The global Traditional Chinese Medicine (TCM) industry has naturally felt the impact of inflation throughout past years; in 2010, however, herbs used widely in TCM experienced much higher price increases than usual. The rate of inflation in China is now at its highest level in over 2 years,¹ and the country’s various enterprises, including its market for herbs, are feeling the brunt of this situation. For example, TCM products sold in 2010 in China—especially in Northern and Eastern Chinese cities, such as Anguo and Shanghai—most of which were medicinal herbs, doubled in price (on average).^1-3 Prices of certain ingredients and particularly popular herbs have risen considerably higher.^1-7

Many factors are being blamed for the elevated prices, including cogent market demand, the Yuan’s increasing strength, weather/climate changes, herbs being cultivated more than wild collected, general economic proceedings, recent public health crises, and herbal supply shortages.^1-7 Approximately 85% of the total amount of Chinese traditional medicines in the market are said to have seen surges in price, according to various online reports referencing a recent pronouncement by the China Association of Traditional Chinese Medicine (CATCM).^3,4 Other reports by CATCM found that the cost of over 25% of herbal medicines at least doubled in the second half of 2010,² and that some raw herbal materials and finished herbal medicine products have supposedly seen price spikes as steep as 700% over the past year.³

The increase in prices is also spreading around the world. In the Southeast Asian country of Singapore, for example, the cost of many herbs used in TCM rose by approximately 30% last year.^6,7 According to Subhuti Dharmananda, PhD, director of the Institute for Traditional Medicine in Portland, Oregon, herb suppliers in the United States have also experienced increased prices across the board, with the increase in prices up to 30% in the past 3 years (e-mail, January 7-8, 2011). “This last year (2010) was possibly the highest percentage increase,” he said. “The prices of certain bulk raw materials (such as dried leaves, flowers, roots, and barks) have increased by as much as a factor of 3 within a single year.”

Recent Public Health Crises

The 2010 increase in TCM herb prices is not entirely unique, as prices have risen during recent episodes of public health crises. Dr. Dharmananda said the cost of Chinese herbs remained “relatively stable” for approximately the first 30 years after they became of widespread interest in the West in the mid- to late-1970s. But, he continued, a dramatic upswing in prices began with the SARS (Severe Acute Respiratory Syndrome) epidemic in 2003 and 2004 and has continued, sometimes with significant cost jumps. 

“Because SARS was a major concern in China at that time and there was no known treatment, Chinese herbs came into very high demand as a possible remedy,” said Dr. Dharmananda. Anti-infection herbs such as isatis (Isatis indigotica), which is used for its antimicrobial and antibiotic properties,⁸ fell into very short supply as a result, forcing prices upward. Before SARS, the root of white peony (Paeonia lactiflora) cost approximately 3 Yuan per kilogram ($0.45 US) and the price fluctuated very little for years.⁸ In 2010, however, the price increased to around 20 Yuan ($3.03 US) per kilogram due to limited production. According to Dr. Dharmananda, the prices started increasing at the supply chain level of basic herb supplies/raw materials.

John Scott, president of Golden Flower Chinese Herbs in Albuquerque, New Mexico, said the recent scare surrounding H1N1 (also known as swine flu, a subtype of influenza A virus and the most common cause of human influenza in 2009) also caused the cost of TCM materials to skyrocket in 2009 (oral communication, January 12, 2011). According to Scott, the prices of honeysuckle (Lonicera spp .) flower, which is used traditionally for a variety of reasons, including as an antimicrobial, to lower fever, and to reduce inflammation,⁹ “went through the roof.” This partly could have been due to the State Administration of TCM recommending people take the Chinese herbal mixture Lian Hua Qing Wen to defend and fortify their immunity. Versions of this mixture contained forsythia (Forsythia suspensa) fruit and honeysuckle flower,¹⁰ the latter of which now costs up to 5 times more than it did a couple years ago.^6,7

Market Conditions

Factors other than temporary health crises have also been in play during the past decade, one of which is China’s adoption of a market-style economy. According to Dr. Dharmananda, this new economic system replaces a majority of the communist government-controlled economy and has successfully raised the living standard of the Chinese people. As a result, the Chinese populous is more able to purchase medicinal herbs and herb-based products at will. 

“Previously,” said Dr. Dharmananda, “there was almost no discretionary spending on Chinese herbs, which mainly had 2 destinations: prescription to patients in hospitals, and export. Today, the general population can go to stores and purchase health-promoting and symptom- or disease-treating products, and entrepreneurs can develop consumer products that utilize herbs for a variety of uses.” According to Dr. Dharmananda, the large Chinese population and the country’s long-standing experience with herbs have led to a rapid increase in demand for domestic use of the herbs. “With greater demand come higher prices,” he said.

Scott of Golden Flower Chinese Herbs agreed that market conditions are drastically affecting these plants and their availability. The price of labor, though somewhat static in recent years, has increased 100%, Scott said, and labor costs will subsequently push herb prices up. Transportation costs have also gone up, partly due to spikes in fuel costs.

Andrew Ellis, president of Spring Wind Herb Company in Berkeley, California, said there are 3 main considerations that most suppliers mention when asked why 2010 had such a “meteoric rise” in prices: rampant inflation in China, greed inherent in the “get-rich-quick” atmosphere of modern-day China, and last year’s drastic weather that resulted in floods and drought (e-mail, January 25, 2011). These factors, when combined with the US dollar's loss in value, have caused many herbs to almost double in cost in the past year, Ellis continued.

“Many herbs that were previously sold for export because they were too expensive for Chinese consumers are now being sold in China to the new ‘well-to-do class,’” said Ellis. “Thus, the higher demand for higher grade (read: export-grade) herbs has caused a price rise in certain herbs.” According to Ellis, this coincides with a growing popularity of Yang Sheng (translated literally to “nourishing life”), which is the use of herbs to promote good health and long life. “Yang Sheng books fill the book stores these days,” said Ellis. “This has led to the rise in prices of several supplementing herbs."

As TCM becomes more popular not only within China itself, but in the Western world, Scott said prices of more mainstream herbs such as dong quai (Angelica sinensis) root and astragalus (Astragalus spp.) root rise considerably. Prices of dang shen (Codonopsis pilosula) have also gone up considerably over the last several years, according to Scott. He said the price for this herb is “probably double” what is was a few years ago (e-mail, January 31, 2011).

This rise in demand is not without consequences. “When an herb becomes popular, it becomes threatened,” said Scott. “In China they become less discriminatory of what they are picking.” This “irresponsible picking” becomes a problem as time goes on, Scott said, noting that it is becoming more important to promote commercial cultivation of these herbs as opposed to wild collecting.

Interestingly, a transition from wild collecting to cultivation is currently taking place in China. Just 30 years ago, according to Dr. Dharmananda, about 85% of China’s medicinal herb supplies came from wild sources. Today, it is less than 50%. “There are multiple causes for the shift in production,” said Dr. Dharmananda. “Among them are dwindling land areas for wild collection (due to the growth in Chinese population and use of land for expanded production of goods); concerns about endangered species; desire to assure consistent supplies (by having a particular species, rather than several that might be collected, and by uniform growing conditions); and the changed Chinese economy which favors development of herb farms. A more rapid conversion of supplies has taken place in the past decade than previously.”


Consequences of Foreign Influence

Foreign management of imported herb materials has also significantly contributed to the inflation in TCM herb prices. According to Dr. Dharmananda, consumer and regulatory demands implemented in recent years have led to the need for expensive testing of herb materials, and for finished products, such tests may be carried out 3 times (original raw materials; after making an herb extract; and after making a completed product, such as tablets or capsules).

Ingredient qualification, for example, enforced through recent policy such as the US regulations on current Good Manufacturing Practices (cGMPs)— which aim to help ensure the cleanliness, identity, and general quality of herbal raw materials —add to the cost paid by consumers, whether the increase is derived from the manufacturer or the ingredient supplier. “A company that provides both the standard crude herbs (largely untested, as has been the case for years), and tested crude herbs (such things as evaluation of heavy metals, pesticides, and microbes, made available more recently), charges 20% more for the latter,” said Dr. Dharmananda.

Additionally, when TCM products and ingredients seep into the US consumer market and are widely marketed, an increase in the cost of those herbs quickly follows. A good example, according to Scott, would be the fruit of Lycium spp ., which is commercially called goji berry. Often referred to as a “superfood,”¹¹ goji berry has recently gained popularity in the United States due to health claims that it is a nutritionally dense food.

A scientific report published by the State Scientific and Technological Commission of China, which declared the goji berry a national treasure,¹² stated that after ingesting 50 grams of fresh goji berry juice, subjects showed an increase in white blood cell counts and a 75% increase in levels of antibody immunoglobin A (lgA).^13,14 This increased attention and “fashionable” status in the world of Western natural health has caused prices of goji berry to rise.¹⁵

According to Dr. Dharmananda, the increasing prices of Chinese herbs would not have been as notable in the context of a rapid growing consumer economy, but the downturn in the Western economies that began in 2007 and accelerated radically in 2008 and spread throughout the world has greatly impacted the purchasing power of consumers. “The elevated herb prices put a strain on all levels of the market in the West—whether manufacturing with Chinese herb raw materials, distributing manufactured products, or prescribing herbs to patients—as there is a strong motive to keep consumer prices affordable, so as not to destroy the demand that has been established over the years,” Dr. Dharmananda said.

Foreign utilization of Chinese herbs in manufacturing is another determinant in the pressure on TCM material costs. According to Dr. Dharmananda, product manufacturers in Japan and South Korea, making good use of their nation’s well-developed commercial base, may buy up vast quantities of individual herbs to make finished products that are distributed widely— primarily in their own countries, but also for export to other nations. The same approach has been pursued recently by some companies in Europe, the United States, and Canada, and as a result, the availability of the herbs selected for such products can be very limited, and this drives up the price for remaining materials.

Environmental Influences

Climate change and weather events are other considerable factors precipitating the upsurge of TCM herb prices. Earthquakes, floods, droughts, and other natural disasters that have recently plagued China have destroyed many herb crops, therefore hindering the availability and accessibility of certain materials used in TCM. “Floods have pushed people into the woods to look for and pick winter worm fungus (Cordyceps sinensis), which is already an expensive herb to begin with,” said Scott. On the opposite side of the weather spectrum, the severe October 2010 drought in the Yunnan Province (which is responsible for 80% of the herbs/natural ingredients produced for TCM in China) caused a heavy decline in the output of herbs.¹⁶

Cultivated North American ginseng (Panax quinquefolius) root also has experienced an increase in price due to environmental influences. The lake freeze in Wisconsin during the spring of 2010 desecrated ginseng crops across the state, and as a result, a sudden decrease in supply led to elevated prices for the root.¹⁷ An online report claimed that one type of ginseng root that cost 50 Yuan ($7.50 US) per kilogram at most 2 years ago, recently traded at 10 times that amount.¹ Another report postulated that prices for prince ginseng root (Pseudostellaria heterophylla), a winter tonic, recently have risen from 80 Yuan ($12.01 US) per kilogram to as high as 340 Yuan ($51.04 US) per kilogram.^3,18

Future Outlook

It is probable that little can be done to alter the situation regarding the numerous pressures on the Chinese herbs and herbal products. “The Chinese economy continues its boom, even if at a slower pace, and that improvement in Chinese life is considered a good thing,” said Dr. Dharmananda. The promotion of the health benefits of Chinese herbs to Westerners will continue, he noted, and this will result in new products, as well as higher demand for products, something that many herb enthusiasts see as a positive development.

The price increases of the past few years are properly seen as a part of an ongoing process, Dr. Dharmananda continued. There may well be a stabilization point as high prices moderate demand, as the shift from wild to cultivated supplies is completed, and as product manufacturers branch out from Chinese herbs to other types of products. “It is reasonable, though, to expect the price of Chinese herbs and their products to increase, overall, by another 30% over current levels in the next few years,” said Dr. Dharmananda.

References

2. Traditional medicine prices are elixirs for sellers. China Daily. December 22, 2010. Available at: www.china.org.cn/business/2010-12/22/content_21593429.htm. Accessed January 13, 2011.

3. Shanghai hikes prices of Chinese medicines. CapitalVue. December 10, 2010. Available at: www.capitalvue.com/home/CE-news/inset/@10063/post/1262041. Accessed January 14, 2011.

4. Fei M. TCM producers haggard by rising cost pressures. GlobalTimes. December 14, 2010. Available at: www.business.globaltimes.cn/industries/2010-12/601474.html. Accessed January 14, 2011.

5. Fei L. Chinese medicine prices go sky high. Global Times. November 18, 2010. Available at: www.business.globaltimes.cn/industries/2010-11/592986.html. Accessed January 15, 2011.

6. Hui P. Prices of TCM herbs shoot skyward. The Straits Times. December 28, 2010. Available at: www.straitstimes.com/BreakingNews/Singapore/Story/STIStory_618099.html. Accessed January 13, 2011.

7. Traditional Chinese medicine herbs prices surge in Singapore. Global Times. December 29, 2010. Available at: www.news.xinhuanet.com/english2010/china/2010-12/28/c_13667515.htm. Accessed January 18, 2011.

8. Isatis root & leaf (Isatis tinctoria). The Tillotson Institute of Natural Health website. Available at: www.oneearthherbs.squarespace.com/important-herbs/isatis-root-leaf-isatis-tinctoria.html. Accessed January 21, 2011.

9. Medicinal properties of honeysuckle. HerbClip. September 13, 1996. (No. 083063-094). Austin, TX: American Botanical Council. Review of Lonicera japonica, honeysuckle by Van Galen R. Australian Journal of Medical Herbalism. 1995;7(4).

10. Stafford L. International report on herbs and swine flu. HerbalGram. 2009;84:16-17.

11. Glenn L. The cheerful Lycium berry. HerbClip News. May 15, 2009. Available at: www.cms.herbalgram.org/herbclip/376/news115.html.

12. Health promoting properties of wolfberries. Natural Health Way website. Available at: www.naturalhealthway.com/wolfberry/wolfberrystudies/wolfberrystudies.html. Accessed January 25, 2011.

13. Pharmacological Experiment on Lycium. State Scientific and Technological Commission of China.  Register No. 870303

14. Clinical Experiment on Lycium. State Scientific and Technological Commission of China. Register No. 870306.

15. Margolin C. Goji berries price increases, how much are the benefits worth? PacHerbs. November 30, 2010. Available at: www.pacherbs.com/archives/4490. Accessed January 21, 2011.

16. Jialei Z. Winter TCM demand and costs up. GlobalTimes. October 12, 2010. Available at: www.shanghai.globaltimes.cn/business/2010-10/581219.html. Accessed January 21, 2011.

17. Miller J. Wisconsin ginseng farmers rebound from spring freeze. Green Bay Press Gazette.com. Available at: www.greenbaypressgazette.com/article/20101205/GPG03/12050650/Wisconsin-ginseng-farmers-rebound-from-spring-freeze .Accessed January 21, 2011.

18. Wisconsin ginseng farmers fight to protect product reputation. HerbalGram. 2007;75:54-61.