With steadily growing performance, Qizheng Tibetan Medicine is forging its own unique path to achieve greater strength and scale.

　　As China’s largest Tibetan medicine manufacturer, Qizheng Tibetan Medicine has seen its net profit rise from 161 million yuan in 2009 to 290 million yuan in 2016 since its debut on the capital market on August 28, 2009—a growth of over 80% over the eight-year period. By integrating Tibetan medicine with modern medical practices, Qizheng Tibetan Medicine has continued to grow and strengthen its position. Liu Kaili, the company’s president, stated that Qizheng Tibetan Medicine will further enhance its marketing management, accelerate the launch of new products, and cultivate new growth areas for the business.

　　Performance is on a steady growth trajectory.

　　In the first half of this year, Qizheng Tibetan Medicine achieved operating revenue of 458 million yuan, an increase of 4.19% over the same period last year. Net profit attributable to shareholders of the listed company reached 169.6491 million yuan, up 5.2% from the same period last year. Meanwhile, in its interim report, the company disclosed its performance forecast for the first three quarters: it expects net profit attributable to shareholders of the listed company for the period from January to September to range between 201 million and 261 million yuan, representing a year-on-year growth rate of 0% to 30%. Regarding the reasons for the performance growth, the company stated that it was mainly driven by the continued and stable growth of its pharmaceutical business.

　　In recent years, Qizheng Tibetan Medicine has been on a steady growth trajectory. Regarding the driving forces behind the company’s performance growth, Liu Kailie believes they mainly come from two aspects: “First, by adopting refined marketing, academic marketing, and brand marketing strategies, we’ve deepened our presence in lower-tier channels, steadily boosting the pharmaceutical business across hospital, primary-care, and pharmacy channels. Second, we’ve focused on Tibetan medicine, launching new products centered on areas such as pain management related to the musculoskeletal system, neurological rehabilitation, gynecology, and digestion, while intensifying efforts to promote these new products and cultivating new growth drivers.”

　　Liu Kailie is highly optimistic about the future of Tibetan medicine. He stated: “Although the current pharmaceutical environment faces certain pressures, both national and local policies are actively supportive of the development of the Tibetan medicine industry. In this period of profound market transformation, we remain firmly confident in the Tibetan medicine sector. Traditional medicine—including Tibetan medicine—is a crystallization of human wisdom that can offer future generations an even richer array of therapeutic options. It deserves to be preserved and promoted. We must adhere strictly to the principles of drawing on classical texts, basing ourselves on clinical practice, standardizing diagnosis and treatment, embracing technological innovation, and enhancing therapeutic efficacy—while relentlessly seeking the unique clinical value of ethnic medicines.”

　　Regarding the impact of the medical insurance policy—the issue of greatest concern to the market—Liu Kailie frankly admitted that, in the short term, the policy has placed certain pressure on the company. However, in the long run, it is beneficial. To respond to these changes in medical insurance policy, the company has taken proactive measures: fully leveraging its brand influence and the advantages of its exclusive products, further exploring the clinical value of its core products, intensifying brand marketing efforts, revitalizing the team through reforms in marketing mechanisms, and expanding market penetration at the grassroots level by deepening distribution channels, thereby boosting sales in hospitals, essential drug programs, and retail outlets.

　　The integrated pain management solution drives end-consumer demand.

　　The Qizheng topical medication series is supported by a unique theoretical framework and extensive practical experience in external treatment. It features potent medicinal ingredients and a distinctive formulation process, making it a comprehensive pain-management solution throughout the entire treatment process. Liu Kailie stated that the company has expanded from pain-relief patches into the integrated pain management field and has achieved remarkable progress in this area.

　　“In the area of chronic pain, Western medicine offers solutions, but these tend to relapse easily. In contrast, Tibetan medicine can both reduce pain and minimize recurrence. Through this kind of research, we can systematically integrate Tibetan medicine with modern medicine to provide comprehensive treatment plans,” said Liu Kailie.

　　Shifting from solely manufacturing and selling pharmaceutical products to offering comprehensive health management and chronic disease care, Qizheng Tibetan Medicine is dedicated to providing consumers with differentiated solutions. Through free medical consultations, lectures, and other initiatives, the company is fully committed to raising consumer awareness about chronic pain, promoting effective management of chronic pain, and educating consumers on self-medication practices.

　　In terms of market expansion, the company primarily adopts a self-operated sales model and boasts an in-house marketing team of over a thousand members. Through specialized academic promotion and brand-building strategies, the company implements differentiated positioning of brands and products tailored to segmented markets around the concept of “integrated pain management.” In the hospital market, on the one hand, the company adheres to a brand-driven marketing strategy, providing customers with superior clinical solutions; on the other hand, it intensifies efforts to launch new products, achieving rapid market penetration. In the essential medicines market, the company continues to expand its terminal coverage across all products. Leveraging the brand advantage established by its pain-relief patches in major hospitals, the company is poised to capture patient referrals resulting from the tiered healthcare system, thereby further boosting sales growth. In the retail market, while consolidating its leading position in the pain-relief patch segment, the company is also expanding its integrated pain-management product portfolio and rapidly increasing coverage of second-tier products.

　　BOC International Securities pointed out that, as the integrated pain management program is implemented, the company is expected to enter a new stage of development.

　　In addition to its integrated pain management solutions, Qizheng Tibetan Medicine has also made good progress in new drug clinical research. As of the end of 2016, Cuitang Granules had completed Phase II clinical trials for cold and influenza and were now initiating Phase III clinical trials. Zhengru Patch had completed its Phase II clinical trial. Xiasadesi Capsules are proceeding as planned through Phase II clinical trials, while Ethane Selenin Dispersible Tablets, based on the clinical approval issued by the National Medical Products Administration, are undergoing further refinement of their Phase I clinical trials. The Phase IIa clinical study of Xiaotong Aerosol for the treatment of acute sprains and strains is continuing.

　　Covering multiple specialty therapeutic areas of Tibetan medicine

　　Since its inception, Qizheng Tibetan Medicine has been committed to promoting and developing traditional Tibetan medicine through modern pharmaceutical technologies. It is the only “first batch of national innovative enterprises” in the Tibetan medicine industry. By choosing to integrate Tibetan medicine with modern pharmaceutical practices, Qizheng Tibetan Medicine has forged a unique path, bringing Tibetan medicine into countless households.

　　In Liu Kailie’s view, the integration of Tibetan medicine with modern medicine is a necessity for the development of Tibetan medicine: “Tibetan medicine has its own unique theories and medical system, and for thousands of years it has played an important role in safeguarding the health of people in Tibetan areas. However, today, as we face a consumer base in mainland China that is well-versed in both traditional Chinese medicine and Western medicine but knows very little about Tibetan medicine, the question is how to integrate Tibetan medicine’s medical system with those of TCM and Western medicine, creating synergies and complementary advantages, and truly enabling Tibetan medicine to become fully integrated into the modern medical system.” This is a question that Qizheng Tibetan Medicine has been pondering continuously.

　　“Our solution is to conduct modern medical research and tap into the clinical therapeutic value. First, the research findings can be published in high-level journals, thereby demonstrating the scientific validity of Tibetan medicine. Second, we will translate these research outcomes into clinical treatments. Right now, the country is promoting the rational use of medications, and we are providing clinical value to treatment protocols,” said Liu Kailie.

　　In 2015, Qizheng Tibetan Medicine introduced its “One Axis, Two Wings, One Support” strategy. The “One Axis” refers to strengthening the Pain Relief Patch, driving its sustained growth through a three-pronged approach involving major hospitals, essential medicines, and retail channels. The “Two Wings” involve, on the one hand, expanding the pain-management product line to provide patients with comprehensive, integrated pain solutions; and on the other hand, accelerating the market development of new products in neurorehabilitation and gynecological pain management, thereby cultivating new strategic blockbuster products and speeding up the transition from a single-product focus to a diversified portfolio with multiple product lines and tiers, ultimately creating a more rational product structure. The “One Support” involves building capabilities in data information, operations, talent, and mechanisms to enhance efficiency, boost competence, and fuel motivation, thus establishing a highly efficient, collaborative, and dynamic organizational model characterized by “continuous activation, steady momentum, and proactive performance at every level.”

　　2017 marked the concluding year of the “One Axis, Two Wings, One Support” strategy. Speaking about the work done over these three years, Liu Kailie believes that the company has already achieved its expected goals. Currently, the company boasts a total of 55 Tibetan medicine product names and 72 approved drug registration numbers, centered around 12 exclusive varieties or exclusive dosage forms—including pain-relieving patches and Bai Mai ointment. Among these, 9 are OTC products and 2 are nationally classified as confidential medicines, covering multiple specialty therapeutic areas in Tibetan medicine such as orthopedics, neurology, gynecology, and gastroenterology.

　　Securities firms are uniformly optimistic about Qizheng Tibetan Medicine, particularly excited about its potential for external mergers and acquisitions. In September 2015, Qizheng Tibetan Medicine announced that the company plans to invest 200 million yuan together with Xizang Qunying Investment Management Partnership (Limited Partnership) to establish the Xizang Qunying Investment Fund Partnership (Limited Partnership). Additionally, the company intends to invest 2 million yuan to become a limited partner in Qunying Investment. The Qunying Fund will prioritize serving Qizheng Tibetan Medicine’s industrial integration efforts by acquiring and restructuring target companies within Qizheng Tibetan Medicine’s business sectors that demonstrate strong growth potential and strategic value, thereby helping the company consolidate its existing industry position and competitive advantages.

　　Dongwu Securities believes that the establishment of the M&A fund reflects the company’s strong expectations for external expansion, which will help consolidate its current industry position and competitive advantages, with promising prospects for future growth.

　　Reporting media: Securities Daily

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