Raw material cost rises drug prices down Guangdong proprietary Chinese medicine or will be unprofitable

After the 27th round of price reductions of the National Development and Reform Commission was formally implemented on Monday, pharmacies and pharmaceutical companies have reported that rising costs and lower drug prices are challenging the company's breakeven line. In Guangdong, a major province of Chinese medicine, the situation is even less optimistic. In the past few days, this newspaper used a questionnaire survey to investigate more than a dozen old Chinese patent medicine manufacturing enterprises in Guangdong. The results showed that the rise in production costs, which are mainly Chinese herbal medicine prices, has been plaguing the entire Chinese patent medicine industry.

The "2010 China's pharmaceutical industry status analysis and outlook for 2011" issued by the China Investment Advisor shows that since 2010, the price of Chinese herbal medicines has increased significantly. As of the beginning of November 2010, 84% of the 537 kinds of Chinese herbal medicines on the national market went up in price, and the increase was generally between 5% and 180%. Among them, the increase in the value of the Pacific sub-ginseng is the most obvious. The year-to-date increase has reached 353%; Codonopsis has also risen as high as 162%; the March 7 increase has reached 68%.

Guangdong is an important province in the production of Chinese patent medicines and the consumption of Chinese herbal medicines. The madness of Chinese herbal medicines prices is undoubtedly a severe blow to the Chinese medicine industry in Guangdong. In the questionnaire survey, 90% of the respondents stated that production costs rose by 20%. The biggest increase was in Chinese herbal medicines, which generally rose by 10% to 50%, while 30% of the respondents stated that the prices of Chinese herbal medicines needed for core products rose by more than 100%. Eighty percent of the respondents said that the gross profit margin of Chinese patent medicines has declined year-on-year, and it is even unprofitable.

Li Chuyuan, general manager of Guangyao Pharmaceutical Group, frankly stated that the rising cost of raw materials for Chinese herbal medicines and the introduction of a new round of “price reduction orders” by the National Development and Reform Commission will cause the local Chinese patent medicine manufacturing enterprises to further lose their advantages in the “quote price” drug bidding. The profitability of enterprises will also decline further. "In the long run, it will also reduce the research funding or the power of enterprises, which is not conducive to product improvement and innovation."

It is reported that the fact that companies do not produce pharmacies without sales after drug prices have already caused the attention of the National Development and Reform Commission. Li Chuyuan revealed that in the communication with the National Development and Reform Commission, he got a good news. In the next price adjustment, the National Development and Reform Commission will conduct another survey, and the results may be higher or lower depending on the cost situation. Reporter Lu Zhilin (Author: Lu Zhilin)