Qizheng Tibetan Medicine: Relying on Sustainable Management, We Look Forward to the Next Growth Phase.

　　In mid-August, some representatives from the research group on the “Information Disclosure Standards for Social Responsibility Reports of Chinese Listed Companies” were invited by Qizheng Tibetan Medicine to Linzhi, Tibet—the company’s place of origin. Through on-site visits and discussions, they gained an understanding of the company’s performance in areas such as steady development, innovation, and social responsibility practices.

　　The research group on “Information Disclosure Standards for Social Responsibility Reports of Chinese Listed Companies” was established in the first half of this year under the guidance of the China Securities Regulatory Commission and led by the China Association of Listed Companies, in collaboration with the Shanghai Stock Exchange, the Shenzhen Stock Exchange, the Research Bureau of the State-owned Assets Supervision and Administration Commission, the Legal Department of the All-China Federation of Trade Unions, the Securities Times, and several listed companies. Qizheng Tibetan Medicine is one of the listed company representatives serving on this research group.

　　Linzhi is located in southeastern Tibet, bordering the cities of Chamdo, Nagqu, Lhasa, and Shannan to the north and east, and sharing borders with India and Myanmar to the south and west. With an average elevation of 3,000 meters, Linzhi covers a total area of approximately 117,000 square kilometers and is renowned as a “promising base for the development of Tibetan medicinal herbs.” Qizheng Tibetan Medicine established its presence here in 1995.

　　Supporting Tibet’s “self-sustaining” development

　　Economic transformation

　　Since its successful listing on the SME Board of the Shenzhen Stock Exchange in August 2009, Qizheng Tibetan Medicine’s stock price has risen from its initial offering price of 11.81 yuan per share to a peak of 51 yuan per share over the past six years, thus paving a viable path for small and medium-sized enterprises in ethnic regions to achieve value-based investment in the capital market. According to its latest semi-annual report, the company achieved operating revenue of 451 million yuan and net profit attributable to shareholders of the listed company—after deducting non-recurring items—of 141 million yuan, representing a year-on-year increase of 43.9%. The growth rate of net profit after deducting non-recurring items exceeded market expectations.

　　In addition to the company’s own sustained and stable development, it has also selected a number of public welfare projects in social areas such as culture, healthcare, and education—projects that align with its strategic goals—and is giving back to the local community.

　　In Linzhi, the delegation visited the “Gongbu Manlong Yutuo Tibetan Medicine School,” which was donated and built by the company in 2004. This privately-run secondary vocational school for Tibetan medicine offers free enrollment to impoverished Tibetan teenagers and those with physical disabilities. Since its establishment, more than 50 students from the first two cohorts have gone on to either return to their hometowns to open clinics or join Qizheng, thus becoming the next generation of practitioners in traditional Tibetan medicine. “Students who return home to open clinics typically manage to lead stable and prosperous lives in their local communities, thanks to the skills they’ve acquired,” said a company staff member.

　　As of 2014, the company’s “Hundred Tibetan Medicine Clinics in Tibetan Areas” project had donated and built nine Tibetan medicine clinics in Tibetan regions including Tibet and Qinghai, providing a total of approximately 60,000 patient visits. It is understood that Qizheng Tibetan Medicine provided only initial construction funding and daily operational support for the first two years; by the third year, most of these clinics were able to achieve self-sustaining and healthy operations.

　　Since the 18th National Congress, Tibet’s economic development has been shifting from a “blood-transfusion” model to a “hematopoiesis” model. In its 2015 government work report, the Tibetan government listed Tibetan medicine as one of the key industries it would vigorously develop to boost the prosperity of the local people. The initiatives taken by Qizheng Tibetan Medicine are fully aligned with the nation’s advocacy.

　　Verified by modern medicine

　　Promoting the use of Tibetan medicine through challenge-based approaches

　　“Many people come to Tibet, and their warm-hearted Tibetan friends offer them precious Tibetan medicines. Both sides are extremely happy about it. Yet, once they return home, very few actually take these medicines regularly,” said Lei Jufang, Chairwoman of Qizheng Tibetan Medicine. The main reason many people are reluctant to accept Tibetan medicines is the mistaken belief that the mineral-based ingredients and heavy metals contained within them could harm the human body. Feng Ping, Vice President and Secretary of the Board of Directors, told reporters: “The minerals that people misunderstand as harmful are precisely one of the distinctive features and magical aspects of Tibetan medicine preparation. Take Zhitai—a Tibetan treasure medicine recognized as a national-level intangible cultural heritage—as an example: it’s made from highly toxic mercury, which is processed through an ancient, time-honored method into a non-toxic substance with remarkable therapeutic effects.”

　　Lei Jufang believes that, due to the lack of public awareness about Tibetan medicine, promoting it is actually quite challenging, and using evidence-based medicine as a way forward is an essential path to success.

　　For many years, Qizheng has consistently pursued a path of evidence-based medical research, having published nearly 500 post-marketing studies and establishing an undisputed leading position in the fields of Tibetan medicine and traditional topical pain-relief remedies. As a medication backed by the highest level of evidence-based medical evidence, Qingpeng Ointment has been included in the "Expert Consensus on the Use of Topical Traditional Chinese Medicines for the Treatment of Eczema and Dermatitis" issued by the Chinese Association of Integrated Traditional and Western Medicine—marking the first time Tibetan medicine has been incorporated into an expert consensus in the field of dermatology. Furthermore, Qinghua Ruyi Pills have obtained high-level clinical research evidence, enabling their inclusion in the "Guidelines for the Diagnosis and Treatment of Pelvic Inflammatory Disease" released by the Obstetrics and Gynecology Branch of the Chinese Medical Association—another milestone, as this is the first time Tibetan medicine has been integrated into Western medical diagnostic and treatment guidelines.

　　On the other hand, the Tibetan medicine’s “dark, bulky appearance and hard texture” also add to the difficulty of its acceptance. Qizheng Xiaotong Paste is a testament to technological innovation in Tibetan medicine—a product that uses low-temperature vacuum freeze-drying technology to transform the traditional paste-like black ointment into a modern wet compress patch, enabling it to move from the clinics of veteran Tibetan doctors on the plateau to countless households across inland China. In addition to this patch, to better suit the usage habits of modern consumers, the company has also undertaken extensive efforts in Tibetan medicine production by leveraging innovative technologies.

　　Actively explore the development of the Tibetan medicine market.

　　Achieve a painless life for consumers.

　　Lei Jufang believes that, as a company, the most important thing is to focus on its core business and stick to what it does best. As of 2014, the company had a total of 55 Tibetan medicine product names and 74 approved drug registration numbers, with 12 of these products—such as pain-relieving patches and Bai Mai ointment—being either exclusive varieties or exclusive dosage forms. Among them, two were classified as state-confidential varieties. In the same year, despite the fact that basic drug bidding had not yet been launched in most regions across the country, the company’s sales of basic drugs still achieved rapid growth, with an increase rate of 63%.

　　In 2014, the company partnered with a globally renowned consulting firm to develop a new strategy for the next three years, dubbed “One Axis, Two Wings, and One Support.” This strategy centers on strengthening the core product—pain-relief plaster—and expanding the pain-management product line while accelerating the market development of new products for neurological rehabilitation and gynecological pain.

　　Lei Jufang stated, “It was no easy feat to have Qizheng Pain Relief Plaster included in the National Essential Medicines List. The company will continue to leverage this opportunity presented by the National Essential Medicines List to steadily promote the expansion and coverage of its distribution channels, actively reaching out to township health centers, village clinics, community service stations, and other such outlets. Meanwhile, the company’s Tibetan medicinal products—such as Bai Mai Ointment, Qing Peng Ointment, and Hong Hua Ruyi Pills—have already formed a standardized series of Tibetan medicines tailored to address different patient groups and their respective conditions.”

　　“In particular, the company’s Bai Mai Ointment is the first topical medication in China approved for the treatment of pain caused by neurological disorders and for stroke rehabilitation. It is also the only nationally approved topical drug that promotes recovery of limb function. It was included in the National Medical Insurance Reimbursement Catalogue in 2000. Neurological treatment is considered a high-end medical specialty with certain entry barriers. Bai Mai Ointment has been successively added to the supplementary drug lists of Guangdong Province, Chongqing Municipality, Gansu Province, Qinghai Province, and Zhejiang Province,” said Feng Ping.

　　Advocate for the establishment of a catalog of ethnic medicine resources.

　　Deeply cultivating the sustainable utilization of Tibetan medicinal materials

　　The report of the 18th National Congress of the Communist Party of China reaffirmed its strong support for the development of traditional Chinese medicine and ethnic medicine, thereby creating greater room for the growth of the Tibetan medicine industry. Meanwhile, the scarcity of Tibetan medicinal resources has become a widely recognized issue among the public. Against this backdrop, it has become even more urgent to leverage modern scientific and technological means to enhance the efficiency of resource utilization in modern Tibetan medicine, and to carry out wild conservation and artificial domestication of Tibetan medicinal resources right from the source.

　　“Actually, right now, everyone is still unclear about how we should properly protect Tibetan medicinal herbs,” said Lei Jufang. “For three consecutive years, I’ve been calling at the National People’s Congress and the Tibet Autonomous Region’s Two Sessions to urge the compilation of a catalog of ethnic medicinal resources and their tiered, classified development—but there has yet to be any substantial progress.” The so-called “catalog of ethnic medicinal resources” refers to a systematic survey of ethnic medicinal resources that would enable us to grasp the status of commonly used species as well as rare and endangered ones, and establish standards at the very source of market access. Currently, the United Nations Environment Programme is actively exploring sustainable development of native resources in Nepal, while the Kunming Institute of Botany, Chinese Academy of Sciences, is doing the same in Yunnan Province.

　　Every year, Qizheng Tibetan Medicine invests human and material resources in conducting resource surveys and assessments of Tibetan medicinal materials—primarily those used in the company’s products—as well as Tibetan medicinal materials with development potential and endangered plant resources. These efforts provide a solid foundation for formulating and systematically planning programs aimed at the development and conservation of Tibetan medicinal resources. As of 2014, the company had over 100,000 mu of research bases categorized into three types: conservation, cultivation, and wild restoration. Among these, the Tibetan medicinal material conservation base covered 3,090 mu (with an additional 139 mu currently under construction). In total, the research, conservation, and breeding bases cultivated and raised 31 different species of Tibetan medicinal materials.

　　Enterprise employees share in the fruits of development.

　　Establish a sound corporate governance mechanism.

　　The delegation also visited the Linzhi Qizheng Tibetan Medicine Factory. According to the introduction, people with disabilities make up more than 50% of Linzhi’s total workforce. The factory’s employee dormitory complex consists of townhouses and several small high-rise buildings. Most of the factory’s townhouses have been allocated to employees with disabilities who joined the company early on.

　　“When these villas were built, Engineer Lei had the idea of making early provisions for the retirement security of our employees with disabilities,” said Feng Ping. “Tourism is a key industry in Linzhi, and by the time they retire, they’ll be able to turn these villas into family-run guesthouses to ensure their standard of living.” In the home of a regular employee with a disability who has been serving Qizheng Tibetan Medicine for nearly 19 years, he now earns over 3,000 yuan per month. Located within the company’s dormitory area, he enjoys a cozy four-story villa where his family of four lives happily together.

　　In addition to offering employees generous benefits that come with the company’s growth, the company stated that, where permitted by laws and regulations and when conditions are ripe, it will consider implementing medium- and long-term incentive programs based on actual circumstances, thereby boosting team motivation and fostering the company’s steady development.

　　In 2013, Qizheng Tibetan Medicine completed the separation of its strategic decision-making and strategic execution levels, thereby achieving scientific management. Liu Kailie, the company’s director and president, graduated from the School of Medicine at Fudan University and has served as sales director at several renowned pharmaceutical companies both in China and abroad. “Today, the company’s day-to-day operational matters are entirely handled by the president’s team,” said Feng Ping. “The current senior management team at Qizheng, led by President Liu, has a profound understanding of Tibetan medicine.”

　　Over the past 20 years, Qizheng Tibetan Medicine’s steady development has provided a model for ethnic medicine enterprises—including those specializing in Tibetan medicine—by seamlessly integrating traditional and modern medical systems and successfully entering the mainland Chinese market. At the same time, this journey has demonstrated to the capital market the potential for sustainable growth of such enterprises. 2015 marked the beginning of a new strategic phase, and Qizheng Tibetan Medicine has already made extensive preparations in product R&D, marketing, and talent development. Today, Qizheng is fully poised and ready to usher in its next period of rapid growth.

　　Reporting media: Securities Times China Listed Companies Social Responsibility Research Center

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