Author: Tang Weike
Editor: Zhu Ping
Image Source: Tuchong
After experiencing waves of buying frenzy, the prices of traditional Chinese medicinal materials remain robust.
Recently, a herbal merchant from Puning, Guangdong, told the 21st Century Business Herald that in recent weeks, the price of some medicinal materials, such as Lian Qiao (Forsythia), has increased fivefold, reaching 400 yuan per kilogram. “Jin Yin Hua (Honeysuckle), Lian Qiao, and others are still in high demand.”
“When suppliers raise prices, we can only follow suit. During the peak buying period, prices changed several times a day, and it was non-stop at night,” a TCM clinic manager lamented to the 21st Century Business Herald, explaining that initially, when prices were low, they reluctantly purchased a few kilograms of Dang Shen (Codonopsis), but later found not only was there no stock, but prices were also rising.
According to a survey by Zhongyao Cai Tian Di, in December 2022, driven by the demand for TCM related to pandemic prevention, the overall index saw a significant increase. Varieties such as Bo He (Mint), Lian Qiao, and Jin Yin Hua saw price increases of several times, leading to a comprehensive rise in other varieties. Among the 200 varieties in the comprehensive index, 50 saw price increases compared to the previous month.
The rise in TCM prices is closely linked to the market’s high demand for traditional Chinese medicine. As various regions enter the peak of COVID-19 infections, not only are traditional Chinese patent medicines and TCM granules sold out, but various preventive prescriptions and TCM packages are also overwhelming. Additionally, using TCM for recovery after “Yang Kang” (recovery from COVID-19) has become a choice for many.
Xiao Chen (pseudonym), who lives in a county in Guangdong, told the 21st Century Business Herald that since late December last year, the number of infections in her county has increased, and TCM materials in pharmacies have started to sell out, making it difficult to purchase the usual health-regulating medicines. Furthermore, she noted that the number of patients in the TCM outpatient department has also begun to rise, “Many come to seek treatment for bodily system disorders after infection.”
Raw Material Prices of TCM Soar
Lin Lizhu, a renowned TCM physician and vice president of the First Affiliated Hospital of Guangzhou University of Chinese Medicine, revealed that in the past two months, the number of TCM prescriptions issued by the hospital may be 20 times the usual amount, with over 100,000 people seeking TCM assistance for prevention and treatment. Among the TCM decoction pieces, well-known formulas such as Xiao Chai Hu Tang (Minor Bupleurum Decoction), Sang Ju Yin (Mulberry Leaf and Chrysanthemum Decoction), and Zhi Sou San (Cough Suppressing Powder) are included. Additionally, there has been an upward trend in the use of herbs for clearing lung heat and dampness, and strengthening the spleen, such as Wu Zhi Mu (Five-fingered Peach).
The increase in medication demand has also driven up the prices of raw TCM materials. Just a month ago, industry insiders indicated that raw material prices were changing daily, with many prices having doubled.
A TCM procurement and processing merchant from Anhui told the 21st Century Business Herald that all TCM materials related to the pandemic have seen price increases. Core therapeutic varieties for clearing heat and detoxifying, such as Jin Yin Hua, Lian Qiao, and Huang Lian (Coptis), were the first to rise. Following them, varieties for reducing fever, such as Shi Gao (Gypsum), and those for relieving cough and phlegm, such as Xing Ren (Apricot Kernel), have also seen significant price increases.
According to data from a third-party trading platform, from December 11 to 24, the TCM material price index rose by 119.15 points, an increase of 7%, with the short-term rate of increase being three times that of the market opening after the Wuhan outbreak in 2020 (when it rose about 33 points in two weeks).
The price increase of individual varieties is even more pronounced, with the price of Verbena soaring. Relevant data shows that the market price index for Verbena rose from 1208.35 in November to 3528.6 in December, a month-on-month increase of 192.02%. As of January 17, the price for the whole stock rose from 4.5-5 yuan to 45-50 yuan. It is understood that Verbena has a reparative effect on lung damage caused by the COVID-19 virus, especially on small airway damage.
Subsequently, some price-increased varieties have seen a market correction, with prices slightly decreasing but not returning to previous levels.
For the popular Lian Qiao (Qing Shui Boiled from Henan) and Jin Yin Hua (Hebei Whole Stock), their prices have decreased from 262.5 yuan and 230 yuan to 231.25 yuan and 200 yuan, respectively, over the past month. In November 2022, the prices of these two medicinal materials fluctuated around 120 yuan and 136 yuan.
The 21st Century Business Herald reported that with the approach of the Spring Festival, major medicinal markets have begun to enter a holiday phase, with the markets in Bozhou, Anguo, and Yulin closing on January 13, 12, and 16, respectively. The procurement and circulation of TCM materials will slow down, and the market will likely stabilize. In the future, for varieties with oversupply, such as Ban Lan Gen (Isatis Root) and Guang Huo Xiang (Patchouli), as trading enthusiasm declines, prices may gradually fall. However, for varieties with weak inventory, such as Lian Qiao and Fang Feng (Saposhnikovia), while short-term prices may fluctuate, long-term prices may remain strong. As the impact of the pandemic on the body changes and the public’s demand for TCM to regulate health continues, the market for some cough-relieving TCM materials may remain robust.
Will Sales Follow Price Increases?
The rising prices of upstream raw TCM materials are also reflected in terminal sales. Some consumers have reported on social media that the prices of TCM materials in the online prescriptions they usually purchase have started at double the previous prices; Xiao Chen also mentioned that the overall price of the medicine she picked up at a pharmacy a few days ago was more than twenty yuan higher than in November last year.
Additionally, the aforementioned TCM clinic manager stated that due to widespread infections among factory staff, supply has become tighter, “The factory doesn’t even have anyone to issue invoices, let alone ship goods.”
However, according to the 21st Century Business Herald, the prices of TCM materials in hospital pharmacies and chain drugstores have not changed significantly. A staff member from a chain pharmacy in Guangdong revealed that although demand is high recently, prices have not changed; a hospital pharmacy manager stated that price changes generally require adjustments by medical insurance.
“Currently, it appears that the overall supply of TCM materials related to the pandemic is sufficient, and the high market demand makes price increases a normal phenomenon,” said the aforementioned TCM procurement and processing merchant, noting that market supervision and price management have been strengthened, preventing chaotic price increases by merchants.
Regarding whether the prices of medicines made from TCM materials will increase as a result, China Resources Sanjiu stated during a survey that the prices of raw materials for their granule business have risen rapidly recently, but the company currently has a certain inventory of raw materials. Baiyunshan also indicated that they would enhance their bargaining power to effectively ensure the quality and supply of TCM materials while controlling production costs.
However, if raw material prices continue to rise comprehensively, medicine prices will also increase. According to CCTV Finance, many pharmaceutical distributors have reported receiving price increase notifications from manufacturers and suppliers for several brands of An Gong Niu Huang Wan (Calming Pill), citing the rise in raw material prices as the reason. Industry insiders have indicated that the cost of raw materials for traditional Chinese patent medicines accounts for about 30% to 40%, and for An Gong Niu Huang Wan, the prices of its 11 herbal ingredients have all increased between 20% and 50% in 2021.
Prices “Uncontrollable”
In fact, in recent years, the prices of upstream raw TCM materials have shown an overall upward trend.
Dongwu Securities stated that since 2020, due to the pandemic affecting normal production activities, frequent natural disasters in 2021, and the price cycle of TCM materials themselves, the prices of TCM raw materials in China have continued to rise. The TCM material price index, including comprehensive 200, cultivated 100, and wild 99, has rapidly increased, with the three price indices rising by 20%, 21%, and 24% respectively from January 1, 2020, to December 28, 2021; according to data published by Zhongyao Cai Tian Di, from January 1, 2021, to December 25, 2021, among 726 types of TCM raw materials in the Anguo market, 398 types saw price increases, accounting for 54.8%.
Unlike chemical raw materials that can be rapidly expanded in production, the cultivation of TCM materials is more dependent on weather factors and market changes, so once supply tightens, prices will rise.
The price of Lian Qiao has been significantly affected by the above two factors in recent years. In addition to the recent increase in medication demand, the price of Lian Qiao has been rising continuously for the past three years due to weather factors. In the last three years, affected by the “late spring cold”, Lian Qiao has suffered production reductions each year, leading to continuous price increases. An industry insider from the business community stated that the price of Lian Qiao began to rise in 2021, from 40 to 50 yuan per kilogram in 2020, to 110 to 120 yuan in the first half of 2021, with further increases in the first half of 2022.
It is worth noting that due to the “small and scattered” nature of the TCM material market, price fluctuations are also quite frequent, and there have even been instances of “price gouging”.
It is understood that most TCM suppliers in China are primarily farmers, and in the purchasing and selling links at the production site and medicinal material market, individual merchants and small enterprises are the main operators in the professional market. In recent years, with the continuous development of pharmaceutical companies, more and more TCM pharmaceutical enterprises have engaged in the cultivation of TCM materials to ensure supply and stabilize prices, such as Baiyunshan and Yiling Pharmaceutical.
However, even though Yiling Pharmaceutical has a 100,000 mu (approximately 16,500 acres) base for Lian Qiao and other TCM in Hebei, relevant personnel stated, “The income scale is there, but most raw materials still need to be purchased externally.”
Moreover, farmers’ lack of understanding of market supply and demand information, along with hoarding and speculation, can also lead to drastic fluctuations in TCM material prices.
Jia Haibin, founder of the Tian Di Yun Tu TCM Industry Big Data Platform, previously stated in an interview that on one hand, TCM materials, as agricultural by-products, belong to a marginal economy, and blind production is very evident, with more weeds than treasures. On the other hand, after the acceleration of production and sales connections in the middle link, some traditional medicinal material market operators and enterprises have begun to treat hoarding as a means of profit. Artificial hoarding causes temporary shortages in the market, leading to price increases.
END
Editor: Jiang Peipei, Intern: Li Ruiyan
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