Prices of popular Chinese medicinal herbs such as angelica and gastrodia drop sharply
Due to blindly expanded cultivation, output of many previously hot-selling varieties such as angelica and gastrodia is severely oversupplied
Not only have lofty items like bird's nest and cordyceps been “consigned to the cold palace” by the market, but “everyone's darling” Chinese medicinal herbs have also begun to fall in price and attract few buyers. The reporter learned that local hot-selling varieties including Salvia miltiorrhiza, angelica, Astragalus membranaceus and gastrodia have also fallen into a slump, largely thanks to blind planting and overproduction; in addition, the release of the new pharmacopoeia, the difficulty of GMP certification for pharmaceutical companies, and strict inspections of the herb market have also caused this summer's medicinal herb trading volume to decline.
The reporter learned that the lower prices have not stirred up market enthusiasm, and for listed companies, those with their own cultivation bases are little affected by prices, while those that buy herbs externally may benefit from lower costs, or slightly cut drug prices to grab market share.
On one side, the “high-end” bird's nest and cordyceps are still waiting for a rebound, with volume and price showing no obvious recovery; on the other side, the “regulars” in soups and brews, including common Chinese medicinal herbs such as angelica, Astragalus membranaceus and gastrodia, have also fallen into a slump, with no sign of improvement in the short term.
⟦NL> Ordinary Chinese medicinal herbs all fall into a slump
The reporter learned that currently, oversupplied medicinal herbs across China can be described as “widely covered,” including: Salvia miltiorrhiza, angelica, gastrodia, Codonopsis pilosula, Astragalus membranaceus, Atractylodes macrocephala, Rehmannia glutinosa, lily, Platycodon grandiflorus, Pinellia ternata, Pinellia pedatisecta, Corydalis yanhusuo, honeysuckle, chrysanthemum, rose, Ophiopogon japonicus, and others.
Take Salvia miltiorrhiza, a common drug for cardiovascular and cerebrovascular diseases, as an example. It has always held labels such as “large usage, many merchants paying attention, a truly bulk variety,” but unexpectedly in recent years it has gradually fallen into the predicament of supply exceeding demand. It is understood that against the backdrop of frenzied expansion of planting year after year, the annual output of the main producing area Shandong has exceeded 10,000 tons, and the national total output has reached 20,000 tons, while actual demand has not increased and remains around 15,000 tons. The excessive inventory has weakened its market. It is reported that the highest price of ordinary Salvia miltiorrhiza last year reached 12 yuan/kg, and this year in many places it has fallen below 10 yuan. Despite the price decline, movement is still slow, and the future market for Salvia miltiorrhiza is not favored.
At the same time, angelica and gastrodia also face a dilemma. Due to ample market supply, good growth of angelica in producing areas, and weak actual demand, angelica sells poorly. Even though some holders actively offer discounts to sell, the slow movement of goods has not been reversed, and the current price of ordinary goods is about 37-38 yuan/kg; similarly, because of abundant supply and the off-season for sales, gastrodia sells poorly and the market remains sluggish, with the current price of cultivated ordinary goods in the Hehuachi market at around 120 yuan/kg.
Lower prices have not boosted sales volume
“At present, most high-, medium- and low-grade Chinese medicinal herbs have entered a state of ‘falling volume and price’ for various reasons, but consumers seem accustomed to it and there has been no massive rush to buy and hoard. Sales are very stable, even somewhat flat. Local consumption is relatively pragmatic, and lower prices do not necessarily bring higher sales volume.” A person in charge of a pharmacy in Guangdong told this newspaper.
In stark contrast to the roller-coaster ride of medicinal herbs in previous years, why have many varieties suddenly fallen into a market trough? This is inseparable from blind planting in recent years leading to overproduction. It is understood that in previous years many medicinal herbs soared in price, and some varieties rose sharply and stayed high for a long time, such as Pseudostellaria heterophylla, which started at around 20 yuan, rapidly broke through the 100-yuan mark, and then once reached a price level of 200-300 yuan; the price of Panax notoginseng also soared all the way amid speculation by hot money, rising several times in four years. Stimulated by high returns, not only did herb farmers in producing areas expand planting, but non-producing areas also switched to growing such cash crops. The aftereffects of large-scale blind expansion of planting across the country finally became prominent this year: severe overproduction and a sharp fall in prices. “Blind planting has long been a major chronic ailment upstream in the Chinese medicinal herb industry, with more and more varieties falling into a vicious cycle and ultimately dragging down the market. If local governments or relevant management departments do not provide guidance, it will still be difficult for varieties to return to a reasonable price range in the future.” An industry insider said.
The reporter learned from this industry insider that although low-priced medicinal herbs are everywhere, because no sign of recovery can be seen in the short term, distributors are strongly wait-and-see, making the market even more sluggish. Seeing no money to be made, many hot-money players chose to withdraw at this time.
Herb market rectification may have limited impact on listed companies
In addition to the imbalance between supply and demand, several policy factors are also affecting the temperature of the herb market. First, the State Food and Drug Administration focused this year on strictly inspecting and rectifying major herb markets, causing a short-term decline in trading volume; in addition, the release of the new pharmacopoeia further raised quality standards for medicinal herbs, making goods of poor quality in the market even less sought after; moreover, many pharmaceutical companies have now had their GMP certificates revoked, with those involving traditional Chinese medicine production accounting for the majority. Company closures and industry reshuffling will also reduce herb usage and make the herb market colder.
“It is hard to say whether the herb market will recover quickly this year. But in the long run, uneven herb quality can indeed be raised to a higher level through various measures, and it will no longer be a crude farmers-market-style trading model.” The industry insider said.
In their view, listed companies are not greatly affected, because considering factors such as cost and quality control, many capable companies have developed upstream planting and can largely achieve “self-sufficiency” for varieties with large usage; even if pharmaceutical companies purchase externally, because they have “become smarter” and are stricter in reviewing source herbs, they are more likely to go to producing areas for assessment and procurement, skipping the intermediate link of the herb market. “With lower costs, net profit may indeed increase, but after the National Development and Reform Commission liberalized drug prices, market competition has become fiercer, and it cannot be ruled out that some Chinese patent medicine companies will cut prices to grab share.” The industry insider analyzed.