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not imply endorsement by UNIDO or ICS.
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ICS-UNIDO is supported by the Italian Ministry of Foreign Affairs
United Nations Industrial Development Organization and
the International Centre for Science and High Technology, 2002
Earth, Environmental and Marine Sciences and Technologies
ICS-UNIDO, AREA Science Park
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E-mail: [email protected]
International Centre
for Science and High Technology
United Nations
Industrial Development Organization
Medicines and Natural Health Products
Trade and Production of Herbal
Karan Vasisht and Vishavjit Kumar
Ambasciata dItalia
Budapest
i
Preface
The recent years have witnessed a great deal of interest in medicinal plants for their
potential to yield useful drugs. The increasing popularity of herbal medicinal products in
developed countries has given new dimension to the demand of medicinal plants at the
international market. The health giving properties of medicinal plants have been
scientifically validated in a number of diseases. Their effectiveness in such diseases,
where modern drugs are hard to find has fuelled special interest in them. With market
balance clearly tilted in favour of products with a tag of natural, the developed countries
have generated special demand for herbal products. The present trend is expected to
continue in the more years to come. Developing countries, which possess a treasure of
medicinal plant resources, are to benefit from the arising situation.
Despite the rising demand and soaring imports of medicinal plants by developed
countries, the source countries possessing rich biodiversity of medicinal plants have not
been able to benefit from the situation. There are many hurdles in developing export of
medicinal plants and their products. The international trade in medicinal plants is not
well regulated; data is scarce, scattered and inaccessible to those who need it the most;
species specific records are hardly available; and true demand, supply, and the price
situation is rarely available to the producers.
The present publication was planned to contain information on international trade
in comprehensive form touching all-important aspects of the subject. It is expected to
help developing countries to understand, penetrate and take benefit from the emerging
demand of medicinal plants and their products.
Gennaro Longo
Area Director
Earth, Environmental and Marine
Sciences and Technologies
ii
Acknowledgements
The Area of Earth, Environmental and Marine Sciences and Technologies of ICS-
UNIDO is grateful to the Embassy of Italy in Budapest, as well as to the Italian Ministry
of Foreign Affairs for their support to the activities of the Area in Hungary: in particular
to the printing of this publication and to the organization of the Workshop on Cultivation,
Gathering, Post-Harvest Care and Processing Technologies for the Production of Medicinal
and Aromatic Plants, held in Budapest-Lillafred, Hungary, from 28 to 30 May 2001.
During this Workshop, the participants recommended the implementation of such initiative.
Special thanks go to Mr. Francesco Pizzio, Managing Director of ICS-UNIDO, for
his constant support and encouragement throughout the activities carried out, and to the
scientific and secretarial staff of the Area for guidance, compilation, preparation and
editorial work.
iii
Contents
Page
1 Introduction 1
2 Demand for Medicinal Plants 3
2.1 Phytopharmaceuticals 3
2.1.1 World Pharmaceuticals Market 3
2.1.2 World Phytopharmaceuticals Market 4
2.2 Herbal Medicines 6
2.2.1 World Market for Herbal Medicines 7
2.2.2 European Market for Herbal Medicines 8
2.2.3 North American Market for Herbal Products 11
2.2.4 Traditional Medicines and Alternative Practitioners 13
2.2.5 Regional Differences in Use of Herbal Medicines 20
2.2.6 Status of Herbal Medicine in Health-Care Programmes 21
2.2.7 Developments in Herbal Medicine Industry 22
2.3 Natural Health Products 24
2.3.1 Nutraceuticals 25
2.3.2 Major Nutraceutical Products Categories 25
2.3.3 Trends in Global Nutraceuticals Market 26
2.3.4 Future Trends in Global Nutraceuticals Market 29
2.3.5 Developments in Nutraceutical Industry 31
2.4 Phyto-Cosmetics and Personal Care Products 32
2.4.1 Cosmeceuticals 32
2.4.2 Major Cosmeceutical Products Categories 32
2.4.3 Trends in Cosmeceuticals Market 32
2.4.4 Cosmeceutical Industry 34
3 Raw Material Supply 37
3.1 Dynamics of Trade in Medicinal Plants 38
3.1.1 Trends in Global Trade of Medicinal Plants 39
3.2 Supply Sources of Medicinal Plants 41
3.2.1 Wild Harvested Material 41
3.2.2 Cultivated Material 42
iv
Page
3.3 Channels of Supply 43
3.3.1 Major Importing-Exporting Regions and Countries 45
3.3.2 Plant Extracts 57
3.3.3 Prices of Medicinal Plants and Their Products 58
4 Policies and Regulations in Medicinal Plants Trade 63
4.1 Internatinal Trade Restrictions in Medicinal Plants 63
4.2 Legislations in Medicinal Plants Trade 68
5 Constraints in Market Development for Medicinal Plants 77
Bibliography 81
1
1 Introduction
Herbal medicinal products have become a subject of increasing global importance, for
their health benefits and economic considerations. Some major categories of plant-derived
products include phytopharmaceuticals, herbal medicines, natural health products, phyto-
cosmetics and personal care products. The global demand for these products is increasing
due to reinsured interest of consumers in natural products, as they are considered safer
and more cost-effective than synthetic counterparts.
Herbal medicines in most developing countries of Asia, Africa and Latin America
have played a central role in health-care since time immemorial. According to a survey
of World Health Organization (WHO) about 80 per cent of population in these countries
still rely on traditional or herbal medicines for their primary health-care needs
(Bannerman, 1982).
Over the last decade, herbal medicines have enjoyed a revival in many developed
countries, including the United States (USA), Europe, Australia and Canada. Although
data to accurately calculate the global market for herbal medicines is sparse, but it was
conservatively estimated at around US$ 30 billion in 2000. The worldwide sale during
last decade has increased with an annual growth rate averaging between 5 to 15 per
cent, depending on the region. Europe leads the market, followed by Asia, North America
and Japan. The USA is the fastest growing market where annual retail sale of botanical
products has increased from US$ 200 million in 1988, to an estimated US$ 5.1 billion
in 1997. The consumer use of these products in the USA has increased by staggering 380
per cent in the past ten years. The industrial demand for medicinal plants has increased
exponentially in the world market since last few decades with the emergence of newer
product categories like health foods, natural cosmetics and personal hygiene products.
The overall international trade in medicinal plants and their products has been estimated
at over US$ 60 billion in 2000 (Govt. of India, 2000), with average annual growth rate
(AAGR) of 7 per cent, and it is expected to reach US$ 5 trillion by 2050.
The annual volume of global trade in medicinal plant materials in the 1990s
amounted to an average of 400,000 metric tonnes, valued at US$ 1.2 billion (Lange,
2001). China and India were the top exporting countries and Hong Kong, Japan, the
USA and Germany were the leading importers. About 80 per cent of medicinal plant
material supply in the world market is sourced from the wild collections.
2
Most of the medicinal plant material in the world market originates from develop-
ing countries, although the export volume from most of these countries is small. As world
demand for medicinal plants is continously increasing, there is an ample opportunity for
these countries to expand their global export. In this process they should first aim to
penetrate early stages of the value chain by supplying unprocessed raw material to
manufacturers in the developed countries and then move upward providing value added
products and herbal supplements before tackling the highly regulated market for herbal
medicines.
Trade in medicinal plants is often unregulated in most part of the world. Lack of
species-specific records at national and international level and practice of grouping fresh
and dried medicinal plants under one broad category further complicate the problem.
Furthermore, there is an insufficient information on sources of demand, dynamics of
medicinal plants trade and supply channels. The developing countries which have rich
resources of biodiversity can be benefited from the present state, if the information on
the major user groups and international trends in demand and supply is made available.
The present report provides an overview of current status and trends in the world maket.
Rising global interest in medicinal plants has also created an underground trade in
plant materials. The plant material is collected in developing countries in an unregulated
manner, resulting in indiscriminate harvesting of wild varieties and serious damage to
biodiversity. There is an urgent need to regulate export and allow only sustainable har-
vest of medicinal plants in these countries.
3
2 Demand for Medicinal Plants
Medicinal plants play a vital role in the health-care needs of three quarters of the
worlds population living in the developing countries. The use of medicinal and aromatic
plants, whether in most indigenous form to make decoctions, or in most modern form of
herbal cosmetics, is steadily increasing. Numerous new avenues have emerged for inno-
vative use of medicinal plants. Therefore, before considering the supply sources of me-
dicinal plants and mechanics of the trade, it is essential to have an understanding of
demand points of medicinal plants.
A large number of user groups like pharmaceutical and food industries, traditional
or alternative practitioners, folk or household medicine users, cosmetic and flavour in-
dustry and many more use these plants for their medicinal, aromatic, and health giving
properties. The data on demand from these sectors is sparsely available. Therefore, it is
difficult to estimate the exact demand, but only the trends can be deduced from the data
available from major user groups, as listed below:
Phytopharmaceuticals;
Herbal Medicines;
Natural Health Products;
Phyto-cosmetic and Personal Hygiene Products.
2.1 Phytopharmaceuticals
Medicinal plants are used to obtain a number of important drug molecules of mod-
ern therapeutics. Additionally, they are also a source of precursor molecules for synthesis
of important groups of steroidal and other therapeutically used drugs. Presently, about
50 per cent of the total plant-derived drug sale comes from single entities, which are
mostly prescription products, while the remaining 50 per cent comes from herbal medi-
cines. Although the latter have greater volumes of consumption, the relatively low vol-
umes of single entities are more than compensated by their higher prices.
2.1.1 World Pharmaceuticals Market
More than 80 per cent of worlds production of pharmaceutical active ingredients
originates from developed countries like the USA, the European Union (EU) countries
and Japan and 20 per cent comes from developing countries. The main developing coun-
4
tries involved in manufacturing of pharmaceutical active ingredients are Argentina, Bra-
zil,

China, Egypt, India, Mexico, Korea, Puerto Rico and Turkey (Uzuner, 1999).
The world consumption of drugs in 1997 amounted to about US$ 294 billion in-
creasing to US$ 343 billion in 1999 (The Wall Street Journal, 2000). The consumption
of drugs as a percentage of gross national product (GNP) in developed countries has
increased from 0.65 to 0.95 per cent during 1975 to 1990, while it has decreased from
0.79 to 0.67 per cent in developing countries during the same period. These figures seem
to indicate that the situation in developing countries has not improved but worsened in
the last decade.
The average cost of a successful new drug application in the USA has been esti-
mated at US$ 500 million with a development period of 15 to 20 years (Drews and
Ryser, 1997). Such high costs cannot be met by any company unless there is a reasonable
expectation that a profit will be gained after the drug is marketed. Therefore, most of the
research and development (R&D) investments are made by multinational companies in
developed countries like the USA, Japan, Germany, France, the United Kingdom (UK),
Switzerland, Italy, and Sweden, which have good market for their products.
High investment for R&D in pharmaceutical sector is not affordable by most of the
developing countries. Therefore, they have to devise new ways of developing their own
cost-effective medicines preferably from plants. The cost of developing a herbal medicine
in early 1990s was estimated at about US$ 23.56 million (Foster & Tyler, 2000).
2.1.2 World Phytopharmaceuticals Market
The attitude of pharmaceutical industries towards medicinal plants and natural
products has changed dramatically over the past two decades. This is owing to increased
awareness and interest in medicinal plants and herbal remedies of both general public
and scientific community. As a reflection of this, in 1980 a few of the top 250 pharma-
ceutical companies had research activities involving higher plants, but by the early 1990s
more than half of them had introduced such programmes (Anonymous, 1994).
The single entity plant drugs, most of which are prescription drugs and used to treat
serious ailments, include atropine, digoxin, morphine, paclitaxel, pilocarpine, quinine,
scopolamine, topotecan and vincristine, among many others. Several of the plant com-
pounds have outlived their usefulness in light of better alternatives and they are record-
ing decline in sales. On the other hand, as a consequence of new drug developments from
plants, phytopharmaceuticals are projected to increase their market share.
In the USA, some 25 per cent of prescriptions are dispenced with drugs whose
active ingredients are extracted or derived from plants. The sale of these plant-based
drugs in the USA amounted to nearly US$ 4.5 billion in 1980 and US$ 15.5 billion in
1990 (Farnsworth and Soejarto, 1985). A large number of drugs are derived from mi-
cro-organisms and some from animals. A comprehensive review of literature on plant-de-
rived drugs identified a total of 119 drugs, obtained from fewer than 90 plant species in
5
1995 (Farnsworth et al., 1985) and over 130 in 1997 (Sukhdev, 1997), including the examples
listed in the Table 1.
Table 1: Drugs from natural sources
e l u c e l o m g u r D e c r u o s t n a l P y r o g e t a c c i t u e p a r e h T
e n i t s i r c n i v d n a e n i t s a l b n i V s u e s o r s u h t n a r a h t a C r e c n a c i t n A
n i c e h t o t p m a C a t a n i m u c a a c e h t o t p m a C r e c n a c i t n A
) l o x a t ( l e x a t i l c a P a i l o f i v e r b s u x a T r e c n a c i t n A
e n i n i u Q a n o h c n i C . p p s l a i r a l a m i t n A
n i n i s i m e t r A a u n n a a i s i m e t r A l a i r a l a m i t n A
e n i h p r o M m u r e f i n m o s r e v a p a P t n a s s e r p e d S N C , c i t o n p y H
e n i e d o C m u r e f i n m o s r e v a p a P c i t o n p y h d n a e v i s s u t i t n A
e n i m a l o p o c S r e g i n s u m a y c s o y H e v i t a d e S
e n i e f f a C s i s n e n i s a i l l e m a C s e c r u o s r e h t o & t n a l u m i t s S N C
n i x o t i g i D a e r u p r u p s i l a t i g i D c i n o t o i d r a C
n i x o g i D a t a n a l s i l a t i g i D c i n o t o i d r a C
n i a b a u O s u t a r g s u h t n a h p o r t S c i n o t o i d r a C
n i t e v e h T a i l o f i r e n a i t e v e h T c i n o t o i d r a C
e n i d i p r e s e d d n a e n i p r e s e R a n i t n e p r e s a i f l o v u a R r e z i l l i u q n a r t & e v i s n e t r e p y h i t n A
e n i l a m j A a n i t n e p r e s a i f l o v u a R c i m h t y h r r a i t n A
e n i d i n i u Q a n o h c n i C . p p s c i m h t y h r r a i t n A
e n i m g i t s o s y h P m u s o n e n e v a m g i t s o s y h P c i g r e n i l o h c i t n A
e n i p o r t A a n n o d a l l e b a p o r t A c i g r e n i l o h c i t n A
a p o D - L s n e i r u r p a n u c u M m s i n o s n i k r a p i t n A
e n i t e m E a h n a u c a c e p i s i l e a h p e C c i b e o m a i t n A
e n i p r a c o l i P i d n a r o b a j s u p r a c o l i P c i m o c u a l g i t n A
e n i m a t o g r E a e r u p r u p s p e c i v a l C e n i a r g i m i t n A
e n i r d e h p E a r d e h p E . p p s c i g r e n e r d A
e n i c i h c l o C e l a n m u t u a m u c i h c l o C t u o g i t n A
s e d i s o n n e S a n n e s a i s s a C e v i t a x a L
r o h p m a C a r o h p m a c m u m o m a n n i C t n e i c a f e b u R
l o h t n e M a h t n e M . p p s c i t i r u r p i t n A
l o n i b a n n a c o r d y h a r t e T a v i t a s s i b a n n a C n e g o n i c u l l a h d n a c i t e m e i t n A
With increasing demand of natural product medicines and augmented interest of
pharmaceutical companies in the discovery of novel molecules it is expected that the
share of plant-derived prescription drugs will increase to 30 per cent in the next few
decades (Wilkinson, 2000).
The global import of plant alkaloids and derivatives has increased from 1.9 to 11.4
million metric tonnes during 1966 to 1991, and glycosides and their derivatives from
0.3 to 2.9 million metric tonnes during the same period (United Nations Statistical
Division, 1992). The total market for plant-derived drugs was valued at US$ 22.6 billion
in 1997 and is projected to reach US$ 30.6 billion in 2002, representing an average
annual growth rate (AAGR) of 6.3 per cent (Table 2).
6
Terpenoids contribute the most to the sale of plant-derived drugs. They have been
valued at US$ 7.6 billion in 1997 and are expected to reach US$ 12.4 billion in 2002,
at an AAGR of 10.1 per cent. They are estimated to retain dominant position in future
sale of plant-derived drugs. As the taxoids gain in the treatment of cancer, the terpenoid
category should increase its share in the next several years. Steroids are another key
group in this category.
Glycosides are the next in sale to terpenoids. Flavonoids, saponins, anthraquinones and
digitalis compounds are among the most important groups within this category. Glycosides
sale will increase to US$ 9.2 billion in 2002 from US$ 7.3 billion in 1997, with an
AAGR of 4.8 per cent.
Table 2: Worldwide sale of plant-derived drugs, 1997-2002
y r o g e t a c g u r d t n a l P ) $ S U n o i l l i m ( e u l a v e l a S % R G A A
7 9 9 1 * 2 0 0 2
s d i o n e p r e T 0 6 6 , 7 0 0 4 , 2 1 1 . 0 1
s e d i s o c y l G 0 0 3 , 7 0 3 2 , 9 8 . 4
s d i o l a k l A 0 0 6 , 3 5 4 0 , 4 4 . 2
s r e h t O 8 4 0 , 4 3 1 0 , 5 4 . 4
L A T O T 8 0 6 , 2 2 8 8 6 , 0 3 3 . 6

*Estimates
Source: Business Communications Company Inc. 1998
Alkaloids rank third most significant category of plant-derived drugs in terms of
sale. This group includes alkaloids from belladona, cinchona, camptotheca, poppy, rau-
wolfia, vinca and others. Alkaloids turnover was valued at US$ 3.6 billion in 1997 and
is projected to reach US$ 4 billion in 2002, representing an AAGR of 2.4 per cent.
All other plant-derived drugs are put under miscellaneous substances and also include
plant drugs for which active principles have not been well characterized. Among the impor-
tant groups within this category are plant-derived vitamins, psoralens, ephedrines, salicylates
and various others. This category also includes many substances that have been duplicated
through complete synthesis. The turnover of this category was valued at US$ 4 billion, with
expected rise to US$ 5 billion in 2002.
No single therapeutic category dominates the plant-derived drugs. Among the most
significants are those related to neural, respiratory, digestive and skin problems along
with pain and cancer. Additional applications include contraception, hormone replacements,
cardiovascular, infectious and other diseases.
2.2 Herbal Medicines
Herbal medicines are also referred as botanical medicines, or more recently and
widely accepted as herbal medicinal product. It makes use of herbs for therapeutic or
7
medicinal purposes. It is the oldest form of health-care known to mankind and consti-
tuted an integral part of development of modern civilization. Primitive man observed
and appreciated greatest diversity of plants available to him. He methodically collected
information on herbs and developed well-defined herbal pharmacopoeias. During the
first half of 20th century most of the pharmacopoeias contained drugs derived from the
herbal lore of native peoples. In modern time, many commonly used drugs are of herbal
origin.
The World Health Organization (WHO) estimates that 4 billion people of the world
population presently use herbal medicines for their primary health-care. Medicinal plants
are major component of all indigenous or alternative systems of medicine. They are
common element in Ayurvedic, Homeopathic, Naturopathic, Oriental and Native Ameri-
can Indian medicine. WHO notes that about three fourth of plant-derived drugs correlate
directly with their traditional uses in native cultures.
2.2.1 World Market for Herbal Medicines
The herbal medicine industry is one of the fastest growing industry in the world.
Global market for herbal medicines was estimated at US$ 12.4 billion in 1994, increas-
ing to US$ 19.6 billion in 1999 (Gruenwald, 1998). The demand for herbal medicines is
expected to grow about US$ 24.2 billion by 2002 (Figure 1). Europe leads the world
market with an impressive figure of US$ 7 billion, followed by Asia, North America, and
Japan (Table 3). Latin America and Eastern Europe have a retail sale of US$ 600
million and 400 million respectively. The share of Africa and Middle East together, and
rest of the world is about US$ 200 million each (Gruenwald, 2000).
The fastest growing market for herbal medicines is found in the USA. In 1999, it
had a retail sale of US$ 3.8 billion, and an estimated sale of US$ 4.5 billion in 2002.
Demand for herbal medicines in Europe was almost static in the late 1990s, while in
North America it had steadily increased during this period. In Asia, the demand had
almost doubled during the late 1990s, partly from the increasing population pressure.
6
.
0
7
.
0
7
.
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.
9
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.
5
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.
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.
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.
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V
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(
$

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S

b
i
l
l
i
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)
Europe North
America
Japan Asia Rest of world
1994
1997
1999
2002
Figure 1: Trends in global demand of herbal medicines
8
Table 3: Sale of herbal medicines in different regions of the world
n o i g e R ) $ S U n o i l l i b ( e u l a v e l a S
4 9 9 1 7 9 9 1 9 9 9 1 * 2 0 0 2
e p o r u E 0 0 . 6 0 0 . 7 0 0 . 7 0 9 . 8
a c i r e m A h t r o N 0 5 . 1 0 6 . 1 0 8 . 3 0 5 . 4
n a p a J 0 8 . 1 0 4 . 2 0 2 . 2 0 9 . 2
a i s A 0 7 . 2 0 2 . 2 0 1 . 5 0 0 . 6
a i s A - l a r t s u A - - 2 1 . 0 4 1 . 0
t s a E e l d d i M & a c i r f A - - 9 1 . 0 1 2 . 0
a c i r e m A n i t a L - - 0 6 . 0 3 8 . 0
e p o r u E n r e t s a E - - 7 3 . 0 0 4 . 0
d l r o w f o t s e R 0 5 . 0 0 8 . 0 0 2 . 0 0 3 . 0
L A T O T 0 4 . 2 1 0 0 . 4 1 8 5 . 9 1 8 1 . 4 2
*
Estimates
Source: IMS 1994; Gruenwald, 1997; Gruenwald, 2000
2.2.2 European Market for Herbal Medicines
In Europe, the market situation of herbal medicines is well diversified. Herbal
medicines are sold as licensed and unlicensed products. Accurate figures for unlicensed
herbal products are difficult to locate than regulated licensed products. However, the
herbal market has been described as a leading sector within both the dietary supplement
(Sauer, 1999) and over-the-counter (OTC) drugs (Wilhelm, 2000).
During 1994, the overall annual sale of OTC herbal medicines amounted to US$ 6
billion. It increased to US$ 7.5 billion, at the rate of 10 to 15 per cent per annum in
1997. The European market for licenced herbal medicines in terms of sale stood at more
than US$ 475 million in 1997, and was dominated by products based on ginkgo (Ginkgo
biloba), which alone accounted for the three top selling preparations. In Germany, where
the herbal market is particularly well developed, the sale of ginkgo products has dropped
during the last 10 years (from 9.9 million sales in 1993 to 8.5 million in 1997). The
sales of some other herbs, especially St. Johns wort (Hypericum perforatum) increased
sharply over the same period from 2.6 to 8.5 million sales (Mertens, 2000). The leading
herbal products in demand are from ginkgo, ginseng, garlic, St. Johns wort, evening
primrose and echinacea (Table 4).
Within Europe, Germany leads the market with sales worth US$ 3.5 billion, fol-
lowed by France, Italy, the UK, Spain, Scandinavia and the Netherlands (Table 5). Ger-
many comprises about half of the European market and its per capita consumption of
US$ 42.9 is about ten times of any other European country.
German pharmacies sell almost one third of all non-prescription drugs as herbal
medicines (Schwab and Paffrath, 1994). This category is further divided into prescribed
and reimbursed semi-ethical herbal medicines (accounting for US$ 9 million in retail
sales) and OTC herbal medicines (US$ 1.1 billion) (Figure 2).
9
Table 4: Sale performance of licenced herbal medicinal products in Europe
t c u d o r p l a b r e H e c r u o s l a c i n a t o B r e r u t c a f u n a M e u l a v e l a S
) $ S U n o i l l i m (
k n a R
2 9 9 1 8 9 9 1 2 9 9 1 8 9 9 1
n i k a n a T a b o l i b o g k n i G r u o f u a e B 7 . 2 8 6 . 5 8 1 1
r o k n i G a b o l i b o g k n i G r u o f u a e B 3 . 1 5 1 . 7 5 3 2
n i n o b e T a b o l i b o g k n i G e b a w h c S 9 . 9 7 7 . 4 4 2 3
n o l e t o d n E a r e f i n i v s i t i V a m r a h P i f o n a S 8 . 1 4 9 . 0 4 4 4
n o x i m r e P s n e p e r a o n e r e S e r b a F e r r e i P 3 . 3 3 1 . 7 3 5 5
e r u v e l a r t l U t s a e Y x e d o c o i B 2 . 5 1 9 . 1 2 6 6
n a n e d a T a n a c i r f a s u n u r P t a b e D / r e i n r u o F 2 . 4 3 8 . 2 2 4 7
n i s r a J m u t a r o f r e p m u c i r e p y H a m r a h P r e w t h c i L 9 . 2 7 . 4 2 - 8
t e r p u n i S a n a i t n e G . p p s a c i r o n o i B 1 . 7 1 8 . 2 2 0 1 7
i a w K m u v i t a s m u i l l A a m r a h P r e w t h c i L 0 . 0 2 0 . 9 1 9 0 1
m u i g n i G a b o l i b o g k n i G G A l a x e H 7 . 5 0 . 9 1 - 0 1
n a k e o R a b o l i b o g k n i G H b m G n a s r e t n I 6 . 4 1 . 8 1 - 3 1
l o t r y m o l e G a t i r e p i p a h t n e M l h o P 1 . 8 1 2 . 6 1 - 4 1
l i b o g k n i G a b o l i b o g k n i G m r a h P o i t a R 3 . 3 1 0 . 9 1 1 1 0 1
n i s a t s o n e V m u n a t s a c o p p i h s u l u c s e A a m r a h P e g n i l K 9 . 0 2 2 . 5 1 8 6 1
e t r o F L S r a p e H s u m y l o c s a r a n y C r e n r u t r e S 0 . 1 2 . 6 1 - 4 1
t s i e g n e s s i l e m u a r f r e t s o l K s i l a n i c i f f o a s s i l e M u a r f r e t s o l K 9 . 1 2 5 . 0 1 7 7 1
e s o t y h p u E a r o l f i s s a P . p p s a n a i r e l a V , . p p s s a l o h c i N e h c o R 6 . 7 3 . 4 1 - 7 1

Source: Mertens, 2000
Table 5: Over-the-counter sale of herbal medicines in European Union member states
y r t n u o C e u l a v e l a s l i a t e r l a u n n A
) $ S U n o i l l i b (
a t i p a c r e P
) $ S U (
4 9 9 1 6 9 9 1 6 9 9 1
y n a m r e G 0 0 . 3 8 5 . 3 9 . 2 4
e c n a r F 0 6 . 1 9 7 . 1 2 . 1 3
y l a t I 0 6 . 0 2 8 . 0 2 . 2 1
m o d g n i K d e t i n U 0 3 . 0 9 4 . 0 9 . 6
n i a p S 3 2 . 0 3 3 . 0 6 . 7
s d n a l r e h t e N 0 1 . 0 6 1 . 0 4 . 6
m u i g l e B 4 0 . 0 - -
e p o r u E f o t s e R 3 1 . 0 3 3 . 0 5 . 4
L A T O T 0 0 . 6 0 5 . 7 ) n a e m ( 5 . 9 1
OTC herbal
medicines
(15 %)
OTC non-plant
medicines
(73 %)
Prescribed semi-
ethical herbal
medicines
(12 %)
Figure 2: Herbal medicines in German pharmacies
10
Among the most prescribed herbal mono-preparations in Germany are ginkgo prod-
ucts, which lead with total sales of US$ 284 million, followed by horse chestnut with
US$ 70 million (Table 6). Under the non-prescription herbal medicines, garlic tablets
are the leading product. According to actual surveys, seven million Germans (8 per cent
of total population) regularly take garlic supplements. The leading garlic product Kwaireg
holds about 50 per cent of market share, with an annual sales value of US$ 50 million.
Table 6: Most frequently prescribed herbal mono-preparations in Germany, in 1998
s g u r d l a b r e H e c r u o s l a c i n a t o B s s a l c c i t u e p a r e h T e u l a v e l a s l i a t e R
) $ S U n o i l l i m (
o g k n i G a b o l i b o g k n i G t n e g a y r o t a l u c r i C 4 8 2
t u n t s e h c e s r o H m u n a t s a c o p p i h s u l u c s e A s n i e v e s o c i r a v n I 0 7
s n o i t a r a p e r p t s a e Y e c r u o S l a g n u F l e o h r r a i d i t n A 6 3
t r o w s ' n h o J . t S m u t a r o f r e p m u c i r e p y H t n a s s e r p e d i t n A 6 3
e l t r y M s i n u m m o c s u t r y M t n a s s e r p p u s h g u o C 2 2
e l t t e n g n i g n i t S a c i o i d a c i t r U c i g o l o r U 0 2
o t t e m l a p w a S s n e p e r a o n e r e S e t a r t s o r P / c i g o l o r U 9 1
e l t s i h t k l i M m u n a i r a m m u b y l i S c i g o l o r U 8 1
f a e l y v I x i l e h a r e d e H t n a s s e r p p u s h g u o C 8 1
e o t e l t s i M m u b l a m u c s i V t n e m t a e r t r e c n a C 4 1
s n a e b y o S x a m e n i c y l G s e s u l a c i g o l o t a m r e D 9
e l i m o m a h C a l l i m o m a h c a i r a c i r t a M s e s u l a c i g o l o t a m r e D 9
y e r f m o C e l a n i c i f f o m u t y h p m y S s e s u l a c i g o l o t a m r e D 8
a v a k - a v a K m u c i t s y h t e m r e p i P r e z i l l i u q n a r T 8
e n i d n a l e c r e t a e r G s u j a m m u i n o d i l e h C s t n e m t a e r t l a n i t s e t n i o r t s a G 8
m o r f ( n i a l e m o r B
) s e l p p a e n i P
s u s o m o c s a n a n A , y r o t a m m a l f n i - i t n A
c i t y l o e t o r p
7
) l i o l a i t n e s s e ( e l o e n i C s u t p y l a c u E . p p s y d e m e r d l o C 7
h s o h o c k c a l B a s o m e c a r a g u f i c i m i C s e s u l a c i g o l o c e a n y G 6
Source: RIRDC, 2000
The European market for herbal supplements is estimated at over US$ 2.7 billion
and a further US$ 0.9 billion for herbal remedies. Germany is by far the largest market,
growing rapidly at over 4 per cent per annum for herbal remedies and considerably faster
for herbal supplements. In Germany and France, with well-established theory of using
herbal supplements, annual sales have been forecasted to rise at approximately 5 per
cent, whereas in the UK and Scandinavia growth rates of more than 10 per cent are
predicted (Wilhem, 2000).
Plant-derived drugs with tranquillizing or sedative actions are likely to continue
their popularity, and the demand for herbal products, such as valerian (Valeriana
officinalis), St. Johns wort (Hypericum perforatum), hops (Humulus lupulus), passion
flower (Passiflora spp.) and kava-kava (Piper methysticum) with these properties is set
to continue. The increasing demand for this category can be seen from the case of Jarsin,
a licensed product based on St. Johns wort. Its sale rose from US$ 2.9 million in 1992
to US$ 24.7 million in 1998. Other plant products, such as ginkgo and ginseng are
likely to grow rapidly to meet the increasing demand. Ginkgo products such as Tanakin
and Ginkor and Tebonin already dominate the European market for herbal medicines,
recording annual sale in excess of US$ 180 million in 1998.
11
2.2.3 North American Market for Herbal Products
The North American market for botanicals is considered to be in its developmental
phase as compared to European market, and most of the herbal products are sold as
dietary supplements. Demand for medicinal plants has increased significantly during the
1990s and was particularly strong among the aging baby-boomer generation, eagerly
seeking preventive treatments for various ailments as opposed to prescription treatments,
which are usually available only after a problem has surfaced.
In 1994, the annual sale value of herbal medicines in North America was only US$
1.5 billion, which increased to US$ 3.8 billion in 1999, registering about two and a half
fold increase (Gruenwald, 2000).
The USA is the largest market for herbal products in North America. During 1998,
the US market at about US$ 4 billion was 20 per cent higher than the previous year. The
most significant growth in the USA has occurred in the mass market of food, drug and
merchandise outlets. The mass market for top selling botanicals was US$ 600 million in
1998. Twelve botanicals accounted for 94 per cent of market sale and all of these exhib-
ited greater than 25 per cent growth in preceeding three years (Scimone and Scimone,
1999). Herbal formulas also showed healthy growth rates, reaching 25.1 per cent in the
year 1998 (Scimone and Scimone, 1999) and 17 per cent in the following year (Sauer,
1999). The strongest growth within this sector was shown by formulae containing St.
Johns wort (>1000 per cent annual growth rate), with a number of others showing
more than 30 per cent growth.
Many of the top-selling herbal products in the USA are similar to European prod-
ucts, e.g. ginkgo, ginseng and garlic. Six products from herbs ginkgo, St. Johns wort,
ginseng, garlic, echinacea and saw palmetto accounted for 85 per cent of total sales in
1998. At that time, the products with the fastest growth were St. Johns wort (2801 per
cent), echinacea (140 per cent), ginkgo (140 per cent) and saw palmetto (138 per cent).
Kava-kava and evening primrose registered growth rates of 473 and 104 per cent re-
spectively, but their market share was still very small (Table 7). The sale of natural
supplements, herbs and homeopathic remedies is also increasing at faster rate in the
USA.
The Dietary Supplement Health and Education Act (DSHEA), 1994, classified me-
dicinal herbs as food supplements as opposed to defining them as medicines or food
products. This exempted medicinal herbs from the approval under food and drug stand-
ards from official Food and Drug Administration of the United States (USFDA). Conse-
quently, the sale and distribution of medicinal herbs increased at most of the major retail
channels (Table 8). The sources indicate that the positive market response is reinforcing,
as medicinal plant products are available at trusted retail centres increasing their
legitimacy and appeal among consumers.
The fastest growing natural product in the USA has been soy isoflavones, while
speciality product like lycopene (from tomato) has also seen a rapid growth. Medicinal
12
plants used in OTC medicines, for which legal drug claims can be made, enjoy a relatively
stable market than dietary supplements. These include Aloe vera, Cassia senna, Plantago
ovata, Rhamnus purshiana, and Hamamelis virginiana.
Table 7: Leading herbals in the USA, in 1998
s l a b r e H e m a n l a c i n a t o B
e u l a v e l a S
) $ S U n o i l l i m (
h t w o r g t n e c r e P
8 9 - 6 9 9 1
o g k n i G a b o l i b o k g n i G 8 3 1 0 4 1
t r o w s ' n h o J . t S m u t a r o f r e p m u c i r e p y H 1 2 1 1 0 8 , 2
g n e s n i G x a n a P . p p s 8 9 6 2
c i l r a G m u v i t a s m u i l l A 4 8 7 2
a e c a n i h c E a e c a n i h c E . p p s 3 3 1 5 1
o t t e m l a p w a S s n e p e r a o n e r e S 7 2 8 3 1
d e e s e p a r G a r e f i n i v s i t i V 1 1 8 3
a v a k - a v a K m u c i t s y h t e m r e p i P 8 3 7 4
e s o r m i r p g n i n e v E s i n n e i b a r e h t o n e O 8 4 0 1
l a e s n e d l o G s i s n e d a n a c s i t s a r d y H 8 0 8
y r r e b n a r C n o p r a c o r c a m m u i n i c c a V 8 5 7
n a i r e l a V a n a i r e l a V . p p s 8 5 3
s r e h t O - 1 3 -

Source: RIRDC, 2000
Table 8: Annual market growth of selected plant products, in 1997-98
y r o g e t a C ) t n e c r e p ( h t w o r g e l a s l a u n n A
s e r o t s s t c u d o r p l a r u t a N s t e l t u o s s a m / g u r d / d o o F
h t i w s t c u d o r P
n i t i o r d n o h c / e n i m a s o c u l g
1 3 0 0 3
* s l a b r e h g n i z i l l i u q n a r T 2 4 3 8 1
n e m o w r o f s a l u m r o f l a b r e H 8 7 9 0 1
s m a e r c & s n o i t o l l a i c a F 5 3 6
) s l a c i p o t ( s c i h t a p o e m o H 8 1 5 1
s t c u d o r p y r d n u a L 0 3 a / n
*Includes Valerian, Kava-kava, and Chamomile
Source: RAISE, 2001
Industry sources indicate that 1999 was the first year, since 1994, which recorded
negative growth in the sale of medicinal plants (Table 9).
Table 9: Sale performance of selected medicinal herbs during 1998-99
b r e H e m a n l a c i n a t o B ) $ S U n o i l l i m ( e u l a v e l a S e g n a h c t n e c r e P
8 9 9 1 9 9 9 1
o g k n i G a b o l i b o g k n i G 0 3 . 9 0 1 4 7 . 2 0 1 0 . 6
t r o w s ' n h o J . t S m u t a r o f r e p m u c i r e p y H 0 3 . 1 0 1 9 0 . 8 7 3 . 3 2
g n e s n i G x a n a P . p p s 5 2 . 1 7 6 1 . 0 6 6 . 5 1
l a e s n e d l o G / a e c a n i h c E a e c a n i h c E s p p s , .
s i s n e d a n a c s i t s a r d y H
8 6 . 4 4 9 5 . 4 4 2 . 0
a v a k - a v a K m u c i t s y h t e m r e p i P 3 9 . 0 1 9 5 . 1 1 1 . 7

Source: RAISE, 2001
13
Despite the slowdown in sales, there is a wide variation in demand for certain plants
and extracts. The overall market for dietary supplements, which was growing at around
6 per cent until 1999, dropped to under 3 per cent in 2000. The herbal segment is
generally more sluggish than other sectors of the nutrition industry, such as functional
foods, vitamins and minerals. The market for functional foods (foods with specific health
benefits) has been growing at more than 9 per cent per year.
The US market of herbal medicinal products is expected to peak at US$ 6 to 8
billion in the next few years. The present dietary herbal supplement market is estimated
at US$ 4 billion and has been growing at 6 to 8 per cent per annum.
2.2.4 Traditional Medicines and Alternative Practitioners
The traditional system of medicine refers to ways of protecting and restoring health
that existed before the arrival of modern medicine. As the term implies, these approaches
to health belong to the traditions of most of developing countries, and have been handed
down from generation to generation. Traditional medicines have fulfilled the needs of the
local communities since many centuries. China and India, for example, have well-devel-
oped and sophisticated systems, such as Traditional Chinese Medicine (TCM) and Ayurvedic
medicine respectively.
A large proportion of population in a number of developing countries still rely on
traditional practitioners, including birth attendants, herbalists and bone-setters, and use
local resources of medicinal plants to satisfy their primary health-care needs. WHO
estimates that traditional birth attendants assist up to 95 per cent of all rural births and
70 per cent of urban births in developing countries.
Traditional medicines have maintained their popularity in a number of Asian coun-
tries, including China, India, Japan and Pakistan. In China, for example, traditional
medicines (herbal preparations) account for 30 to 50 per cent of the total medicinal
consumption. In 1993, the total sale of herbal medicines in China amounted to more
than US$ 2.5 billion. In Japan, from 1974 to 1989, there was a 15-fold increase in the
sale of Kampo (Chinese method) medicinal preparations in comparison with only 2.6 fold
increase for mainstream pharmaceutical products. The per capita consumption of herbal
medicines in Japan appears to be highest in the world.
During the last decade, there has been a renewed interest in traditional and alterna-
tive systems of medicine in many developed countries. One third of American adults have
used alternative treatment and 60 per cent of population in the Netherlands and Bel-
gium, and 74 per cent in the UK are in favour of complementary medicine to be available
within the framework of National Health Service. A survey among member states of the
EU in 1991, identified about 1,400 herbal drugs used in the European Economic Com-
munity (EEC).
14
The demand for medicinal plants is undoubtedly increasing in all sectors and this
growth is fuelling an increase in both the number of species and volume of medicinal
plants being traded.
Traditional Medicine Market in Asia
Alternative systems of plant-based medicine form an important part of the health-
care systems in most of the Asian, African, Latin American and some developed coun-
tries. Among Asian countries Japan, China and India have the highest per capita con-
sumption of traditional medicine. Most of the population in Africa and Latin America
also relies on traditional medicine.
Japan
Traditional medicines have been used effectively in the Japanese society for more
than a thousand years. The Japanese traditional medicine may be divided into folk medi-
cine and Chinese medicine from ancient China, popularly called Kampo medicine, which
are extremely popular. Each Kampo drug is a formula usually consisting of 5 to 10
different herbs. Most of the modern ready-to-use forms of the original formulae are
produced in granular, powdered or other forms, based on the classical decoction. At
present, there are approximately 210 Kampo drugs available as ethical drugs on the
market.
Kampo drug market experienced dynamic growth since 1980s. It has enjoyed an
annual growth rate of 15 per cent over the last five years. At present the annual produc-
tion of Kampo drugs is worth about US$ 1 billion of which the prescription sale accounts
for 78.6 per cent and OTC for 21.4 per cent. Sho-saiko-to is the largest Kampo formula-
tion of seven crude ingredients, with annual sale of US$ 111 million. Hochu-ekki-to,
with less than half the sales (US$ 52 million) is at second place. Table 10 shows the sale
values of top ten Kampo formulations on the market.
Table 10: Sale values of top ten Kampo formulations in Japan, in 1999
n o i t a l u m r o f o p m a K e u l a v e l a S
) $ S U n o i l l i m (
e r a h s t n e c r e P
o t - o k i a s - o h S 0 . 1 1 1 8 . 1 1
o t - i k k e - u h c o H 3 . 2 5 6 . 5
n a s - o y o h s - i m a K 7 . 6 2 8 . 2
o t - u y r i e s - o h S 7 . 2 2 4 . 2
o t - o d n o m u k a B 6 . 1 2 3 . 2
o t - u k o b i a S 3 . 0 2 2 . 2
n a s - o i j - i m i h c a H 5 . 8 1 0 . 2
n a s - u k a y u k a h s - i k o T 8 . 7 1 9 . 1
o t - n o k k a K 4 . 6 1 7 . 1
o t - i h s n u k k i R 4 . 6 1 7 . 1
n e t p o t f o l a t o T 7 . 3 2 3 5 . 4 3
s r e h t O 5 . 4 1 6 6 . 5 6
L A T O T 2 . 8 3 9 0 . 0 0 1

Source: Kampo Today, 2001
15
Chinese herbal remedies and manufactured products have a demand in excess of
US$ 840 million a year in Japan, representing 2 per cent of the entire spectrum of
market in 2001 (Stephen, 2001). In the last decade, 45 items among the top hundred
OTC drugs sold in Japan were herbals. The most common and favoured plants in Japan
are ginseng, lingzhi and ginkgo.
China
In China, plant-based medicines are the backbone of the health-care for a billion
people. Medicinal plants are used by 40 per cent of Chinese urban patients and over 90
per cent of rural patients for the primary heath-care needs. In the traditional medicines
as well as in the officially decreed medicines, huge quantities of plant materials are used.
Indeed, long back the annual demand had been reported to exceed 700,000 metric tonnes
(Xiao, 1991). In 1978 the market for Chinese medicine was US$ 0.44 billion, which
rose to 0.66 billion in 1990 and 1.3 billion in 1992. In 1993, the total sale of herbal
medicines amounted to more than US$ 1.6 billion, excluding US$ 400 million worth of
exports. The demand for medicinal plant material in China has grown annually at 9 per
cent. There are over 4,000 composite drugs in 40 different formulations in Traditional
Chinese Medicine. The annual average cost of herbal medicines per person was US$ 0.06
in 1956; US$ 0.26 in 1978; US$ 0.56 in 1986, which rose to US$ 1.57 in 1993.
Chinese herbal medicinal preparations are exported to more than a hundred coun-
tries. The production of plant-based medicaments and related products was around US$
5.8 billion per annum in 1996. TCM make up to 40 per cent of the market, while western
style drugs work out around 60 per cent. The annual output value of TCM industry is
around US$ 1.8 billion with a volume output of more than 200,000 metric tonnes in
early 1990s. The export of TCM was around US$ 480 million in 1992, and US$ 506
million in 1993. Chinas current export of herbal medicines totals US$ 36.6 billion per
annum (Trade Daily, 2000).
India
The medicinal plant trade in India is estimated to be around US$ 11.7 million per
year. During 1980s, India was the largest supplier of medicinal plants to EEC with a
supply of 10,055 metric tonnes of medicinal plant material and 14 metric tonnes of plant
alkaloids and their derivatives. The annual turnover of Indian herbal industry was esti-
mated at around US$ 300 million in 1995 (Anonymous, 1996). In 1997-1998, the
export value of Ayurvedic and Unani medicines was about US$ 33.5 million, which
dropped to US$ 27.7 million in 1998-1999, and again went up to US$ 31.7 million in
1999-2000. Psyllium husk, popularly known as isabgol, is a major item with export
value of US$ 23.5 and 19.6 million in 1998-99 and 1999-2000, respectively (Pharmabiz,
2001). Of a total turnover of US$ 48.9 million of Ayurvedic and herbal products, the
major OTC products contribute around US$ 25.5 million, the ethical formulations around
US$ 13.8 million, and the classical Ayurvedic formulations the remaining US$ 9.6
million. Realizing Indias potential, the Government of India has projected export earn-
ings from these herbal products to be US$ 63.89 million by 2005, and US$ 212.92
16
million by 2010 (Chandrika, 2000). The demand from different countries for Ayurvedic
and Unani medicines is given in Table 11.
Table 11: Demand for Ayurvedic and Unani medicines from top 11 countries during 1997-98
y r t n u o C ) T M ( y t i t n a u Q ) $ S U n o i l l i m ( e u l a V
e c n a r F 3 0 . 8 2 3 . 0
y n a m r e G 3 4 . 1 4 9 2 . 0
y l a t I 1 8 . 2 3 0 6 . 0
a i s y a l a M 6 0 . 1 7 4 7 . 0
s d n a l r e h t e N 5 2 . 3 7 6 4 . 0
a i s s u R 6 8 . 7 5 1 8 4 . 0
e r o p a g n i S 4 1 . 9 2 1 6 . 0
d n a l r e z t i w S 8 2 . 6 2 4 1 . 1
e n i a r k U 0 1 . 7 4 0 4 . 0
s e t a r i m E b a r A d e t i n U 6 0 . 0 3 1 4 5 . 0
A S U 6 2 . 1 6 9 4 . 0
L A T O T 2 6 . 8 9 2 , 1 0 8 . 8

Source: Pharmabiz, 2001
Malaysia
The Malaysian herbal industry is estimated at about US$ 315 million per annum,
growing annually at a steady pace of 20 per cent (Bernoma, 1999). Despite being one of
the worlds 12 mega biodiversity centres, 80 to 90 per cent of the countrys herbal
products are imported. The import of raw material for traditional medicines is largely
from Indonesia, China, Thailand, Taiwan and the USA, and is mostly channelled through
Singapore, Philippines, Australia and Hong Kong, while export is largely to Singapore.
Preliminary trade statistics show that the total import value of medicinal plant products
has increased from US$ 14 million in 1990 to 16 million in 1992. There was 18 per cent
rise in demand for herbal products during these two years. The market value, which was
estimated at US$ 10 million in 1994, grew up to about US$ 15.8 million in 1996. Today
the main products in demand are garlic, echinacea, ginkgo and evening primrose oil. The
Malaysian herbal market has the potential to hit US$ 842 million by the year 2005 and
US$ 1.36 billion by the year 2010 (Bernoma, 1999; Hanim, 2000). There are about
1,000 manufacturers of Malay herbal medicines in Malaysia.
Indonesia
Indonesia is the second largest biodiversity centre after Brazil. It has more than
30,000 plant species, distributed on different Indonesian islands. There are about 1,000
medicinal plants of which 350 are used as potential source of raw material for herbal
medicines. Medicinal plants have been used by the people of Indonesia since ancient time
and there is a tendency of improving their demand in future. There are different forms of
traditional practices in Indonesia, all associated to a greater or lesser degree with differ-
ent ethnic groups. But the oldest and most widespread is Jammu system of herbal medi-
cine. It is an important constituent of national health-care programmes and economy of
rural people. Manufacture of traditional medicine has been growing in Indonesia and
correspondingly the number of companies has also increased. According to the data of
17
Ministry of Health, about 48.98 per cent of herbal medicines are used for preventive
purposes, 22.47 per cent for promotion ventures, 21.78 per cent for curative intentions,
and rest for birth control, beauty care, personal hygiene and sexual purposes. In general,
40 per cent of Indonesian population utilizes herbal drugs for health-care needs. A part
of crude drugs is also imported from other countries. Indonesian herbal medicines are
divided into two groups, i.e. Jammu medicine and Phytopharmaca group. The Jammu
medicines are based completely on the experiences and their manufacture generally do not
comply with the requirements of Goods Manufacturing Practices (GMP). Phytopharmaca
medicines comply with the formal GMP requirements and their efficacy is based on tests.
In Indonesia, the development of herbal industry has increased rapidly since last
decade. In the year 1992, there were 468 registered industries (448 small and 20 large
ones), that increased to 807 (720 small and 87 large ones) in 2000. This increase in
number of manufacturing units is the reflection of an increase in the consumption of
herbal medicines in Indonesia. The consumption volume of herbal medicines increased
from 6,052 metric tonnes in 1995 to 7,685 metric tonnes in 2000. One of the top com-
panies dealing with manufacture of Jammu medicine, namely PT Jammu Air Mancur,
reported an annual income of US$ 360 million, mostly from domestic sales and US$ 9
million from export of Jammu medicines in 1995.
Cambodia
The use of traditional medicine is a rich tradition to maintain health, among the
people of Cambodia. The Khamer is the most popular traditional medical system. It is
closely linked to the history of its religion. The practice of herbal medicine continues due
to its biomedical benefits and place in cultural beliefs through out the country. Cambodia
has the potential to source the national requirements of raw material of more than 500
valuable medicinal plants. Usually ground or chopped parts of medicinal plants in decoc-
tion, liquor or powder form are used.
Lao Peoples Democratic Republic
Lao has large reserves of natural resources, including medicinal and aromatic plants.
Most of the traditional practitioners in Lao use domestic raw material for preparation of
their prescriptions. In Lao no big company undertakes the business on materia medica.
There is only one small scale factory in the southern part of the country, which produces
raw material of medicine from plants, and another in the central part which produces
essential oil from pines. There are some pharmaceutical factories in the capital, from
which three belong to government sector, one is a joint venture with China, and rest are
private. The country produces only a small quantity of plant-based medicines.
Philippines
Medicinal plants provide basic and alternative health-care to the people of Philip-
pines, especially in remote islands, where there is a lack of modern medicines and medi-
cal facilities. The new developments and remarkable progress have taken place in the
medicinal and aromatic plant sector in the Philippines since the establishment of the
18
Asian Network on Medicinal and Aromatic Plants (ANMAP), in June 1993. Many phar-
maceutical companies have expanded their business to herbal medicines and body-care
products. Among the exported herbal products, the most prominent are herbal teas and
herbal cosmetics. There is also a strong movement from folk medicine to pharmaceuti-
cals, and herbal medicine is now considered a strong partner in the health-care delivery
system. Medicinal plants which were earlier regarded as for concoctions and poultices
dispensed by herbalists, are now available in modern dosage forms such as tablets, cap-
sules, syrups and ointments. Herbal soaps, shampoos, skin and body lotions, powders,
colognes are also available, and are quite popular in the market.
Thailand
Thailand is bestowed with rich natural resources of medicinal and aromatic plants.
There are more than 10,000 species of plants of which about 1,400 are used as indig-
enous medicinal and aromatic plants in Thai traditional materia medica. Thailand pro-
duces enormous quantities of plant-based raw materials, which are used globally in phar-
maceutical, perfumery, cosmetic, aroma-chemicals and related industries. Potential spe-
cies of export value include: senna, pepper, chili pepper, sweet basil, citronella, jasmine,
champa, ylang ylang, and lemon grass. Apart from fulfilling the domestic demand Thai-
land also exports these plants in the form of raw materials or intermediatry chemicals to
Europe, the USA, and Japan. In 2000, there were 699 manufacturing units of tradi-
tional drugs in Thailand (248 in Bangkok, 451 in the rural areas).
Vietnam
Medicinal plants and herbal drugs have made a tremendous contribution to the
national health and development in Vietnam. There is an age-old traditional system of
medicine, handed down from one generation to another since time immemorial. Vietnam
government has integrated the traditional and modern systems of medicine into a Viet-
namese system of medicine. It has been estimated that by the year 2010 Vietnam will
produce itself 70 per cent of the needed medicines. Herbal and plant-based drugs using
the indigenous raw materials will account for 30 per cent of the total value of produced
medicines. At least 3,000 metric tonnes per annum of medicinal plants material is re-
quired to fulfill the needs of 20,000 traditional practitioners. According to a survey of
medicinal plants resources, 2,000 species and sub-species of medicinal and aromatic
plants have been used in traditional medicine.
Sri Lanka
In Sri Lanka traditional medicine systems (i.e. Ayurveda, Siddha, Unani and Deshiya
Chikitsa Traditional Ayurveda) are the major users of medicinal plants. Most of the
demand of medicinal plants is met through import from India. In 1994 over US$ 10
million worth medicinal plants were imported from India through the Department of
Ayurveda. The rest was locally collected mostly from the wild. The herbal drug and raw
material imports to Sri Lanka are controlled by the private sector. The largest buyer is
Ayurvedic Drugs Corporation. In addition there are 84 Ayurvedic drug manufacturing
companies. According to the figures available at the customs, in 1995 Sri Lanka exported
19
368 metric tonnes of medicinal plants valued at US$ 1.53 million, and 65 metric tonnes
(US$ 0.98 million) of medicaments. In 1996 over sixty species were imported at an
annual value of US$ 1.27 million from India and neighbouring countries.
Traditional Medicine Market in Africa
The traditional system of medicine is an important part of African culture. It varies
in different cultures and regions. In the past, African governments largely ignored their
importance. However, the diminishing revenues as a result of structural adjustments,
programmes and cuts in international aids, have forced many governments to reconsider
the advantages of local health-care systems. Moreover, there is a growing evidence of the
effectiveness of traditional remedies for the treatment of common ailments, including
some HIV/AIDS opportunistic diseases. In Africa, traditional healers enjoy high social
status within their communities.
The high cost of western pharmaceuticals make modern health-care services out of
reach, especially for those living in rural areas. Therefore, more than 80 per cent of
African population relies on medicinal plants for their health-care needs.
In South Africa, the demand for indigenous medicines is considerably higher than
for western medicines. In Zambia, 70 per cent of the population relies on traditional
medicines and their trade is worth over US$ 43 million per annum. There are about 78
species of medicinal plants used widely in Zambia. An acute shortage of drugs in Uganda
made most of its population to depend on herbal medicines. In Swaziland the ratio of
traditional healers to total population is 1:110, in contrast to dismal ratio of 1:10,000 of
medical doctors. This indicates that majority of Swaziland population cannot access modern
medicine clinics and are catered by traditional healers using indigenous medicinal plants.
Over 90 per cent of Nigerians in rural and about 40 per cent in the urban areas
depend partly or wholly on traditional medicine. Virtually all native species of plants are
used for the treatment of one or another ailment. Almost all plants in the wild used as
food also appear in the list of plants used for traditional medicine. In Namibia, medicinal
plants are used greatly by rural people for their health-care needs. More than 80 medici-
nal plant species have been identified alone in Tsumkwe district of Otjozondjupa region of
Namibia that are used to treat 30 different ailments.
Over 80 per cent of the population in Mozambique relies on traditional medicine. The
forest area is highly inhabited by traditional healers and sources the supply of medicinal
herbs to the practitioners of traditional medicine. The predominant medical system in use
in Malawi is traditional, especially in rural areas. Limitations to government health
services, such as drug shortages and an insufficient number of hospitals, as well as unfa-
vourable doctor to patient ratio of 1:50,000 have contributed to the reliance on traditional
medicines. A variety of medicinal plants are used in traditional medicines.
In Ethiopia, 70 to 90 per cent of the population relies on traditional medicine
20
especially from medicinal plants for their primary health-care needs. The value and role
of traditional health-care systems will not diminish in the future because they are both
culturally viable and expected to remain affordable while the modern health-care service
is both limited and expensive. In West Africa, a shortage of basic medications, the lack
of health services, the high cost of drugs, and cultural practices mean that most of the
population, particularly in rural areas is restricted to traditional medicine, healers, and
herbalists.
Traditional Medicine Market in Latin America
Traditional medicine has a significant presence in most Latin American countries,
with different forms of expression according to the region and the location. One of its
natural niches are the rural areas inhabited primarily by indigenous population. Tradi-
tional medicine is also expanding to urban zones. About 70 to 80 per cent of the Latin
American population relies on traditional medicine for their health-care needs. For ex-
ample, about 80 per cent of the population of Ecuador depends on the traditional medi-
cine for their health-care needs and, consequently, on the plants or natural products from
which these medicines are derived. There is a lack of access to modern drugs among
significant part of the population. The increasing control of pharmaceutical industry by
international companies and decreasing participation of the national governments in the
purchase and distribution of medicaments further complicate the problem.
The consumption of drugs in Latin America was worth US$ 16.5 billion in early
1990s, slightly less than 5 per cent of the world consumption. The per capita consump-
tion of drugs is approximately US$ 21. These figures vary among different countries of
the region (Argentina US$ 65, Brazil US$ 17, Bolivia US$ 6) and among different
regions of the same country, as is the case of Brazil (Northeast less than US$ 5, South
US$ 70, Sao Paulo US$ 90), (Gerez, 1993).
The big countries of the region like Argentina, Brazil and Mexico import approxi-
mately 10 per cent of their requirement of finished pharmaceutical products, while those
in Central America import approximately 80 per cent, and others like Chile, Peru, Ven-
ezuela and Bolivia import around 20 to 50 per cent.
2.2.5 Regional Differences in Use of Herbal Medicines
Herbal medicine is considered as a bridging gap between traditional based comple-
mentary medicine and the highly scientific conventional medicine.
This link is well established in European medical community, for example, in Ger-
many more than 80 percent of all physicians regularly use plant medications. Even in
Europe the trend of complementary medicine is still increasing, especially scientifically
documented herbal medicines which are more accepted and appreciated by both the
patient and physician.
21
In Asia, both traditional and conventional medicines are practiced in parallel, but none
of the two is regarded as the only therapy being the truth for human health.
The situation in the USA is different from the two above-mentioned cases. Comple-
mentary medicine and conventional medicine are far apart like strangers. However, the
situation is changing with increasing interest of people in complementary medicine.
American health authorities have also realized the importance of herbal medicine. There-
fore they formulated the Dietary Supplement Health and Education Act (DHSEA), in
1994, allowing the sale of herbal products as dietary supplements without subjecting
them to the complex process of drug evaluation by Food and Drug Administration of the
USA.
2.2.6 Status of Herbal Medicine in Health-Care Programmes
There are four different legal categories of herbs: herbal medicines with a product
licence, which could be prescription, pharmacy or general sale list medicines; herbal
medicines exempt from licensing; herbal products marketed as food supplements; and
herbal products marketed as cosmetics.
In Western Europe, the professional use of herbs and herbal medicine enjoys a
relatively strong integration with conventional medicine. In the countries of the EU,
herbal medicines are generally sold in pharmacies as licensed non-prescription and pre-
scription medicines. According to the EUdirective 65/65/EEC, all herbal medicines are
treated as drugs, with the exception of the Netherlands and the UK, where botanicals are
still sold as food supplements or dietary supplements (Gruenwald, 1998). In Europe,
herbal medicines are marketed according to indications. Among the major categories,
the largest proportion was spent for herbal drugs useful for cardiovascular problems
followed by respiratory (cough and cold), gastrointestinal (digestive improvements), ton-
ics, hypnotics and sedatives, as well as topicals (Nicholas Hall Reports, 1994). Europe is
forging a common legal framework for botanical products, which can be sold as drugs
with both labels and inserts. They can be legally prescribed by doctors and most impor-
tantly, expenses can be reimbursed through various medical insurance plans.
Herbal medicines have long been a part of the established medical practice in Ger-
many. The German Medicines Act of 1978 has permitted the issuing of Standard Li-
cences for botanical products after each has been examined in a published monograph
which details qualitative and quantitative information about the product-side effects,
interactions, dosages, effects, indications, contradictions, etc. These monographs are
created under the jurisdiction of a specially conceived body called Kommission E of the
German Federal Health Agency and the focus in the German system is on individual
plants. So far, 410 monographs have been created analyzing 324 herbs with recom-
mended dosages and it is expected that this approach will be accepted by the EU. Of all
the herbal medicines sold in Germany, about half are OTC products sold for self-treat-
ment and the other half through medical prescription.
The cost of prescribed phytomedicines is also reimbursed in France, but in the UK
22
many phytomedicines are in a General Sales List category and are sold as food supple-
ments without the possibility of reimbursement. The prescribed St. Johns wort costs can
be reimbursed in Germany (also sold OTC), while in France it is available only as OTC
drug and in the Netherlands as a food supplement. To harmonize these discrepancies,
according to the EU directive 65/65, all phytomedicines will be treated as drugs necessitat-
ing registrations based on efficacy and safety. The European Scientific Cooperative for
Phytomedicines (ESCOP) will prepare the European monographs to be used as the founda-
tion for registration of phytomedicines in Europe.
In the USA, herbal medicines and products are sold as dietary supplements.
Nutraceuticals/functional foods may carry either health claims, which are usually FDA
pre-approved or structure/function claims depending on the most recent regulations prom-
ulgated by FDA, under Dietary Supplement Health and Education Act (DSHEA), 1994.
The FDA regulates medical foods somewhat loosely within their own regulatory category.
Nutraceutical Research and Education Act (NREA), 1999, legally defines nutraceuticals
as a separate regulatory category, thus allowing them to carry specific disease treatment or
prevention claims previously allowed only for drugs.
In Japan, Kampo medicines used for the last 1,000 years had become eligible for
reimbursement by the National Insurance Scheme in 1976. In China and India, Tradi-
tional Chinese Medicine and Ayurvedic medicine are respectively used as prescription
drugs and reimbursed in the respective National Insurance Schemes.
2.2.7 Developments in Herbal Medicine Industry
Europe has a long history of research and processing of botanical extracts, and has
strict regulations, established quality control procedures and decades of clinical data to
support the products. Overall, the European market is as well regulated as the drug
industry and many of the compounds sold in the USA as dietary supplements are mar-
keted as drugs in other countries. The majority of leading companies, specialized in
herbal drugs, are located in Germany, France, Italy and Switzerland. Some of them are
over 100 years old and many are still privately owned.
In the last decade, it has been observed that there is a tendency of multinational
pharmaceutical companies to buy smaller herbal companies in Europe. Table 12 summa-
rizes such acquisitions, where also several American companies, like American Home
Products, Bausch and Lomb, Johnson & Johnson, Pfizer and Searle can be found. Other
developments in this regard are joint ventures between European herbal medicine com-
panies and American partners. Natures Way was founded in 1969 and later became
Murdock Health Care. In 1988 Madaus Murdock was founded as a joint venture between
the German Madaus and Murdock Health Care in the USA. In 1993, Madaus and the
German firm Schwabe formed a new entity, Murdock-Madaus-Schwabe (MMS). The
new corporate entity markets the Natures Way and Naturalife brands in the USA. A
group of multinational pharmaceutical companies markets herbal medicines in several
countries, which are produced by smaller companies, specialized in herbal drugs. Such
23
collaborations exist, e.g. between the Ciba Geigys daughter Zyma, which sells a special
herbal medicine line called Valverde, produced by Zeller AG in Switzerland. Also BASFs
daughter Knoll, in Germany, sells products from Zeller AG.
In selected regions, companies like Boehringer Ingelheim (Sweden), Lederle (Aus-
tralia) and Schering (Belgium and Hungary) sell herbal medicines. In these cases, the
garlic product Kwaireg from the German company Lichtwer Pharma is an example.
The interest in phytomedicines by conventional pharmaceutical companies is likely
to continue in the near future, as evidenced by the growing acquisitions of companies
specializing in phytomedicines. There is an increasing consolidation in the herbal indus-
try at all sales levels. Beginning with the merger of Twin Labs and Natures Herbs in
1989, many important mergers have taken place (Table 13).
Table 12: Acquisitions of European phytomedicine companies by multinational pharmaceutical companies
l a n o i t a n i t l u M d e r i u q c a y n a p m o c e n i c i d e m o t y h P
s t c u d o r P e m o H n a c i r e m A ) y n a m r e G ( h c u M . r D
m i e h e l g n I r e g n i r h e o B ) a d a n a C ( t s e u Q d n a ) d n a l r e z t i w S ( n o t a m r a h P
s t o o B ) y n a m r e G ( d l o n a K
b m o L & h c s u a B ) y n a m r e G ( n n a M . r D
a s s u g e D ) y n a m r e G ( a c i d e M a t s A
a w a s i j u F ) y n a m r e G ( e g n i l K
k c r e M / n o s n h o J & n o s n h o J ) y n a m r e G ( a m r a h P m l e o W
r e z i f P ) y n a m r e G ( k c a M
r e r h o R c n e l u o P e n o h R ) y n a m r e G ( n a m r e t t a N
i f o n a S ) y n a m r e G ( n a g r O t n a l P
e l r a e S ) y n a m r e G ( n n a m u e H
m a h c e e B e n i l K h t i m S ) y n a m r e G ( k n i F
y a v l o S ) y n a m r e G ( e i m e h C i l a K
Source: study data
Table 13: Mergers and acquisitions in the herbal drug industry
s e i n a p m o C
/ r e g r e m f o r a e Y
n o i t i s i u q c a
a i l a t o B / s g n i n o s a e S l a i t s e l e C 5 9 9 1
l a n o i t a n r e t n I e c r u o s n u S / m e t t a h C 7 9 9 1
s b r e H r a t S l a t s y r C / . c n I a m r a h P s e n o J 7 9 9 1
i e t e b A / e n i l K h t i m S 7 9 9 1
i a h C n i a t n u o M / s g n i n o s a e S l a i t s e l e C 8 9 9 1
r a G e r u P / l o r t a N 8 9 9 1
u a e B e l i c a L / l o r t a N 8 9 9 1
l a n o i t a n r e t n I s t c u d o r P l a c i n a t o B / s t n e i d e r g n I l a c i n a t o B y t i l a u Q 8 9 9 1
Herbals are the fastest growing segment in the raw materials market in the USA,
valued at over US$ 600 million. The Martin Bauer Group, a German corporation with
24
over US$ 250 million in sales and whose subsidiaries include Finzelberg, Plant Extract,
(Plantextrakt), Phyto Lab, and Phytocon, is the market leader. Other major companies
include the pharmaceutical giants Trostburg and Madaus in Germany and Schweizerhall
in Switzerland, as well as speciality company Indena in Italy, a US$ 200 million supplier
of herbal products for the pharmaceutical, cosmetic and food industries.
The Zuellig Group is also exclusive US agent for Finzelberg. Euromed, the major
supplier of standardized extracts of saw palmetto, pygeum, and echinacea, is a wholly
owned subsidiary of Madaus in Germany. Madaus generates sales of US$ 400 million
per annum from herbal medicines.
Most of the large pharmaceutical companies have also started the herbal division.
Warner Lambert, American Home Products, Bayer and SmithKline Beecham are all
introducing herbal products. And this adds respectability to this marginalized market
with driving demand for high quality raw material of medicinal and aromatic plants.
The main producers are manufacturers based in the developed countries, including
the large multinational pharmaceutical companies. There are also smaller companies
that specialize in herbal products and some have emerged to challenge the multinationals
for market leadership in this field. The main products sold are based on plants such as St.
Johns wort that are now well known for their medicinal properties in the consuming
countries.The market share of herbal products in developing countries remains compara-
tively low.
2.3 Natural Health Products
Herbs have been used for thousands of years by indigenous people for medicinal and
healing purposes. In recent years, with the expansion of consumers interest in the health
benefits of foods and personal care products, more attention is being paid to the health
foods (nutraceuticals), cosmetics and personal care products (cosmeceuticals) contain-
ing natural ingredients. The major factors for their growing demand are aging popula-
tion of industrialized countries, growing desire for alternatives to conventional pharma-
ceutical products, and increased awareness of consumers for health benefits of these
products. In the west, health foods are viewed as revolution and represent a fast growing
segment of health products industry while in East, these have been a part of culture for
centuries. The USA, Europe and Japan are the major producers and consumers of health
food products. On the other hand, the increasing interest and popularity of health prod-
ucts in the Asia, Latin America, Africa and Middle East is creating more opportunities
at international level than at the domestic level.
Health foods are the food products supplemented with herbal ingredients, vitamins,
minerals and nutrients or ingredients isolated/purified from conventional foods. These
are demonstrated to have a physiological benefit and reduce the risk of chronic disease.
These are either sold at conventional retail outlets or through physicians.
25
Health foods are known with different names throughout the world i.e. functional
foods in Oriental and nutraceuticals in Western region. In literature and media, the
terms nutraceuticals and functional foods are used synonymously for health food
products.
2.3.1 Nutraceuticals
Nutraceuticals is a latest term for health foods, first coined in 1996 by Stephen
DeFelice, founder of the Foundation for Innovation in Medicine of New Jersey, USA. The
term nutraceuticals is an amalgamation of the terms nutrition and pharmaceuticals
used as a marking level to distinguish certain foods and food ingredients, usually from
natural sources, which confer specific health benefits. Nutraceuticals are more correctly
defined as parts of a food or a whole food that have a medical or health benefit, including
the prevention and treatment of disease, e.g. oil extracted from flaxseed and sold in
capsule. The main three constituents which make up the nutraceuticals are herbal and
related extracts, vitamins and minerals & nutrients. Nutraceuticals are the latest prod-
ucts in a succession of health food evolution (Table 14).
Table 14: Evolution of nutraceuticals
n o i t u l o v e f o r a e Y t p e c n o c h t l a e h d o o F e p y t t c u d o r P
0 6 9 1 - 0 5 9 1 d e n i f e R e r b i F
0 7 9 1 n e e r G s t n e i d e r g n i l a r u t a n e e r f - e d i c i t s e P
0 8 9 1 t h g i l d n a w o L e k a t n i e i r o l a C
0 9 9 1 s l a c i t u e c a r t u N s e r b i f y r a t e i D
s e d i r a h c c a s o g i l O
s d i c a y t t a f d e t a r u t a s n u y l o P
s d i p i l o h p s o h p / s e n i l o h C
. c t e , s e d i s o c y l G
0 1 0 2 l i t n U s d o o f g n i t h g i f - e s a e s i D d n a s t n a l p d e r e e n i g n e y l l a c i t e n e G
s c i r t a i d e p r o f s a n a n a b . g . e ( s t i u r f
d e t a v e l e h t i w s e o t a m o t ; s e n i c c a v
g n i k o m s d i a o t t n e t n o c e n i t o c i n
) n o i t a s s e c
s d o o f g n i z i m i t p o - h t l a e H n o i t n e v e r p e s a e s i d h t i w s d o o F
, s e n e t o r a c , s e n e p r e t . g . e ( n o i t c n u f
, s l o r e t s o t y h p , s l l y h p o h t n a x , s d i o n o m i l
d n a s e d i r a h c c a s o g i l o , s e n o v a l f o s i
) s d o o f d e h c i r n e n i m a t i v
2.3.2 Major Nutraceutical Products Categories
In the nutraceuticals industry major products include: dietary supplement, such as
food-supplements, drinks, herbal extracts, vitamins, and essential oils; fortified foods,
such as high carotenoid tomatoes, and vegetables oils modified to improve their fatty
acids profiles; foods and beverages with added bioactive ingredients, such as ginseng
tea or cholesterol lowering phytosterols; and entire food regimes. Some of the broad
categories of nutraceuticals as a result of modifications of food composition are
shown in Table 15.
26
The strongest market driver for nutraceuticals is the baby boomer generation which
will be the largest buying consumer group in the years ahead. The health concerns and
corresponding nutraceuticals treatments are given in Table 16.
Table 15: Emerging nutraceuticals
s t n e t u t i t s n o c e v i t c a y l l a c i g o l o i B n o i t a c i f i d o m f o e d o M y t i l a n o i t c n u f e l b i s s o P
s l a c i m e h c o t y h P n o i t i d d A f o k s i r r e w o l , y t i v i t c a t n a d i x o i t n A
f o k s i r r e w o l , s e s a e s i d r a l u c s a v o i d r a c
. e r u s s e r p d o o l b e c u d e r , r e c n a c
s c i t o i b o r p / e r P n o i t i d d A , n o i t c n u f ) I G ( l a n i t s e t n i - o r t s a g e v o r p m I
f o k s i r e c u d e r , m e t s y s e n u m m i e c n a h n e
. s e i g r e l l a f o k s i r e c u d e r , r e c n a c n o l o c
s n i e t o r p / s e d i t p e p e v i t c a o i B n o i t i d d A e s a e r c n i , n o i t c n u f e n u m m i e c n a h n E
. s l a r e n i m f o y t i l i b a l i a v a o i b
s e r b i f y r a t e i D n o i t i d d A f o k s i r e c u d e r , n o i t a p i t s n o c f o n o i t n e v e r P
. e r u s s e r p d o o l b e c u d e r , r e c n a c n o l o c
s d i c a y t t a f d e t a r u t a s n u y l o P n o i t i d d A e m o s d n a s k c a t t a t r a e h f o k s i r e c u d e R
. m e t s y s e n u m m i e c n a h n e , s r e c n a c
s n e g r e l l A l a v o m e R d o o f c i f i c e p s f o k s i r e t a n i m i l e / e c u d e R
. s e i g r e l l a
Table 16: Major health concerns corresponding nutraceuticals in demand
n r e c n o c h t l a e H t n e m t a e r t l a c i t u e c a r t u N
s e s a e s i d r a l u c s a v o i d r a C d n a i w i k f o s t c a r t x e ; n i l u n i , s d i c a y t t a f 3 - a g e m o ; y o s d n a m u i l l y s p , n a r b t a O
. s t i u r f r e h t o
r e c n a C d n a s n i m a t i v ; y o s d n a s n i a r g , s e l b a t e g e v , s t i u r f ; e n e p o c y l , s e n o v a l f o s I
. s l a b r e h
y t i s e b O e k i l s r e n r u b t a F . a i g o b m a c a i n i c r a G
s i s o r o p o e t s O . s r e h t o d n a s l a b r e h , d e e s x a l f , s e n o v a l f o s i y o s ; n i l u n i , s n e g o r t s e o t y h p l a r u t a N
n o i s i v l a m i t p O , n i e t u l , s n i n a y c o h t n a g n i n i a t n o c s t c u d o r p d n a s e g a r e v e b l a c i t u e c a r t u N
. c t e , n i h t n a x a e z
d n a r o i v a h e b , d o o M
e c n a m r o f r e p l a u t c e l l e t n i
. t r o w s ' n h o J . t S d n a e l i m o m a h c , r e w o l f n o i s s a p , n a i r e l a V
s e i d e m e r t u G g n i n i a t n o c e a l u m r o f e v i t s e g i d ; s t c u d o r p c i t o i b - o r p d n a c i t o i b - e r p e v i t a e r C
, a y a p a p , l e n n e f , t n i m r e p p e p , r e g n i g e k i l s b r e h l a n o i t i d a r t ; s e d i r a h c c a s o g i l o
. s r e h t o d n a e o l a , e c i r o u q i l , e l i m o m a h c
s l a n o m r a H e s u a p o n e m d n a s p m a r c l a u r t s n e m r o f ( s l a b r e h d n a d e e s x a l f , s e n o v a l f o s i y o S
y t i l i b a b r o s b a m u i c l a c h t o b e v o r p m i o t ( s t c u d o r p n e g o r t s e o t y h p ; ) s m o t p m y s
. ) h t g n e r t s e n o b d n a
2.3.3 Trends in Global Nutraceuticals Market
The precise market value for nutraceuticals is not clear, due to the difficulty with
which the market is defined. But there is a general agreement that the neutraceuticals
industry is a promising sector with enormous growth potential. The USA leads the mar-
ket followed by Western European countries and Japan as both major producer and
consumer of nutrceuticals (Table 17). In 1998-99, the herbal supplements and vitamins
were the strongest performing sector in the global OTC market, with an annual growth
27
rate of 16 per cent. This reflects the increasing world wide interest in self medication
that goes beyond traditional cold remedies and pain relievers (Sauer, 1999).
In 1999, the global nutraceutical market was valued at US$ 6.8 billion, almost
thrice the value in 1987 (Figure 3, Table 18). It has been projected to rise at over 8.3 per
cent per annum to reach US$ 11.2 billion in 2004 (Freedonia Group Inc., 2001a).
Table 17: Apparent size of major world market for nutraceuticals
s n o i g e R ) $ S U n o i l l i b ( e z i s t e k r a M
a c i r e m A f o s e t a t S d e t i n U 7 3 - 0 1
s e i r t n u o c n o i n U e p o r u E 0 2 - 5 1
n a p a J 4 1 - 0 1

Source: Lapsley, 1998; Witwer, 1998; Technology Catalysts, 1999
The global demand for herbal and related extracts in nutraceuticals grew to US$
2.8 billion in 1999 from US$ 0.52 billion in 1987, depicting almost four fold rise in
demand. It has been predicted that herbal and related extracts will generate the fastest
growth in worldwide demand among all nutraceuticals, reflecting their widely perceived
health advantages, increased validation and increasing support among medical practi-
tioners.
Figure 3: Global nutraceuticals demand
Table 18: Global nutraceuticals demand from 1987 to 2002
m e t I ) $ S U n o i l l i b ( e u l a v d n a m e D h t w o r g l a u n n a t n e c r e P
7 8 9 1 7 9 9 1 9 9 9 1 2 0 0 2 7 9 / 7 8 9 1 2 0 0 2 / 7 9 9 1
s t c a r t x e d e t a l e r & l a b r e H 2 5 . 0 3 7 . 1 9 . 2 6 9 . 2 9 . 2 1 3 . 1 1
s n i m a t i V 8 6 . 0 8 3 . 1 3 . 2 3 9 . 1 2 . 7 0 . 7
s t n e i r t u n & s l a r e n i M 4 1 . 1 9 3 . 2 6 . 1 1 3 . 3 7 . 7 7 . 6
L A T O T 4 3 . 2 0 5 . 5 8 . 6 0 2 . 8 9 . 8 3 . 8
Source: Theodore, 1997; Freedonia Group Inc., 2001(a)
If the term nutraceutical is taken in its broadest sense, including health foods,
dietary supplements and natural foods, the global market has been put at US$ 504
2
.
3
4
0
.
5
2
5
.
5
1
.
7
3
6
.
8
2
.
9
8
.
2
2
.
9
6
0
1
2
3
4
5
6
7
8
9
V
a
l
u
e

(
b
i
l
l
i
o
n

U
S
$
)
1987 1997 1999 2002
Year
Total
Herbal Extracts
28
billion (James, 1999). This market value is split equally between the US and the European
markets. It contrasts with another study valuing the market for functional foods at US$
32 billion in 1997, rising to US$ 45 billion by 2002, shared primarily between Japan
(US$ 14 billion rising to US$ 19.5 billion), the USA (US$ 10.5 billion rising to US$ 15
billion) and Europe (US$ 7.5 billion rising to US$ 23 billion), (James 1999).
The market for nutraceutical beverages is difficult to categorize, as it ranges from
soft drinks through fortified juices to herbal teas. Functional teas occupy a relatively
small market share (annual sales approximately US$ 75 million). Fortified juices (such
as calcium or vitamins enriched orange juices) accounted for approximately US$ 200
million sales in 1997, while isotonic sports drinks sales in the same year came to US$
1.2 billion (Theodore, 1997).
Antioxidants and herbal teas also form an important part of the nutraceuticals
market. The leading antioxidant phytochemicals in demand are vitamin A, C, and E,
carotenoids and flavonoids. The natural vitamin C market rose to US$ 0.3 billion in
1998 showing a 9 per cent rise over the previous year. Carotenoid formulae showed an
even larger increase of 11.4 per cent during the same period with sales totaling to US$
96.8 million, while sales of natural vitamins A, D and K increased by 16.1 per cent to
US$ 11.5 million. The largest increase occurred in the market for natural vitamin E
single supplements, which increased by 24.8 per cent to US$ 0.3 billion from 1997 to
1998 (Kane, 1999).
Functional beverages in 1997 accounted US$ 92.7 million. Within the functional
beverage sector, powder-to-mix products (mainly proteins and fibre based products) ac-
counted for 40 per cent, teas in bags 37 per cent and cultured drinks for less than 10 per
cent of the sector. The annual increase in sales were predicted at 3.3 per cent for powder-
to-mix products and 27 per cent for teas in the bags (Kroll, 1997). Herbal teas are
forecasted to be an area of particularly rapid growth in the next few years. According to
Business Communications Company Inc., the global market for functional foods and
beverages will rise at approximately 12.4 per cent per annum to reach US$ 0.3 billion by
2002 (Kroll, 1997).
In 1999, the market for self-medication of coughs, colds and respiratory complaints
stood at approximately US$ 9 billion, growing 2 per cent annually. The most dominant
herbal remedies for this market are those based on Echinacea spp. (E. purpurea, E.
pallida and E. angustifolia), which account for 9 per cent of herbal sales in Europe and
12 per cent in the USA. Total annual sales of Echinacea products in the USA alone in
1999 have been put at between US$ 71 to 109 million (Aarts, 2000, Brevoort, 2000),
and there is still considerable potential for commercial development of products from
this genus. If high quality herbal products could account for approximately 30 per cent
of this market, as has been predicted for pharmaceutical companies (Wilkinson, 2000), the
future potential of herbs for cough and cold could be as high as US$ 3 billion.
Cardiovascular diseases are frequently cited as a key health issue, both by consum-
29
ers and by manufacturers of functional foods. Herbs like hawthorn, horehound and gin-
seng are likely to dominate the herbal treatments for this market. Closely related are
herbs to lower cholesterol, such as artichoke and garlic. Lichtwers Kwai, a licensed
product based on garlic, had annual sales in Europe of US$ 20 million in 1998. Unli-
censed garlic products accounted for 10 per cent of European herbal sales in 1997, and
16 to 18 per cent of sales in the USA between 1996 to 1999. Considering the emphasis
put on cardiovascular diseases as a therapeutic target, these values are very likely to
increase over the next years.
Grouped with cardiovascular diseases obesity was cited as a key health concern by
70 per cent of the people in a poll study in the USA. Globally, the market for weight
control products has been put at US$ 64.1 billion in 1997 (Peet, 1999). Diet or healthy
foods accounted for the large share of 91 per cent and only 2 per cent being OTC dietary
aids. However, even small 2 per cent share is worth over US$ 1 billion. Herbs, such as
Garcinia spp. have potential for development as weight loss aids, through their potential
to alter lipid metabolism.
The US demand for nutraceuticals increased from US$ 880 million in 1987 to
US$ 1.7 billion in 1996 and was expected to reach US$ 2.5 billion in 2001. The herbal
and related extracts which forms only 3.40 per cent of nutraceuticals demand in 1987
increased to 18.49 per cent in 1996 (Table 19). The sales of dietary supplements in the
USA has tripled to more than US$ 10 billion per year with thousands of supplements in
the retail outlets in 2001.
Table 19: The US bulk nutraceuticals demand and growth from 1987 to 2001
m e t I ) $ S U n o i l l i b ( e u l a v d n a m e D h t w o r g l a u n n a t n e c r e P
7 8 9 1 6 9 9 1 1 0 0 2 1 0 0 2 / 6 9 9 1
s t c a r t x e d e t a l e r & l a b r e H 3 0 . 0 2 3 . 0 5 6 . 0 2 . 5 1
s n i m a t i V 9 2 . 0 8 4 . 0 5 6 . 0 0 . 6
s t n e i r t u n & s l a r e n i M 6 5 . 0 3 9 . 0 3 2 . 1 -
L A T O T 8 8 . 0 3 7 . 1 3 5 . 2 8 . 7
Source: Theodore, 1997
Japan is the third largest producer of nutraceuticals in the world and the largest in
the Asia-Pacific region. Over half of all patents for nutraceuticals have been developed in
Japan. In 1998, the Japanese market for vitamins, nutraceuticals and dietary supple-
ments was estimated to be worth over US$ 18 billion, which means that it was more than
ten times larger than any European market, with an increase of nearly 15 per cent from
1994. Dietary supplements accounted for the largest share of this market, with sales of
more than US$ 14 billion.
2.3.4 Future Trends in Global Nutraceuticals Market
In 1998, herbal supplements were part of the fastest growing sector of the US$ 45
billion global OTC market, with annual growth rates of 16 per cent. Similarly, herbal
products dominate the global market for herbal remedies. The areas of most rapid annual
30
growth (between 50 and 100 per cent) are predicted to come from those countries where
the herbal market is relatively poorly developed e.g. the USA, Australia, etc.
Freedonia Group Inc. reports (2001a) have projected that Asia-Pacific, Latin
America, Africa and Middle East will provide the fastest growth for nutraceutical indus-
try. China will see the most impressive jump in nutraceuticals consumption and produc-
tion levels. The USA, Japan and major West European countries will remain the largest
global producers and consumers of nutraceuticals due to higher consumer income levels,
widespread preferences for speciality nutritional and herbal products, trends promoting
preventive medicines and self treatment. The growth in demand will accelerate as new
functional food additives continue to flow into the marketplace and expand uses in con-
ventional and speciality products. Soy and fiber nutrients (e.g., isolated soy proteins, oat
bran, psyllium) will provide the striking growth opportunities based on consumer prefer-
ences to obtain nutritional requirements through normal dietary practices, such as liquid
meal substitutes, energy boosting shakes, sports beverages and fortified foods. These
applications will also drive up global demand for bulk vitamins, especially antioxidants
(i.e., vitamin A, C and E) with scientifically supported health benefits. The US demand
for nutraceuticals will increase 6.7 per cent annually to US$ 2.7 billion in 2004, serving
end-use product markets totaling US$ 34 billion.
Herbal and Related Extracts
Of the three major constituents of nutraceuticals, herbal and related extracts will
see the strongest growth based on expanding scientific evidence of health benefits and
the rising popularity of alternative medicines (Freedonia Group Inc. Report, 2001a).
Widely perceived health benefits among consumers will drive demand for herbal and
related extracts up ten per cent annually to US$ 350 million in 2004. Ginkgo for esti-
mated cognitive properties, St. Johns wort for managing mild depression, ginseng for
energy boosting, echinacea for strengthening immunity, and saw palmetto for benign
prostatic hyperplasia will provide the best growth prospects among herbs.
Nutrients and Functional Additives
The second group of nutraceuticals, nutrients and functional additives, will gener-
ate above average sales gains, spured by ongoing advances in the quality of ingredients.
Among the nutrients, soy proteins, oat brans and psyllium will continue to comprise the
largest selling components due to health and wellness advantages and increasing uses in
fortified foods and beverages. Polyunsaturated fatty acids (PUFAs) will emerge as the
leading group of functional additives, with demand advancing 30 per cent annually through
2004. The third group of nutraceuticals, vitamins and minerals, will continue to be domi-
nated by antioxidants (vitamins A, C and E). Demand for essential nutrients and func-
tional additives will increase almost nine per cent annually to US$ 1.2 billion in 2004.
Soya proteins and PUFAs will lead growth based on proven health benefits, ongoing
advances in formulations and broad adaptability to end-use products. Clinically con-
firmed cholesterol-reducing actions will drive up demand for oat bran and psyllium.
31
2.3.5 Developments in Nutraceutical Industry
Nutraceuticals are the most promising sector for health food and pharmaceutical
industries. Many functional food/nutraceutical companies are part of larger food or phar-
maceutical industries. In general, pharmaceutical industry is better positioned to pro-
duce functional foods, however there are companies that operate in both areas through
strategic alliances. Many pharmaceutical companies have subsidiaries that sell nutri-
tional products. A number of large food and pharmaceutical companies, such as Kellog,
Heinz, Quaker, Unilever, Dupont, Novartis, Cargill, Hormel, Abbott Laboratories, Royal
Numico, Amway, and American Home Products are active in the field because they con-
sider that the nutraceuticals market has promising growth potential. The leading compa-
nies in the global market for functional foods are given in Table 20. A certain number of
these companies may well be interested in contract growing of raw materials for their
products, due to the scale of their operations.
Table 20: Worlds leading functional food companies by turnover during 1997-99
y r t n u o C y n a p m o C s d o o f l a n o i t c n u F
) $ S U n o i l l i b (
l a t o T
) $ S U n o i l l i b (
f o s e t a t S d e t i n U
a c i r e m A
s e i r o t a r o b a L t t o b b A 6 2 . 1 8 4 . 2 1
y n a p m o C g o l l e K 0 9 . 0 6 7 . 6
l a n o i t a n r e t n I n o i t i r t u N r e d i e W 5 2 . 0 5 2 . 0
s l l i M l a r e n e G 0 2 . 0 7 0 . 7
s t c u d o r P a n a c i p o r T 0 1 . 0 0 0 . 2
y n a p m o C r a B e c n a l a B 8 0 . 0 8 0 . 0
e r a c h t l a e H r e m u s n o C l i e N c M a / n a / n
a m r a h P e k o o C 5 0 . 0 5 0 . 0
l a n o i t a n r e t n i h c e T m u G 1 0 . 0 1 0 . 0
y n a m r e G r e l l e o M s i o l A i e r e k l o M 8 1 . 0 0 2 . 1
n n a m r h E a / n 2 3 . 0
d n a l r e z t i w S l a n o i t a n r e t n I s i t i r a v o N 0 4 . 2 0 3 . 1 2
e l t s e N 0 2 . 0 9 9 . 1 5
i n o T 6 0 . 0 3 1 . 1
e c n a r F e n o n a D e p u o r G 0 5 . 0 0 1 . 4 1
s i l a t c a L e p u o r G 7 1 . 0 0 0 . 5
g r o b i r t s i D e p u o r G 6 1 . 0 5 2 . 0
s d n a l r e h t e N / K U e i n u k l e M a n i p m a C 5 5 . 0 0 9 . 3
k r a m n e D s d o o F D M 8 1 . 0 0 6 . 3
m o d g n i K d e t i n U m a h c e e B e n i l K h t i m S 6 7 . 0 6 9 . 2 1
a i l a r t s u A m u i r a t i n a S
r e d l e i F n a m d o o G
8 1 . 0
0 2 . 0
8 1 . 0
y l a t I t a l a m r a P 1 1 . 0 0 5 . 5
d n a l n i F p u o r G o i s i a R 5 0 . 0 0 9 . 0
m u i g l e B e l e t r o o m r e d n a V 5 0 . 0 5 8 . 0
n e d e w S y r i a D e n a k S / r e i r e j e m e n a k S 2 0 . 0 0 3 . 0
n a p a J a h s n o H t l u k a Y 7 2 . 1 7 2 . 1
l a c i t u e c a m r a h P a k u s t O 9 5 . 0 3 1 . 3
y n a p m o C s i p l a C 8 4 . 0 0 8 . 0
s t c u d o r P k l i M i j i e M 1 4 . 0 0 8 . 3
s t c u d o r P k l i M d n a r B w o n S 3 3 . 0 4 6 . 4
y r o t n u S 0 3 . 0 0 7 . 6
o z u h S a r a k a T 9 0 . 0 0 6 . 1

Source: James, 1999
32
Celestial Seasonings, one of the largest producers of herbal drinks has recently been
acquired by the Hain Food Group for US$ 390 million, to form the largest natural food
company in the USA. The resulting Hain Celestial Group Inc. expects total sales of US$ 1
billion by 2002 (Plank, 2000).
2.4 Phyto-Cosmetics and Personal Care Products
2.4.1 Cosmeceuticals
In a similar way to the acceptance of nutraceuticals as a valid sector of the food
industry, cosmetic and personal care products containing natural products are also find-
ing an increasingly receptive trend in the market. Beginning in the early 1990s, cosmetic
manufacturers began to use the term cosmeceuticals to describe OTC skin care products
that claim therapeutic benefits through the addition of active ingredients such as alpha-
hydroxy acids and vitamins. Thus, cosmeceuticals are well defined as the products, which
lie on the boundary line between drugs and cosmetics which posses desirable physiologi-
cal activities, such as skin healing, antioxidant, and smoothing or conditioning proper-
ties.
2.4.2 Major Cosmeceutical Products Categories
Major cosmeceuticals product categories involving botanical ingredients are as below:
Skin care: age-defying and sun-protecting products;
Hair care: hair growth retardants and stimulants;
Professionals: professional products used for appearance-enhancing facial im-
plants, injections, chemical peels and related procedures;
Other products.
2.4.3 Trends in Cosmeceuticals Market
Globally, the market for cosmeceuticals has been estimated at US$ 22 billion, with
the fastest growing sector being anti-aging products. The USA, Japan, Australia, and
Europe are the most dominant markets for cosmeceuticals; however, China, Malaysia,
Russia, and Latin America have strong potential for long-term growth (Technology Cata-
lysts International, 2001). Baby boomers entering their fifties made anti-aging products
the core of the skin-care products. In 2000, cosmeceuticals retail sales grew by 7 per
cent to nearly US$ 4.5 billion, which caps four years of dramatic growth. A plant polysac-
charide called galacto-arabinan could possibly become the next big exfoliating ingredi-
ent. Manufacturers claim that the protein exfoliates the skin without irritation, reduces
water loss, and tightens the skin. Middle aged white women are currently the key
cosmeceutical consumers.
In the USA, the market for cosmeceuticals in 1998 was estimated at US$ 2.5
billion (Brown, 1998). The key markets within this category were products effective in
anti-wrinkle treatments, promotion of micro-circulation, sun screens, analgesics, and
33
promotion of hair growth. In the USA, the market for botanical ingredients for use in
cosmetics and toiletries stood at US$ 345 million in 1998 (Figure 4, Table 21), and was
forecasted to increase at 7.9 per cent annually, to reach US$ 505 million by 2003
(Freedonia Group Inc., 1998).
3
8
1
8
0
2
6
5
4
6
2
3
0
3
4
5
6
3
3
4
5
5
2
5
1
1
5
7
2
0
1
1
0
5
0
200
400
600
800
1000
1200
D
e
m
a
n
d

V
a
l
u
e

(
m
i
l
l
i
o
n

U
S
$
)
1989 1993 1998 2008
Year
Aloe Extract Demand
Botanicals Extract Demand
Total Demand
Figure 4: US demand for herbal extracts in cosmetic & toiletries
Table 21: Botanical extract demand in cosmetic and toiletries from 1989 to 2008
m e t I ) $ S U n o i l l i m ( e u l a v d n a m e D
9 8 9 1 3 9 9 1 8 9 9 1 * 8 0 0 2
t c a r t x e e o l A 8 3 6 4 3 6 5 1 1
t c a r t x e l a c i n a t o B 0 8 1 0 3 2 5 4 3 0 2 7
s r e h t O 2 2 4 3 7 6 4 7 1
s e m y z n e / s d i c a t n a l P 9 1 7 3 5 6 3 7 1
s l i o l a i t n e s s E 1 0 1 3 1 1 0 5 1 8 5 2
s t c u d o r p l a r u t a n r e h t O 5 8 5 1 1 0 8 1 5 8 3
L A T O T 5 6 2 5 4 3 5 2 5 5 0 1 , 1
*Estimates
Source: Freedonia Group, 1998
The US demand for cosmeceutical products is projected to increase by 7.6 per cent
per annum, to reach US$ 4.3 billion in 2005. The value of chemicals used in these
cosmeceutical formulations is expected to advance by 9.2 per cent per annum to reach
US$ 1 billion in 2005. Accordingly, demand for chemicals is expected to grow faster
than shipments of end-use preparations, with the cost of chemicals increasing its share of
the total production value of cosmeceuticals to 24 per cent in 2005 (Table 22). Growth in
cosmeceuticals demand will be driven by increased demand for new appearance enhanc-
ing and age-defying products in the market.
Skin care will dominate cosmeceutical product demand, accounting for 60 per cent
of the total in 2005 with a healthy annual growth of seven per cent. The fastest growth
among cosmeceuticals will be recorded by professional products used for appearance
enhancing facial implants, injections, chemical peels and related procedures. The de-
34
mand of professional products is expected to rise more than 14 per cent annually to
reach US$ 340 million in 2005.
Table 22: Natural extracts demand in the US cosmeceutical industry
m e t I ) $ S U n o i l l i m ( e u l a v d n a m e D h t w o r g l a u n n a t n e c r e P
5 9 9 1 0 0 0 2 * 5 0 0 2 0 0 0 2 / 5 9 9 1 5 0 0 2 / 0 0 0 2
s l a c i m e h c l a c i t u e c e m s o C 0 6 3 0 6 6 5 2 0 , 1 9 . 2 1 2 . 9
s t c a r t x e l a r u t a N 2 3 4 7 8 3 1 9 . 4 1 3 . 3 1
s t c u d o r p l a c i t u e c e m s o C 0 8 7 , 1 5 6 9 , 2 5 7 2 , 4 7 . 0 1 6 . 7
e r a c n i k S 5 9 0 , 1 0 2 8 , 1 0 5 5 , 2 7 . 0 1 0 . 7
e r a c r i a H 0 3 2 2 5 4 5 0 7 5 . 4 1 3 . 9
l a n o i s s e f o r P 1 7 5 7 1 0 4 3 8 . 9 1 2 . 4 1
s r e h t O 4 8 3 8 1 5 0 8 6 2 . 6 6 . 5


*Estimates
Source: Freedonia Group Inc. (2001b)
Introduction of new cosmeceutical chemicals providing unique benefits often initi-
ates a rapid surge in demand. Chemicals, which are projected to record double digit
growth through 2005 due to their novel or improved performance, include coenzyme Q
10, which combines antioxidants and exfoliant action; polyhydroxy acid, with a reduced
risk of skin irritation; eflornithine hydrochloride, a hair growth retardant with new com-
mercial applications; finasteride, a hair growth stimulant; and a wide range of botanical
and herbal extracts which have crossed over from the nutraceuticals industry and bring
with them an established reputation of safety and health benefits.
2.4.4 Cosmeceutical Industry
The cosmeceutical market has erupted with the addition of new active ingredients,
the discovery of enhanced technologies, and the spreading of cosmeceutical ingredients
to the make up and hair-care products. Manufacturers are frequently replacing vitamins
with herbal ingredients, such as saw palmetto, ginseng and ginkgo. Indena is one of the
worlds largest botanical extract suppliers with a wide range of extracts of cosmetic
potential in a number of key and emerging cosmeceutical therapeutics areas, as shown in
Table 23. The market leaders are Johnson & Johnson, LOreal, Unilever, and Proctor &
Gamble. Este Lauder is leading the way in the prestige category with about 60 per cent
of the total market.
Table 23: Selected botanical ingredients with their claimed activities used in cosmeceutical industry
y n a p m o C t c u d o r P e c r u o s l a c i n a t o B y t i v i t c A
y e r b u A , e r b a F e r r e i P
s c i n a g r O
s t a O a v i t a s a n e v A y r o t a m m a l f n i - i t n a , g n i t a t i r r i - i t n A
s t n e m e l e o i B a e c a n i h c E a e c a n i h c E . p p s , s e l k n i r w d n a s e n i l s e c u d e R
y t i c i t s a l e n i k s e v o r p m i
a c i n a t o B - o i B n i l o n e l p o t y h P i i m a h g n i n n u c a d i p i t n e C r a l u l l e c , y r o t a m m a l f n i - i t n A
n e e r c s n u s , l a w e n e r
f a e l e v i l O a e p o r u e a e l O l a r i v i t n a , l a g n u f - i t n A
s l a c i m e h c o t y h P a r e v i n U e o l A a r e v e o l A g n i h c a e l b n i k S
Continued
35
y n a p m o C t c u d o r P e c r u o s l a c i n a t o B y t i v i t c A
s t c u d o r P m e k o t y F x e m u R x e m u R . p p s ) r o t i b i h n i e s a n i s o r y t ( g n i n o t n i k S
b r e h w o l l i W a b l a x i l a S t n a t i r r i - i t n A
) l i o d e e s e p a R ( a l o n a C s u p a n a c i s s a r B r e n o i t i d n o c n i k S
a n e d n I t c a r t x e y r d e l i m o m a h C a l l i m o m a h c a i r a c i r t a M n i k s d e t a t i r r i n o t c e f f e g n i h t o o S
t c a r t x e y r d d l o g i r a M s i l a n i c i f f o a l u d n e l a C
t c a r t x e y r d t r o w s ' n h o J . t S m u t a r o f r e p m u c i r e p y H
a e c a n i h c E t c a r t x e y r d a e c a n i h c E . p p s g n i g a - i t n A
t c a r t x e t f o s d e i f i r u p m u e g y P a n a c i r f a s u n u r P
s n i n o p a s n a e b y o S x a m e n i c y l G
n i r a m y l i S m u n a i r a m m u b y l i S
t c a r t x e y r d y r r e b l i B s u l l i t r y m m u i n i c c a V g n i g n a v a c s l a c i d a r e e r F
t c a r t x e c i l i h p o p i l d e e s n i k p m u P o p e p a t i b r u c u C n o i t a l u g e r o b e S
s n e p e r a o n e r e S t c a r t x e d e i f i r u p s n e p e r a o n e r e S
n r o h t w a H s u g e a t a r C . p p s
t c a r t x e y r d k c a r w r e d d a l B s i s o l u c i s e v s u c u F n i k s " l e e p e g n a r O "
t c a r t x e y r d m o o r b s ' r e h c t u B s u t a e l u c a s u c s u R
t c a r t x e t f o s y v I n o r d n e d o c i x o t s u h R
n i c s e A m u n a t s a c o p p i h s u l u c s e A
o g k n i G a b o l i b o g k n i G n o i t a l u m i t s n o i t a l u c r i c o r c i M
t c a r t x e f a e L a c i t a i s a a l l e t n e C s i s e h t n y s n e g a l l o c f o n o i t a l u m i t S
t c a r t x e y r d t o l i l e M s i l a n i c i f f o s u t o l i l e M n o i t c e t o r p y r a l l i p a c o r c i M
t c a r t x e d i u l f k r a b n a i v u r e P a r b u r i c c u s a n o h c n i C r i a h p l a c s f o n o i t a l u m i t S
37
3 Raw Material Supply
The demand for medicinal plant material has increased in the world market due to
rise in interest for natural products and increased acceptance of traditional medical
systems around the world. Medicinal plants are traded in a variety of forms, for example:
entire plant parts such as leaves, bark, and roots; chopped or sliced plant-parts; deriva-
tives, semi-processed or manufactured material such as powders, extracts, tonics, pills,
teas and other products; and finished pharmaceutical products.
It has been said that as many as 35,000 to 70,000 species of plants have been used
at one time or another for medicinal purposes (Farnsworth & Soejarto 1991). In India
more than 1,000 plant species, 700 species in Nepal, approximately 7,000 species in
Peninsular Malaysia and its neighboring islands and over 1,800 species in Vietnam are
reported to have medicinal value. However, relatively a very small number of them are
used in any significant volume e.g. in Traditional Chinese Medicine, 9,905 botanical
materials are used but only an estimated 500 are commonly used in any significant
volume (Natural Medicine Marketing, 1996).
In the early 1980s, about 400 species were reported to be used in Europe for their
medicinal values (International Trade Center, 1982). More recent findings suggest that
this number could be closer to 1,500 including those used in homeopathy (Lange, 1996).
In 1980, the eight countries then belonging to the EEC imported 80,738 metric tonnes
of vegetation plant material used in pharmacy. The leading importer was Germany
(31,452 metric tonnes), followed by France. This import volume has grown to an annual
avarage of 120,000 metric tonnes during 1992 to 1996. The major part, 60 per cent, of
raw material supply to the EU originates from developing countries of African and Asian
continents.
It has been estimated that 500, and possibly as many as 600 species of medicinal
plants are traded through Hamburg, Germany, which lies in the heart of the import
business in Europe (Lewington 1992). In 1980, India was the leading exporter of me-
dicinal plants to Europe (10,055 metric tonnes out of total 80,738 metric tonnes imported)
followed by Eastern Europe. In the same year, Europe exported about 70,000 metric
tonnes of plant material mainly to the USA.
The market for medicinal plants is dynamic and complex. Therefore, it is difficult to
obtain precise information about the structure and scale of international trade in medici-
38
nal plants. The trade statistics and custom records on medicinal plants are inadequate
(Lewington 1992). The problem is further complicated with no clear distinction between
medicinal, food, spice and aromatic usages of these plants. The place of trade is generally
far away from the area of production, and processing often takes place in countries other
than country of origin.
The trade in medicinal plants not only takes place from developing to urban
industralized countries, but also among developing countries. For instance, there is a
major trade from the Himalayas, including Nepal, to India and beyond, mostly for use in
herbal medicine (notably Ayurvedic medicine). The volume of this trade is unknown,
because it is believed that the greater part of it passes through unofficial channels.
Understanding the dynamics of the trade in medicinal plants is difficult, because overall
volumes and values are not known, and species-specific information is not comprehensive at
all. The scarcity of such data is one reason for the lack of attention that countries have
directed towards the medicinal plant resource. Insufficient knowledge about the scope of the
trade, in particular at national level, has resulted in ineffective implementation of existing
regulations and initiatives in producing countries, to the detriment of the resource and
those who will depend on it in the years to come. Perhaps most important is that there is
little appreciation for the increasingly critical imbalance between supply and demand.
3.1 Dynamics of Trade in Medicinal Plants
The term Medicinal Plants is applied to plants that contain a substance or sub-
stances of medicinal properties, which have been proven to be useful as drugs or contain
drug constituents, used as therapeutic agents, as starting materials for the synthesis of
other drugs, as models for new synthetic drugs, and as tools in drug development and
testing.
In international trade, medicinal plants have been coded under the Standard Inter-
national Trade Classification (STIC), and the Harmonized Commodity Description and
Coding System (HS) or Customs Cooperation Council Nomenclature (CCCN). HS or
CCCN code 1211, which is widely accepted by World Trade Organization (WTO), relates
to botanical drugs (plants and plant-parts of a kind used primarily in perfumery, phar-
macy, or for insecticidal, fungicidal, or similar purposes) and sub-sections under this code,
specifies the categories or a specific single drug. Some selected examples are shown in Table
24, and their sub-categories in Table 25.
Further more these categories do not include the data on trade in glycosides and
vegetable alkaloid derivatives, which are important raw materials to the pharmaceutical
industry.
39
Table 24: SITC and HS or CCCN codes for major botanical drug groups in international trade
e d o c N C C C r o S H y t i d o m m o C e d o c 3 . v e R , C T I S
0 0 . 1 1 2 1 n i y l i r a m i r p d e s u d n i k a f o s t r a p t n a l p d n a s t n a l P
, l a d i c i t c e s n i r o f r o , y c a m r a h p n i , y r e m u f r e p
. s e s o p r u p r a l i m i s r o , l a d i c i g n u f
0 4 . 2 9 2
0 1 . 1 1 2 1 s t o o r e c i r o u q i L 1 4 . 2 9 2
0 2 . 1 1 2 1 s t o o r g n e s n i G 2 4 . 2 9 2
0 9 . 1 1 2 1 t n i m , s n a e b n i u q n o t , m u r h t e r y p g n i d u l c n i s r e h t O
, a n e b r e v , n e d n i l e r a g l u v m u n a g i r O d n a a i v l a S
. s i l a n i c i f f o
9 4 . 2 9 2
Table 25: Sub-categories of CCCN codes 1211.20 and 1211.90
e d o c N C C C r o S H n o i t p i r c s e D
0 0 . 0 0 . 0 2 . 1 1 2 1 t o o r g n e s n i G
0 2 t o o r g n e s n i g d e t a v i t l u C
0 4 t o o r g n e s n i g d l i W
0 0 . 0 0 . 0 9 . 1 1 2 1 s t n a l p l a n i c i d e m r e h t O
: s e v a e l t n i M
0 0 . 0 2 d e r u t c a f u n a m t o n r o e d u r C
0 0 . 0 4 : s r e h t O
0 2 . 0 4 ) d e x i m n u , s e i c e p s e l g n i s ( s n o i s u f n i l a b r e h d n a s a e t l a b r e H
0 4 . 0 4 s r e h t O
0 0 . 0 6 s n a e b a k n o T
0 0 . 0 8 s e i t r e p o r p c i t u e p a r e h t r o c i t c a l y h p o r p , c i t e h t s e n a g n i v a h s e c n a t s b u s r e h t O
: s t n e m a c i d e m n i s t n e i d e r g n i s a r o s t n e m a c i d e m s a d e s u y l l a p i c n i r p d n a
0 1 . 0 8 s e v a e l a c o C
0 2 k s u h d e e s m u i l l y s P
0 3 s r e h t O
0 4 l i s a B
0 5 e g a S
0 8 ) d e x i m n u , s e i c e p s e l g n i s ( n o i s u f n i l a b r e h d n a s a e t l a b r e H
0 9 s r e h t O
3.1.1 Trends in Global Trade of Medicinal Plants
It is not possible to assess global trade in all medicinal plants as a substantial part
of this trade is not recorded and official trade statistics either do not identify the plants
individually, or do not separate their medicinal usage from other uses such as culinary
herbs and spices, insecticides, fungicides and sources of perfumes and essential oils.
World demand for medicinal plants is steadily increasing not only from developing
countries but also from industrialized countries, where the demand is fuelled first by the
interest in products that are natural, and second by the aggressive marketing of herbal
medicines. The demand for medicinal plants is increasing as the drug-pharmaceutical
products are falling under more strict governmental regulations.
According to the International Trade Center (ITC), as far back as 1967, the total
40
value of global import of starting materials of plant origin for the pharmaceutical and
cosmetic industry was of the order of US$ 52.9 million. From this amount the total value
grew to US$ 71.2 million in 1971, and then showed a steady annual growth rate of
approximately 5 to 7 per cent through to the mid-1980s. From 1987 to 1991, the avarage
value of trade in medicinal plants increased to US$ 853 million. It generally showed an
upward trend except for the year 1990, when it dipped slightly before rising to US$ 1.08
billion in 1991 (Iqbal, 1993). World trade in medicinal plants and plant-parts averaged
US$ 1.28 billion between 1995 to 1999. During this period, world imports rose slightly
from US$ 1.3 billion in 1995, to nearly US$ 1.4 billion, but subsequently decreased to
US$ 1.1 billion in 1999. In 1996 the volume of traded material was 440,000 metric
tonnes, valued at US$ 1.3 billion. Above mentionned trends are depicted in Figure 5.
5
2
.
9
7
1
.
2
9
6
0
.
3
2
1
0
8
0
1
3
0
0
0
200
400
600
800
1000
1200
1400
V
a
l
u
e

(
m
i
l
l
i
o
n

U
S
$
)
1967 1971 1987 1991 1996
Years
Annual import value
Figure 5: Trends in global trade of medicinal and aromatic plants material
In terms of value, other medicinal plants represented three quarters of the total
imports, ginseng roots covered one fifth, and the rest was liquorice roots. The six leading
importers (volume-wise) were Hong Kong, Japan, Germany, the USA, South Korea and
France during late 1990s. World trade in medicinal plants and their products has now
been put at over US$ 60 billion, with annual average growth rate of 7 per cent (Govt.
of India, 2000) to reach US$ 5 trillion by 2050 (FRLHT, 1996 c.f. IDRC, 2000). The
growth is fastest in the EU countries (10 per cent) and the USA (20 per cent).
The major international trade in medicinal plants is from developing to urban-in-
dustrial countries. Among developing countries, China is the leading exporter of botani-
cal drugs, having exported on an average about 140,000 metric tonnes during 1991 to
1998. India, the second largest exporter, has exported on an average about one-fourth
the volumes exported by China during the same period.
41
3.2 Supply Sources of Medicinal Plants
The supply of medicinal plants generally comes from two sources viz. wild and
cultivated. Surprisingly, the bulk of the material traded is wild harvested and constitutes
more than 80 per cent of supply. Only a very small number of species are cultivated.
3.2.1 Wild Harvested Material
Wild harvesting is the collection of plant material from natural habitats of the
species. In many traditions of medicine, wild harvested material is generally considered
to have higher therapeutic activity, and therefore fetches higher price.
The wild harvested material of medicinal plants constitutes the major part of trade,
which is a matter of concern for source countries. In Asia and Africa more than 80 per
cent of medicinal plant supply comes from the wild sources, e.g in China about 60 per
cent demand for medicinal plants is met from the wild sources. An estimated 90 per cent
of medicinal plants collected in India is from the wild (Vinay, 1996). In Nepal, every
year over 15,000 metric tonnes of plant material, representing some 100 species, is
harvested from the wild. The traditional medicine in Indonesia still relies to a large
extent on plant materials collected from the wild. From the 55 most important medicinal
plant species used in Jammu, about 25 per cent are still collected from the wild.
In Latin America, most of the medicinal plant supply comes from wild sources. In
Brazil most of the plant material used locally or traded is collected from the wild. The
most significant species under exploitation are Maytenus ilicifolia (espinheira santa),
Pfaffia paniculata (Brazilian ginseng), Phyllanthus niruri (quebra pedra), Pilocarpus
microphyllus (jaborandi), Psychotria ipecacuanha (ipecac) and Solanum mauritianum
(cuvitinga), among others (Vieira, 1999).
Although the major part of the wild harvested material is sourced from developing
countries, a surprisingly high amount is also gathered in developed countries. Wild col-
lections still play a vital role in trade of medicinal and aromatic plants in Europe par-
ticularly in Albania, Turkey, Hungary and Spain. From 1,200 to 1,300 European plant
species traded, at least 90 per cent are collected from the wild. In terms of volumes, the
wild harvested material accounts for 30 to 50 per cent in Hungary; 50 to 70 per cent in
Germany; 70 to 80 per cent in Bulgaria; and almost 100 per cent in Albania and Turkey.
The overall volume of wild collected plant material in Europe is estimated to be at least
20,000 to 30,000 metric tonnes annually (Lange, 1998). An estimated 70 to 90 per
cent of the medicinal plants, imported into Germany, are wild harvested and only 50 to
100 species among these are currently propagated on a large scale (Lange, 1996).
In the USA, wild harvested plants used for their therapeutic value are marketed
either as medicines or dietary supplements. Plants that have been tested for safety and
efficacy and meet strict US Food and Drug Administration (FDA) standards are mar-
keted as medicines or drugs. Plants and plant-products that do not meet the FDA stand-
ards are marketed as dietary supplements. There are more than 25 tree species, 65
42
herbaceous plants, and 29 shrubs that have been listed by the United States Pharmacopoeia
for their medicinal value (Chamberlain et al., 1998).
3.2.2 Cultivated Material
The other source of medicinal plant material is through cultivation, which is infi-
nitely more appropriate to use it in the production of herbal drugs. As quality require-
ments are becoming more and more stringent, standardization for pure products, ex-
tracts or crude drugs is of crucial importance.
The countries like China, India, Spain, Argentina, Hungary and Poland cultivate
medicinal plants on a large scale. In China, more than 250 species of medicinal value are
being commercially cultivated and among these 60 species have performed well. Since
1980, there has been a rapid increase in the area under cultivation in China with about
380 thousand hectare of land under medicinal plants cultivation in 1984. The output of
the cultivation in China was estimated to be between 300,000 and 400,000 metric tonnes
in 1994. Among the estimated 1,000 frequently used medicinal plants in China, more
than 200 are obtained through cultivation.
In India about 25 species of medicinal value have huge demand and are brought
under commercial cultivation. The supply of the raw material to manufacturers of tradi-
tional medicines in Indonesia comes from the medicinal plants grown in farmers fields
and gardens. Cultivation includes both mono-cropping and intercropping practices. Farm-
ers growing medicinal plants receive a fixed price for their crop. The price is set, with a
contract-like agreement, when the farmers start cultivation for the contracting company.
In Europe about 130 to 140 medicinal and aromatic plants are cultivated on an
estimated area of 70,000 hectares. France, Hungary and Spain have the largest area
under cultivation.
Several exotic and introduced species of medicinal and aromatic plants are under
cultivation in Brazil, such as lemongrass (Cymbopogon citratus) and Aloe spp. are culti-
vated in backyard gardens. In Southern Brazil, due to favorable cultural and environ-
mental conditions, several exotic species are cultivated on large areas. These include
chamomile (Matricaria recutita), calendula (Calendula officinalis), rosemary (Rosmarinus
officinalis), Duboisia spp., and Japanese mint (Mentha arvensis).
Few medicinal plants are cultivated in South Africa, e.g. Warburgia salutaris
(pepperbark tree), Agathosma spp. (buchu), and Siphonochilus aethiopicus (African
ginger).
Given the high cost of cultivated material, cultivation is often done under contract.
In the majority of the cases, companies would cultivate only those plant species which
are used in large quantities or in the production of derivatives and isolates, where quality
is critical.
43
Recently, growers have set up co-operatives or collaborative ventures in an attempt
to improve their negotiating power and achieve higher prices. One such co-operative in
the Netherlands is Vernigde Ned Kruidencooperatie (VNK).
3.3 Channels of Supply
Medicinal plants trade generally takes place at three levels:
On the first level, there is national trade in medicinal plants which involves hun-
dreds of species. It is undertaken at regional markets. For example in urban
markets of Kwa Zulu Natal, South Africa more than 400 species are being traded
out of a total 1,000 that are used medicinally in the area. In Vietnam, 70 per
cent of the production of medicinal plants in the northern parts is traded by Ninh
Hiep market.
The second level is informal and consists of trade across national borders but
within the same continent. This trade tends to consist of few number of species,
although many of these are threatened. For example in Africa, Warburgia salutaris
and Siphonochilis aethiopicus , two species with high demand and scarce supply,
are traded to Durban market in South Africa. In Asia, Nardostachys grandiflora
and Valeriana jatamansi are examples of species which are threatened, but still
traded from Nepal to India.
The third level comprises formal export trade. In Africa, only a limited number
of species are traded in significant volumes. For example medicinal plant species
like Prunus africana (a bark extract of which is used in the treatment of benign
prostate hypertrophy) from Cameroon and Madagascar; Harpagophytum
procumbens from Botswana, Lesotho, Namibia and South Africa; Hibiscus
sabdariffa from Sudan and Egypt; Pausinystalia johimbe from Cameroon, Ni-
geria, Rwanda; and Rauvolfia vomitoria from Madagascar, Mozambique and
Zaire are traded to the European and the US markets. Based on the imports of
plant material into Germany, a significant number of species are traded interna-
tionally in significant volumes.
In most of the developing countries, medicinal plants collections are carried out
directly by the consumers, in the case of rural or indigenous people for daily consumption
or, in the case of commercialization, after the order of middlemen, suppliers or stores, or
by order of researchers. They are used and traded as raw material, in whole or parts, in
milled or pulverized form, and also in crude or semi-purified extracts, pure chemical
substances or semi-synthetics. The produce is gathered by individual farm households
and sold after carrying out first post-harvest treatments to the local collectors/traders
which sell the produce to licensed export companies or to pharmaceutical processing
factories. Most of the production (80 to 90 per cent) is for direct export in the form of
extracts or dried herbs. Only 10 to 20 per cent of the medicinal plants are consumed or
processed domestically as traditional medicines and by pharmaceutical industry (Dia-
gram 1).
44
Diagram 1: Trade structure for medicinal plants in developing countries
In the developed countries, the supply of plant material passes from the source of
collection, through a network of buyers, including collectors and state run organiza-
tions, and agents or subsidiaries of the plant traders (Diagram 2).
The major part of material is sold to plant trading companies. These companies hold
enormous stocks, and also have the facilities to undertake the quality controls required
for raw materials used in the production of drugs. The major trading companies are
located in Hamburg, New York, Tokyo and Hong Kong and play an enormously powerful
role in the medicinal plants trade by dictating the prices and holding the position of
power in trade.
There are also brokers who buy plant material and sell it on adding a commission. In the
past they played a more important role as they had the contacts at the purchasing level.
Other traders have been emerging, referred to as the ecological trade (Lange,
1996). They source medicinal plant material generally to the smaller herbal medicine/
health product companies and alternative practitioners. They establish their contacts in
the source countries and have shorter sales routes involving fewer parties. However, they
only deal with raw material.
Individual collector
Pharmaceutical industry/distiller
Whole salers
Local collectors
Export
Export companies
State run organizations
Forest farms
45
Diagram 2: Trade structure for medicinal plants in Western European region
3.3.1 Major Importing-Exporting Regions and Countries
Volume that passes through the supply channels, needs to be examined to give an
overview of the demand-supply situation in medicinal plants trade. Unfortunately, there
is few data on the volume of international trade in medicinal plants. The reported annual
average international trade in medicinal plants amounted in the 1990s to 400,000
metric tonnes valued at US$ 1.2 billion, and showed an increase of 100 per cent from
1991 to 1997. The USA, Europe and Japan are the major importers of medicinal plants
while Asia, Africa and East European countries are the major exporting regions.
Major Importing Regions and Countries
The EU, the USA and Japan are the biggest consumer markets of medicinal plant
materials. Europe, Germany, France, Italy, and Spain are the major markets for medici-
nal herbs. Germany dominates the European trade in medicinal plants as it dominates
the European market for phyto-pharmaceuticals. During 1991 to 1997 about 46,000
metric tonnes of botanicals were imported annually from more than hundred countries
into Germany, amounting to about US$ 142 million (Lange, 2001). One-third of the
material was re-exported as finished products primarily to Western Europe and the USA.
In North America, the USA is an important market for medicinal plants. In 1988,
the annual turnover of the plant-derived pharmaceuticals industry in the USA was US$
Agent/broker
Importer/dealer
Export agent/shipper
Dietetic food shops Pharmacies Other medical outlets
Manufacturer/processor
Producer/exporter
46
10 billion (The World Conservation Union, 1988). The herbal products industry in 1994
was US$ 1.6 billion at retail sales. In the US market the health products are the fastest
growing sector and demand for medicinal plant material is significantly high. The major
part of the material is sourced from Europe (Eastern Europe) and Asia. Over the last
decade, the demand in North America for medicinal plants from Latin America, China
and India has increased significantly.
The major importers of medicinal plants in Asia are Hong Kong, Japan, Singapore
and Malaysia. The volumes of material used in the traditional systems of medicine, par-
ticularly in Asia are of great concern while considering the demand for medicinal plants.
China also imports significant volumes of medicinal herbs apart from being largest pro-
ducer and exporter of medicinal herbs.
Hong Kong, Japan, the USA and Germany were the major importers of this com-
modity with annual average import volumes of 74,000; 57,000; 51,000 to 72,000; and
46,000 metric tonnes, respectively during 1991 to 1997 (Lange, 2001). Among others,
the leading importers are Republic of Korea, France, Pakistan, Italy, Singapore, China,
the UK and Spain.
Major Exporting Regions and Countries
China and India were the leading exporting countries of medicinal plant material to
the world market with average annual export volumes of 140,000 metric tonnes and
about 35,000 metric tonnes respectively, during 1991 to 1997. Other major exporting
countries among the top twelve are: Germany, Singapore, Egypt, Chile, the USA, Mo-
rocco, Mexico, Pakistan, France and Thailand. The significant volumes of medicinal
plants also originate from Albania, Brazil, Bulgaria, Hungary, Korea, Turkey, and smaller
market share runs from Kenya, Mauritius and Indonesia. Singapore and Hong Kong are
the main re-exporters of medicinal plants to the world market.
Hamburg is the worlds leading trade center in medicinal plant materials. The most
important exporters to Hamburg are Albania, Argentina, China, Egypt, France, Greece,
Hungary, India, the Netherlands, Poland, former Yugoslavia and Zaire.
Chinas total output of medicinal plants from both cultivated and wild harvested
sources was estimated about 1.6 million metric tonnes. In comparison, Germany pro-
duces relatively small volume of 40,000 metric tonnes. Ayurvedic and Unani herbs are
also traded in large quantities and over a very wide geographical area. For example in
1992, estimated 4,117 metric tonnes were exported, largely to Bangladesh, Japan, Pa-
kistan, Saudi Arabia, the US and the United Arab Emirates (Kuipers, 1995).
According to International Trade Classification System, medicinal plants have been
classified into three main categories: i.e., liquorice roots (HS 1211.10), ginseng roots
(HS 1211.20), and other medicinal plants (HS 1211.90). Liquorice roots and ginseng
roots are in high demand in international market and therefore have been kept under
47
separate category. All other medicinal plant species have been kept under one broad
category other medicinal plants. Trade in each category has been discussed as below:
Liquorice Roots HS (1211.10)
The genus Glycyrrhiza is widely distributed in Eurasia, extending to Australia, North
America, and the temperate regions of South America. In Eurasia, around 20 species
occur, among them five are confined to Europe. The roots of many species are sources of
liquorice, though often only of local importance. Liquorice is used in confectionery, cough
mixtures, lozenges, medical remedies, plug tobacco and in brewing stout. In trade, sev-
eral kinds of liquorice are distinguished with regard to their geographical origin: Span-
ish, Russian, Persian, and Mongolian liquorice, but not to plant species from which the
roots are derived.
A widely used species is Glycyrrhiza glabra, a herbaceous perennial native to the
Mediterranean region, the Near East, Central Asia, as well as Western Siberia. Other
highly exploited species are: G. uralensis, that extends from Western to Eastern Siberia,
as well as across Central Asia to Mongolia; G. echinata with an area extending from the
Balkans across Asia Minor to South-Eastern Russia and Western Siberia; and G.
pallidiflora native to the Far East and China.
In many cases, the plant is cultivated, e.g. in Italy, Southern France and Spain,and
also in Central Asia, Australia, and Brazil (Mansfeld, 1986), but liquorice plants grow-
ing in the wild also continue to be exploited to a large extent.
The USA was the leading importer of liquorice roots with annual average import
volume of about 17,887 metric tonnes, valuing to about US$ 10.5 million during 1994
to 1997. The main source countries were China, Afghanistan, Pakistan, Azerbaijan and
Turkmenistan. The EU annual average import volume during 1994 to 1997 amounted to
about 4,562 metric tonnes, valuing to US$ 3.6 million (Table 26 ). In 1996, the Euro-
pean countries imported 6,000 metric tonnes of roots, almost all from Asia. Main source
countries were Azerbaijan, Turkmenistan, Afghanistan, Iran and Pakistan. Afghanistan
exports liquorice roots mainly to the USA, Japan, France and India with an annual
export value of US$ 4.2 million. The EU exports of liquorice roots amounted to 2,700
metric tonnes only, more or less evenly directed to North America, Africa and Asia.
France dominates the import trade in Europe. Turkey is the biggest exporter of
liquorice, shipping 3,040 metric tonnes in 1991; 1,684 in 1992; 1,350 in 1993; 1,140
in 1994; 1,560 in 1995 and 1,730 metric tonnes in 1996, according to the UNCTAD
Comtrade database (Lange, 1998). In addition, Turkey also exports liquorice extracts to
the USA, Egypt, Italy, France, and Israel.
Spain also exports liquorice, however the quantities involved are much less. It is
obtained either from wild stock or from cultivation. According to Blanco (Blanco and
Breaux, 1997 c.f Lange, 1998) the species is not threatened in Spain. In Bulgaria,
liquorice is regarded as being rare (WCMC, 1988). Nmeth (Nmeth, 1997 c.f. Lange,
48
1998) reports that this species has been threatened in Hungary owing to its over-exploi-
tation. No law exists to protect this species, or to regulate trade, either nationally, or
internationally.
Table 26: The USA and the EU import of liquorice roots (commodity code HS 1211.10) during 1994-97
y r t n u o c e c r u o S t r o p m i e g a r e v a l a u n n A
S U U E
e m u l o V
) T M (
e u l a V
) $ S U n o i l l i m (
e m u l o V
) T M (
e u l a V
) $ S U n o i l l i m (
a n i h C 2 4 9 , 5 3 . 3 7 2 2 4 . 0
n a t s i n a h g f A 2 1 7 , 4 1 . 2 4 5 4 3 . 0
n a t s i k a P 3 2 3 , 4 1 . 2 5 0 2 1 . 0
n a j i a b r e z A 6 6 9 5 . 0 3 5 7 3 . 0
n a t s i n e m e k r u T 2 0 5 3 . 0 0 5 0 , 1 6 . 0
y e k r u T 3 5 4 3 . 0 4 7 4 4 . 0
a i r y S 0 9 2 2 . 0 6 8 2 6 . 0
s r e h t O 9 9 6 7 . 1 1 1 1 , 1 8 . 0
L A T O T 7 8 8 , 7 1 5 . 0 1 0 6 5 , 4 5 . 3
Ginseng Roots HS (1211.20)
Ginseng (Panax spp.) is the most revered medicinal plant in Traditional Chinese
Medicine and is quickly becoming one of the most popular herbs in western markets. In
the USA, where the market for medicinal botanicals totals US$ 4 billion and is still
growing, ginseng is the top selling herb among first-time herbal users and ranks third,
surpassed only by echinacea and garlic, in sales of herbs in the US health food stores. No
other plant represents the better cultural and economic value of medicine harvested from
the wild in North America than American ginseng (Panax quinquefolius). This herba-
ceous plant grows in Eastern US and Canadian deciduous forests and is sought for its
high-value roots, most of which are exported to East Asia, the dominant ginseng market.
There is a continuing strong demand for ginseng in Asia. The herbal products con-
taining ginseng are also appearing to grow in the USA, Canada, and Europe. It has been
kept under separate custom category HS 1211.20, which has been further divided into
two sub-categories, i.e. cultivated ginseng roots (HS 1211.20.00.20) and wild ginseng
roots (HS 1211.20.00.40).
The annual world trade of ginseng roots is between 3,500 and 4,100 metric tonnes.
China is the worlds leading exporter of ginseng roots followed by Korea, the USA,
Canada and Japan. Canada is the worlds largest grower of American ginseng (Panax
quinquefolius), accounting for more than 60 per cent of the world production. It ranks
third in the production of all ginseng, next only to China and Korea, and exports almost
90 per cent of its ginseng root overseas (Statistics Canada 1999, USDA, 1999, and Hong
Kong Trade Statistics 1998). Ginseng production in Canada has increased 18 fold in 12
years, from 106 metric tonnes in 1987 to 1,864 metric tonnes in 1998.
The USA represents about 30 per cent of total American ginseng production. It is
49
the worlds second largest producer of American ginseng and fourth in terms of all gin-
seng production. Its production has tapered off since 1994. In 1998, its export of culti-
vated roots amounted to US$ 20.9 million and 702 metric tonnes (USDA, 1999).
Hong Kong is the first destination market for American ginseng. Export to Hong
Kong represented 84 per cent of all American ginseng exported from Canada in 1998.
China and the USA were the second and third at 10 and 2 per cent respectively. Canadian
export volume of American ginseng to Hong Kong increased by 29 per cent from 919
metric tonnes in 1997 to 1,299 metric tonnes in 1998.
More than 80 per cent of the American ginseng roots entering Hong Kong is re-
exported to China. The Chinese consumers are the ultimate end-users of American gin-
seng, and statistics of Canada, Hong Kong, US Department of Agriculture show that
China imports more than 75 per cent of all American ginseng production. China has also
reduced American ginseng tariffs from 45 to 40 per cent (plus 13 per cent VAT). Other
markets for American ginseng are Singapore, Taiwan, Malaysia and the member coun-
tries of the Association of Southeast Asian Nations (ASEAN). These are the small mar-
ket niches with significant future potential for the American ginseng industry (Xiao,
2000).
Wildcrafted ginseng fetches higher prices, being considered superior than culti-
vated ginseng. According to the United States Fish and Wildlife Services (USFWS),
approximately 64 metric tonnes of wild ginseng root was harvested in the USA in 1996
out of which 46 metric tonnes (85 per cent) was exported to Hong Kong, and smaller
amounts were exported to Taiwan (3.6 metric tonnes), Singapore (2.7 metric tonnes),
Malaysia (769 kg) and Canada (459 kg)(Robbins, 1998).
The USA is also a sizable importer of wild ginseng, which may in fact be a variety of
ginseng species seeded and grown under wild conditions. According to the US Bureau of
the Census (Customs) data, which refers to all species of ginseng, the USA importation
values during 1990 to 1996 were: 208 metric tonnes of wild ginseng from China; 59
metric tonnes from South Korea; 34 metric tonnes from Mexico; and 19 metric tonnes
from other countries, including Canada. Presumably, the large volume of the US import
of wild ginseng from China consists of roots harvested from naturalized populations of
ginseng in China, or roots of wild-collected American ginseng that originated in the USA
and was re-exported from China. The US import of wild ginseng from Canada, which
prohibits the export of wild ginseng, could be P. quinquefolius or another ginseng species
exported from the USA or elsewhere to Canada for processing, and subsequently re-
exported to the USA.
The amount of wild American ginseng harvested and exported has remained rela-
tively constant in recent years, although a growing number of ginseng harvesters in the
US national forests suggests that the collection of wild roots is on increase.
50
Other Medicinal Plants (HS 1211.90)
The Other Medicinal Plants (HS1211.90) group includes all other medicinal plants
except those for which separate commodity code has been assigned as for liquorice and
ginseng.
Medicinal Plants Trade from Africa
African continent is endowed with a rich biodiversity of medicinal plants. It exports
a significant volume of medicinal plants raw material to the European and the US mar-
kets. In 1996, the EU imports amounted to 27,000 metric tonnes of African medicinal
plants, which was the second largest export volume after Asia.
The countries which export a significant volume of medicinal plant material out of
Africa are: Botswana, Kenya, Madagascar, Mozambique, Namibia, South Africa, Sudan,
Tanzania, and Uganda.
African export to Germany averaged to about 7,374 metric tonnes in 1994. Sudan,
Egypt, Zaire and Morocco lead the export market with significant trade volume of me-
dicinal plant material (Table 27).
Table 27: African countries exports to Germany (exceeding 500 metric tonnes) for commodity code 1211.90
y r t n u o C
) T M ( e m u l o V
7 9 9 1 6 9 9 1 5 9 9 1 4 9 9 1 3 9 9 1 2 9 9 1 1 9 9 1
n a d u S 7 5 1 , 3 7 5 5 , 2 5 0 0 , 3 5 5 7 , 3 1 9 8 , 2 9 4 9 , 1 5 5 6 , 1
t p y g E 6 4 6 , 2 1 8 8 , 1 7 3 6 , 1 9 2 7 , 1 1 5 3 , 1 7 8 6 , 1 7 8 9 , 1
e r i a Z 2 5 6 8 3 9 , 1 7 7 2 , 1 2 1 9 8 2 7 - -
o c c o r o M 8 7 5 1 3 5 6 7 3 7 6 2 5 8 2 7 6 5 2 6 5
The amount of trade in the medicinal plants in some African countries is well docu-
mented, but not in all cases. In 1995-96, about 20,000 metric tonnes of medicinal
plants material with an approximate value of US$ 60 million and finished products of
worth US$ 215.6 million were traded from South Africa. About 2,000 metric tonnes of
rooibos tea only (Aspalathus linearis) alone was exported in 1999 (Hoegler, 2000). Pres-
ently 6,000 metric tonnes of rooibos tea, valued at US$ 3.88 million and 700 metric
tonnes of Aloe ferox per annum are exported from South Africa.
Medicinal plants from South Africa with a position in the international trade are
Cape aloes (Aloe ferox), buchu (Agathosma spp.), devils claw (Harpagophytum
procumbens), umkcaloabo (Pelargonium sidoides) and uzara (Xysmalobium undulatum).
From the African biodiversity, a large number of species containing active components
have the potential to play a role in the medicinal market on a global scale. At present,
bioprospecting is done on all plants in South Africa to determine their pharmaceutical
potential. In South Africa, a domestic phytomedical company-South African Druggists-
has a subsidiary to develop phytomedicines based on traditional knowledge.
51
Cameroon is the major supplier of Prunus africana bark to the world market since
1972. From 1986 to 1991 about 11,537 metric tonnes of the bark, at an average of 700
metric tonnes per annum, was processed in south-west Cameroon by Plantecam Medicam
a subsidiary of French company. In addition to Cameroon, Kenya (1,923 metric tonnes),
Uganda (193 metric tonnes), Zaire (300 metric tonnes) and Madagascar (78 to 800
metric tonnes) also export Prunus africana bark to Europe (Cunningham and Mbenkum,
1993; Cunningham et al, 1997).
It is difficult to establish the scale of trade, but the available information indicates
that the total harvest ofPrunus africana bark ranges between 3,200 to 4,900 metric
tonnes per annum. It is exported primarily to France, Italy, and Spain, and also to the
USA, Argentina, Brazil, Venezuela, and Japan. Prunus africana products are traded in
five forms:
Unprocessed dried bark (570-580 metric tonnes per year) from Congo, Cameroon,
Tanzania, Kenya, and Madagascar;
Bark extract (estimated at 14.6 metric tonnes per year extracted from 3,000
metric tonnes of bark) from Cameroon and Madagascar;
Herbal preparations sold as brand-name capsules in Europe, South America, the
USA, Australia, and other countries and regions;
As a component in hair tonic sold in Japan.
Cameroon is the most important source of Prunus africana bark. The major ex-
porter companies are Plantecam (Cameroon) and Socit pour le Dveloppement Industriel
des Plantes (SODIP) (Madagascar). The primary importers being Labatoire Debat/Groupe
Fournier (France), and Indena Spa (Italy), (Table 28). Other importing companies are
Invermi della Beffa (Italy), Inofarma (Spain) and Muggenburg Extrakt GmbH (Ger-
many). During 1985 to 1991, Prunus africana bark made up approximately 88 per cent
of export by the Plantecam Medicam factory in Mutengene, South West Province,
Cameroon. The annual market for Prunus africana bark has been put at US$ 220 million
in Europe and the USA according to the Nairobi based International Center for Research
in Agro-forestry (ICRAF) and Washington based Future Harvest. The annual harvest for
the bark is 3,500 metric tonnes (Cameroon 2,000, Madagascar 600, others 900 metric
tonnes).
Although other herbal medicines, such as saw palmetto (Serenoa repens) compete
in the market place with Prunus africana, the demand does not show signs of decrease,
though it needs to be confirmed by market studies.
Another plant species mainly exported from Cameroon are the seeds of Voacanga
africana, used for the production of the alkaloid tabersonine, a central nervous system
(CNS) depressant in geriatric patients. Cameroon exported US$ 40 million of Voacanga
africana in 1993.
In Madagascar, the export sale of Catharanthus roseus and other plants represent an
export earning of US$ 180 million (Hoyt, 1988).
52
Table 28: Quantity of some medicinal plants species exported from Cameroon during 1995-97
s e i c e p s t n a l p l a n i c i d e M y n a p m o C ) T M d n a s u o h t ( e m u l o V
6 9 - 5 9 9 1 7 9 - 6 9 9 1
a n a c i r f a a g n a c a o V A d e m i r f - 8 4 . 5 7
m a c e t n a l P 7 3 . 4 2 1 4 . 0 4
O C A S 0 0 . 1 3 -
a n a c i r f a s u n u r P A d e m i r f - 0 9 . 3 5
m a c e t n a l P 6 5 . 1 1 9 , 1 7 2 . 4 9 1 , 2
e b m i h o j a i l a t s y n i s u a P A d e m i r f - 5 6 . 6 3
e b m i h o j a i l a t s y n i s u a P m a c e t n a l P 8 9 . 3 7 6 4 4 . 4 4 3
e b m i h o j a i l a t s y n i s u a P n o m i r E S T E 0 0 . 8 -
e b m i h o j a i l a t s y n i s u a P m e k u o h c T e m M 0 0 . 0 1 -
e b m i h o j a i l a t s y n i s u a P e s i r p r e t n E . s o r B & I D N . K . I - * 0 4 . 6 1
L A T O T 1 9 . 8 5 6 , 2 5 1 . 5 4 7 , 2

* Volume in year 1997 only

Source: Anonymous, 1997
Devils claw (Harpagophytum procumbens) is an another plant of interest in inter-
national trade from Africa. It grows in the Kalahari deserts of Namibia, Botswana,
South Africa, Angola and to a lesser extent, in Zambia and Zimbabwe. The secondary
tubers which contain active ingredients harpagosides, used to treat rheumatism and
cancerous tumours, have a high demand from Europe. More than a decade ago, Botswana
used to export 15 to 20 metric tonnes of Devils claw roots to Germany. In Namibia, the
first large scale export of this plant took place in 1962, with Germany as the destination.
Over the years , the annual Namibian export has increased to around 600 metric tonnes
to meet the overseas demand. At this level and at current international prices, export is
generating an estimated US$ 1.0 million in foreign exchange. In addition to France,
Germany and South Africa, Spain, Switzerland and the UK have also become important
importers of this plant. Most of the Devils claw roots in Namibia are harvested in com-
munal areas and it has been estimated that 10,000 to 12,000 families depend on the
local revenues from its biotrade. The harvesters sell their produce to local traders and
middlemen who in turn may sell to other traders down the marketing chain, before the
produce reaches the exporters. Since last five years, traders in Namibia collect 100 to
200 metric tonnes per annum of roots (Figure 6). In 1998, dried root material exported
from Namibia brought a revenue of US$ 0.83 to 1.15 million. In Omaheke region of
Namibia, community members harvest and sell the dried product to exporters at US$
1.25 per kg (Hailwa, 1998).
In Nigeria, a joint venture between Bioresources Developemnt and Conservation
Programme (BDCP) and the Healers Collective have Axxon Biopharm which offer stand-
ardized and highly purified extracts and botanicals to the international market for
phytomedicines, nutraceuticals and personal care products. High quality phytomedicines
are manufactured at home, based on the original formulations of the healers but with the
state of the art quality control.
53
The majority of commercial companies operating in the phytomedical, nutraceutical,
natural care and cosmetic products are located in Northern countries. Through partner-
ships and collaborations with high biodiversity countries, these companies can contribute
with significant benefits in the form of capacity building, technology transfer, and train-
ing for business development that can assist in the development of the domestic industry.
2
5
1
0
0
6
0
1
5
0
2
8
0
3
1
0
2
5
0
6
1
0
0
100
200
300
400
500
600
700
V
o
l
u
m
e

(
M
T
)
1991 1992 1993 1994 1995 1996 1997 1998
Year
Volume (MT)
Figure 6: Export of Devils claw roots from Namibia
Medicinal Plants Trade From Latin America
Latin America exports significant volumes of crude drugs mainly in the dried form
and to limited extent, as simple extracts and pure drug entities. These plants are mainly
gathered from wild sources. Only a few countries of the region have large scale cultiva-
tion programmes for a selected number of medicinal plants. It is very difficult to estimate
the Latin American market of medicinal plants and their derivatives, owing to lack of
reliable information or statistics. The pharmaceutical market in Latin America is con-
trolled by international companies. The participation of national companies is small. It
varies from 50 per cent in Argentina to 20 per cent in Brazil and Colombia, and 10 per
cent in Costa Rica and Ecuador. The processing of raw material for pharmaceutical
industry is scarce. Many medicinal plants are also imported from industrialized countries
to satisfy the local demand. Pharmaceutical end-products are also imported to some
extent. Brazil used to import less than 10 per cent of its needs but with the globalization
the situation is changing very fast. Medicinal plants import to the USA and the EU from
Latin American and Caribbean countries during 1994 to 1997 are shown in Table 29.
Chile
In Chile, only a few commercial enterprises are involved in the international trade
of medicinal plants. Chile exports over US$ 20 million of medicinal plants, of which
Quillaja saponaria amounts to US$ 80,000. Other important export items are Peumus
boldus, Origanum majorana, Rosa perruna and Smilax medica. The volume of medicinal
and aromatic plants exported during the years 1992 to 1994 reached 10,000 to 11,000
metric tonnes per year (Portilla, 1995). Quillaja spp., Rosa mosqueta and Peumus boldus
are collected from wild sources. Rosa mosqueta and Peumus boldus are exported mainly
54
to Brazil and Argentina, and Origanum and Quillaja spp. are exported mainly to Ger-
many.
Table 29: The US and the EU imports from Latin American and Caribbean countries during 1994-97
e c r u o s f o y r t n u o C 0 9 . 1 1 2 1 e d o c y t i d o m m o c r o f t r o p m i e g a r e v a l a u n n A
S U U E
e m u l o V
) T M (
e u l a V
) $ S U n o i l l i m (
e m u l o V
) T M (
e u l a V
) $ S U n o i l l i m (
e l i h C 4 7 3 1 . 1 6 1 3 , 3 7 . 8
r o d a u c E - - 0 1 2 3 . 0
l i z a r B 4 3 1 3 . 0 9 3 6 7 . 2
a n i t n e g r A - - 5 8 8 , 1 4 . 5
o c i x e M 3 0 0 , 1 9 . 1 0 6 3 1 . 1
s r e h t O 5 8 4 5 . 1 9 5 0 , 1 7 . 2
L A T O T 7 9 9 , 1 8 . 4 9 6 4 , 7 9 . 0 2
Ecuador
About 500 medicinal plants used in the country are known. According to World-
wide Fund For Nature (WWF), 228 species of medicinal plants are most widely used, and
out of these, 125 are the most marketed ones. There is not enough basic scientific or
techanical information nor an ecological profile on most of these species, to know the
best conditions for procurement or production of sufficient raw material to satisfy the
existing demand. The plants of the Andean region are the best known and demanded on
the local and international markets. Ambato, located in the Andean region, is one of the
biggest centres of wholesale storage and distribution of medicinal plants in Ecuador
(Buitron, 1996).
The local demand is projected to be high, but due to the lack of records and trade
statistics a proper estimate cannot be carried out. Official import and export data are
based on common global level import tariffs. Plants and parts of plants used in medicine
and perfumery are registered as others. Only ginger and ginger oil, cascarilla, red
cascarilla, yellow cascarilla, cascarillon and condurango are registered as export prod-
ucts without specifying the species (Table 30), while oregano (Origanum vulgare) is the
only import product .
Other species,such as dragons blood (Croton spp.) and cats claw (Uncaria tomentosa
and U. guianensis), are regionally and globally marketed even if they are not registered
under category of others nor under official tariffs . Although, due to the lack of trade
monitoring, actual official data on import or export do not exist in Ecuador. Those mar-
keted within the country and from the country are imported mainly from the USA, Ja-
pan, Europe, Peru and Colombia. Those exported correspond to national products, as
well as products from Peru, Colombia, Argentina, the USA and Europe. The products
leave Ecuador wholesale and retail without any official documentation, mainly to the
USA and Europe, or as an inter-continental exchange for other products in the borders
with Colombia and Peru. The most demanded species and products at local and interna-
tional levels are the Croton spp. (dragons blood), Uncaria tomentosa (cats claw), and
Cinchona pubescens (cascarilla), among others.
55
Table 30: Medicinal plants trade from Ecuador
t r o p x e e g a r e v a l a u n n A
t c u d o r P 3 8 9 1 2 9 9 1 5 9 9 1 6 9 9 1 7 9 9 1
e m u l o V
) T M (
e u l a V
0 0 0 1 (
) $ S U
e m u l o V
) T M (
e u l a V
0 0 0 1 (
) $ S U
e m u l o V
) T M (
e u l a V
0 0 0 1 (
) $ S U
e m u l o V
) T M (
e u l a V
0 0 0 1 (
) $ S U
e m u l o V
) T M (
e u l a V
0 0 0 1 (
) $ S U
s t n a l p l a n i c i d e M - - - 2 . 0 - - - - 1 3 . 6
k r a b n a i v u r e P - - 5 0 . 1 5 2 0 . 5 2 - - 2 2 0 . 8
a l l i r a c s a C w o l l e Y - - 4 5 2 . 4 5 4 9 6 . 2 8 7 1 7 . 5 1 8 3 7 . 5 1
a l l i r a c s a C d e R - - 2 4 3 . 3 1 1 1 1 3 . 1 3 0 8 9 . 3 2 5 8 8 . 3 2
n o l l i r a c s a C - - 8 3 . 2 - - 3 1 8 . 2 3 6 . 0
o g n a r u d n o C 8 4 4 . 8 4 1 1 7 . 6 6 1 4 . 9 9 3 6 . 2 2 - -
e r b i g n e J 7 4 . 2 6 1 4 . 3 1 - - 3 6 5 1 . 7 2 3 - -
s r e h t O - - 1 2 7 . 1 1 - - - - 0 6 8 . 9 2
L A T O T 5 5 8 . 0 5 7 5 1 8 . 2 0 1 6 4 2 1 8 . 5 2 1 2 1 7 1 . 2 9 3 8 0 2 3 . 4 8
Source: Buitron, 1996
Colombia
More than 70 per cent of medicinal and aromatic plants trade in Bogota, Colombia
is unregulated. The species in trade are not officially registered by the National Institute
for Control of Medicines and Food (INVIMA), a regulatory agency of Colombian Gov-
ernment. According to INVIMA, trade is permitted for about 100 medicinal plants species
in Colombia, of which only 11 are native. Yet alone in Bogota trade center, at least 200
medicinal plant species are traded regularly in large volume at the local markets. The
demand for medicinal plants from natural health centres, hospitals and laboratories has
increased in the past years by an estimated 50 per cent. There is also a concern for
adequate identification of plants in trade, in order to aviod potential health risks, such as
poisoning and allergies.
Brazil
Brazil is considered the country with the greatest biodiversity on the planet, with
nearly 55,000 native species distributed over six major biomes, i.e. Amazon (30,000);
Cerrado (10,000); Cattinga (4,000); Atlantic rainforest (10,000); Pantanal (10,000)
and the subtropical forest (3,000). The Brazilian Amazon forests constitute about hun-
dreds of medicinal plants (Berg, 1982). The Cerrado is the second largest ecological
dominion of Brazil and constitutes about 220 species used in the traditional medicine
(Vieira and Martins, 1998). Various medicinal plants have their centres of genetic diver-
sity in Caatinga biome, where the use of local folk medicine is common (Craviero et al,
1994). In Brazil herbal extracts are considered as remedies, and they must be prepared
under the supervision of the National Sanitary Agency and be registered. The growth in
the botanical extracts sector is growing slowly but consistently.
Brazilian import of medicinal plant extracts, glycosides, alkaloids, essential oils
and steroid harmones reaches US$ 40 to 45 million per year (Perezdias, 1994). Brazil-
ian trade in medicinal plants and their products in early 1990s is shown in Table 31.
56
Table 31: The Brazilian trade in medicinal plants and related products, during 1991-93
s t c u d o r P
t r o p m I t r o p x E
e m u l o V
) T M (
e u l a V
) $ S U n o i l l i m (
e m u l o V
) T M (
e u l a V
) $ S U n o i l l i m (
s t n a l p l a n i c i d e M 0 0 5 , 1 6 . 1 0 0 8 5 . 3
s t c a r t x e t n a l P 0 0 6 5 . 2 0 0 2 5 . 3
s e d i s o r e t e H 0 2 3 . 1 0 0 3 0 . 6
s e n o m r a h d i o r e t S 0 2 0 . 5 1 - 0 . 7
s d i o l a k l A 5 2 0 . 5 1 0 2 0 . 0 3
Argentina
Argentina exports approximately two metric tonnes of artichoke extract (US$
24,000), about 460 metric tonnes of other vegetable extracts (US$ 300,000) and 11
metric tonnes of heterosides (US$ 1.5 million). Matricaria recutita is exported in large
quantities to Germany and Italy in early 1990s (Bandoni, 1993).
Medicinal plants Trade from Least Developed Countries
Among 162 developing countries throughout the world, 49 have been designated as
least developed (LDCs) by the United Nations. African continent alone has 34 countries
in the list and rest are from Asia, Caribbean islands and Oceania. The least developed
countries have rich resources of biodiversity in medicinal plants. The share of export
from the least developed countries is very low and many export small quantities, as
illustrated in Table 32.
Table 32: European Union import of medicinal and aromatic plants from some least developed countries
y r t n u o C
) $ S U d n a s u o h t ( e u l a v t r o p m I
6 9 9 1 7 9 9 1 8 9 9 1
u t a u n a V 0 0 2 7 8 , 1
o g o T 5 1 3 , 1 1 5 8 , 1 4 8 4 , 1
r a c s a g a d a M 6 7 6 , 1 7 6 5 , 1 4 4 8
a o m a S n r e t s e W 8 9 2 9 8 2 8 0 7
o s a F a n i k r u B 9 5 4 3 1 5 6 6
Source: ITC, 2001
At present, export of medicinal plants from these countries consists of two groups:
liquorice root; and other plants and pharmaceutical products. About 12 per cent of
annual world import of liquorice and 3 per cent of other medicinal plants between 1995
to 1999 originated from these countries. Total export of medicinal plants from these
countries peaked at US$ 37 million in 1998 before slowing to US$ 27 million in 1999.
It averaged around US$ 31 million per year for the period 1995 to 1999 (International
Trade Centre, 2001).
A large number of least developed countries supply other medicinal plants to the
world market. Sudan is the largest exporting country, constituting about 37 per cent of
57
total export. Its average export was about US$ 27 million per year during 1995 to
1999. The other exporters by order of importance are Congo, Vanuatu, Myanmar, Mada-
gascar and the Lao Peoples Democratic Republic.
The EU was one of the largest import markets for these countries. The situation
changed, and in 1999 the EU accounted for only 17 per cent of LDCs export. These
countries therefore have diversified their exports mainly towards Mexico, Korea, the
USA, Poland, Pakistan and other destinations, which have imported around 83 per cent
of their exports in 1999.
The demand for medicinal plants is expected to continue to expand rapidly, fuelled
by the growth of sales of herbal supplements and remedies. However, there is a little
scientific knowledge concerning the range and availability of medicinal plants in these
countries. They have the opportunity to expand their global export share of medicinal
plants through commercially sustainable production and thereby improving their economy.
3.3.2 Plant Extracts
A significant percentage of medicinal plant material is used to make plant extracts.
This process is carried out either by the end product manufacturers or by companies
specializing in extracts. The sale of plant extracts is undoubtedly increasing as evidenced
by the growth of Indena - one of the Europes leading extract suppliers.
For value addition, several companies dealing with extracts have been set up in the
Far East, e.g. QingDao HuanZhong Pharmaceutical Ltd. is a Sino-Japanese joint ven-
ture in China producing 240 metric tonnes of extracts, all destined for export to Japan
and other international markets. Another example is Southern Herbals, in India, which
started production of plant extracts in 1992 and is reported to be supplying companies
such as Amgen, Bristol-Myers Squibb and Fujisawa with vincristine and vinblastine from
Catharanthus roseus.
The US market for botanical extracts is estimated to be approximately US$ 500
million (Boswell, 1999), which is equivalent to about 25 per cent of the global market.
Ground or crushed crude herbs take up the remaining market share. The market of
extract is forecasted to grow to US$ 1.5 billion within five years. The proportion of
extract market to crude herbs, is forecasted to rise as much as 75 per cent, reflecting the
increased demand for product consistency and quality (Boswell, 1999).
Freedonia Group Inc. report (2001) has projected the demand for phyto-chemicals
in the USA to advance at the rate of 7.1 per cent annually to US$ 2.9 billion by 2005
(Table 33, Figure 7).
The growth in demand of plant-derived chemicals will be governed by the develop-
ment of new plant based pharmaceuticals and gains in the beverage market, where con-
sumer preferences continue to shift away from carbonated soft drinks towards alterna-
tive beverages with higher natural flavor loadings. Newly developed products such as
58
Table 33: Demand of phyto products in the US market
m e t I ) $ S U n o i l l i b ( d n a m e D h t w o r g l a u n n a t n e c r e P
5 9 9 1 0 0 0 2 5 0 0 2 0 1 0 2 0 0 0 2 / 5 9 9 1 5 0 0 2 / 0 0 0 2
s l a c i m e h c o t y h P 5 8 3 , 1 0 4 0 , 2 0 8 8 , 2 5 6 0 , 4 1 . 8 1 . 7
s l i o l a i t n e s s E 8 1 5 1 1 7 3 4 9 0 4 2 , 1 5 . 6 8 . 5
s t c a r t x e l a c i n a t o B 4 8 2 1 1 5 3 4 8 0 8 3 , 1 5 . 2 1 5 . 0 1
Source: Freedonia Group Inc. (2001)
1.4
2.0
2.9
4.1
0
0.5
1
1.5
2
2.5
3
3.5
4
4.5

V
a
l
u
e

(
b
i
l
l
i
o
n

U
S
$
)
1995 2000 2005 2010
Year
Phytochemicals
Demand
Figure 7: Phytochemicals demand in the US market
extracts, i.e. grape seed and valerian extract, various multifunctional plant derivatives,
such as lycopene and anthocyanin) will register growth exceeding 8 per cent per annum
through 2005. Established plant derived chemicals, such as essential oils will record
more restrained growth, under six per cent per year through 2005. Plant derivatives,
especially those with pharmaceutical applications, such as anticancer agent paclitaxel,
will register strong growth. The worldwide market for paclitaxel was in excess of US$
1.6 billion in 2000.
Other estimates for the extractive industry valued the total market for plant derived
chemicals at US$ 1.89 billion in 1998, with growth rates over 9 per cent. Within this
market botanical extracts accounts for 29.62 per cent (US$ 560 million) of the total
market.
3.3.3 Prices of Medicinal Plants and Their Products
Despite the fact that herbal products are being exported in large quantities, the
obvious economic value of medicinal plants and the true size of the sector is not known.
The data are scarce or non-existent, information on medicinal plants production, usage,
pricing and financial flows between countries is not available or seldom collected. Only a few
medicinal plants of commercial importance are subject to international regulations.
59
Prices are generally affected by crop conditions, e.g. failure of harvest entails an
increase in price. Other factors that contribute to price variation include volume of re-
quested products by the various industries, freight costs, post handling charges and trad-
ers profit.
Medicinal plant prices fluctuate with shifts in supply and demand. The prices listed
in Table 34 should be considered indicative only. In addition, great care should be taken
in comparing prices of medicinal plants and extracts from different origins, since the
form, the structure and the biochemical activity may differ considerably between appar-
ently similar products.
Table 34: Indicative prices for medicinal and aromatic materials during March 2001
t c u d o r P
) g k / $ S U ( e c i r P
L A I R E T A M W A R
t o o r n a i r e l a V 5 . 4 - 0 . 2
r e g n i G 8 . 1 - 5 . 1
c i r e m r u T 5 . 1 - 2 . 1
o t t e m l a p w a S 2 . 3 - 8 . 2
s e i l l i h C 2 . 1 - 1 . 1
S T C A R T X E
o g k n i G 0 6 - 0 5
a e t n e e r G 0 3 - 0 2
h s o h o c k c a l B 5 4 - 0 3
o t t e m l a p w a S 5 4 - 5 3
t r o w s ' n h o J . t S 0 4 - 0 3
g n e s n i g e s e n i h C 0 5 - 5 1
g n e s n i g n a i r e b i S 0 3

Source: RAISE, 2001
Price and supply volatility is partly a result of consumer trends. St. Johns wort is a
prime example of a medicinal product whose popularity soared as a result of positive
publicity in 1998. As a result, St. Johns wort was heavily cultivated and prepared,
which shortly led to over production and a drop in prices.
Another example is the American ginseng. The average price of cultivated ginseng
root dropped from US$ 69.87 per kg in 1992 to US$ 24.95 per kg in 1998, while the
average price of wild crafted root dropped from US$ 243 per kg to US$ 127 per kg
during the same period. Another source of the American ginseng industry is the wild
crafted American ginseng or wood grown ginseng. This product commands on the aver-
age 10 times the price of field cultivated material at the retail consumer level. In 1998,
the wild crafted ginseng production in the USA amounted to US$ 13. 8 million.
The prices are specific to origin and specifications. Therefore, a price quotation of
one region would be of no value. Therefore exporters obtain prices by sending specifica-
60
tions and characteristics directly to importers accompanied by samples. Price informa-
tion sources are as follows:
y n a p m o C s s e r d d A s t c a t n o C
g n i t e k r a M l a c i m e h C
r e t r o p e R
t e e r t S d a o r B 0 8
3 0 2 2 - 4 0 0 1 Y N k r o Y w e N
A S U
7 7 1 4 8 4 2 - 2 1 2 - 1 + : . l e T
3 0 9 4 8 4 2 - 2 1 2 - 1 + : x a F
: e t i s b e W
l m t h . r m c / l l e n h c s / m o c . o p x e m e h c . w w / / : p t t h
e c i v r e S w e N t e k r a M r e t n e C e d a r T l a n o i t a n r e t n I
t n a l l i r b t n o M e d e u R 6 5 - 4 5
2 0 2 1 e v e n e G
d n a l r e z t i w S
1 1 1 0 0 3 7 - 2 2 - 1 4 + : . l e T
6 7 1 7 3 3 7 - 2 2 - 1 4 + : x a F
g r o . n e c a r t n i @ s n m : l i a m - E
: e t i s b e W
l m t h . s t n a l p d e m / s n m / g r o . n e c a r t n i / / : p t t h
r e g d e L c i l b u P e h T d a o R y e l r e v l a C 0 8
s l l e W e g d i r b n u T
N U 2 1 N T t n e K
m o d g n i K d e t i n U
3 1 8 3 3 5 2 - 9 8 1 - 4 4 + : . l e T
5 9 8 4 4 5 2 - 9 8 1 - 4 4 + : x a F
m o c . r e g d e l - c i l b u p @ g n i t e k r a m : l i a m - E
: e t i s b e W
m o c . r e g d e l - c i l b u p . w w w
n o s w a L y a D t s r e u F
d e t i m i L
e s u o H e r a l C . t S
s e i r o n o M 3 3 - 0 3
N L 1 N 3 C E n o d n o L
m o d g n i K d e t i n U
7 7 7 0 8 8 4 - 1 7 0 - 4 4 + : . l e T
7 2 9 9 8 8 4 - 1 7 0 - 4 4 + : x a F
. c n I . o C e h U e g r o e G N 7 1 e t u o R 2 1
3 5 6 7 0 J N , s u m a r a P
A S U
0 0 0 4 3 4 8 - 1 0 2 - 1 + : . l e T
7 1 5 7 3 4 8 - 1 0 2 - 1 + : x a F
Worlds Leading Botanical Raw Material Suppliers
The leading herbal companies which supply botanical raw material to the world
market are Martin and Bauer Group, with global turnover of US$ 250 million, followed
by Indena and Schweizerhall, each at US$ 200 million, SKW Trostberg and Arkopharma,
with US$ 100 million each in 1998.
In parallel with the increase in demand, the whole market for companies involved in
supplying medicinal plant materials and extracts is moving into a more mature phase
with mergers and acquisitions. According to an estimate on the US market, a company
can survive only with annual sales in excess of US$ 20 million (Boswell, 1999). As
shown in Table 35, many of the largest companies in the herbal business have sales well
in excess of this amount.
As the international market for herbal ingredients for ultimate use in pharmaceuti-
cals, nutraceuticals and cosmetics grows, the sourcing of raw materials is set to broaden
simultaneously, both in terms of increased harvests of existing crops and development of
new crops and varieties.
61
Table 35: Leading suppliers of medicinal plant material
y n p a m o C ) $ S U n o i l l i m ( e u l a v e l a s S U
9 9 9 1 l i r p A
l a n o i t a n r e t n I l a c i n a t o B / r e s u a H 0 0 1 >
a n e d n I 0 5 >
l e k n e H 0 5 - 0 3
) o c m e h C ( e r u p i t p O
n n a m s h c a l F
t k a r t x E g r e b n e g g u M / r e u a B n i t r a M
s l a c i n a t o B d d o T M A
s r e d w o P l a n o i t a n r e t n I s l a c i n a t o B
l l a h r e z i e w h c S 0 2 - 5 1
) s u a d a M ( d e m o r u E
. p r o C e d i w d l r o W o c f a M
s e i r t s u d n I o c r a i r T
a s n i b a S
l a n o i t a n r e t n I . W . M 5 1 - 0 1
r e w o P h t r a E / L S Y A
l a n o i t a n r e t n I s l a c i n a t o B y t i l a u Q
g r e b t s o r T . W . K . S
s l a c i n a t o B d l r o W e r u P
l a n o i t a n r e t n I g n i c r u o S l a c i n a h c e T
a m r a h p o k r A
s l a c i n a t o B t s e w r a t S
m r a F e k a L t u o r T / y a w m A

Source: Boswell, 1999
63
4 Policies and Regulations in Medicinal
Plants Trade
Medicinal plants are found all over the world and harvested to meet the demand of
both local and international markets. The vast majority of medicinal plants used in tra-
ditional medical systems and natural product industries are collected from their natural
habitats. At present, a serious problem is the over-exploitation of these important re-
sources which threatens not only the future of these species, but also the livelihoods and
health status of people relying on these resources throughout the world. Therefore, a
regulation for exploitation and exportation is increasingly demanded, along with inter-
national co-operation and co-ordination. The knowledge of existing international regula-
tions will be of great help in decision making and effective planning for countries willing
to enter the international trade.
4.1 International Trade Restrictions in Medicinal Plants
International trade in medicinal and aromatic plants is controlled and regulated by
various measures and restrictions varying from country to country. The broad trade
restrictions imposed on medicinal plants trade are tariff and non-tariff measures.
Tariff Measures
In several countries, most medicinal plants and crude drugs are traded without any
tariff restrictions. These are exempted from import duty in Canada, Japan, the EU and
the USA, which are major markets for these plants. However, tariff charges in China and
South Africa vary between 10 to 20 per cent of the value of goods, depending on product
and origin. Japan levies a 5 per cent tax on imports of ginseng roots, sandalwood and
some others. The most important tariff measures adopted in medicinal plants trade are
import and export tariffs by the importing and exporting countries, respectively. The
tariff regulations applicable to drug import in the EU, include associated implications of
revenue law, and the conservation legislation. Dried and fresh botanical material are
subject to a tariff codex when imported from developing countries into the EU. This
codex consists of tariff regulations and the associated implications of revenue law. These
comprise Custom Law, Law on Market Organisation and Countervailing Duty Law. Trade
within the EU is unrestricted and exempt from custom duties.
64
Import Tariffs
Import tariffs are imposed to provide protection to domestic products. In case of
developed countries this does not hold true, as medicinal plants are not collected and
produced in these countries because of high labour cost. These countries tend to maintain
low tariffs on import, in order to ensure a sustained supply. The import duties imposed on
botanical drugs in the EU, the USA and Japan are summarized in Table 36. In EU
markets, special rates apply to products from African, Caribbean and Pacific, less devel-
oped Andean, European Free Trade Association (EFTA) and other countries. In the US
market, special rates apply to products from Caribbean or other countries in free trade
areas; and for Japanese markets consumption tax of 5 per cent is levied on the duty-paid
value of the product. However, import tariffs for developing countries are considerably
higher. For example, import tariffs in China range from 12 to 65 per cent, and from 30
to 60 per cent in India. Import duty is calculated by adding value equivalent to figure
listed in Table 37, unless other wise specified for both the countries. In case of products
traded from China the product tax, value added tax, and industry & commerce consolida-
tion tax are also added.
Export Tariffs
Export tariffs are levied on medicinal plants exported from most developing coun-
tries. The main objective is to secure revenue for the country. For example, the export
duty levied on medicinal plants are 15 per cent in Cameroon (US Department of Com-
merce, 1999). The Brazil nuts exported from Brazil attracts 12 per cent duty whereas
gum Arabic from Sudan carries charges of 40 per cent.
Non-Tariff Measures
The major non-tariff measures applicable to medicinal plants and their products in
trade are: species protection controls; health and safety regulations; and quality and
technical standards.
Species Protection Controls
It is the most important measure regulating the international trade in medicinal
plants. After recognizing the fact that the threat of extinction of species is directly re-
lated to their global market demand, nations of the world worked together to regulate
the international trade of rare and endangered species of plants and animals. The pro-
posals of World Union for Conservation (IUCN) presented at the United Nations Stock-
holm Conference on the Human Environment, in 1972, laid down the foundation of an
international treaty known as Convention on International Trade in Endangered Species
of Wild Fauna and Flora (CITES). This treaty came into effect from 1 July 1975 and at
present it has 154 signatories.
65
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67
CITES establishes protocol for regulating the international trade of plants that are
facing danger of extinction due to over-exploitation. Each member nation or party to the
convention has to designate a Scientific Authority responsible for evaluating research on
potentially threatened species, as well as a Management Authority to administer the
various bureaucratic efforts needed to enforce the treaty.
Medicinal plant species which have become endangered are listed under three
appendices, according to their risk of extinction.
Appendix I includes plant species that are currently threatened with extinction.
Trade in Appendix I species is the most heavily restricted, requiring both an export
permit from the country of origin, as well as an import permit from the country of
destination. CITES does not permit the importation of wild plants for commercial purposes
if they are listed in Appendix I. However, CITES can re-designate Appendix I plants
under Appendix II if they are cultivated rather than collected from the wild. In these
instances, the Management Authority for the country of origin is required to inspect the
facilities where the plant is cultivated. In addition, all nurseries must be registered with
both the national authority and the CITES secretariat. Among more than a hundered
plant species included in Appendix I, Nepenthes distillattoria L., Saussurea costus (Falc.)
Lipschitz and Stangeria eriopus (Kunze) Nash are of medicinal value.
Appendix II includes plant species that are not necessarily threatened with extinc-
tion at present, but may become so if not carefully monitored. Regulations governing
trade of these species are less stringent than those in Appendix I plant species. Both
export permits and actual export are monitored carefully by the Scientific Authority to
prevent further risk of extinction and the necessity of moving the plant to Appendix I.
When there is a significant decline in the wild population of the species, the Scientific
Authority advises the Management Authority to take the suitable measures in granting
the export permits for that species.
Appendix III includes plant species that individual nations wish to regulate through
international cooperation in order to prevent or restrict their exploitation. The regula-
tions for this category are more elastic comparing to Appendix II. The importation of
Appendix III plants requires prior presentation of a certificate of origin. When the im-
port is from a state that has included the species in Appendix III, an export permit is also
needed. The scientific approval is not required to import or export plant species listed in
Appendix III.
At present, about 230 plant species included in CITES are traded for medicinal
purposes and they are likely to be traded in future. Recently, a list of fourty-seven medici-
nal and aromatic plants traded in Germany has been included in CITES Appendix II. In
India, ten medicinal plant species in trade have been included in Appendix II and one in
Appendix I. A few countries have also imposed ban on import or export of wild plants,
e.g. Australia has developed a comprehensive system of export control for all its native
plants. Some individual countries also control trade in certain species by controlling
68
their export, e.g. Harpagophytum procumbens in Botswana, many wild orchids in Costa
Rica, Rauvolfia serpentina and wild orchids in India.
Till now, the only international legislation that provides species-specific information
on international trade in medicinal plants is CITES. However, it does not have a complete
control on the voluminous medicinal plant trade.
Health and Safety Regulations
Regulatory requirements for health products in many countries are becoming more
strict and demanding with the increased health consciousness. Many industrialized coun-
tries refuse admission for consignments of plant material that shows signs of pesticide
residues. For example, Germany has regulations concerning the maximum allowable
residue level in phytogenic foodstuffs. Exporting countries of medicinal plants and their
products are required to furnish phyto-sanitary certificate of pesticide residue free prod-
ucts. It is also essential that plant material in trade should be free from microbial con-
tamination, dirt, dust and other unwanted matter.
Imports of edible fungi (morels, truffles etc.) are also subject to phyto-sanitary
regulations as elaborated in the CODEX worldwide standards for dried edible fungi (CO-
DEX STAN 39-1981). Similarly, spices imported to major markets require phyto-sani-
tary certificate of pesticide and fumigants residue free products.
Quality and Technical Standards
Quality considerations are of primary importance in the trade of culinary herbs. The
important factors considered by importers and buyers are cleanliness, flavour, colour
and aroma of the herb. Quality criteria vary from country to country and from herb to
herb and are usually imposed by large importing and processing companies.
The regulations and requirements regarding quality control parameters, i.e. identi-
fication, medicinal qualities, characteristics and storage of medicinal plants and their
derivatives, are well defined in national pharmacopoeias and formulary standards. The
EU has unified its national standards into European Pharmacopoeia, while specifications
for Japan and the USA are listed in Pharmacopoeia of Japan and the United States
Pharmacopoeia, respectively. The developing countries have also developed their na-
tional pharmacopoeias (e.g. Ayurvedic Pharmacopoeia of India, Indian Herbal Pharma-
copoeia and Pharmacopoeia of the Peoples Republic of China), which unifies quality
and technical standards. The WWF has also drawn up certain principles relating to large
international trade in medicinal plants.
4.2 Legislations in Medicinal Plants Trade
Trade in medicinal and aromatic plants in most part of the world is of unregulated
nature. This may be due to the fact that medicinal plants have received too little atten-
tion in national research and development and export development programmes of most
69
of the countries. These have been used since ancient time to cure human sufferings being
abundantly availabile in wild. This might be the reason for the scarse attentionin regulat-
ing their trade and bringing them under cultivation. Presently there is an increased
demand in international markets, but the resources are shrinking due to over-exploita-
tion. This has resulted into short supply of plant material and increased threat to species
survival. There are very few countries which have national policies and legislations to
regulate harvest, trade and conservation of medicinal plants resources. The national and
international legislations adopted by some countries are discussed as below:
China
In China, trade in medicinal plants is regulated only by national legislations and
there is no specific law to implement CITES. The medicinal plant species in trade are
classified into three categories (Category I, II and III) under the Regulations of China on
Protection of Medicinal Resources, 1987. According to these Regulations, the major and
commonly used wild medicinal species, whose resources are diminishing, are included in
category III. The export of these species is subject to quota system under Article 15 of
the Regulations.
Chinas Law of Wild Plant Protection, 1997, provides protection to plant species
classified into species of national key significance and those of local key significance. The
protected plant species of national key significance are further divided into Category I
and Category II protected species. Trade in Category I protected species is not allowed,
while trade in plant species listed in Category II is subject to authorization by the rel-
evant government agencies at the provincial/autonomous region level. The State For-
estry Administration, the Ministry of Agriculture and other authorized governmental
authorities at the provincial/autonomous region level are responsible for enforcing the
Law of Wild Plant Protection. A list of 255 species is appended to this law, out of these,
fifty plant species are classified as Category I, and 205 species as Category II. From
January 1998, Chinas regulatory system for the export of wild plants was strengthened
by the Endangered Species of Wild Fauna and Flora Import and Export Administrative
Office (under the State Forest Administration), the designated CITES Management Au-
thority, and the Customs Authority.
India
The trade in botanical drugs, to and from India, is governed by legislations at na-
tional and international levels. The medicinal plant species protected internationally are
covered under CITES. Those protected nationally are listed in the Schedule VI of Wild-
life (Protection) Act, 1972, revised in 1991, and covered under Indian Forest Act, 1927,
Forest (Conservation) Act, 1980, Foreign Trade (Development and Regulation) Act, 1992
and Customs Act, 1962.
CITES in India is implemented through a combination of provisions of the Wildlife
(Protection) Act, 1972/1991, and the Export and Import Policy (EXIM) under the For-
eign Trade (Development and Regulation) Act, 1992, and the Customs Act, 1962. The
70
Director of Wildlife Preservation of the Government of India is the CITES Management
Authority and it oversees CITESs implementation in the country. The Director has four
Regional Deputy Directors and four sub-regional offices of wildlife preservation, these
serving as assistants to CITES Management Authority.
Out of eleven Indian medicinal plants included in the CITES only one, Saussurea
lappa (S. costus), is listed in Appendix I, while the rest ten medicinal plants species (viz.
Aquilaria malaccensis, Dioscorea deltoidea, Rauvolfia serpentina, Aloe spp., Euphorbia
spp., Podophyllum hexandrum, Pterocarpus santalinus, Nardostachys grandiflora, Picro-
rhiza kurooa and Taxus wallichiana ) are listed in Appendix II.
In the national context, three Acts cover medicinal plant issues in India. These are
the Indian Forest Act, 1927, which applies to medicinal plant material collected from
the forest. The Forest (Conservation) Act, 1980, and the Wildlife (Protection) Act, 1972/
1991, facilitates only the in-situ conservation of medicinal plants. Out from the protected
areas, the Wildlife (Protection) Act, 1972/1991, provides a regulatory mechanism of six
endangered plant species under its Schedule VI. There is no control over the exploitation
of medicinal plants outside the protected areas. In 1994, vide public notice 47 (PN)/92-
97 dated 30 March 1994, the Ministry of Commerce, Govt. of India, upon recommenda-
tions of the Ministry of Environment and Forests, banned around 56 medicinal plant
species for export. In 1997, the Ministry of Environment and Forests set up an expert
committee to review the 1994 ban notice. This committee recommended the preparation
of negative lists at four levels-the first level is to enlist plants for immediate ban. The
committee further recommended that such negative lists should be made applicable not
only for exports but also for regulating domestic trade because the volume of domestic
trade in respect of most of these threatened plant species is higher than their export
trade.
The Export Import Policy of India looks at the export as well as import of plants
and plant-parts on the basis of the CITES regulations. The policy is announced periodi-
cally by the Ministry of Commerce under the provisions of the Foreign Trade (Develop-
ment and Regulation) Act. It lays down conditions governing the import and export of all
goods. Recently, the Ministry of Commerce has banned the trade of 29 medicinal plant
species, vide its notification No. 24 (RE-98)/1997-2002, New Delhi.
Nepal
In Nepal, trade controls in medicinal plants are implemented in National Parks,
conservation and protected areas through the National Parks and Wildlife Conservation
Act, 1973. Elsewhere in the country these are implemented through the Forest Act ,
1993, and accompanying Forest Rules, 1995. The Forest Act stipulates rules pertaining
to collection of medicinal plants via permits issued by the District Forest Offices specify-
ing the collection area.
At present, there is no specific CITES implementing legislation in Nepal. However,
to promote more effective implementation of CITES, a legislation known as Endangered
71
Species (Trade Control) Act, along with a policy specifying allowable exports and imports
has been drafted. The CITES Scientific Authority for Flora is the National Herbarium of
His Majestys Government, Department of Plant Resources, Ministry of Forests and Soil
Conservation. The Management Authority issues export permits for plants covered by
CITES and /or the Forest Act that are in a processed or semi-processed form. Ministry of
Commerce (Customs) and the police assist in the enforcement of import and export con-
trols.
Pakistan
At national level, trade in medicinal plants is regulated by the Pakistan Forest Act,
1927. The collection of medicinal plants is controlled by the Forest Department. The
forest areas are leased for one year to the interested parties. The transport permits for
the transportation of material collected from wild are issued by local Divisional Forest
Officers upon payment of a fixed duty fee. In general, commercial exploitation from
reserved forests is forbidden in Pakistan by the order of the Inspector General of Forests,
Islamabad.
The CITES Management Authority is represented by the National Council for the
Conservation of Wildlife (NCCW), under the authority of the Ministry of Environment,
Local Government and Rural Development, Islamabad. CITES permits are issued by the
NCCW, which is responsible for formulating countrywide legislation for regulating har-
vest, national and international trade of CITES listed species and for inter-provincial
and international co-ordination of CITES implementation.
Bhutan
In Bhutan, the protection of flora and fauna in the country is provided under the
Forest and Nature Conservation Act, 1995. The collection of medicinal plants is allowed
under this Act and their transportation within country is controlled under a system of
permits through a related regulation. Specific guidelines have also been set by the Royal
Government Forestry Services Division for the extraction of medicinal plants from the
wild, i.e. restricting collection to less than 30 per cent from any area and covering
exposed areas with soil. The export of most of the medicinal plants has been banned. A
certificate of origin and a transit permit are required to be presented to customs check
posts at the time of export. Bhutan is not a party to CITES.
South Africa
In South Africa, medicinal plants are protected under CITES regulations. The De-
partment of Environmental Affairs and Tourism is responsible for coordinating the im-
plementation of the convention at country-level. The provincial authorities are responsi-
ble for implementing the convention in their respective provinces and provincial law
enforcement units to enforce the legislation with regrad to CITES. The Endangered
Species Protection Unit (ESPU) of the South African Police Service deals with law
enforcement regarding trade across international boundaries involving crime syndicates.
The Chief Directorate of Sea Fisheries is responsible for introductions from the sea.
72
Latin America and Caribbean Countries
In Latin America and the Caribbean Islands countries, medicinal plants are pro-
tected under regulations of CITES. About 30 countries of the region have become signa-
tory of the convention till date. CITES in Brazil is implemented under Decree No. 76.723,
which was adopted in July, 1975. It covers all species included in the Appendices. Under
Decree No. 120 of 16 November 1996, Brazil authorized the use of Autorizacao para
Transporte de Produto Florestal (ATPE) forms, marked with the stamp Carimbo de
Certificado Origen- CITES as CITES certificate of origin. Brazils CITES Management
Authority is the Istituto Brasileiro do Meio Ambiente e dos Recursos Naturais Renovaveis
(IBAMA). It is responsible for issuing certificates of origin. In Argentina, the Directorate
of Environmental Subjects, Ministry of International Relations, Commerce and Culture
has been designated as CITES Management Authority. The permits and certificates of
origin are issued by the Division of Fauna and Flora of Sustainable Environmental Devel-
opment of the Ministry of Social Development, which has been designated as Scientific
Authority alongwith Argentina Museum of Natural Sciences.
European Union
Medicinal and aromatic plants trade in Europe is subject to international, Euro-
pean and national legislations. Out of 120 species, fourteen species were specifically
included in the Appendices because of the need to regulate trade in medicinal material.
Other six species, Adonis vernalis, Camptotheca acuminata, Cistanche deserticola,
Harpagophytum procumbens, Harpagophytum zeyheri and Panax ginseng, were proposed
for inclusion in Appendix II, at Conference of the Parties (COP)11.
CITES regulates the trade in medicinal and aromatic plants in the EU at interna-
tional level. All 47 European medicinal plants listed under CITES are included in Appen-
dix II. They require special permits for their trade. At national level, the convention on
the Conservation of European Wildlife and Natural Habitats of 1982 (Bern Convention)
lists six species of medicinal and aromatic plants in trade, suggesting measures to regu-
late their trade.
At EU level, CITES is implemented by Council Regulation (EC) No. 338/97 and
Commission Regulation (EC) No. 939/97, and its various amendments. In addition to 47
CITES listed species, seven others are listed in Annexe D, which means that their trade
within the EU should be monitored. Council Directive 92/43 EEC (EC Habitats, Fauna
and Flora Directive) lists ten medicinal plant species with three species in Annexe II, one
in Annexe IV (b), and six in Annexe V (b). The Directive aims to promote the conserva-
tion of natural habitats of wild flora within the EU for future availability and sustained
supply.
The legislation on protection and trade of endangered medicinal and aromatic plant
species is present in almost all the European countries. Altogether, 341 plant species are
affected by the combined national legislations of Bulgaria, France, Germany, Hungary,
Spain and Turkey.
73
The implementation of convention regulations for species included in the appendices
is poor, and in many cases non-existent. Germany has made notable efforts to implement
CITES through the publication of the checklist of medicinal and aromatic plants and
their trade names covered by CITES and EU Regulation 2307/97. The Plants Committee
has examined the trade through the medicinal plant significant trade study. Additional
significant plant trade surveys have been undertaken by Trade Records Analysis of Flora
and Fauna in Commerce (TRAFFIC). However, these efforts are too scarse, and although
member nations have taken domestic measures to conserve native plant populations,
still implementation of the convention for medicinal plants is unsatisfactory.
Bulgaria
The trade in botanical drugs in Bulgaria is governed by legislations at national and
international level. The internationally protected species are covered in CITES. In Bul-
garia eight species used as botanical drugs are listed in Appendix II, i.e. snowdrop
(Galanthus nivalis), pyramidal orchid (Anacamptis pyramidalis), butterfly orchid (Orchis
papilionacea), gobose orchid (Orchis globosa), military orchid (Orchis militaris), provence
orchid (O. provincialis), Cyclamen coum, and ivy-leaved sowbread (C. hederifolium).
The species protected nationally are listed in the Bulgarian Ordinance on the Con-
servation of Species, and/or are subject to legal restrictions and ordinances concerning
control of the botanical drug species. Bulgarian Species Conservation Legislation came
into force on 21 July 1989, vide ordinance no. 718, dated 20 June 1989. Under this
ordinance, cutting, collecting, picking, uprooting, trading and exporting of thirty seven
medicinal plant species, either as fresh or dried material, is strictly prohibited. Bulgaria
has also set up a quota-system for the collection of 23 plant species.
Trade in botanical drugs in Bulgaria is also subject to different laws and regulations
established in 1991 under the Law for the Protection of the Environment. The botanical
drug species occurring in the forest comes under the jurisdiction of the Forestry Commit-
tee, and its use is subject to forestry laws. Since 1991, wild harvesting and trade in
threatened plant species are subject to restrictions and prohibitions, issued by the Minis-
try of the Environment. For collection from the wild, a fee has to be paid as per Decree
No. 202 dated 26 September 1994, published in Official Gazette No. 82, 1994. Import-
export certificates for plant drugs are granted as per the Decree No. 132, dated 31
March 1997, published in Official Gazette No. 28 of 3 March 1997.
United States of America
There is little government legislation concerning the conservation of medicinal plants
in the USA. Most efforts being made to protect the sensitive, threatened or endangered
species come from private, non-profit organizations. The most prominent legislation con-
cerning the conservation of medicinal plants in the USA is encompassed in the Endan-
gered Species Act, 1973.
The Endangered Species Act (ESA), 1973, was enacted to halt the rapid loss of
74
plant and animal life, as well as to provide protection for threatened or endangered
species. Frequently referred to as the crown jewel of environmental laws, the ESA has
played a significant role in saving many species that are on the brink of extinction. The
ESA has been effective in preventing actual extinction by acting as a last ditch intensive
care unit for those species that have been pushed to the edge of extinction, however it has
been significantly less successful in bringing the species to a level at which it no longer
requires protection. The recently proposed Endangered Species Recovery Act (H.R. 2351)
strengthen and improve this act by protecting imperiled species and their habitats, pro-
moting true species recovery, by offering financial incentives to landowners who pro-
motes recovery of a species (Bagai et al, 2000).
The threatened medicinal herb goldenseal (Hydrastis canadensis), included in
CITESs Appendix II, is subjected to certain regulations and requires a permit to
countinue the trade. The listing includes roots, rhizomes, rootstocks, and bulk powdered
herb, while finished products will be exempt from CITES control. In the USA, finished
products are only regulated by the Federal Trade Commission (FTC).
Another example is the wild American ginseng (Panax quinquefolius), which occurs
naturally in 34 of the 50 states and it is officially listed as endangered in one state,
threatened in four, rare in one, and vulnerable in another. Nine states consider American
ginseng a species of special concern or include it in a watch list while seven peripheral
range states do not afford any protection to the species. Twenty-four states, in coopera-
tion with the federal government, regulate the harvest and/or the sale of American gin-
seng (Robbins, 1998).
The commercial trade in the American ginseng has been regulated since 1975 when
it was listed in CITESs Appendix II. The US Fish and Wildlife Service (USFWS) is the
designated CITESs Scientific and Management Authority. Before issuing a CITES ex-
port permit, the USFWS must determine whether ginseng roots being exported were
legally acquired and their export will be a decisive factor to the species' survival. In order
to make these verifications, the USFWS has established a joint ginseng management
programme with states to monitor wild ginseng populations and regulate harvest and
commerce. According to the programme requirements, ginseng dealers must register
with each state in which they intend to purchase and sell wild and cultivated American
ginseng roots and must report their transactions to these states. The single states submit
an annual information on ginseng harvest, biology, laws, and regulations to the USFWS,
which the Federal Agency uses to approve or disapprove ginseng export on a state-by-
state basis. Out of the 24 US states approved by the USFWS for American ginseng
export, 19 are authorized to export wild and cultivated roots and five are authorized to
export cultivated roots only.
Given the steady rise in the demand for wild American ginseng and its commercial
value, it is critical that harvest and trade continue to be monitored, reported, and regu-
lated to identify and avert potential conservation problems. The USFWS administrators
should look at the extent to which states are capable of meeting federal criteria. Simi-
75
larly, states should seek creative partnerships and alternative approaches to manage a
high-value resource that is increasingly under pressure from commercial collection and
habitat loss.
Canada
Canada became a party to the CITES on 10 April 1975, with enforcement com-
mencing on 3 July 1975. The Canadian Wildlife Service of the Federal Department of
the Environment has been designated as the authority to manage and coordinate the
application of the convention in Canada. The Canadian Export and Import Permits Act
(R. S. 1995, c. E-19) regulates CITES, and protected species are documented in the
regulations promulgated through the Act and published in the Canadian Gazette. The
Federal Department of Agriculture issues export permits for medicinal plants and their
products for all provinces and territories except Qubec, where they are issued directly
by the Ministry of Environment. The permits for plants from wild are issued only after
approval from the province or territory in which the plant originates. The import of
plants and their products is controlled by the Plant Protection Act (1990, c.22) of the
Federal Deaprtment of Agriculture. In Canada, the export of wild American ginseng root
is banned under provincial law in Qubec and Ontario. The Canadian government has not
been obligated by CITES to make a no-detriment finding for exports. However, cultivated
ginseng is exported from Ontario and British Columbia, that are together the top North
American producers and exporters of cultivated roots.
Australia
In Australia, CITES became enforceable under Australian law on 27 October 1976.
The Wildlife Protection (Regulation of Exports and Imports) Act, 1982, provides the
legislative basis for meeting Australias responsibilities under CITES which is adminis-
tered by the Wildlife Australia Branch of Environment. The Wildlife Permits and En-
forcement Section of Environment is the Management Authority for CITES and respon-
sible for the coordination of enforcement matters. The Wildlife Scientific Advice Section
of Environment Australia has been designated as the Scientific Authority for CITES.
Most investigations are undertaken by the Australian Custom Service or the Australian
Federal Police. The Wildlife Protection Act, 1982, controls the export and import of
medicinal plants and their products. Strict regulations govern the export of all Austral-
ian native plants.
Legislative Shortcomings
Wherever medicinal plant legislation exists, it tends to have flaws like government
inability to enforce limits and regulations. Most of the national legislations do not ban
collection of rare or endangered plants on private lands, unless national laws specifically
forbid the practice, and many countries do not have such laws. This poses a threat of
habitat destruction. A lot of medicinal plants grow outside the protected areas of domain,
and since there is no consolidated strategy for medicinal plants, many of them disappear
without the knowledge of anyone.
76
Perhaps the largest legislative obstacle for medicinal plants is the lack of attention
that they receive. Over the last years, too little attention has been paid to the conserva-
tion of medicinal plants, compared to aimals. Although, far more plant species are at
risk or threatened due to human activity, only a tiny portion of conservation is devoted to
plants. These efforts are widely scattered and minimal.
The international treaties like CITES do not have enforcement power on their own.
It is up to the individual member-country to enforce the regulations suggested by CITES.
At present, no member-country is bound to CITES trade restrictions. This loophole in the
agreement ignores the protection of several threatened species of plants. Undoubtedly,
regulations designed to protect endangered or threatened species should be supported,
though mere trade restrictions, as most conservationists will agree, will hardly address
the real issues. Inevitably, such regulations will increase the market prices, thus encour-
aging poachers and illegal trade.
77
5 Constraints in Market Development for
Medicinal Plants
Medicinal plants are considered as minor crops and have received low priority in
national investment, research and export development programmes in most of the devel-
oping countries. Most of the medicinal plants supply to the world market is sourced from
these countries. Despite the large import of medicinal plants by developed countries, the
growth of export from developing countries is constrained by several factors.
Lack of Research and Development Facilities
Most of the developing countries lack appropriate research and development facili-
ties needed for entering the major markets of Europe and the USA. Their entry into the
markets, where herbal medicines are not sold as OTC products is also difficult, as distri-
bution outside food outlets is hard and risks are higher.
Lack of Technology
There is a lack of knowledge on production, extraction and standardization tech-
nologies in most of the developing countries. The skill shortages also result most often
inadequate post-harvest handling, storage, processing and packaging resulting in poor
quality and low unit values for exports.
Lack of Quality Control Measures
The exporters lack knowledge of international standards for hygiene, product speci-
fication and quality. They also lack systems of measurement and testing the quality and
efficacy of the products.
Lack of Knowledge of Supply
Most of the developing countries have few or no inventory of species of medicinal
value. Prospects for cultivation are scarce or yet to be studied. The supply potential is
thus virtually unknown. At present, only a few countries have the resources and the
institutional capability to advise on policy and regulatory mechanisms to provide
consistently high quality products. The know-how in processing technologies is also
deficient, as is the availability of sustainable production processes.
78
Limited Knowledge of Medicinal Value
The limited knowledge of medicinal properties of herbs beyond traditional knowl-
edge and belief restricts the use and marketability of these plants. A systematic process
is required to work with end-users in the developed countries to study their use of herbal
supplements and remedies to explore the possibility of selling their own traditional
herbal supplements and tonics and lastly, to examine the requirements for marketing
traditional medicines. The sale of the latter requires regulatory approvals that are usually
expensive and time consuming, beyond the resources of most of the exporting countries.
Intellectual Property Rights (IPRs)
The intellectual property rights are an issue of great importance to the source coun-
tries. Medicinal plants have been used in traditional medicine for centuries and hence
cannot be protected by patent. They can be registered as individual or regional trade-
marks. The knowledge of the complete system of IPRs field is limited in these countries
and hence access to IPR system is limited.
Market Access
The access issues of foreign markets have also constrained export development.
Generally, most of the crude drugs are allowed without any tariff restrictions in several
countries. They are exempt from import duty in Canada, Japan, the EU and the USA
which are the major import markets.
Strategies for Export Development
In order to improve the export of medicinal plants from developing countries fol-
lowing strategies should be adopted.
Market Knowledge
The knowledge of consumers, their requirements and preferences, market access
conditions, appropriate marketing channels, and marketing techniques should be strength-
ened. Preliminary knowledge of import requirements and regulations should be given to
suppliers and exporters to allow them to obtain the necessary standards of quality and
sophistication requested by the international markets. The capacity of the agencies re-
sponsible for export promotion and business associations should be strengthened so that
they could work efficiently. The producers should be trained in sustainable harvesting
techniques, sorting and grading, packaging and shipping to meet customer requirements.
Resource Assessment
It is necessary to access local resources of medicinal plants before aiming to reach
international market. Inventories should be prepared in order to map the areas where the
plants occur naturally and in order to estimate available quantities through sustainable
harvesting. The available species should be tested for quality parameters to determine
their potential in export markets. The estimates of supply potential should be followed by
79
an active programme of marketing. Agrotechniques should be developed to introduce
cultivation if demand exceeds the sustained supply from natural resources.
Alternative Sales Techniques
The practice of e-commerce needs to be popularized in the developing countries for
efficient and fast marketing. As an example dietary supplements sales on the Internet
reached US$ 40 million in 1998, with an increase of US$ 12 million over the preceeding
year. This accounts for only 0.3 per cent of the total US supplements market of US$
13.6 billion in 1998 . However, the rate of sales growth for supplements on the Internet
far exceeds that of natural foods stores, mass market stores, and multilevel marketing.
81
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Coverpage insets include pictures of:
Aloe (Aloe vera),
Ginkgo (Ginkgo biloba) and
Purple coneflower (Echinacea purpurea)