On May 10, Pan Jie, chairman of Zhangzhou Jiulongjiang Group Co., Ltd., the parent company of Zhangzhou Pian Zixi Pharmaceutical Co., Ltd. (hereinafter referred to as Pian Zixi, SH: 600436), and Liu Congsheng, vice president of Pian Zixi, were both investigated.
Eight Points noted that as of press time, the reasons and details of the investigation of the two executives have not been disclosed. However, some industry insiders revealed that one of the two executives who "fell from the horse" this time is in charge of the "marketing center" - not only to manage the market, but also to manage the procurement of raw materials, handling more money and more power.
Just five days before the two executives were investigated (May 5), Pian Zixi, nicknamed "Chinese medicine Mao", raised the price of its leading product, Pian Zi Xi from 590 yuan / capsule to 760 yuan / capsule, which is regarded as the largest price increase in its history.
"For companies, attributing price increases to raw materials is the safest and least troublesome way to say." A Chinese medicine industry insider said. However, just last year (2022), the gross profit margin of Pian Zixi has reached 80%.
Since its listing on June 11, 2003, in the past 20 years, the company has soared from 115 yuan / capsule to 760 yuan / capsule today, an increase of 561%.
The two events that happened in succession left a lot of room for people's reverie, and also cast a treacherous fog on Pian Zixi, a traditional Chinese medicine company from Fujian.
From hundreds of years of history, Pian Zixi has always been popular in southern Fujian, and almost everyone in Fujian knows about it. The imperial physicians of the palace were exiled to Zhangzhou to relieve the suffering of the people, and the US military purchased a large number of them during the Vietnam War, and regarded it as a trick to deal with the jungle plague... The bizarre legends are also true and false, giving Katazai a lot of subtle and magical glory.
Although in recent years, the official has tried to expand its indications through clinical trials, emphasizing the properties of the drug. But in the people, the narrative logic of Pian Zixi seems to have never been at another level, it has become a good gift in the eyes of the public, and people look at it more in terms of health care products and even financial products, but not medicine - after all, no one will buy a PD-1 inhibitor to put at home in case of "emergency".
What is clear is that the pricing of Pian Zixi does not follow the principles of pharmacoeconomics, and there is no linear relationship between its effect and price - in fact, this is the case for a considerable number of high-value Chinese medicines.
The sharpest price increase in history
"Is it a little inappropriate to raise prices so outrageously?"
Seeing the announcement of the price increase of Pian Zixi, Meng Jingu (pseudonym), a professor at a Chinese medicine university, first reacted to doubts. With a dual academic background of traditional Chinese medicine and western medicine, he is accustomed to understanding the logic of drug price increase from the "uniqueness" and "exclusivity" of drugs. The price increase of the film Zixi has "refreshed" his cognition again to some extent.
"If a molecular drug for cancer has only one molecule in it that can have an effect on cancer, then its price increase may be understandable." But the effect of the piece is very ordinary, clearing heat and detoxification, cooling blood and removing stasis, reducing swelling and relieving pain, there is nothing special. ”
Meng Jingu was not the only one who was confused. When it comes to Pian Zixi, Fujianese Xiao Tang immediately said: "There is no Fujianese who has not used Pian Zixi's products. "Slice Zixi, oolong tea, Shoushan stone - these three things are known locally as the "Three Treasures of Fujian".
In 1999, Zhangzhou Pharmaceutical Factory was restructured and became today's "Pian Zixi". Four years later, Pian Zixi landed on the Shanghai Stock Exchange and was recognized as the first batch of "Chinese time-honored brand" enterprises by the Ministry of Commerce in 2006. The series of Chinese medicines is its leading product, which is divided into two types: lozenges and capsules, of which lozenges are the most sought after.
"The elderly are very trusted." Don said. However, when she heard that the current price of the tablet was 760 yuan a pill, she was surprised: "I knew it was expensive, but I didn't expect it to be so expensive." Xiao Tang's aunt commented bluntly: the price is too expensive, the medicine is so unpalatable, and the increase is outrageous.
The rich, humid and warm coastal zone of East China is the cradle of the "time-honored Chinese brand" film. For local people, nowadays Pian Zixi is not only a miracle medicine for swelling in the neighborhood, but also an "intangible cultural heritage" and "gift-giving" representing traditional culture. On social media, there are many people who post gift boxes for their elders to show their "filial piety", and some people directly use them as proof of their personal ability - send a photo of the gift box with the text: "Call me a rich woman." ”
Meng Jingu also tried to understand the price increase of Pian Zixi from this perspective: "It is detached from the concept of medicine, and is regarded by everyone as a high-end gift made of precious Chinese medicinal materials, and it is good to be able to buy it, which may be a confidence in the price increase." ”
Combing through the financial reports of Pian Zixi in 2022, it can be found that this traditional Chinese medicine "money printing machine" once overheated and downshifted its horsepower after experiencing almost crazy folk hype, rush buying and skyrocketing prices in the summer of 2021.
According to the financial report, in 2022, the company achieved a total operating income of 8.694 billion yuan, an increase of 672 million yuan year-on-year, an increase of 8.38%. This is the first single-digit revenue increase in 7 years. Sales expenses, including promotions, business publicity and advertising, decreased by 25.70% year-on-year. Correspondingly, the sales of the star product liver disease drugs (i.e. Pian Zixi series capsules, lozenges, etc.) also fell by 4.05% year-on-year last year, to 3,383,400 boxes.
The sales performance that is not outstanding enough cannot support the high valuation given to the film in the secondary market. The choice to raise prices in order to boost stock prices may reflect another anxiety about performance growth and a desire to stabilize the confidence of the capital market.
On May 8, after the price increase, the stock price of Pian Zixi (SH:600436) rose to 301.19 yuan.
Medicinal herbs are good, not as good as stories
In the official caliber, the reason for this price increase is not complicated, just because of the rise in the cost of main raw materials and labor - a "dilemma" that almost all Chinese medicine companies have encountered in recent years.
The main ingredients are musk, bezoar, Panax notoginseng and snake gall. Among them, the "most expensive" are natural musk and natural bezoar.
According to data from the Chinese Materia Medica.com, since March this year, the price of natural bezoar has risen from about 500,000 yuan per kilogram to about 800,000 yuan per kilogram, almost more expensive than gold. The cheapest artificial bezoar only needs about 500 yuan per kilogram; According to data from Yaotong.com, the price of natural musk has also risen from 4.2 million yuan per kilogram last year to 4.5 million yuan, compared with 60,000 yuan per kilogram of artificial musk.
It seems completely logical to raise the price of high-end pharmaceutical tablets that mainly use "natural bezoar" and "natural musk", in such a wave of rising raw material prices. But even so, the more expensive the herbs, the better the efficacy. Many industry insiders also told Eight Points that there is no necessary connection between the efficacy of Chinese medicine and pricing.
"The effect of proprietary Chinese medicines is determined by the rationality of the formulation and the symptomatic application of clinical patients. Many cheap medicinal herbs, the preparation of the drug effect is also very good. Zhou Yongqiang, founder of Nanjing Le Yao Venture Capital Management Co., Ltd., said.
Meng Jingu also said that the relationship between Chinese medicinal materials and medicinal efficacy is an important research topic in the academic community, "Whether the medicinal materials are good or not, what should be used to evaluate?" Some people think that it is in the traditional way, looking at its origin, appearance, and then determining it by ingredients. However, the composition of medicinal materials and clinical efficacy have not established a linear relationship at present, and it cannot be directly proved that the composition is high, and the effect is good. ”
Based on this, people's views on Chinese medicinal materials have given birth to two schools of view: one school believes that Chinese medicine is born of tradition and needs to respect tradition. According to the ancient records, the use of natural medicinal materials used in ancient times can maximize the "copying" of ancient formulas and achieve the best results.
Another group believes that artificially manufactured medicinal materials, although they cannot make the ingredients of medicinal materials 100% the same as natural ones, but if the main ingredients are similar, and then do activity evaluation, the effect of medicine can also be achieved.
"These two views are right and wrong, and in the absence of unified clinical trial indicators and systems, it really cannot be evaluated." Meng Jingu said.
But what is certain is that some Chinese medicine companies may prefer to follow the former's view.
The concepts of "natural medicinal materials" and "traditional secret recipes" have given them the label of "prestigious" and "advanced", and also broadened their room for price increases - as if to say, "The natural medicinal materials I use are too scarce and the price is rising too fast." No way, I also have to increase the price. ”
Click on the official website of Pian Zixi, and the words "intangible cultural heritage" and "first-class protected varieties of traditional Chinese medicine" immediately occupied half of the screen. As the only company to enjoy the state-level lifetime formula secrecy (the other is Yunnan Baiyao), Pian Zixi seems to be very good at telling stories about its "traditional secret recipe" - it has left a full page on its website to tell the legend of its origins, origins and even going to sea.
It is said that the secret recipe of Pian Zixi came from the imperial physician of the Ming Dynasty, who lived in Zhangzhou under the belief of resisting feudal tyranny, cut his hair and became a monk, and used the secret recipe of Pian Zixi to relieve the local people. In modern times, it was purchased in large quantities by the US military as a necessity for soldiers to fight in the jungle, and was therefore banned from export by China.
In peacetime, Katazai "appeared" again and was presented to Japanese leaders as a "national gift" in diplomatic occasions. In this series of legendary stories featuring "miraculous medicinal effects", Katazai seems to never limit himself to just a "medicine", but imagines himself as a "witness" who participates in the historical process, and chooses a path that conforms to the "human society".
A number of industry insiders told Eight Points Jianwen that telling about the "traditional culture" behind drugs is the "customary means" of marketing of Chinese medicine enterprises, and it is also the most distinctive core of the Chinese medicine system as a drug.
"The promotion of Chinese medicine enterprises is based on the characteristics of Chinese medicine itself, such as the cultural attributes of Chinese medicine, which Western medicine does not have." Shen Yong, deputy secretary-general of the Internal and External Simultaneous Treatment and Drug Branch of the China Association of Traditional Chinese Medicine and chairman of Beijing Shengshi Kanglai Traditional Chinese Medicine Marketing Planning Company, told Eight Points Jianwen. "Behind Yunnan Baiyao is the story of Qu Huanzhang, and behind Ejiao is the story of replenishing blood. These stories, cephalosporin and aspirin in Western medicine are not there. ”
Legendary stories and natural medicinal herbs have given Pian Zixi enough room for price increases.
But even if there is room for unbridled price increases, they must still be subject to regulation.
Zhou Yongqiang told Eight Points that although the state has given enterprises the right to set their own prices and no longer approve prices before price increases, it will still monitor price changes of pharmaceutical companies, and at the same time use other regulations such as anti-monopoly laws to control enterprises that are about to "get out of control".
"The government will still monitor the market. For OTC drugs of TOC, in addition to direct anti-monopoly law, there are also methods such as drug production cost verification and tax system monitoring. Zhou Yongqiang said.
Piece in the haze
Since 2018, after being valued by the capital market, the film seems to have begun to run all the way out of the circle. Although most people outside the southern Fujian region do not understand what "zai" means and what "xi" means, as long as these three words are linked, people will think of this expensive and miraculous little pill.
But a small pill, priced in hundreds, what confidence does it have to sell so expensive? What exactly does it do? Who bought it?
Like the vast majority of high-value proprietary Chinese medicines, Pian Zixi does not take the hospital route.
Although its annual report does not show the proportion of pharmacy and hospital, there is a detail that can be proved - in June 2022, its products were withdrawn from the Fujian Provincial Medical Insurance Catalog, which Pian Zixi believes has no significant impact on it. This means that the company mainly relies on out-of-hospital revenue.
"This drug is known in the industry as 'one-product double cross', and can be both a prescription drug in a hospital or an OTC drug in a pharmacy." Shen Yong said that such drugs are often of reliable quality and can be used for common diseases.
The strong accessibility of pharmacy sales has also contributed to the emergence of Pian Zixi. In 2021, when the film is at its most popular, even if the purchase is limited to 2 capsules, the front of the store will always be full of people standing in line. This naturally attracted an influx of scalpers, and under their hype, the price of the piece even reached 1600 yuan per grain.
The highlights of 2021 seem to overdraw the potential of the film. According to the annual report, in 2022, the sales volume of Pian Zixi liver disease products decreased by 4.05% compared with 2021, only 3,383,400 boxes were sold, and the inventory reached 854,900 boxes, an increase of 122.34% over 2021, and although the gross profit margin was still as high as 80%, it was also lower than in 2021.
Therefore, the price increase of Pian Zixi may have a lot to do with its performance pressure.
Four traditional Chinese medicine practitioners in Beijing, Shanghai and Shandong told Eight Points that their hospitals did not have Pian Zixia, and they rarely prescribed Pian Zi Xie. Only one of the four doctors prescribes tablets every month on average.
"We first ask patients if some treatments may be more expensive and can they afford it." A Chinese medicine practitioner in Shanghai said, "I mainly use it for malignant tumors. ”
This TCM practitioner believes that the use of Pian Zixi only for liver disease is "narrow", "The function of Pian Zi Xi is to clear heat, detoxify, dissolve turbidity, drain turbidity, and can be used to fight evil spirits, such as treating plague, severe infections, malignant tumors, etc." ”
Wang Guowei, former vice president and chief physician of internal medicine of Beijing Hospital of Traditional Chinese Medicine, explained that traditional Chinese medicine pays attention to "using its own medicine for its symptoms", as long as there are symptoms of "heat toxicity" and accurate identification, you can use tablets of Zixi, not only liver disease, reflecting the "same treatment of different diseases" of traditional Chinese medicine.
Wang Guowei affirmed the efficacy of Pian Zixia, but there are other Chinese herbal medicines similar to Pian Zixi, which play a role in clearing heat and detoxification, "I am more accustomed to prescribing Chinese medicine decoctions, which are not only cheap, but also more able to reflect the overall concept and dialectical treatment." ”
"My friend recently got on fire and had a sore throat and asked me if I could eat it." This is Wang Guowei's daily life in contact with Katazai. This may indicate that in the people, people's understanding of the role of the film is somewhat amplified.
"There are two main types of people who buy tablets: one is health care, frequent drinkers, high-end business people; One category is patients, liver disease is more serious. A person close to a local distributor in Fujian told Eight Points that Pian Zixi often sponsors activities for the elderly, and some elderly people "buy tens of thousands."
With its rising stock price, Pian Zixi has won the title of "Moutai in medicine", and even some netizens jokingly call the relationship between the two "after drinking Moutai hurts the liver, eat Pian Zixi to protect the liver".
Although it is a joke, it also reflects many people's perception of Katazai. Health care products and investment and financial products seem to have become an image that Pian Zixi cannot get rid of.
"Promoting products as gifts is a common marketing tactic for all proprietary Chinese medicines with nourishing functions." Shen Yong said that the previous Dong Ejiao also followed a similar route, not only aggressively entering the supermarket health care products area, but also raising prices 17 times in 13 years, gradually rising from 160 yuan per kilogram to nearly 6,000 yuan per kilogram.
"During the epidemic, the companies behind some antipyretic and detoxifying drugs or antiviral drugs did not have strong control over channels." Mao Hongliang, director of the central marketing department of Jiangsu Wuzhong Medicine Group Co., Ltd., said, "In the past, when they were not standardized, they would use the publicity ideas of health products when they were publicizing, but now they are not allowed." ”
Zhou Yongqiang believes that the impression of this "health care product" is more related to the promotion of downstream agents, and pharmaceutical companies will not pay too much attention to this matter, and even like to hear it, "as long as the sales go up".
How Pian Zixi views the promotion of health care products, we may not know, but what we can see is that it continues to launch various health products and daily chemical products along the route of Yunnan Baiyao, and goes further and further on the road of "de-medicine".
Zhou Yongqiang judged that in the future, the new product project of Pian Zixi will focus on two points, "The first is that there are great health attributes; The second is to be able to stack the brand value of Pian Zixi, which is equivalent to 1+1>2".
The price of traditional Chinese medicine has risen wildly over the years
Pian Zixi is not the only Chinese medicine that has seen skyrocketing prices in recent years.
The more expensive ones, like Rentang's "miracle medicine" natural musk version of Angong Niuhuang Pills, were raised in price from 780 yuan to 860 yuan per capsule at the end of 2021. Cheaper ones, such as Xiao Chai Hu pellets, have also been "snapped up" during the epidemic.
According to media reports, in a pharmacy in Guangzhou, the supply price of Xiaochai Hu granules "rose from about 10 pieces a box to more than 30." Correspondingly, the price of chaihu (medicinal materials), which has always been stable, has also risen from 65~80 yuan / kg to 88~91 yuan / kg this year.
The general price increase of medicinal materials is the reason for the increase in the price of traditional Chinese medicines, while the reasons for the rise in the price of medicinal materials are more complicated, and scarcity is one of them. In addition to the increasing availability of wild medicinal materials and so-called "precious herbs" such as natural musk and bezoar, even in vitro cultivated bezoar and artificial bezoar are in short supply.
In fact, some common Chinese medicinal materials cannot escape the end of the rise.
According to the "Economic Information Network" program, since last year, the price of Chinese medicinal materials has generally risen, and relatively few varieties have remained flat or reduced. Traditional tonic and tonic bulk Chinese medicinal herbs, such as angelica and codonopsis, have risen sharply, "every few days." ”
A number of industry insiders said that in addition to the strong downstream demand forcing the price of proprietary Chinese medicines and medicinal materials to rise, Chinese medicinal materials that are closely integrated with agriculture and animal husbandry are also frequently affected by environmental protection, animal protection, and even natural disasters, food planting and other factors, reducing production capacity, thereby raising prices.
"At present, some provinces and cities have implemented the transformation of cultivated land into staple food, which has affected the planting area of some medicinal materials." Shi Lin, director of the Zhejiang Bawei Research Institute of Zhejiang University of Chinese Medicine, said, "The 2020 edition of the Chinese Pharmacopoeia requires heavy metal content and pesticide residues in Chinese medicinal materials and drinking tablets, which increases the planting cost and testing cost of traditional Chinese medicine. ”
In addition to the reasons for medicinal materials, the production and processing process and labor costs of proprietary Chinese medicines have also increased by varying degrees. "In the past, proprietary Chinese medicine companies used to burn coal to provide energy for the extraction of medicinal ingredients, but in the past two years, environmental protection has been promoted, and now it has gradually changed to natural gas boilers," Zhou Yongqiang said. "Although there are subsidies for using natural gas, the cost is still much higher than before.
The new version of the Chinese Pharmacopoeia implemented at the end of 2020 has increased the safety and quality control requirements of traditional Chinese medicines, especially affecting the traditional Chinese medicine tablet industry, and forcing traditional Chinese medicine enterprises to change their quality testing methods.
A Chinese medicine expert who did not want to be named told Eight Points that in recent years, the standards of traditional Chinese medicine drugs have been continuously improved, and the quality inspection items have increased a lot. The early detection of only a few iconic ingredients can no longer meet the requirements, but to carry out multi-component content control, some varieties such as injections require fingerprint control for medicinal materials, intermediates and preparations. There are also corresponding requirements for pesticide residues, heavy metals and mycotoxins.
In order to meet the technical requirements of quality inspection, the sensitivity of the high-performance liquid phase is limited, and enterprises also need to be equipped with high-sensitivity analysis equipment such as mass spectrometry, and the cost of detection equipment has soared - "three or four hundred thousand high-performance liquid phases, but mass spectrometry requires more than 3 million." The cost of maintaining the equipment and the cost of standards for testing and analysis are also very high.
When talking with Eight Points Jianwen, the owner of a traditional Chinese medicine company sorted out 18 "reasons for the rise in prices of traditional Chinese medicines", covering various aspects from the difficulty of medicinal materials, management, energy, and sales.
Among them, he mentioned "rising labor costs" three times. In his eyes, these rising labor costs cover almost all aspects of the traditional Chinese medicine industry chain——
In the most source of medicinal material planting, due to the stricter requirements of the Chinese Pharmacopoeia on heavy metals and pesticide residues, some raw material suppliers "dare not sprinkle pesticides" when planting, and instead use the most basic "stupid method" to manually weed, which increases labor costs.
In the intermediate processing of medicinal materials, the labor cost required to process medicinal materials has also increased in the past two years. "In the past, processing medicinal herbs cost 100 yuan a person a day, but now you can't get 200 yuan," he said.
In the end, the boss of a Chinese medicine company found that it became more and more difficult to collect money when the salary requirements of marketers and the cost of travel became higher. "Especially after three years of the epidemic, many medical institutions, downstream customer commercial companies, chain pharmacies, etc., are not very good financial, which makes it difficult for us to collect payments and increases financial costs."
Various analyses have been used as justification for rising prices in traditional Chinese medicines, but these cost increases do not seem to have affected the continued profitability of traditional Chinese medicine companies.
According to China Business Daily, 80% of the 67 Chinese medicine companies that have released their 2022 annual reports have achieved profits, and nearly 10 Chinese medicine companies such as Taiji Group, Dong'e Ejiao and Kang'en Bei continued to double their performance in the first quarter of 2023.
Not only that, Lotus Qingwen, Xiao Chai Hu Granules, and Lanqin oral liquid are still snapped up in the second wave of new crown infections this year; On May 19, the stock price of Pian Zixi still rose to 305.85 yuan per share; and on social media, people showed boxes of red or yellow packaging, continuing to call Pian Zixi and Angong Niuhuang Pill "life-saving medicine" and "fairy pill".
The price increase has not affected people's enthusiasm for traditional Chinese medicine, and under the "great health" story of traditional Chinese medicine, the continuous surge in the future may not stop.
Written by Zhang Yuxiao, Song Xinze, Lin Shuiyao
Yan Yucheng丨Responsible editor
This article was first published on the WeChat public account "Eight Points Jianwen" and may not be reproduced without authorization