Why has the price of traditional Chinese medicine skyrocketed? Market | Price | Traditional Chinese Medicine
"There are not as many people buying goods in the Bozhou market as there are selling them," observed Liu Yanyan, the owner of Bozhou Boyuan Pharmaceutical Co., Ltd., which is engaged in the purchase and sales of real estate Chinese herbal medicine. The company mainly connects with pharmaceutical factories, and their purchases are determined based on market conditions. With high prices of medicinal herbs, they also adopt a wait-and-see attitude.
Liu Yanyan's company mainly engages in the purchase and sales of traditional Chinese medicinal materials in Gansu region. In this round, the varieties produced in Gansu, such as Angelica sinensis, Codonopsis pilosula, and Coptis chinensis, have seen a significant increase. Among them, Angelica sinensis has risen to around 240 yuan in July. The price increase is also reflected in the acquisition price. Last year, the acquisition price was 40 to 60 yuan per kilogram, and this year it has reached as high as 150 yuan. Currently, the company is under great operational pressure. As consumers at the transmission end of the entire chain, it is natural to feel that taking one medication this year is half or even several times more expensive than in previous years.
Related data shows that compared to the same period last year, the prices of approximately 276 medicinal herb varieties have increased. Industry insiders say that the number and magnitude of price increases in medicinal herbs in the past three months are very rare. Someone speculates that a "bull market" for traditional Chinese medicine has arrived. Really? Both Bozhou in Anhui and Pan'an in Zhejiang have nationally renowned professional markets for traditional Chinese medicine. The reporter found industry insiders from both places and analyzed the reasons.
What are the financial attributes of traditional Chinese medicine?
Why has the price of traditional Chinese medicine increased?
On the supply side, the prices of Northwest goods such as Angelica sinensis have been hovering at low levels in the past, and a large number of growers have abandoned their crops. As market demand increases, prices naturally rise. At the same time, several professionals, including Han Zhijun, Vice President of the Bozhou Pharmaceutical Industry Association, have mentioned the impact of extreme weather. Gansu's traditional Chinese medicine cultivation is mainly carried out by individual farmers, and many have experienced reduced production due to extreme weather. Last year's drought caused almost no harvest of Angelica sinensis in the field.
On the consumer side, after the epidemic, the demand for traditional Chinese medicine among ordinary people has increased due to the need for health care. At the same time, due to limited supply of goods and insufficient supply of raw materials for medicinal materials, prices have naturally risen. "Previously, when the prices of traditional Chinese medicine increased, the public generally did not feel it," said Zong Kankan, a member of the Party Group and Minister of Industry of the Pan'an County Traditional Chinese Medicine Industry Development Promotion Center. Since June this year, many places have been unable to afford medicine, which is a serious problem. Consumers who go to hospitals to get traditional Chinese medicine have seen a significant increase in prices, which has been transmitted to the market.
At the same time, there is a consensus among everyone that some capital may be speculating on the market of traditional Chinese medicine and hoarding goods. "The highest has increased by 3 to 5 times," said Gao Shuai, Executive Director of Bozhou Shengxiangtang Chinese Medicinal Materials Co., Ltd., which mainly produces imported and Hainan medicinal materials. "Some hot money has indeed come in.". "The factors that affect price increases are quite complex, and it is more likely to be a problem similar to beating drums to spread flowers." Zong Kankan observed that the price of Yuanhu has not increased for nearly 10 years, with the lowest price being only 30 yuan per kilogram. Last year, Yuanhu reduced production, while demand increased, and price increases were normal. However, in June this year, Yuanhu was newly added, and production increased compared to previous years, but the price has been rising, currently rising to 150 yuan. At the same time, there has even been a phenomenon of "resale" in Pan'an. Taking Zhejiang Fritillaria as an example, someone previously purchased a batch of goods from the well-known Chinese herbal medicine market in Pan'an, but now they are selling them back to Pan'an at a higher price than at that time. This situation was rare before, and the Pan'an people jokingly said, "Many Chinese herbal medicines now have financial attributes, like futures. When the price is low, they are collected, and when the price rises, they are gradually sold out."
The tide is receding
The production of Baizhu, Yuanhu, Zhebeimu, Xuanshen, and Tianma in the "Zhejiang Eight Flavors" produced in Pan'an accounts for more than 20% of the national total, and it is also a regional distribution center for traditional Chinese medicine. Zong Kankan said that the price increase has a significant impact, and in the short term, it is beneficial for the people as their income has significantly increased. At this point, his tone changed. From the backend perspective, some companies may not be able to afford goods due to price increases, so they may not take them or produce them, which could lead to the entire industry chain being disrupted.
More seriously, the impact has spread throughout the entire industry chain and growth cycle, and now not only consumers are under pressure, but even planters are also affected. Han Zhijun is concerned that the price increase may drive growers to increase the planting cost of most medicinal materials, and once the peak of medicinal material usage passes, the profit margin of planting will be seriously affected, entering the curse of "cheap medicine harms farmers" again. Zong Kankan has observed that the price of Zhejiang Fritillaria seeds has risen very expensive. Local farmers in Pan'an usually prepare some seeds in advance for the upcoming year, but many farmers from other regions feel they have money to make and purchase expensive seeds for planting. If the price drops suddenly next year, they may lose all their money.
Several industry insiders have judged that the tide is receding and the price increase should not continue. Because the current prices of traditional Chinese medicine have reached historical highs, prices will gradually fall back to a rational range in the future. According to Gao Shuai's observation, in the past half month, we have seen a stagnation in market growth, with many medicinal herb prices falling by 10% to 20%.
Recently, some people in the Bozhou herbal medicine market have observed that the refrigerators here have become more popular. Local Chinese herbal medicine merchants have stated that in addition to possible hoarding situations, merchants and farmers do not only put medicinal materials in cold storage due to rising prices, but also have a growing awareness of using cold storage for scientific storage in recent years. Liu Yanyan explained that in the past, farmers in Bozhou kept medicinal materials at home, which were prone to insect infestation and mold. Once the medicinal materials became insect infested, they were scrapped, and no matter how low the price was, no one would accept them; Putting it in the cold storage now may incur some costs, but it is easier to preserve.
How to deal with market cycles?
As the saying goes in the cycle of the rise and fall market for traditional Chinese medicine: rise for three years, fall for three years, neither rise nor fall for another three years, the market has its own pattern of ups and downs. What needs to be considered is how to supplement the management of the traditional Chinese medicine market, stabilize market prices, and make the traditional Chinese medicine market develop more orderly.
At present, the development of traditional Chinese medicine has shown some bottlenecks. On the one hand, the cultivation of Chinese medicinal materials is relatively scattered, with a long growth cycle. Many medicinal materials take 5 to 6 years to harvest. Although we are currently promoting centralized procurement of Chinese medicinal materials to sign long-term contracts to stabilize prices, the entire system is not yet fully formed and is susceptible to factors such as weather and capital speculation. On the other hand, the current policies and regulations regarding the cultivation, production, and sales of traditional Chinese medicine are relatively lagging behind. At the same time, traditional Chinese medicine belongs to agricultural and sideline products, and "less is treasure, more is grass." When it enters the market as a commodity, there is also a lack of effective price control mechanisms and demand measurement mechanisms, leading to long-term supply-demand contradictions in the industry. In addition, in the storage process, there is no large warehouse available for farmers to store in a centralized manner, and the government also finds it difficult to carry out centralized management and planning.
In the management of the Chinese herbal medicine market, the government cannot be absent and should take more action. On the one hand, it is necessary to constrain and guide the stable development of the traditional Chinese medicine industry through clear policies and regulations at the government level; On the other hand, local governments should continue to explore the cultivation and sales of traditional Chinese medicine, and accelerate the scale and marketization of the traditional Chinese medicine industry. In addition, to cope with the extensive operation of traditional Chinese medicine, the government should take the lead in establishing specialized consulting service enterprises. Through market research, regional climate conditions and other related big data collection, statistics, monitoring, and warning, a complete information chain should be closed to achieve accurate analysis from market demand to raw material supply, thereby reducing the price fluctuation space of traditional Chinese medicine.
