Chinese herbal medicines prices plummeted, favoring proprietary Chinese medicine companies

Chinese herbal medicines that have been continuously soaring have now turned into plunge, and "drugs you bitterness" has also become "drug you lose." According to the statistics of Industrial Securities, the prices of the 19 main Chinese herbal medicines and white sugars tracked by the company in October this year saw 10 kinds of month-on-month declines, while 9 types were flat, only one increase. In April last year, the price of RMB 550 per ton in March and March was only RMB 300/ton; in April this year, the price of CNY 380/ton was only RMB 220/ton, and the price almost fell by half. Other Chinese herbal medicines such as Chinese angelica, Codonopsis, honeysuckle, Chinese wolfberry, etc. have also experienced different degrees of decline.

In May and June of this year, many people still expect Chinese herbal medicines to continue to rise, but the current market situation has turned sharply. What caused the plunge of herbal medicines?

The price inflection point is now

"The decline in Chinese herbal medicines is mainly a matter of the past two months. It is now a price inflection point." Guo Fanli, a research fellow of China Investment Advisor Pharmaceuticals, said in an interview with the "Financial Business" of the First Financial Daily that the original Chinese herbal medicines were consumed during autumn and winter. The peak season, but the current price has turned to plummet, but this time the price plummet from the previous irrational to rational return, is expected to continue until early next year.

“Before the price of Chinese herbal medicines rose so far, it was mainly the speculation of hot money.” An analyst of a securities company’s pharmaceutical industry told reporters that after the tightening of monetary policy, the liquidity of funds is tight. “In addition to the debt problems in Wenzhou and Ordos, a lot of liquidity quickly withdrew from the Chinese herbal medicine market.”

The drug analysts of the above securities companies also pointed out that drug prices have fallen, there are more sellers and fewer buyers, and the drug market has experienced serious panic.

“After last year's skyrocketing price of herbal medicines, the area of ​​planting of medicines and peasants has continued to increase. Now that new drugs are on the market, the phenomenon of insufficient supply has been alleviated, and even the supply has become oversupply.” Guo Fanli pointed out that together with the crackdown measures of the National Development and Reform Commission, he has maliciously hoarded Chinese medicines around the country. The companies inspected the materials and the market itself has already anticipated the price drop of Chinese herbal medicines.

In July this year, the National Development and Reform Commission transferred some local price enforcement personnel to form an inspection team to conduct a comprehensive inspection of more than 20 Chinese herbal medicine storage warehouses in the western Yunnan region. In addition, 10 operators, such as Zhejiang Southern Medicinal Materials Co., Ltd. who had coerced the Codonopsis before December 2010, issued a price enforcement enforcement admonition, ordering them to pay no more than one kilogram per kilogram before July 21, 2011. More than 200,000 kilograms of Codonopsis that have been stored is sold to pharmaceutical companies that use Codonopsis pilosula as a raw material and have obtained GMP certification. At the same time, the company has warned 44 operators who have codonopsis since January 2011, and ordered them to sell more than 800,000 kilograms of codonopsin stored before December 31, 2011 to a proprietary Chinese medicine medicine that uses ginseng as a raw material and has obtained GMP certification. enterprise. If it fails to sell and submit valid vouchers as stipulated, it will be given an administrative penalty according to law.

Guo Fanli pointed out that investigations by the National Development and Reform Commission undoubtedly dried up the moisture of Chinese herbal medicines. Some drug dealers even panicked. "But it is unlikely that the price will fully fall back to the previous level, and it may be slightly higher than last year."

"It's hard to say how long it will last." Analysts from the pharmaceutical industry pointed out that the plunge in the price of Chinese herbal medicines is actually unfavorable. Downstream herbalists and farmers who grow Chinese herbal medicines will be greatly hurt and lose their enthusiasm. Then, the planting area of ​​Chinese herbal medicines may be aggravated. Decrease, then there may be a surge.

"So it's better to be generally stable and it may fall to a reasonable range."

However, compared with the wholesale market, the current price of the Chinese herbal medicine retail market is not particularly obvious. A staff member from a Chinese medicine shop in Beijing told the reporter that the price of 200 kinds of Chinese herbal medicines currently sold has not changed much, and only some of them have slightly decreased. It is understood that because pharmacies have more stocks, the current sales of medicinal materials may still be purchased at the beginning of the year, so the retail market still has some lag in relation to the wholesale market.

Chinese medicine companies have good losses for drug makers

After the decline of Chinese herbal medicines, there is no doubt that Chinese patent medicine companies will have a positive effect. Since medicines are related to the people's livelihood, the country has strict restrictions on drug prices. Even if the price rises, the range cannot be compared with Chinese herbal medicines. In addition, many proprietary Chinese medicines belong to the National Essential Drug List, and companies are unable to increase their prices.

“Since Chinese patent medicine companies have no pricing power, when Chinese herbal medicines prices soared last year, many companies stopped production because production was equal to a loss.” Guo Fanli pointed out that the current decline in the prices of Chinese herbal medicines can ease the cost pressures of Chinese patent medicine companies.

From the listed company's annual report, the three companies Tong Ren Tang, China Resources Sanjiu and Jiuzhitang began to decline in gross margin from 2010, Tongrentang's gross margin in the first quarter of 2011 was 44.59%, which was up from 42.51% in the fourth quarter of 2010. However, it decreased to 41.28% in the third quarter of 2011. The gross profit margin of China Resources Sanjiu began to decline from the first quarter of 2010. It was 59.43% in the second quarter of 2011 and 57.51% in the third quarter of 2011. The gross profit margin of Jiuzhitang was 52.28% in the second quarter of 2011 and 52.55% in the third quarter.

"Relatively speaking, traditional Chinese medicine companies enjoy greater benefits." The above-mentioned pharmaceutical industry analysts pointed out that traditional Chinese patent medicine companies' raw materials accounted for more of their cost factors, and were more affected by changes in prices of Chinese herbal medicines.

However, some Chinese medicine companies with large stocks may be affected by this round of plunge. "Inventory companies with many herbs are actually not affected the most." Guo Fanli pointed out that pharmaceutical companies will always have some stocks, and some stocks will be even as high as 1 to 2 years. “Actually, the plunge in the prices of Chinese herbal medicines has a greater impact on speculators and retail investors. Individuals may suffer more losses in the short term.”

Jia Haibin, deputy director of the Chinese Herbal Medicine Information Center of the Chinese Medicine Association, told the newspaper that according to their investigations, at present more than 70% of drug dealers have suffered losses. “Basically, almost all of the drug dealers have lost money. People who fry herbs have lost more. In recent years, people who fried Chinese medicine have tasted the sweetness of Chinese herbal medicines in the process of rising prices of Chinese herbal medicines, and invested more money into it. Now, After the crash, not only did the previous earning lose money, it even caught up with their own funds. This kind of psychology is like gambling."