Will the mainland version follow suit and increase the price? Tong Ren Tang responded that the price of the Hong Kong version of Angong Niuhuang Wan increased to HK$1,280 per pill
In the past two days, the news that Tong Ren Tang's Hong Kong version of Angong Niuhuang Pills was raised in price from HK$1,060 per pill to HK$1,280 per pill has aroused market concerns.
Along with the price increase of Angong Niuhuang Pills, price monitoring on some professional Chinese medicine websites showed that the latest price of natural bezoar is 1.65 million yuan per kilogram, up 65% from the same period last year.
Judging from the price trend of Chinese medicinal materials, it is not just natural bezoar that has seen a price increase. Since the first half of this year, many Chinese medicinal materials have seen a surge in prices. We have entered the traditional off-season for Chinese medicinal materials, but the prices of some medicinal materials are still strong. Looking at the long term, there was a surge in the prices of Chinese medicinal materials last year. Why is it happening again this year?
The First Financial reporter confirmed with Tong Ren Tang's secretary's office that the company's Hong Kong version of Angong Niuhuang Wan has increased its price. As for whether the mainland version of Angong Niuhuang Wan will follow suit and increase its price, the staff said that there is no further news yet.
In 2023, Tong Ren Tang achieved operating income of 17.861 billion yuan, a year-on-year increase of 16.19%, among which the Angong Niuhuang series was one of the company's top five main products in terms of operating income.
Regarding the price trend of natural bezoar, in May this year, Tong Ren Tang stated in an institutional survey that natural bezoar is a pathological product of cattle, and its production has a certain uncertainty. The entire market resource volume is generally limited. At present, national policy still prohibits the import of bezoar, and it is impossible to predict future price trends. The prices of Chinese medicinal materials fluctuate according to different types of varieties, especially since last year, some varieties have fluctuated greatly, and the reasons are relatively complicated. The long-term price trend remains to be observed.
Tong Ren Tang also said that the cost pressure it faces this year is still relatively large. With the implementation of the large-variety strategy, high-quality strategy, and high-quality development strategy, overall sales are currently relatively stable. The launch of the Imperial Medicine series products and the opening of new stores will add new profit growth points.
In addition to Tongrentang, on March 11 this year, Fozhi Pharmaceutical issued an announcement stating that in view of the rising costs of raw materials and production, the company has decided after research and decision to adjust the ex-factory prices of its main Chinese patent medicine products from March 11, 2024, with an average price increase of 9%.
In May this year, China Resources Sanjiu said in an institutional survey that price increases are not the company's main strategy and consideration for promoting long-term business growth. The company's core OTC products will consider moderate price increases from time to time, mainly to cover the impact of rising raw material costs. The price increase process will fully consider the patient's acceptance. In addition, the company will continue to upgrade its products, build a professional brand, and launch products with better experience.
While some Chinese patent medicines have increased in price, the price of Chinese medicinal materials has made a comeback since this year.
From the perspective of the TCM 200 Index tracked by TCM Tiandi.com, as of January 1, 2023, the index broke through 3,500 points in June 2023, and then slowly declined in the second half of the year. However, after entering 2024, the index rose again to over 3,400 points. As of June 10, 2024, the index was still at 3,449.15 points.
The Chinese Medicinal Materials Price Index tracked by Kangmei Chinese Medicine Network shows that the index rose from 2062.56 points on January 8, 2024 to 2242.03 points on June 13, 2024.
"In the first half of this year, the price of Chinese medicinal materials as a whole has increased significantly. Those with longer growth cycles, such as those with three to five years' growth, have seen eye-catching growth," a person in the traditional Chinese medicine industry told the First Financial reporter.
Kangmei Chinese Medicine Network staff told the First Financial reporter that the varieties with the largest recent increases are mainly concentrated in spices, such as black pepper, magnolia flower, and oxyphylla, which have doubled in price this year, and Amomum villosum, Amomum tsaoko, and costusroot have also increased by more than 60%. "The growth cycle of spices is also relatively long. Generally, they are shrubs. It takes 3-5 years after planting to enter the peak fruiting period, and then they gradually age."
The staff of Kangmei Chinese Medicinal Materials Network said that the recent rise in the price of Chinese medicinal materials is caused by many reasons. First, the long-term low prices of some Chinese medicinal materials, such as white peony root, moutan bark, angelica dahurica, and atractylodes macrocephala, have affected the enthusiasm of farmers to plant and led to production shrinkage; second, weather reasons, such as the drought in Yunnan caused a reduction in the production of costusroot and tsaoko, and the rain and snow in Henan in spring caused a reduction in the production of magnolia flowers; third, the aging of plants affects the later production, such as the affected varieties of yizhi, gardenia, pepper, and amomum. In addition, due to the epidemic, after the price of some Chinese medicinal materials rose, it attracted some funds from other industries to flow into the Chinese medicinal materials industry. It is expected that the market price of Chinese medicinal materials will continue to be strong in the future, especially the dual-purpose medicinal and edible varieties, wild medicinal materials, perennial medicinal materials, etc., but the prices of some varieties that are easy to recover may have a downward trend.
The aforementioned Chinese medicine industry insider told the First Financial reporter that after the price increase in the first half of this year, the current price of Chinese herbal medicines has stabilized somewhat, but it is still hard to say what will happen in the future. When the market was booming last year, some growers increased their planting. Some Chinese herbal medicines require a three-year growth cycle. In this way, next year may usher in a large number of listings, which will then suppress prices. But on the other hand, the recent continuous drought in some central regions has affected the planting of some Chinese herbal medicines. In any case, for downstream Chinese patent medicine companies, after the price increase of Chinese herbal medicines, they need to increase prices to absorb the cost pressure of raw materials, but in the context of medical insurance cost control, it is not easy to directly increase prices. Overall, after the price increase of Chinese herbal medicines, the pressure and challenges brought to downstream Chinese patent medicine companies are great.
Regarding the continuous sharp rise in the prices of Chinese medicinal materials in the past two years, Jia Haibin, chief analyst of the Chinese Medicine Big Data Center of Zhongkang Technology, believes that the fundamental reason is the imbalance between the continuous growth of Chinese medicinal materials consumption and the weak supply.
"In other words, the current scattered small-scale peasant economy of Chinese medicinal materials cannot support the large-scale industrialization of the industry. In addition, there are some external reasons. In the past few years, after the outbreak of the new crown epidemic, the demand for Chinese medicinal materials has increased significantly, consuming a lot of inventory, resulting in the current market supply tension. In addition, the three obvious rural trends, namely aging, hollowing out, and low birth rate, have led to a decrease in the number of Chinese medicinal materials growers; in addition, capital speculation is also an inducing factor." Jia Haibin told the reporter from China Business Network that downstream Chinese patent medicine companies have no choice but to raise prices, but it is not a solution. Failure to solve the problem of raw material security is equivalent to shifting the cost pressure to ordinary people and the medical insurance system.
In order to cope with the cost pressure of Chinese medicinal materials, some Chinese patent medicine companies have built their own Chinese medicinal materials planting bases.
An insider of Taiji Group told the First Financial reporter that in recent years, the company has been strengthening the cultivation of Chinese herbal medicines. At present, the area of the standardized base for Chinese herbal medicines has reached 200,000 mu. At the same time, a Chinese herbal medicine processing center has been built next to the base for graded processing. "For some large varieties of Chinese patent medicines, the raw materials can be self-sufficient, and the cost side is relatively controllable. The company currently has no plans to raise prices. If there is a subsequent price increase, it will also consider market share, brand influence, etc."
Jia Haibin also believes that allowing most Chinese patent medicine companies to build their own Chinese medicinal material planting bases is not the ultimate solution. If some Chinese medicinal material varieties are mainly supplied to a small number of Chinese patent medicine companies, if Chinese patent medicine companies build their own planting bases, it can reduce the pressure of price fluctuations of Chinese medicinal materials. However, most Chinese medicinal material varieties are supplied by many Chinese patent medicine companies. If Chinese patent medicine companies build their own planting bases, the cost may be two, three times, or even higher than that of ordinary growers. When the price of external Chinese medicinal materials rises, building a planting base by yourself may smooth out some cost pressures, but when the price of external Chinese medicinal materials plummets, self-built planting bases are more likely to fall into losses. How to ensure a stable supply of Chinese medicinal materials remains to be explored.
