After 8 years, 48 types of patent traditional Chinese medicines are getting added to the fund portfolio—has the turning point for the traditional Chinese medicine sector really arrived?

I. What happened? — The essential medicines list has been updated after eight years, giving Chinese patent medicines a clear incremental entry point

1. One update every eight years; the list shifts from “ensuring basic coverage” to “prioritizing clinical value”

On July 9, 2026, the National Health Commission, the National Administration of Traditional Chinese Medicine, and the National Center for Disease Control and Prevention released the “National Essential Medicines List (2026 Edition),” which will take effect on September 1. This is the fourth version of the list since the establishment of the national essential medicines system in 2009, and the first update after eight years since 2018. The new version includes 794 drugs in total, of which 476 are chemical drugs and biologics, and 318 are Chinese patent medicines. Chinese patent medicines added 48 new entries compared with the previous edition, and no products were removed, raising their share in the list to 40.1%. The newly added products cover traditional Chinese medicine advantageous areas such as the heart, lungs, brain, gynecology, and pediatrics, and they also include national medicines and Category 1 TCM innovation drugs. This indicates that “essential medicines” are no longer simply synonymous with low-priced mature drugs; they now place more emphasis on clinical necessity, evidence quality, and accessibility at the primary-care level.

2. The core value of being included in the essential list: from “covered by medical insurance” to “easier to get into hospitals and drive volume”

Being included in the essential medicines list does not automatically translate into rapid volume growth, but it significantly reduces friction in hospital access. Faced with a large medical insurance directory, hospital pharmacy committees typically prioritize essential medicines, nationally negotiated drugs, and volume-based procurement (VBP) products. In addition, the allocation and utilization ratios of essential medicines are also factored into public hospital performance assessments. As a result, essential-list products are more likely to enter hospital formularies, and they can form a medication linkage across tertiary hospitals, county hospitals, and primary healthcare institutions. For exclusive Chinese patent medicines that were originally concentrated in certain provinces or in a small number of hospitals at specific tiers, the most important significance of the new status is to open up nationwide coverage space, rather than simply raising prices.

Historical experience shows that elasticity often varies inversely with existing scale. In the 2018 edition, once large products already at the “hundreds of millions” level were included, they typically maintained steady growth. Meanwhile, for exclusive products with sales of only $100 million to $500 million, if the company has academic promotion, manufacturing, and channel capabilities, doubling revenue within three to five years is not uncommon. Products such as Qiliang Strong Heart Capsules, JinZhen Oral Liquid, Zishen Yutai Pills, and Qishen Yiqi Dripping Pills show that inclusion in essential medicines can further convert “clinical value” into “end-terminal coverage.” However, the final realization still depends on whether companies can complete provincial listing for reimbursement, hospital development, doctor education, and capacity assurance.

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