First, the financialization of Chinese medicinal materials, sour jujube kernel is a representative variety
Due to the growing demand for Chinese medicinal materials and the characteristics of agricultural and sideline products of "one production and sales to the world, one season to produce and sell throughout the year", in recent years, more and more surplus funds have flowed into the medicinal materials market, and some "sky-high" medicinal materials have emerged in an endless stream. As far as the sour jujube kernels that will take off in 2022, the codonopsis and angelica that will rise sharply in 2023, and the white peony and atractylodes that will rise sharply this year, it can be said that one side sings and the other side appears.
Counting the varieties with relatively large price fluctuations in recent years, the sour jujube kernel is a more conspicuous one, the unit price of sour jujube kernel is still below 500 yuan before the new production in 2022, with the opening of the epidemic, the growth of demand, coupled with the recession of the stock market and the property market, the social hot money is eyeing this variety, collecting goods, grabbing green, and raising the market price, doing everything, the price of sour jujube kernel has risen from more than 400 to more than 800 or even more than 1,000, and countless people have become rich for a while. Stimulated by high prices, wild jujube granules returned to the warehouse, and no one cared about the sour jujube planting and grafting technology also ushered in the second spring, and the sour jujube planting bases around the country sprung up like mushrooms after a rain, and the high price led to the cost inversion of Chinese patent medicine enterprises, the suspension of production and the decline in overall demand. The blind expansion of production, the sharp decline in market demand, and the cashing out of capital have all brought a heavy blow to the market of jujube kernels, and after the new production in 2023, jujube kernels began to enter a downward channel, falling all the way to 500 yuan/kg unit price. Now that the new production of sour jujube kernels is approaching, how many operators and hoarders are difficult to ride? It is also in response to the often saying that "the money earned by luck will eventually be lost back by strength".
Figure 1: Jujube kernels
Second, the sour jujube kernel has fallen, is the next one a gardenia?
Recently, some public accounts and websites have also appeared more articles about "gardenia expansion at a high price, reduction in dosage, and hidden worries", and also saw some comments posted by some online bloggers on related platforms. Judging from the long history of the gardenia market, the two historical highs of gardenia are inseparable from the promotion of capital. The first push time was in 2012, and the second push time was in 2016, but the results ended in failure, and the high market of gardenia was like a flash in the pan.
Figure 2: Gardenia
In view of the current high market of gardenias, according to people familiar with the matter, the price of gardenias has skyrocketed due to many factors, but the most fundamental is the involvement of capital and artificial speculation. Based on the current gardenia price at the highest level in history, the market operation risk is large, which is mainly reflected in the following aspects:
1. Macro level: The market of Chinese herbal medicines will face policy regulation and declining demand
First of all, the competent authorities will strengthen the monitoring and regulation of the Chinese herbal medicine market. On August 22, the State Administration for Market Regulation issued a reply to Recommendation No. 8154 of the Second Session of the 14th National People's Congress on its official website, in which it seriously responded to the "Proposal on Strengthening Anti-monopoly Law Enforcement in the Chinese Herbal Medicine Market to Ensure the Smooth Operation of Drug Prices" put forward by the representatives. Promote the standardized and healthy development of the Chinese herbal medicine industry, focusing on the following three aspects:
(1) Further improve the regulatory mechanism and standardize the market order of Chinese herbal medicines.
(2) Further strengthen law enforcement efforts to maintain a good market environment for Chinese herbal medicines.
(3) Further strengthen the linkage of departments to form a joint force in the supervision of the Chinese herbal medicine market.
Figure 3: SAMR's response to Recommendation No. 8154
On August 30, CCTV Finance released a news release, and a symposium held by the Public Security Bureau pointed out that it continued to launch cluster campaigns against online trolls to cause trouble, and resolutely curb the momentum of high incidence. The remarks of industry Internet celebrities and the Ministry of Industry Information may become the object of attention, and it is unknown whether they will be misjudged as helpers for the monopoly of Chinese herbal medicines.
Secondly, the high-quality development and upgrading of the pharmaceutical industry has brought new challenges to the Chinese patent medicine industry. According to the author's statistics on the total revenue of some well-known domestic traditional Chinese medicine enterprises in the first half of 2024, net profit attributable to the parent company and year-on-year growth rate, the performance of traditional Chinese medicine enterprises in the first half of 2024 will decline to varying degrees. Even some former industry leaders have fallen into a situation of declining revenue and profits. This phased development slowdown will inevitably lead to a decrease in the demand for raw materials for Chinese herbal medicines in the pharmaceutical industry.
Table 1: Semi-annual total revenue of some traditional Chinese medicine enterprises
2. Micro level: The gardenia market is facing a pullback
(1) Yield: The high price of gardenia in Fuding gardenia production area and other places this year has greatly stimulated the management of gardenia farmland, and the quality of gardenia field management is positively correlated with gardenia yield, and the new production is approaching, this year's wind and rain are smooth, Fuding gardenia is growing well, and the branches have been fruitful, and the overall output of gardenia is expected to be much higher in 2024 than in 2023.
(2) Inventory: According to incomplete statistics: the overall inventory of the market is at least 8,000 tons, basically 10~20 yuan/kg of low-price inventory, the source of goods mainly exists in Bozhou, Anguo market cold storage, and relatively concentrated; More insiders revealed that in the market, some goods are less than a certain price, and the pressurs will not show you the goods, and the inventory may be far beyond imagination.
(3) Dosage: Gardenia accounts for more than 80% of the production of Chinese patent medicine, and the top demand is Lanqin oral liquid, Jie'er Yin lotion, Qingkailing granules, children's soy Qiao Qingre granules, etc., according to the Zhongkang Yunling Chinese medicine industry data system: In 2023, the amount of gardenia Chinese patent medicine will be about 11203.04 tons, a year-on-year decrease of 2.02%, and it is expected that by the second half of 2024, with the decline in revenue of most traditional Chinese medicine industry enterprises and the weakening of demand, the demand for gardenia may further shrink.
To sum up, on the one hand, the state authorities have taken the monopoly of the Chinese herbal medicine market as the focus of law enforcement; On the other hand, the rapid rise in gardenia prices is at a historical high, releasing the upside in the next two years in advance, and the downward pressure has increased sharply; Third, the inventory base of the same market is huge, the lack of industrial demand side of the pull, gardenia production after the price of the new where, "high risk, start with caution, novices do not follow the trend".
For more detailed interpretation, please contact the background and refer to the "2023 Blue Book on the Development of Traditional Chinese Medicine Industry" and the "Industrial Big Data and Trend Analysis in the Next Three Years" series of reports launched by Zhongkang Yunling Traditional Chinese Medicine Industry Data System (click on the picture below to get the full text of the catalog)!
(Unless otherwise noted in the article, the data are from Zhongkang Yunling)