1. Cycles exist objectively, but they are not impossible to cross
In recent years, the concept we first used was the "new normal". The term "new normal" actually lowers social expectations in advance.
Later, many experts introduced the concept of "cycle" with the intention of incorporating the current economic situation into a historical cycle.
Admittedly, economic development has cycles, and even the spread of viruses has cycles. However, "today's economic and social conditions should mainly be the result of active choices made by decision-makers. Cyclical factors have an effect but are not decisive, or the adjustment of development direction "encounters" cyclical factors"-excerpted from Du Chen's "Our Times and Us in the Times".

2. The current difficulties may only be the initial stage
The "new cycle" has just begun, and we must be prepared for long-term hard work.
Combining data from the National Bureau of Statistics, Minnet, IQVIA, etc., the average annual compound growth rate of China's pharmaceutical market in the past 20 years has been as high as 15%, and the average annual growth rate of the pharmaceutical market in the next five years will be 3.7%.
It is predicted that by 2029, the in-hospital market will grow to 1.6 trillion yuan at a compound growth rate of 2-3%, and the following changes will occur in structure:

Chinese medicine injections show negative growth, while oral cardiovascular, orthopedic, nephrology and other outpatient therapeutic Chinese patent medicines show positive growth. Among them, the sales of Chinese medicine injections in public hospitals reached the peak in 2016, with a market size of 102.1 billion yuan, and fell to 47.2 billion yuan in 2022.
However, with the advent of urbanization and aging of the population, the demand for medicines is increasing. The spectrum of diseases, demand points, and clinical drug use structure have changed, and tumors, cardiovascular and cerebrovascular, chronic diseases and pediatric drugs are becoming new growth points.
The positioning of the pharmaceutical industry as a sunrise industry has not changed.
The Third Plenary Session of the 20th CPC Central Committee clarified the overall goal of further deepening reform, and with economic reform as the driving force, comprehensively deployed reforms in various fields and aspects, and put forward more than 300 important reform measures. In particular, it emphasized many important contents in the field of medicine and health. For example, deepening the reform of the medical and health system, promoting the coordinated development and governance of medical care, medical insurance, and medicine, promoting the hierarchical diagnosis and treatment system, and promoting the expansion and sinking of high-quality medical resources and regional balanced layout, will have a significant impact on promoting the long-term and healthy development of the pharmaceutical industry.

3. How to control systemic risks?

1) Where to find the incremental growth is the primary issue.

"The data sends a clear signal. The ceiling of the stock market of medicines that are mainly paid by medical insurance and meet the basic medical and drug needs is clearly visible. It is urgent for the industry to grasp the iterative health needs and enhance value creation through innovation. To cross the cycle, it is necessary to find a breakthrough direction, seize opportunities for segmented tracks and new demands, and seek market growth from different fields such as consumer medical care and serious medical care, self-pleasing economy and silver hair economy" - Wu Han, chairman of Zhongkang Technology, pointed out in his keynote speech at the 2024 Xipu Conference. The industry has already conducted in-depth discussions on where to find incremental growth.

2) In fact, systemic risk control is the most important issue.
Risk has become a content that must be paid attention to in the operation of pharmaceutical companies. Pharmaceutical companies operate in an ecosystem, and the ecosystem is constantly evolving. If there is a problem at any end of the upstream, downstream or horizontal direction, it will cause trouble in the entire chain.
If ten years ago was a stage of development opportunities, then in the next ten years, please pay attention to preventing and controlling systemic risks and building a risk management system.
3) Think systematically about the capital structure of the enterprise.
Capital is the means for enterprises to win, and the capital structure determines the governance structure. According to different factors such as tracks, fields and resources, think, judge and choose the capital structure of the enterprise. This is a big problem for entrepreneurs to think about.
4) Focus on the main business, reduce costs, revitalize assets, and improve core competitiveness.
5) With compliance as the goal, firmly implement business transformation, especially marketing model transformation, research and development layout transformation and management system transformation.
Whether it is risk prevention and control, focus, or transformation, it is impossible to be "flowers all the way" and applause, but will be full of "pain" and challenges.
Under the changing situation, doing difficult and correct things is the most important thing.

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