中药行业四季度策略：四季度关注支付端变化，长期关注三大主线

Investment Rating - The industry rating is maintained at "Overweight" [16] Core Viewpoints - The Chinese medicine industry is experiencing short-term pressure on performance due to multiple factors, including rising raw material prices, high base effects, and weak consumer demand [13][35] - The Chinese medicine sector has undergone significant adjustments, with valuations at historical lows, providing a high margin of safety for investors [14] - The report emphasizes the importance of changes in payment mechanisms and ongoing policy support for the growth of the Chinese medicine industry [15] Summary by Sections 1. Performance Pressure in Q2 - The overall performance of the pharmaceutical industry continues to decline, with a 1.43% decrease in revenue and a 9.79% drop in net profit for H1 2024 [25] - In Q2 2024, the pharmaceutical industry reported a revenue of 623.26 billion, a 3.85% year-on-year increase, but net profit fell by 7.7% [25] - The Chinese medicine sector's performance in Q2 was below market expectations, with both revenue and profit showing increased declines [35] 2. Valuation and Adjustment - As of October 22, 2024, the Chinese medicine sector's PE ratio is approximately 27.59 times, and PB ratio is about 2.44 times, indicating a significant adjustment and low historical valuation [14] - The Chinese medicine sector has underperformed the CSI 300 index by 20.41 percentage points, but has outperformed the pharmaceutical biotechnology sector by 4.91 percentage points [14] 3. Focus on Payment Mechanisms and Long-term Strategies - The report highlights the ongoing policy support for traditional Chinese medicine, including the inclusion of more Chinese patent medicines and decoction pieces into medical insurance payment systems [10][15] - Three main investment themes are identified: innovation in Chinese medicine, brand strength in traditional Chinese medicine, and the benefits of state-owned enterprise reforms [18][19] 4. Market Dynamics and Company Performance - The top 10 companies in the Chinese medicine sector for H1 2024 are primarily focused on brand and innovative medicines, with seven companies reporting revenues exceeding 5 billion [49] - The report notes that companies with strong research capabilities and innovative products are likely to benefit from upcoming changes in the medical insurance directory [18][49]