Core Insights - Major multinational pharmaceutical companies like Merck, Eli Lilly, and GlaxoSmithKline have withdrawn dozens of original research drugs from registration in China over the past three years due to various reasons including failed negotiations with health insurance, competition from generic drugs, and cost pressures [1] - As of 2024, 161 imported drugs have not been re-registered in China, including both orphan drugs and widely used medications, indicating a significant impact on patient access to essential treatments [1] - The trend of original drug companies abandoning the market has led to a growing reliance on generic drugs, raising concerns among patients regarding the efficacy and safety of these alternatives, particularly for chronic and rare disease patients [1][2] Industry Trends - Over 90% of pharmaceutical companies in China are generic drug manufacturers, with over 95% of the 170,000 drug approvals being for generics, reflecting a strong market presence of generics [2] - Despite the government's efforts to enhance the quality of generics through consistency evaluations, public skepticism remains regarding the efficacy of low-cost generics, leading some patients to seek original drugs through alternative means [2][18] - The increase in cross-border medical travel for drug procurement is becoming more common, particularly among young patients and those with chronic conditions, as they seek original drugs that are no longer available domestically [18][26] Patient Behavior - Patients are increasingly resorting to self-funding for original drugs, traveling abroad, or utilizing gray areas in online healthcare to obtain necessary medications, indicating a shift in patient behavior driven by the unavailability of original drugs [2][19] - Stories of individuals like Sun Ping and Xu Chenggong illustrate the lengths to which patients will go to secure original medications, including studying abroad or traveling to countries like Thailand for treatment [3][13][14] - The reliance on online platforms for obtaining prescriptions and medications is growing, with patients willing to pay significantly more for original drugs due to concerns over the effectiveness of generics [20][24] Regulatory and Market Implications - The withdrawal of original drugs from the market poses challenges for the healthcare system, as patients face limited options and potential health risks associated with switching to generics [1][26] - The increasing trend of cross-border drug purchases raises questions about regulatory compliance and the safety of medications obtained through unofficial channels [12][18] - The healthcare system must address the balance between cost control and ensuring access to effective treatments, as the current situation leads to patients seeking alternatives outside the established healthcare framework [27]

Core Viewpoint - Tonghe Pharmaceutical reported a revenue of 759 million yuan for 2024, a year-on-year increase of 5.1%, and a net profit attributable to shareholders of 107 million yuan, up 0.6% [1] Group 1: Company Performance - The company's operating cash flow net amount reached 285 million yuan, growing by 74.2% [1] - The company focuses on the research, development, production, and sales of chemical raw materials and pharmaceutical intermediates, with a leading production capacity and product quality in China [2][3] - The company has over 600 various types of enamel and metal reaction kettles, with a total volume exceeding 3 million liters [2] Group 2: Market Outlook - The global active pharmaceutical ingredient (API) market is expected to see significant growth, with approximately 300 billion USD worth of original drugs set to lose patent protection from 2019 to 2026, leading to a potential API market increase of nearly 200 billion yuan [2] - China is a major global producer and supplier of APIs, and the implementation of centralized procurement policies is expected to enhance the concentration of pharmaceutical companies and increase the space for import substitution [3] Group 3: Strategic Focus - The company emphasizes focusing on its core business, avoiding diversification, and aims to strengthen its position in the chemical pharmaceutical industry [4] - The average R&D investment over the past three years accounted for 8.34% of sales, with increased focus on various therapeutic areas [4] - The company plans to enhance domestic market development while maintaining a strong export focus, aiming for simultaneous sales in both domestic and international markets [5]