development of traditional Chinese medicine and related industries, strengthen international exchanges and cooperation in traditional Chinese medicine, and enhance the international competitiveness and influence of traditional Chinese medicine. At the same time, Chinese traditional medicine companies have also continuously increased their investment in research and development, strengthened technological innovation, improved product quality and brand image, expanded market channels and regional layout, and enhanced their core competitiveness.

III. Competition landscape and regional distribution of the traditional Chinese medicine industry

From the perspective of industry concentration, my country's traditional Chinese medicine industry as a whole shows the characteristics of low concentration, and the market competition is relatively fierce. According to a survey by Shangpu Consulting, in 2022, the competition landscape of my country's traditional Chinese medicine industry has changed. The market share of the top ten companies totaled 18.7%, among which Baiyunshan (600332.SH) continued to lead with a market share of 3.5%, followed by Yunnan Baiyao (000538.SZ) and China Resources Sanjiu (000999.SZ), with market shares of 3.1% and 2.9% respectively. Other companies on the list include Tong Ren Tang (600085.SH), China National Traditional Chinese Medicine (0570.HK), Yiling Pharmaceutical (002603.SZ), Taiji Group (600129.SH), Buchang Pharmaceutical (603858.SH), and Tasly (600535.SH).

From the perspective of regional distribution, my country's traditional Chinese medicine industry is mainly concentrated in provinces such as Guangdong, Zhejiang, Hunan, and Guizhou. According to a survey by Shangpu Consulting, currently registered Chinese medicine companies are mainly distributed in inland areas, such as Anhui, Sichuan, and other provinces and cities. Guangdong, Liaoning, and other provinces and cities follow. From the perspective of the traditional Chinese medicine trading market, the main trading centers are distributed in inland areas such as Anhui, Henan, Sichuan, Jiangxi, and Chongqing, and the regions with more trading types are Hebei, Jiangxi, and Chongqing.

Judging from the regional distribution of listed companies in the traditional Chinese medicine industry, Guangdong has the largest number of listed companies in the traditional Chinese medicine industry, with companies such as Baiyunshan (600332.SH), China Resources Sanjiu (000999.SZ), Jiaying Pharmaceutical (002198.SZ), and Zhongsheng Pharmaceutical (002317.SZ) all located here. Zhejiang, Hunan and Guizhou provinces also have a large number of listed companies in the traditional Chinese medicine industry. Zhejiang has listed companies such as Kangenbei (600572.SH), Zoli Pharmaceutical (300181.SZ), and Shouxiangu (603896.SH); Hunan has listed companies such as Qianjin Pharmaceutical (600479.SH), Fangsheng Pharmaceutical (603998.SH), Tus Pharmaceutical (000590.SZ), and Jiuzhitang (000989.SZ); Guizhou has listed companies such as Youyibai Pharmaceutical (600594.SH), Guizhou Sanli (603439.SH), Xinbang Pharmaceutical (002390.SZ), and Guizhou Bailing (002424.SZ).

IV. Development Trends and Challenges of the Traditional Chinese Medicine Industry

Judging from the development trend, my country's traditional Chinese medicine industry will face the following opportunities and challenges in the future:

Opportunity 1: The traditional Chinese medicine industry has benefited from the continuous support and promotion of national policies. Especially under the influence of the new crown epidemic, traditional Chinese medicine has played an important role in preventing and controlling the epidemic, enhancing the social status and public awareness of traditional Chinese medicine, and creating a good environment and conditions for the development of the traditional Chinese medicine industry. Opportunity 2: The traditional Chinese medicine industry has benefited from the improvement of national health awareness and living standards. More and more people choose traditional Chinese medicine as one of the means of health care, body conditioning and disease prevention. The demand for traditional Chinese medicine is increasing, which has brought broad market space for the development of the traditional Chinese medicine industry.

Opportunity 3: The Chinese medicine industry has benefited from the promotion of technological innovation and industrial integration. With the development and application of modern science and technology, the Chinese medicine industry has achieved regularization, standardization and modernization in the planting, processing, circulation and quality supervision of Chinese medicinal materials, which has improved the quality and benefits of Chinese medicinal materials; at the same time, the Chinese medicine industry has achieved optimization, simplification and incentives in the research and development, innovation, registration and listing of new Chinese medicines, which has enhanced the creation ability and market competitiveness of new Chinese medicines; in addition, the integrated development of the Chinese medicine industry and related industries, such as the combination with the Internet, big data, artificial intelligence and other industries, has brought new impetus and opportunities for the development of the Chinese medicine industry.

Challenge 1: The traditional Chinese medicine industry is facing intensified market competition and increased industry concentration. With the increase in market demand and strengthened policy support, more and more companies are entering the traditional Chinese medicine industry, resulting in more intense market competition. At the same time, with the promotion of technological innovation and industrial integration, some leading enterprises have improved their strength and market share through scale expansion, brand building, channel expansion, etc., resulting in a gradual increase in industry concentration. These have brought great pressure and challenges to small and medium-sized enterprises.

Challenge 2: The Chinese medicine industry faces resource and environmental constraints and protection issues. With population growth, economic development, lifestyle changes and other factors, my country's natural resources and ecological environment are facing severe challenges. On the one hand, some rare and endangered Chinese medicinal materials are decreasing or disappearing, leading to an intensification of the contradiction between supply and demand; on the other hand, some irregular and unreasonable planting, collection, processing and other methods have caused resource waste and environmental pollution, affecting the sustainable use of resources and ecological balance. These have brought great obstacles and risks to the development of the Chinese medicine industry.

Challenge three: The traditional Chinese medicine industry is facing difficulties and problems in inheritance, innovation and internationalization. With the development and application of modern science and technology, the traditional Chinese medicine industry is facing some difficulties and problems in inheritance and innovation. On the one hand, TCM's theoretical system, diagnosis and treatment methods, and drug composition are quite different from those of modern medicine, which makes it difficult for TCM's scientificity, effectiveness, and safety to be fully recognized and proven; on the other hand, TCM's traditional knowledge, experience, and skills are subject to loss, loss, and insufficient protection, which makes it difficult for TCM's cultural connotations, unique advantages, and other aspects to be fully utilized and inherited. At the same time, the traditional Chinese medicine industry also faces some difficulties and problems in internationalization. On the one hand, the international market demand and potential for traditional Chinese medicine are large, but they are constrained by international regulations, standards, trade barriers and other factors, which limit the international market development and expansion of traditional Chinese medicine. On the other hand, the international exchange, cooperation and influence of traditional Chinese medicine are relatively weak, but they are challenged and impacted by international competitors, which threatens the international status and reputation of traditional Chinese medicine.

V. Conclusion

In summary, the analysis of the current market demand of my country's traditional Chinese medicine industry in 2023 shows that my country's traditional Chinese medicine industry has great advantages and development space in terms of policy support, market demand, and technological innovation, but it also faces challenges and problems in market competition, resources and environment, inheritance and innovation, and internationalization. Therefore, it is recommended that my country's traditional Chinese medicine industry seize opportunities while also responding to challenges, strengthening its own construction, enhancing its core competitiveness, and promoting high-quality development. Shangpu Consulting believes that in 2023, China's traditional Chinese medicine industry will show the following development trends:

Shangpu Consulting believes that my country's traditional Chinese medicine industry will show the following development trends in 2023:

The traditional Chinese medicine industry will accelerate the adjustment and optimization and upgrading of the industrial structure, promote the standardization, scale and industrialization of Chinese medicinal materials cultivation; promote the innovation of Chinese patent medicine varieties, quality improvement and brand building; and promote the modernization, intelligence and greening of Chinese herbal medicine processing.

The traditional Chinese medicine industry will strengthen scientific and technological innovation and talent training, promote the integration of traditional Chinese medicine theory with modern technology, and enhance the scientificity, effectiveness and safety of traditional Chinese medicine; promote the construction of the traditional Chinese medicine talent team, and cultivate a group of high-level traditional Chinese medicine experts, scholars and entrepreneurs.

The traditional Chinese medicine industry will strengthen resource and environmental protection and sustainable development, promote the rational use and recycling of traditional Chinese medicine resources, and protect rare and endangered traditional Chinese medicine resources; promote green and clean production in the planting, collection, and processing of traditional Chinese medicines, and reduce resource waste and environmental pollution.