Medicinal Plants. (Market Profile)

International Trade Forum, July-September 2001 | Go to article overview

Medicinal Plants. (Market Profile)


There are good prospects for export growth from LDCs in this market. Sales of herbal medicine alone are estimated to have exceeded US$ 12.5 billion in 1994 and US$ 30 billion in 2000, with annual growth rates averaging between 5% and 15%, depending on the region. The herbal supplements market had an even higher annual average growth rate of 25% between 1990 and 1997.

Markets for herbal medicine in developed countries -- especially in Europe and the United States -- are highly regulated and very difficult to penetrate, particularly for developing countries and LDCs whose products have not undergone the stringent tests applied by developed country pharmaceutical manufacturers before mass production.

Rising global interest in medicinal plants has also created a sustained and largely 'underground' trade in plant materials, many of which are being collected in LDCs in an unregulated manner, resulting in indiscriminate harvest of wild varieties and serious damage to biodiversity.

It is, therefore, not possible to assess global trade in all medicinal plants. A substantial part of this trade is not recorded. In addition, official trade statistics either do not identify the plants individually, or do not separate their medicinal use from other usage. Total recorded exports of medicinal plants from LDCs peaked at US$ 37 million in 1998 before falling to a reported US$ 27 million in 1999. They averaged around US$ 31 million a year from 1995 to 1999.

Major trade constraints

* Lack of knowledge of supply. Few, if any, LDCs have carried out an inventory of species and sustainable off-take on the basis of gathering or limited husbandry. Prospects for cultivation are yet to be studied. At present, few LDCs have the resources and institutional capability to advise on policy or the regulatory mechanisms to provide consistently high-quality products. Know-how in processing technologies is also deficient, as is the availability of sustainable production processes.

* Limited knowledge of properties. There is also limited knowledge of the herbs' medicinal properties beyond traditional knowledge and belief. This restricts the use and marketability of the plants.

* Intellectual property rights. An issue of potentially huge importance to the LDCs and all developing country exporters is intellectual property. Plants have been used in traditional medicines for centuries and hence cannot be protected by patent. They can be registered as individual or regional trademarks, with explicit rules of origin. Knowledge of the whole intellectual property fights (IPR) field is limited in the LDCs, as is access to IPR systems.

Solutions

* Prospects, policies and strategies for LDCs. LDCs should aim to cultivate in a sustainable manner and enter markets at the early stages of the value chain by first supplying developed country manufacturers with unprocessed raw materials. Then they can move towards providing herbal supplements before tackling the highly regulated market for herbal remedies.

* Explore alternative sales techniques. Alternative sales techniques, especially sales via the Internet, are available to the LDCs. According to the Nutrition Business Journal, dietary supplement sales on the Internet reached US$ 40 million in 1998, an increase of US$ 12 million over 1997 figures. This accounts for only 0.3% of the total 1998 United States supplement market of US$ 13.6 billion. However, the rate of sales growth for supplements on the Internet far exceeds that of natural foods and mass-market stores, and multilevel marketing.

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