The price of Chinese medicinal materials needs to be vigilant

Recently, the Office of the Centralized Procurement Leading Group of the Inter-Provincial Alliance of Chinese Patent Medicines issued the "Announcement on the Centralized Procurement of Chinese Patent Medicines in the Inter-Provincial Alliance (No.
4)", and the results of the centralized procurement of Chinese patent medicines in the 19 provinces of Hubei Province were officially announced
.

This time, 182 products from 157 companies in the 19-province Chinese patent medicine alliance in Hubei participated in the quotation, with a procurement scale of nearly 10 billion yuan
.

97 companies and 111 products were selected, the selection rate of enterprises reached 61.

The author's analysis believes that the centralized procurement of traditional Chinese medicine is the only way for medical insurance to control costs and reduce drug prices.
However, in the context of the continuous and general increase in the price of traditional Chinese medicine, centralized procurement may once again push up the price of related traditional Chinese medicine raw materials and the winning bid price.
Enterprises and even the entire medical insurance cost control process have negative consequences
.

The following is the author's specific analysis of the winning products and their raw material guarantee capabilities:

01 Bid-winning products gather in leading companies

01 Bid-winning products gather in leading companies

Figure 1: Proportion of winning bidders in the production enterprises of this variety (part)

Judging from the proportion of successful bidders: Ginkgo biloba leaves and Salvia miltiorrhiza injections have significantly improved their supply concentration after centralized procurement
.

There are 61 domestic manufacturers of ginkgo leaves, and 14 companies have won bids for centralized procurement, accounting for 22.

That is to say, the large variety of Chinese patent medicine suppliers are obviously concentrated, and the supply from many manufacturers in the past has been changed to the hands of one or two leading enterprises
.

02 The price of raw materials for winning bidders generally rises

02 The price of raw materials for winning bidders generally rises

Figure 2: Fluctuation of the Comprehensive 200 Index of the Chinese Herbal Medicine Market (Source: Chinese Herbal Medicine World Network)

Judging from the Chinese Herbal Medicine 200 Index: In the past 5 years, due to cyclical laws and human factors, the Chinese Herbal Medicine Comprehensive 200 Index has continued to run at a high level, which not only made the insiders enthusiastic, but also became the focus of attention from outsiders
.

On the one hand, it creates an opportunity for capital to intervene in speculation; on the other hand, the price of Chinese medicinal materials has repeatedly been out of control, which has seriously affected the stable and continuous supply of traditional Chinese medicine raw materials
.

Especially starting from 2020, the continuous over-issue of the US dollar has caused global inflation to intensify.
As bulk agricultural and sideline products, especially the raw materials of traditional Chinese medicinal materials with obvious rigid demand, it is the first to bear the brunt; at the same time, with the acceleration of production and sales, the traditional medicinal materials market Operators lack living space, and they can only make profits by hoarding goods to increase, and counteract the purchasers
.

Figure 3: Statistics on the occurrence frequency of Chinese herbal medicine raw materials involved in the winning products

From the analysis of the Chinese patent medicines that won the bid involving the raw materials of Chinese herbal medicines: the frequency of blood-regulating medicines is relatively high
.

The 111 bid-winning products involved 44 varieties of raw materials, and the demand was concentrated on blood medicines, of which 7.

Figure 4: The rise and fall of the raw material market of the winning products

Judging from the ups and downs of the raw material market: the rising varieties account for a relatively high proportion, and the overall cost is generally high
.

Among the 44 varieties of Chinese medicinal materials, 29 varieties rose, accounting for 65.

Among the rising varieties, there are 5 varieties with an increase of ≥100%, accounting for 11.
36%, such as: Caowu, Rehmannia glutinosa, Achyranthes, Chuanxiong, and Turmeric; 6 with an increase of 30%-99%, accounting for 13.
64% %, such as: Citrus aurantium, Angelica sinensis, Ophiopogon japonicus, Taizishen, Schisandra and Forsythia; 18 with an increase of less than 30%, such as: Platycodon grandiflorum, ginseng, Salvia, Poria, safflower, tangerine peel, frankincense, hawthorn, Cordyceps sinensis, etc.

.

Among the declining varieties, there is 1 product with a decline of ≥30%, accounting for 13.
64%, such as cockroach; 5 products with a decline of less than 30%, accounting for 11.
36%, such as: borneol, skullcap, pinellia, and Mutara and honeysuckle
.

03 Rising raw material prices drive up production costs

03 Rising raw material prices drive up production costs

Figure 5: Statistics on the consumption of raw materials for the winning products

Calculation and analysis of the raw material consumption of the winning bidders: the proportion of high-demand varieties and low-demand varieties remained the same
.

There are 15 varieties with demand greater than or equal to 100 tons, accounting for 48.

Among the varieties with raw material consumption ≥ 100 tons, there are 4 varieties with demand ≥ 1000 tons, accounting for 12.
90%, such as Ophiopogon japonicus, angelica, Panax notoginseng, Rehmannia glutinosa; 11 varieties with demand between 100-999 tons, accounting for 35.
48% , such as: Ginkgo biloba, Citrus aurantium, Salvia miltiorrhiza, Periplaneta, Caowu, Wulingzhi, Momordica, sweetgum, licorice, Bupleurum, Dengzhanhua;

There are 16 raw material consumption less than 100 tons, accounting for 51.
62%, such as: Forsythia, musk, Scutellaria, honeysuckle, Taizishen, Pinellia, Achyranthes, Cordyceps sinensis, Frankincense, Schisandra, Coptidis, Red Ginseng, Borneol, Hawthorn, Ginseng, Astragalus
.

Figure 6: The rise and fall of the production cost of the winning products

Looking at the cost of Chinese patent medicines: Affected by the general increase in raw materials, the proportion of Chinese patent medicines with increased production costs is relatively high
.

There are 9 varieties with rising costs, accounting for 52.

The production cost of proprietary Chinese medicines has risen.
In the past two years, the main cost is the cost of raw materials for Chinese herbal medicines, followed by additives, flavorings and other auxiliary materials, as well as the increase in packaging costs and labor costs
.

04 The centralized procurement of traditional Chinese medicine will affect the supply of raw materials and price stability

04 The centralized procurement of traditional Chinese medicine will affect the supply of raw materials and price stability

1.
From the supply of raw materials of Chinese herbal medicines:

(1) The bid-winning company cannot perform the contract, and the production of finished medicines will be affected
.

Since the second half of 2020, the prices of bulk raw materials such as Forsythia and Rehmannia glutinosa have doubled, and there is still an upward trend.

(2) It is very easy to monopolize raw materials, especially some hot-selling products, such as Lianhua Qingwen series, Shuanghuanglian series, Xuesaitong, Xuefu Zhuyu capsule, Huoxuezhitong, Shenshuining capsule, Chuanbei loquat cough The core raw materials of products such as Hexingsu Relieving Cough may become an obvious target of "sniping", and it will be easier for capital roasters to "hunt" one or several raw materials of the winning products
.

2.
The price stability of Chinese herbal medicines is as follows:

(1) Chinese medicinal materials are agricultural and sideline products, and their prices are easily affected by factors such as planting area, growth cycle, harvest time, content, appearance, and processing technology
.

The continuous rise in the price of raw materials of traditional Chinese medicine is very easy to mislead the growers in the production area to plant on a large scale.
It will become an indisputable fact that some varieties with easy planting and high production capacity will have excess production capacity in the future, such as Chuanxiong, safflower, Salvia, Ginkgo biloba, Pinellia
etc.

(2) Some varieties of Chinese herbal medicines have financial attributes
.

The agricultural and sideline product attributes of traditional Chinese medicinal materials determine that the cultivation of traditional Chinese medicinal materials still needs to "depend on the sky", but in the face of varieties with long growth cycles, high planting difficulties, and difficult production recovery, their financial attributes are often more obvious, such as Panax notoginseng, Ginseng, Angelica, Codonopsis, American ginseng, etc.