Chinese Herbs into the International Market — A Long Road
Chinese medicine is a jewel of Chinese tradition. Tempered for over a millennium, TCM theory takes the zhong-yong (middle-and-constant) road, attentive to treating the root, and reaches the aim of strengthening the root, removing disease, and toughening the body by regulating the body's jingluo, vessels, and mai. Compared with Western medicine's head-disease, head-treat; foot-disease, foot-treat, it is more advanced and scientific. Compared with Western drugs (chemicals), Chinese herbs draw on natural sources, with light side effects and remarkable effect — they walk apart in the world's medical world, and the world is paying ever greater attention. At present, of foreign-investment enterprises set up, medical enterprises form only 1.7%, yet take 14.7% of total profits. The high return of the Chinese-herb sector has drawn medical bodies and big enterprises of many countries; the global production and sales of Chinese herbal medicines have become a theme of 21st-century world pharma. With China about to join the WTO, a new wave of foreign investment in pharma will be set off — a strong push for Chinese herbs to enter the world. At the same time, the fully opened Chinese-herb market brings fierce competition. The traditional Chinese-herb industry will face serious challenges.
Surging demand and prices — Chinese herbs in demand
In 2000 the world drug market kept growing. In the 13 main world markets drug sales grew 10%, with retail-pharmacy sales reaching US$216.1 billion — up 8% over the prior year. Fastest in North America: up 15% to $95.4 billion, with Canadian sales up to $5.2 billion. The five main European countries fell 7%, to $52.9 billion; but in Italy, drug sales rose 11% — cardiovascular drugs up 14%, central-nervous-system drugs up 12%. Japan's drug market stayed at 5% growth. International herbal medicine grew at 10%.
In Europe and America, the cautious stance on TCM is relaxing. In Asia, which holds the largest TCM market, more countries have legalized TCM. Traditional pharmacy is widely viewed as a rising-sun industry; traditional medicines internationally chiefly mean Chinese herbs. Annual sales now top US$15 billion and grow 10% a year. Years ago, the cure of England's then-high incidence of skin eczema by TCM shook British and European medicine. England has now eased rules on opening TCM clinics, and many European countries allow sale of crude-extract Chinese herbs. The U.S., long strict, is also loosening; more Chinese herbs reach the shelves under the health-food label. Besides Japan, Korea, and China, Thailand has joined the list of countries and regions where TCM and Chinese herbs are legalized.
Bright market prospect, hard to win legal status
Many domestic firms are pushing Chinese-herb projects into world markets. World trade barriers make this risky. TCM has no legal status in Europe; the situation is severe.
In the EU integration of medical management, drug-administration changes have been very cautious. On plant and traditional medicine imports, the efficacy bar has been slightly relaxed, but other parts still follow strict modern pharmaceutical procedures. Single-herb plant drugs long used safely in the EU may take a flexible registration. For compound TCM preparations, EU authorities recognize the advantages of compounds but still require regular drug-approval procedures. To this day, not one Chinese herbal product has been approved as a drug in Europe and sold legally; no Chinese herb has entered hospital prescription or the health-insurance system. The three categories that have entered Europe are: sliced herbs, plant extracts, and proprietary medicines. Sliced herbs enter as agricultural/specialty goods; extracts as raw plant-drug materials; proprietary medicines as health-care products or food. Management strictness varies. In Germany and Belgium, little Chinese-herb trade is seen; in England and the Netherlands, Chinese herbs are sold as health foods. But even there, neither sliced herbs nor proprietary medicines may be sold as drugs; packaging absolutely may not list therapeutic use.
Since the 1990s, with the return to nature trend, natural plant medicines have gained worldwide attention. By report, more than 120 countries and regions have plant-medicine bodies — clinical, research, and sales work. Major pharma firms have begun emphasizing traditional plant-medicine R&D to enlarge markets and profits.
Westernizing TCM: challenge and opportunity
With natural-plant pharma's fast growth and bright outlook, government and pharma attention is growing. In the U.S., Congress passed in 1997 the Botanical Drug Approval Law, allowing traditional plant-drug compound mixtures into the U.S. market — growing 20% a year. Italy, advanced in pharma, has more than 200 natural-plant-based preparations; plant-medicine takes 23% of yearly drug spending. France, Germany, and Switzerland: 24%–38%. Major pharma firms have set up natural-medicine R&D bodies. International TCM-and-plant patent filings have risen sharply — 15,000 in 1978, 30,000 in 1985. Germany imports yinxingye (ginkgo leaf) from China, extracts it with modern process, makes cardiovascular drugs — US$300 million in sales. Japan, to research natural plants, has set up 10,000 m² of cultivation, with over 50 species and 200-ton yield. By latest data, EU's natural-plant medicine has surpassed chemical medicine in growth, with a complete sales system. The EU is the most-potential, most-promising natural-plant-medicine market. By 1999 figures, EU herbal-supplement market was about US$7 billion.
Prof. Sun Zhongping of the Beijing University of Chinese Medicine says: most of our Chinese herbs are natural plants; Chinese herbs are a brilliant crystallization of fine Chinese tradition, with major contribution to the world's natural-plant medicine. Our herbal resources are very rich. By the national herbal-resource survey since the 1980s, there are now 12,807 species; 11,146 are natural medicinal plants; over 1,200 commonly used herbs; over 4,000 ethnic-medicine herbs; over 7,000 folk herbs. Plus 1,581 medicinal animals and 80 medicinal minerals. By count of 320 common plant herbs alone, total reserve is around 8.5 million tons.
Our TCM-pharma industry has initial scale: by partial count, over 500 TCM proprietary-medicine plants, around 3,000 TCM health-product factories, total industry output around 30 billion yuan, health-product output around 30 billion yuan. We must seize this historical moment, use this favorable international setting, meet challenge in fierce market competition, and bring China's natural plant medicines into the mainstream of every country.
The world's natural-environmental degradation and ecological worsening have raised loud calls to return to nature; people pin more hope on natural and traditional medicines for human health, and a worldwide natural-medicine fever has risen. But our China — with deep cultural roots and millennia of clinical practice — exports a Chinese-herb share only 3% of the world natural-drug market; direct Europe-and-America imports from China are only 11% of their total Chinese-herb imports. This is wildly out of step with our position as a TCM nation. Therefore: combine TCM's distinct strengths with modern science and technology, research and develop modern Chinese herbs to internationally-recognized standards. Production and management enterprises must strengthen international development. China's domestic market remains the main: 90%+ of Chinese-herb sales. But the international market is huge: the U.S. alone spends US$700 billion on health-care a year — per-capita $3,000. Alternative-therapy spending nears $20 billion; herbal-medicine market $4 billion. Chinese herbs have great room in international markets. We must build crack R&D teams; develop modern Chinese herbs to fit international demand; gradually form a science-driven Chinese-herb industry. We must value IP protection; build firm-side market-information and R&D-information systems. Draw quality information from disciplines, firms, and markets; use it. Build production-study-research combined; build science-industry-trade integrated modern Chinese-herb enterprises or alliances — strengthen domestic and international competitiveness.
From China Reform News, 17 June 2001.