On April 30th, the fourth batch of national traditional Chinese medicine alliance procurement officially opened bidding in Wuhan. According to the National Healthcare Security Administration, this procurement includes 89 types of drugs across 28 procurement groups, with over 40,000 medical institutions participating in the reporting. Ultimately, 310 products from 243 companies were selected.

The biggest highlight of this traditional Chinese medicine procurement is the inclusion of OTC traditional Chinese medicines for the first time. Previously, in 2024, Anhui planned to include China Resources Sanjiu's flagship drug "Sanjiu Cold Medicine" in the provincial procurement, which faced strong backlash, and ultimately only included OTC products such as Siberian Ginseng and Pediatric Lung Heat Cough and Wheezing Granules. However, this time, the national traditional Chinese medicine procurement has included popular household items such as Stomach and Digestion Tablets, Strong Loquat Syrup, Cold and Heat Relief Granules, Pediatric Lung Heat Cough and Wheezing Granules, and Blood Circulation Pain Relief Plaster, all of which have annual sales exceeding 100 million. Several exclusive varieties, such as Yindan Xinnaotong Soft Capsules and Yinzhan Xinmai Droplets, have also entered the selection range of this traditional Chinese medicine procurement.

The OTC drugs included in the procurement are the main sales force of chain pharmacies. The official has not disclosed the price reductions of the selected products, but industry insiders generally expect an average reduction of over 40%, with some varieties seeing reductions of more than 60%. With the advancement of the "three-entry" policy for procurement drugs, the pressure on chain pharmacies has increased sharply: they previously relied mainly on OTC drugs for profit, but now low-priced procurement OTC drugs are being widely distributed in hospital pharmacies, leaving them wondering how to remain profitable.

According to the National Healthcare Security Administration's plan, this traditional Chinese medicine procurement is expected to be implemented in July. In the face of the impending impact on the retail channel pricing system, it remains to be seen how relevant pharmaceutical companies will adjust their pricing and channel strategies.

A large number of OTC and commonly used drugs are seeing price reductions.

Traditional Chinese medicine is a major sales category for chain pharmacies. According to data from Minet, from 2020 to 2025, the sales of traditional Chinese medicine accounted for about 40% of chain pharmacies, making it a primary source of profit.

Pharmacies are keen to sell traditional Chinese medicine, and the reasons are not hard to understand. Many traditional Chinese medicines do not have relatively uniform prices, and sometimes the normal online price differs greatly from the market price. For example, 105mg Chuanxinlian Tablets can range from 0.07 yuan to 1.05 yuan per tablet in the market, with a price difference of up to 15 times. Naturally, pharmacies will promote high-margin varieties more and stock fewer or even avoid low-priced drugs to achieve higher profits.

However, after the traditional Chinese medicine procurement, the competitive advantage of pharmacies has been significantly reduced. Taking the "Liver Protection Tablets," which has annual sales exceeding 1 billion, as an example, previously, Kewang Pharmaceutical held over 90% of the market share, dominating the market. This time, 31 companies including Taiji Group, Guizhou Bailing, and Guangdong Luofu Mountain were selected, and it is clear that each company hopes to capture more market share through price reductions Especially OTC drugs, which were once the main products sold in pharmacies. Companies like CR Sanjiu and CR Jiangzhong, which focus on OTC traditional Chinese medicine, list significant advertising and marketing expenses in their annual reports to influence consumer perception and increase sales through retail channels. Now, several star OTC traditional Chinese medicines have entered centralized procurement, directly penetrating the product's bottom price through a "volume-price linkage and unified procurement" approach, which will inevitably affect the marketing strategies of related companies.

The digestive tablets, with annual sales exceeding 2 billion yuan, were originally the revenue mainstay for companies like CR Jiangzhong and Wuhan Jianmin. After centralized procurement, a "warlord" situation has emerged, with 12 selected companies including Kewang Pharmaceutical, Yiling Pharmaceutical, and Yuekang Pharmaceutical. In the future, the market for digestive tablets will undoubtedly face a fierce battle.

Based on the promotion of the "three advances" policy for centralized procurement of drugs in various regions, OTC traditional Chinese medicines from centralized procurement will inevitably flood into retail channels. Even if companies with brand advantages do not lower prices, their market position and revenue scale cannot remain consistent with the past, directly impacting a large number of pharmacies and related companies. The centralized procurement office may have noticed this, which is why it rarely announced the overall price reduction and specific selected prices for this centralized procurement. However, referencing the average reduction of 48.3% for OTC varieties in Anhui's centralized procurement in 2024, with some exceeding 60%, it is estimated that the average reduction for the fourth batch of national centralized procurement OTC varieties could reach 40% to 50%.

Chain pharmacies seek transformation

Retail industry practitioners have indicated to Jian Shi Ju that the most direct impact of centralized procurement of traditional Chinese medicine is a decline in income, as chain pharmacies cannot gain more profit from centralized procurement products, making survival more difficult. Currently, many pharmacy operators are still observing whether there will be a turnaround.

In 2025, the financial report data of several listed chain pharmacies is not very good. Yixin Tang's revenue in 2025 is 17.34 billion yuan, a year-on-year decrease of 3.70%; LBX Pharmacy has also seen a trend of declining revenue and profits. However, JZJ and DSL have maintained stable financial performance without significant growth.

The era of chain pharmacies relying on high-margin single products is over. Some pharmacy operators have stated that if chain pharmacies cannot survive long-term on cheap centralized procurement drugs, business will undoubtedly become increasingly difficult, and after being passively drawn into price wars, they will be eliminated by the entire industry.

The traditional Chinese medicine market is currently at a critical period of both scale expansion and structural adjustment. Data shows that by 2026, the domestic traditional Chinese medicine market is expected to grow by 10% year-on-year, surpassing 1.5 trillion yuan. However, behind the market prosperity, structural issues such as intensified homogenization competition, inflated prices for some products, and insufficient innovation capabilities are becoming increasingly prominent. The impact of the fourth batch of centralized procurement on some OTC and commonly used household medicines is profound; in the future, will the influence of product recognition and reputation be able to compete with price? This time, several selected varieties have provided the industry with an opportunity for observation.

Recently, chain pharmacies have been emphasizing transformation, hoping to rely on more diversified services, professional consultations, and medication guidance to enhance sales and profits. Ruan Hongxian, Chairman of Yixin Tang Pharmaceutical Group Co., Ltd., recently stated that the company plans to upgrade and create "Health Station Shared Centers" in Yunnan Province as the first batch. This will not only serve as a drug supply point but also as a comprehensive service platform that integrates professional pharmaceutical services, full-cycle health management, and public health emergency support.

The centralized procurement of traditional Chinese medicine, especially OTC, has impacted the revenue foundation of chain pharmacies. Moreover, the fourth batch of centralized procurement will not be the endpoint; more OTC traditional Chinese medicines will be included in centralized procurement in the future. The sales method reform of chain pharmacies must keep pace with the rhythm of centralized procurement in the industry to avoid being swept away by the tide of reform