The rich tapestry of Traditional Chinese Medicine (TCM) not only serves as a cultural cornerstone in China but also poses unique challenges and opportunities for enterprise innovation in this field. As businesses delve into the complexities of TCM, the necessity for creative transformation and innovative growth emerges as a key determinant of success. On December 11, 2023, at a forum focused on the heritage and innovation of TCM, Wu Rui, the Secretary of the Board of Shijiazhuang Yiling Pharmaceutical Co., Ltd. (002603.SZ), shared insights on the innovative future of traditional medicine.

Wu emphasized that the foundation of TCM innovation lies within theoretical advancements. These foundational theories are not just academic; they directly inform the development of new prescriptions and the refinement of production processes in research and development phases. With the backdrop of a comprehensive understanding of the concept of "meridian disease," Yiling Pharmaceutical has made strides in clinical drug development targeting major illnesses. As of now, the company has received approval for fourteen innovative TCM formulations that address cardiovascular, respiratory, and endocrine disorders, among others, while also exploring treatment avenues for other diseases.

However, the journey isn't devoid of hurdles. Wu acknowledged that the TCM industry has experienced fluctuations over the past two to three years, necessitating time for stakeholders across the industrial chain to adapt. Both hospital-prescribed medications and consumer-directed products outside medical facilities pose specific challenges to Yiling Pharmaceutical. In response, the company has recalibrated its marketing strategies for hospital markets and developed a multi-faceted branding approach for external markets, encompassing academic and societal dimensions. It is crucial to recognize that pharmaceuticals and general consumer products differ fundamentally; thus, regardless of market upheavals, the efficacy of the product remains the cornerstone for thriving in the industry. Therefore, businesses must focus on solidifying their academic underpinnings and bolstering their scientific evidence to support clinical marketing efforts.

From the perspective of operational excellence, Wu pointed out that fluctuations in raw material costs, particularly in TCM herbs, can significantly impact profit margins. Consequently, firms must bolster management capabilities during these decisions, such as expanding their production facilities and ensuring the consistent quality of raw materials while minimizing procurement costs. The ensuing efficiency improvements, paired with robust academic work, can lead to a higher caliber of product management and delivery in the long run.

Developing innovative TCM formulations can be resource-intensive. Wu highlighted the company's substantial investments in evidence-based medicine research—a critical aspect of modern pharmaceutical science. Yiling Pharmaceutical consistently engages in financing projects related to innovative TCM drug research. As the landscape for TCM evolves, the government is increasingly supportive of innovations through policy frameworks. Yiling advocates that the genesis of these innovations should stem from clinical practice. Many new prescriptions have been rigorously vetted over extended periods at leading hospitals, aligning with the national new drug review strategy that advocates for a model of “theoretical foundation + human experience + clinical trials.” This ethos respects the empirical and objective principles guiding TCM's practice and research.

One pressing concern in the industry revolves around the establishment of evidence from clinical trials—an issue that many TCM enterprises grapple with. Wu explained that Western medical specialists dominate around 80% of resources; thus, for TCM products to compete effectively, it is essential that these experts recognize and advocate for the efficacy of TCM therapies to their patients. Unfortunately, many Western practitioners lack familiarity with TCM ingredients and their synergistic effects in formulations. However, they acknowledge experimental data supporting efficacy. Since 1995, Yiling has been conducting evidence-based trials on its flagship products, utilizing well-regarded, rigorous methodologies to validate the efficacy of TCM treatments, while also providing TCM specialists with insights into formulation characteristics and theories that underlie them.

After years of diligent effort, Yiling has executed over forty evidence-based trials and established a "theory, clinical application, new drug, experimentation, and evidence" development model. This innovative framework creates new pathways to address the challenges faced by many in the TCM industry. Wu concluded that the approval of a new product is not merely the culmination of efforts but the beginning of ongoing responsibilities, making the challenge of accumulating precise and thorough experimental data even more vital. Such data helps clinical practitioners meet patient needs more effectively, forming the cornerstone of strong and sustainable product performance.

Looking ahead, Wu remains cautiously optimistic about the industry’s trajectory despite the challenges. He noted that industry insiders have felt these difficulties acutely and expressed confidence that in the coming year, the TCM sector will implement timely adjustments. By aligning industry-wide efforts with the realities of trends in development and individual corporate strategies, the TCM industry stands poised for a stronger position by 2025.