As 2025 draws to a close, the Chinese herbal medicine market remains in a pronounced downturn, characterized by falling prices and a clear imbalance between supply and demand. Industry analysis suggests this bottoming-out phase will likely extend into the first half of 2026, though structural opportunities are emerging for high-quality, policy-backed, and resource-scarce varieties.
📉 Market Overview at the End of 2025
Sustained Price Declines with No Clear Bottom in Sight
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Persistent Oversupply: Data from the Chinese Herbal Medicine Heaven-Earth Network indicates that the total output of 384 commonly used bulk varieties in 2025 is approximately 5.8 million tons, while market demand is only about 5 million tons, resulting in an oversupply rate of 16%. This fundamental imbalance continues to drive prices downward.
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Double Pressure from Inventory and New Harvests: The market faces additional pressure from the autumn harvest peak of rhizome herbs like angelica (当归), astragalus (黄芪), and codonopsis (党参), which adds fresh supply to already high existing inventories, further suppressing any price recovery.
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Policy Factors as a Continued Drag:
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The normalization of Centralized Procurement for Proprietary Chinese Medicines has led to average price drops of 30%-50% for winning bids, forcing manufacturers to reduce raw material costs.
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The second round of National Unified Procurement for Chinese Herbal Pieces has expanded its coverage, reinforcing a “price reduction and efficiency” orientation.
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The strengthening of traceability systems is pushing non-compliant inventories without proper documentation onto the market, creating short-term price shocks.
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🌿 Diverging Price Trends: Sharp Declines vs. Standout Performers
While most prices are falling, a few varieties have bucked the trend due to supply gaps or strong demand.
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Driven by Supply Shortages: Ginseng (人参) prices rose 30% year-on-year due to scarcity of high-quality sources and reduced production, while goji berries (枸杞) saw a 15% increase.
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Supported by Multiple Factors: Polygala (远志), schisandra (五味子), and pseudoginseng (三七) saw price increases ranging from 50% to 160%, influenced by resource scarcity, rigid demand, and policy support.
🔮 2026 Price Forecast: Bottoming Out & Growing Division
Overall Assessment: Continued Weakness with Sharper Structural Divergence
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Mainstream Varieties to Remain Under Pressure: The oversupply situation for varieties like angelica, astragalus, codonopsis, and paris rhizome (重楼) is unlikely to reverse soon.
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“Quality Premium” Mechanism to Strengthen: The full implementation of GAP (Good Agricultural Practices) standards and traceability systems will allow high-quality herbs to command better prices, potentially resisting the broader downtrend.
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Policy-Driven Varieties Hold Potential: Herbs like polygala, bezoar (牛黄), and snow lotus (雪莲) may see price increases due to their status as both medicine and food, resource scarcity, or policy support.
💡 Strategic Recommendations & Risk Warnings
Core Advice for Market Participants
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For Buyers: Consider stocking up in batches at low prices, focusing on high-quality, traceable varieties like polygala, ginseng, and goji berries. Avoid low-grade varieties with poor sales prospects.
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For Growers: Avoid expanding planting blindly. Shift towards standardized, GAP-certified cultivation and focus on high-value-added varieties to improve herb grade and marketability.
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For Investors: Focus on themes aligned with policy direction and resource scarcity, paying attention to leading varieties in specific sectors. Steer clear of small, niche herbs that were previously subject to speculative spikes.
⚠️ Key Risks to Monitor
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Policy Change Risk: The expansion of centralized procurement and rising quality standards could further depress prices for low-grade herbs, intensifying market division.
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Climate Impact Risk: Extreme weather events could lead to reduced production for some varieties, triggering short-term price volatility.
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Demand Recovery Risk: If end-demand for herbal pieces and proprietary Chinese medicines does not rebound significantly, overall market confidence will be slow to recover, making a broad market reversal unlikely.
💎 Conclusion
The Chinese herbal medicine market at the end of 2025 is mired in a downturn defined by falling volumes and prices, with oversupply and policy regulation being the core influencing factors. The market in 2026 is expected to be characterized by “overall weakness with selective bright spots,” guided by the three main themes of quality premium, policy support, and resource scarcity.
Industry participants are advised to assess “bottom-fishing” opportunities rationally, abandon the mindset of pure scale expansion, and turn instead towards quality improvement and demand alignment. This strategic shift is crucial for building competitive advantages during this industry adjustment cycle and seizing opportunities in the next period of recovery.
