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CBI MARKET SURVEY: THE MARKET FOR NATURAL INGREDIENTS FOR PHARMACEUTICALS IN THE EU

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CBI MARKET SURVEY

THE MARKET FOR NATURAL INGREDIENTS FOR

PHARMACEUTICALS IN THE EUPublication date: October, 2008

CONTENTS

REPORT SUMMARY ..................................................................................................... 2

INTRODUCTION.......................................................................................................... 4

1 INDUSTRIAL DEMAND........................................................................................... 5

2 PRODUCTION...................................................................................................... 18

3 TRADE CHANNELS FOR MARKET ENTRY............................................................... 24

4 TRADE: IMPORTS AND EXPORTS ......................................................................... 29

5 PRICE DEVELOPMENTS........................................................................................ 37

6 MARKET ACCESS REQUIREMENTS ....................................................................... 40

7 OPPORTUNITY OR THREAT?................................................................................ 42

APPENDICES

APPENDIX A PRODUCT CHARACTERISTICS............................................................. 43

APPENDIX B INTRODUCTION TO THE EU MARKET .................................................. 47

APPENDIX C LIST OF DEVELOPING COUNTRIES ..................................................... 48

APPENDIX D LIST OF HERBS BASICALLY QUALIFIED FOR THE PREPARATION OF HERBAL MEDICINAL PRODUCTS ON THE EU MARKET......................... 50

APPENDIX E CULTIVATION VERSUS WILD COLLECTION......................................... 51

APPENDIX F REFERENCES ...................................................................................... 52

This survey was compiled for CBI by ProFound – Advisers In Developmentin collaboration with Klaus Dürbeck and Andrew Jones.

Disclaimer CBI market information tools: http://www.cbi.eu/disclaimer

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Report summary

This market survey provides exporters of natural ingredients for pharmaceuticals with a wide range of facts, figures and information pertinent to the market in the European Union (EU). The market in individual EU countries is discussed further in separate market surveys. These market surveys can be downloaded at http://www.cbi.eu/marketinfo. The survey also includes a large number of references for additional research, primarily using the Internet.

The natural ingredients for pharmaceuticals in this survey fall into the following groups: Medicinal and aromatic plants; Vegetable saps and extracts; Vegetable alkaloids.

Industrial demand for natural ingredients for pharmaceuticalsNatural ingredients for pharmaceuticals are used in the conventional pharmaceutical industry and the herbal medicine market. Herbal medicines represent a range of product types, including products sold as raw herb (dried or fresh), and others, which are processed to varying degrees, including tinctures (an infusion of herbs in alcohol) and extracts (greater concentration of the active material of the plant with the aid of a solvent).

There certainly is a market for natural ingredients for pharmaceuticals in Europe. In 2007, total European sales of pharmaceutical products totalled € 176 billion, of which Germany, France and the United Kingdom had the largest market shares. The EU pharmaceutical market showed a growth of approximately 4% since 2005. This upward economic trend was reflected by growth figures in almost all EU countries. At the same time, East European countries, such as Poland, Romania and Slovakia, showed a strong growth between 2005 and 2007, generated mainly by a strong growth in non-prescription sales.

Furthermore, total pharmaceutical production in the EU amounted to approximately € 182 billion in 2006, or 35% of world’s production. France, the United Kingdom, Germany and Italy were the largest producers.

TrendsThe main trend taking place in the global trade of natural ingredients is the shift of further processing of raw plant material from Western countries to developing countries. It used to be rather challenging for exporters in developing countries to supply EU buyers with ready-to-use saps and extracts, because these were mostly processed within the EU. Nowadays, however, a limited but increasing number of suppliers in developing countries, most notably China and India, but also Brazil, Mexico and Malaysia, are able to supply processed ingredients. This shift was firstly related to lower-value saps but, as was notable at CPhI 2007, a major pharmaceuticals trade fair, this now also concerns further processed extracts. Nevertheless, industry sources indicate that EU companies remain competitive on the EU market, due to the very high quality demands and legislative requirements in the EU.

The use of natural ingredients for pharmaceuticals is expected to rise globally, both in conventional and herbal medicine. This upward trend is predicted not only because of general population growth, but also due to the increasing popularity of natural-based, environmentally-friendly products, which especially stimulates the consumption of herbal medicine. Next to these reasons, the demand for herbal medicines, and especially their renaissance in the EU, is driven by the following factors: Increasing costs of institutional, pharmaceutical-based health care; Interest of individuals, communities and national governments in greater self-reliance in

health care; Interest of communities and national governments in small and large-scale industrial

development based on local/national biodiversity resources;

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Increasing success in validating the safety and efficacy of herbal remedies; Legislation improving the status of the herbal medicine industry; Renewed interest of companies in isolating useful compounds from plants; Search for new drugs and treatments of serious and drug-resistant diseases; Marketing strategies by the companies dealing in herbal medicine.

Production in the EUEurope's place in the production of medicinal and aromatic plants is of global importance. At least 2,000 medicinal and aromatic plants in Europe are used on a commercial basis, of which two-thirds are native to Europe. Of the 2,000 species, about 130 plant species are cultivated in the EU and less than 500 plant species are cultivated worldwide. Wild collection, especially in certain East European countries, plays a vital role in this. Nowadays, Eastern Europe is the most important region in Europe where medicinal plants are wild-collected. Bulgaria and Albania are important producers of medicinal plants in this region; and suppliers in Romania are specialized in the wild-collection of Arnica, which is widely used in Europe and the United States.

Trade structureEuropean-based companies and German companies in particular, dominate the global herbal supply industry. Manufacturers of herbal medicines used to acquire their raw materials from traders, but now some have their own plantations or have direct contact with producers.Besides, manufacturers of herbal products are increasingly interested in having direct relationships with producers of the required materials, in order to ensure a sustained source and/or to save costs (traceability). Furthermore, the capacity of many countries harbouring biological diversity to engage in value-adding research has expanded over the last decade. Companies are therefore increasingly open to collaboration with provider-country institutions, if they are confident of the quality and cost-effectiveness of the work of these institutions.

EU trade and developing countriesDeveloping countries accounted for a significant share in the EU market of natural ingredients for pharmaceuticals in 2007: 34% for medicinal and aromatic plants, 43% for vegetable saps and extracts and 22% for vegetable alkaloids. Especially the product group vegetable saps and extracts showed a strong average annual growth in imports from developing countries, corresponding with the trend that processing of raw plant material is increasingly taking place in developing countries.

In 2007, the leading developing country suppliers of medicinal and aromatic plants to the EU were China, India, Morocco, Egypt and Turkey. The leading suppliers of vegetable saps and extracts were Turkey, Iran and China, and of vegetable alkaloids were India, China, and Indonesia. China and India were the dominant developing country suppliers in this marketsegment.

Opportunities for exportersNext to general opportunities stemming from a growing demand for natural ingredients for pharmaceuticals, some more specific opportunities are discussed in this EU survey. First of all, next to certain ingredients and wild-collected ingredients mentioned in this survey, there are increasing opportunities for processed and value-added plant material. In the past, this appeared to be challenging for developing country suppliers, but this situation has somewhat improved. Moreover, natural ingredients not available within the EU, such as active ingredients from tropical fruits and vegetables, offer opportunities for developing country suppliers. Entering a niche market is also an interesting opportunity.

The registered growth of the production as well as consumption of (herbal) medicine in Central and East European countries also offer opportunities for developing-country producers of natural ingredients. For more information, see also the specific regular and compact country surveys of these countries.



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Introduction

This CBI market survey profiles the natural ingredients for pharmaceuticals market in the EU. The emphasis of this survey lies on those products, which are of importance to developing country suppliers. The role of and opportunities for developing countries are highlighted.

The natural ingredients discussed in this market survey fall under the following groups: Medicinal and aromatic plants (examples are ginseng roots, poppy straw and St John’s

Wort, but the variety is enormous, covering over 50,000 species used for medicinal purposes worldwide);

Vegetable saps and extracts (examples are liquorice extracts, aloe, hop extracts, agar-agar and guava, but here also the variety is very large);

Vegetable alkaloids (an alkaloid, strictly speaking, is a naturally-occurring amine produced by a plant. Examples are cinchona, opium and rye ergot).

For detailed information on the selected product groups, please consult appendix A. More information about the EU can be found in appendix B.

CBI market surveys covering the market in specific EU countries, specific product(group)s or documents on market access requirements can be downloaded from the CBI website. For information on how to make optimal use of the CBI market surveys and other CBI market information, please consult ‘From survey to success - export guidelines’. All information can be downloaded from http://www.cbi.eu/marketinfo go to ‘Search CBI database’ and select your market sector and the EU.



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1 Industrial demand

There is a general lack of information on the industrial demand for natural ingredients for pharmaceuticals. Therefore, this chapter on industrial demand will first discuss pharmaceutical consumption in general, then natural pharmaceutical and herbal medicine consumption. Afterwards, an overview of the pharmaceutical production in the EU will be presented. The developments of the pharmaceutical industry in the EU are interesting to understand in order to assess the needs of the market. The overall information given in this chapter will provide indicators of the industrial demand for natural ingredients for pharmaceuticals in the EU.

1.1 Market size

Pharmaceutical consumptionData from the Intercontinental Marketing Services (IMS Health) covering 90% of total pharmaceutical global sales, showed that global pharmaceutical sales increased by 6% to 7% in 2007. However, 2008 is expected to be a year of transition and global pharmaceutical sales are estimated to grow 5% to 6%, totalling € 460 billion. This small slow down on growth is expected to occur because of a decline in the cost of drug treatments, pricing and market access, among others. A shift in growth from the top seven markets to emerging markets is also expected.

Europe accounted for 31% of global pharmaceutical sales in 2007. Approximately 24% of sales of new medicines launched during the period 2002-2007 were generated on the European market (IMS, 2008). According to the European Self-Medication Association (AESGP)1, European sales of pharmaceutical products totalled € 176 billion in 2007, of which Germany, France and the United Kingdom had the largest share (together around 54%). These data are shown in Table 1.1, which also shows the total pharmaceutical market (non-prescription and prescription, excluding hospital sales) and the non-prescription (or Over-The-Counter, OTC) market.

The EU pharmaceutical market in 2007 showed a growth of approximately 4% in comparison to 2005. The upward economic trend is reflected by growth figures in almost all EU countries(except Italy). It is interesting to note that East European countries, such as Poland, Romania and Slovakia, showed a strong growth between 2005 and 2007, originating mainly in a strong growth in non-prescription sales.

Table 1.1 EU pharmaceutical market by country, excluding hospital sales, 2005-2007, in € million, share of non-prescription in % of value

Total Non-prescription% non-

prescript-ion drugs in 2007

2005€ mln

2006€ mln

2007€ mln

annual growth

2005€ mln

2006€ mln

2007€ mln

annual growth

EU Total* 163,063 167,828 175,733 4% 24,694 25,456 26,358 3% 15%Germany 35,085 35,100 36,600 2% 5,908 5,910 5,869 -0.3% 16%France 28,908 29,950 31,000 4% 5,668 5,840 5,921 2% 19%United Kingdom 25,204 25,944 26,617 3% 3,939 4,175 4,608 8% 17%Italy 19,431 19,185 19,053 -1% 2,195 2,044 2,139 -1% 11%Spain 12,841 13,454 14,032 5% 1,472 1,483 1,145 -12% 8%Poland 5,207 5,601 6,294 10% 1,309 1,427 1,663 13% 26%Greece 4,497 5,010 5,887 14% 350 364 435 11% 7%The Netherlands 5,119 5,347 5,585 4% 637 664 696 5% 12%Belgium 4,003 3,997 4,204 2% 595 619 634 3% 15%Austria 3,588 3,744 3,995 6% 326 323 339 2% 8%Sweden 3,541 3,712 3,968 6% 326 348 367 6% 9%

1 It should be noted that figures from IMS Health and AESGP cannot be compared, due to differing definitions of pharmaceuticals.



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Total Non-prescription% non-

prescript-ion drugs in 2007

2005€ mln

2006€ mln

2007€ mln

annual growth

2005€ mln

2006€ mln

2007€ mln

annual growth

Portugal 3,364 3,388 3,577 3% 238 284 267 6% 7%Denmark 2,239 2,441 2,706 10% 212 222 241 7% 9%Finland 2,367 2,361 2,509 3% 275 242 273 -0.4% 11%Hungary 2,015 2,131 2,072 1% 284 301 287 1% 14%Ireland 1,686 1,883 2,068 11% 263 292 330 12% 16%Romania 1,082 1,543 1,974 35% 166 364 458 66% 23%Czech Republic 1,526 1,488 1,881 11% 376 375 485 14% 26%Slovakia 920 1,081 1,224 15% 124 147 168 16% 14%Slovenia 440 468 487 5% 31 32 33 3% 7%Source: AESGP (2008)* Excluding: Bulgaria, Cyprus, Estonia, Latvia, Lithuania, Luxembourg and Malta.

Pharmaceutical products concern a broad range of products. However, in this market survey we will focus on the self-medication category and non-prescription market, as this includes the bulk of herbal medicine sales, which are an important destination for natural ingredients. Whereas non-prescription pharmaceuticals include all medicines which are available without a prescription from a physician, self-medication specifically relates to products which are directly available on shelf space in pharmacies, drugstores and supermarkets.

Table 1.2 shows expenditure on pharmaceutical, non-prescription and self-medication products in the European Union. Both the non-prescription and the self-medication market show growth between 2005 and 2007. In 2007, the European self-medication market amounted to € 25.4 billion, 70% of the total non-prescription market. The continuous growth of especially the self-medication sector can be explained by continuous product development, innovation and more products being available on the market. Several sub-markets can be distinguished within the self-medication market. The largest sub-markets are cough and cold medicaments, followed by analgesics and digestive products. Of the largest sub-markets, only analgesics and skin products exceeded the overall growth of the self-medication market.

Table 1.2 Pharmaceutical market in the EU, in € million2005€ mln

2006€ mln

2007€ mln

2005-2007% change

Total 163,063 167,828 175,733 4% Non-prescription 24,694 25,456 26,358 3%

Self-medication 17,110 17,566 18,568 4%Cough & cold 3,906 4,178 3,964 1%Analgesics 3,109 3,128 3,545 7%Digestives 2,625 2,627 2,712 2%Skin products 1,870 1,998 2,090 6%Vitamins and minerals 2,141 2,184 2,217 2%

Source: AESGP (2008)

Natural pharmaceuticals and herbal medicine consumptionDuring the last three decades, the herbal medicine market grew substantially around the world. At present, 80% of the population in developing countries relies on plant-based drugs for their healthcare needs, as these drugs are more widely available and more affordable.Moreover, their use is firmly embedded within wider belief systems, and local expertise is involved. In many developed countries, popular use of herbal medicine is fuelled by concern about the adverse effects of chemical drugs, but also by greater public access to health information (WHO, 2005). At present, herbal medicines have a global market share of approximately 30% (FNR, Agency of Renewable Resources, 2007).

Estimates of the overall value of natural pharmaceuticals vary considerably, also because of the use of different definitions. According to the Development Center for Biotechnology, the global market value for herbal medicines totalled € 19 billion in 2006 and it is expected to

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surpass € 26 billion in 2011 (China Post, 2007). In Europe, herbal or phyto medicines have a relatively strong position compared to other markets, due to traditional acceptance and the high share in the reimbursement system for drugs. In 2003, the biggest markets for phyto-pharmaceuticals within the EU were Germany and France, comprising two thirds of the European market of around € 6 billion. Germany accounted for 39% of the market, while France accounted for 29%. Italy, Poland, the UK and Spain accounted for 7%, 6%, 6% and 4% of the market, respectively. Imports were significant, as domestic production only met a small proportion of demand (i.e. 5-10% in Germany, 30% in France) (IENICA, 2004).

Next to natural pharmaceuticals, strong growth is seen in the area of functional food. It is estimated that sales of extracts to the food industry, for use in functional foods, are growing by around 20% per year (Nutraingredients Europe - online newsletter, 2006), while the number of consumers of functional foods is growing between 6% and 7% annually. The major growth sectors are digestive health and functional food for the immune system (Foodtechnology - magazine, 2005).

EU production of (natural) pharmaceuticals Total pharmaceutical production in the EU amounted to approximately € 182 billion in 2006, or 35% of the world’s production. France, the United Kingdom, Germany and Italy were the largest producers, representing 19%, 14%, 13% and 12% of the total EU production, respectively.

Table 1.3 Pharmaceutical industry in the EU*, in € million1990 2000 2005 2006 2007**

Production 63,010 123,282 172,098 182,339 190,000

R&D expenditure 7,766 17,849 21,778 24,759 26,000* Data relate to EU-27, Norway and Switzerland since 2005**EstimationSource: EFPIA (2008)

Moreover, in 2006, the pharmaceutical industry invested about € 25 billion in Research & Development (R&D) in Europe. Compared to the North American and Asian regions, Europe is a relatively less attractive R&D investment location in terms of market conditions and incentives for the creation of new biopharmaceutical companies. R&D spending in the US grows more than twice as fast as in Europe (IMS, 2007).

Next to West European well-established pharmaceutical industries, Central and East European countries (mainly Poland, Hungary and the Czech Republic) are becoming increasingly important hotspots for pharmaceutical research. These countries offer low-cost manufacturing, and well-qualified medical practitioners are available to conduct clinical research.

The growing interest of the pharmaceutical industry in East and Central European countries also becomes visible in the manufacturing of natural pharmaceuticals. In Chapter 2 on the Production of medicinal plants in Europe, it becomes clear that the East European region has a long tradition in the collection and cultivation of herbs and medicinal and aromatic plants. Next to the availability of raw material, the countries (especially the Czech Republic, Poland and the three Baltic states) show many developments in the field of product innovations. This is alsorelated to the fact that these countries have not fully harmonised their regulations with EU regulations on herbal medicine. Examples of product innovations are pharmaceutical applications of active ingredients from fruit and vegetables.

Next to East and Central European countries, the established processing industries in countries such as Germany, Switzerland, France and the United Kingdom retain a large share in EU production of natural pharmaceuticals.



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Industrial demand for natural ingredients for pharmaceuticals

Medicinal and aromatic plantsIn 2004, the Food and Agricultural Organisation (FAO) estimated that only up to 13% of flowering plant species was used medically worldwide, constituting over 50,000 species out of an estimated total of 420,000. In the period 1991-2003, the reported average annual global exports of medicinal and aromatic plant material amounted on average to 467,000 tonnes, or approximately € 1.06 billion (FAO, 2004).

The international trade was dominated by only a few countries: 80% of the worldwide imports was channelled to just 12 countries. Three international trade centres for botanicals could be recognised: the USA for North and South America, Hong Kong for Asia, and Germany for intra-European trade. Europe was responsible for one third of the annual global imports. Germany accounted for 12% of the total, and four other EU countries (France, Italy, the United Kingdom and Spain) were among the major importers. In these countries, the raw material was mainly processed in each country’s industry, and then sold as finished products either on the domestic market or exported (FAO, 2004).

A large part of the EU demand for raw plant material is sourced from within the European Union, especially since the accession of Romania and Bulgaria, both being important producers of raw plant material. However, a vast array of tropical and subtropical plant species cannot be sourced in the EU, mostly due to climatic reasons. In Chapter 4, it becomes apparent that the imports by EU countries of raw plant material are increasing, and that imports from developing countries are also increasing. Germany, with its large extraction industry, is the biggestmarket for raw plant materials, but France and Italy are also of importance. Moreover, there is a growing demand from East and Central European producers, which increasingly position themselves in the market for natural ingredients for pharmaceuticals.

Table 1.4 shows the most important medicinal plants on the European market. Echinacea has been on the list for a long time. Gingko, Valerian and St. John’s Wort are confirmed as important plants by European importers and manufacturers. They also mention having had continued success with Hawthorn, Chamomile, Goldenseal, Garlic and Devil’s Claw. Several South African plants are also becoming more popular in Europe, especially in functional food markets. These include the antibiotic Umckalaoba in Germany, but also fruit extracts from baobab and wild melon (Nutraingredients, 2006).

Table 1.4 Top ten ranked medicinal plants and medicinal herbs most commonly used in the United States and Europe

Species Use

Hypericum perforatum Anxiety, depression, insomniaEchinacea purpurea Immune stimulationGinkgo biloba Dementia, Alzheimer’s disease, tinnitusSabal serrulata Benign prostatic hyperplasiaTanacetum parthenium Migraine prophylaxisAllium sativum Lipid-lowering, antithrombotic, fibrinolytic, anti-hypertensive, anti-theroscleroticZingiber officinalis AntiemeticPanax ginseng Tonic, performance enhancer, “adaptogen”, mood enhancerValeriana officinalis Sedative, hypnotic, anxiolyticEphedra distachya Asthma, rhinitis, common cold, weight loss; enhancer of athletic performanceSource: “Medicinal Plant Biotechnology. From Basic Research to Industrial Applications” (2007)

The information given above, and in Table 2.2 in the production chapter, do not show much overlap. From this, it becomes clear that European importers of many medicinal plant ingredients depend on sourcing in countries outside the EU.

Within the natural ingredients trade, a dominance of certain preferred wild-collected species and quantities can be observed above cultivated species. The main reason for this is that



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domestication of plant species is very costly in terms of investment, in terms of time (around 10 years) and human capacity (e.g. seed masters). In 2005, the total value of organic wild production worldwide was estimated at between € 530 and € 630 million at FOB prices, of which 19% was destined for food supplements and 14% for natural remedies. The EU accounted for 43% of this market. Of the total organic wild-collected species market, 22% was constituted by medicinal and aromatic plants (International Trade Centre - ITC, 2006).

For more information on wild-collection, please refer to Table 1.5 (under Section 1.3 in this chapter) which shows a list of medicinal plants and notes whether they are principally cultivated or wild-collected. The subsequent section on certification of natural ingredients also discusses certification of wild-collected plants. Moreover, the following chapter on EU production and the CBI market surveys covering the market in individual EU countries also discuss wild-collection taking place in the EU.

Vegetable saps and extracts Vegetable saps and extracts are not only used by the pharmaceutical and herbal medicine industry, but also in the cosmetics and the food sectors. Unfortunately, total demand figures for this product group are not available and it is also quite difficult to isolate the demand of the pharmaceutical industry.

In general, European - and especially German - companies play a vital role in the trade and processing of vegetable saps and extracts. The most important EU consumers are also located in Germany, where there are many extractions and processing companies active in the saps and extracts trade. Furthermore, the new and increasingly important position of China and India as suppliers is also interesting to note.

It used to be rather challenging for exporters in developing countries to supply EU buyers with ready-to-use saps and extracts because these were mostly processed within the EU, isolating active ingredients, or making them suit other buyer requirements necessitating complicated processing steps. Nowadays, however, a limited but increasing number of suppliers in developing countries, most notably China and India, but also Brazil, Mexico and Malaysia, are able to meet such demands. This shift was firstly related to lower-value saps but, as was notable at CPhI 2007, a major pharmaceutical trade fair, this now also concerns further processed extracts. Nevertheless, industry sources indicate that EU companies remain competitive on the EU market, due to the very high quality demands and legislative requirements in the EU.

Furthermore, fruit and vegetable extracts are increasingly in demand. For example, from research conducted by the Scottish Crop Research Institute (2007), it became clear that blackcurrant is far more nutritious than other more exotic fruits containing high anti-oxidant contents. Blackcurrant is used in the food and pharmaceutical industries as well as in the intervening nutraceutical sector. At CPhI 2007, interest was also expressed for dried fruit powders of fruits with high contents of interesting ingredients, such as vitamins and anti-oxidants. The most evident example was the sales of cranberry powder.

Vegetable alkaloidsNo European market data is available for most of the products described here and therefore information is provided only on global demand. It is important to note that alkaloids predominately come from cultivated sources and have well established supply chains.

The six opium alkaloids which occur naturally in large amounts are morphine, narcotine, codeine, thebaine, papaverine and narceine. Of these, morphine, codeine, and thebaine are under international control. They are all three used in the drug industry, thebaine usually for conversion into some derivative which is more useful medically. They are all heavily regulated. Papaverine is also economically significant.



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A variety of actors is involved in the manufacture of opium-based products, ranging from government departments, which oversee licensed opium production schemes, to subsidiary companies of a small number of larger companies, among which are Europe’s Sanofi-Aventis, Bayer and Glaxo Smith Kline. They have numerous subsidiaries and partners and most of them operate in a number of different countries. In many cases, it is these subsidiaries which actually manufacture and market the opium-based medicines. In 2003, the global exports of licit opiates consisted of almost 500 tonnes opium (The Senlis Council, 2004). Currently, the global market for opiates shows upward trends, mostly due to an increased demand in Asia.

Cinchona alkaloid is another important alkaloid, widely used in the pharmaceutical and chemical industry. The most popular compound Quinine is a valuable anti-malarial agent and muscle relaxant. The commercial quinine market today is difficult to calculate. It is estimated that around 300-500 metric tons of quinine alkaloids are extracted annually from 5,000-10,000 metric tons of harvested bark. Nearly half of the harvested raw material is directed to the food industry for the production of quinine water, tonic water, and as an FDA-approved bitter food additive. The remainder is used in the manufacture of pharmaceutical products. Quinine is also used for a variety of ailments in European herbal medicine. Furthermore, natural quinine extracted from Cinchona bark is making a come-back in the treatment of malaria.

1.2 Market segmentation

The market for natural ingredients for pharmaceuticals can be segmented into ingredients required by the pharmaceutical industry, and those by the herbal medicine industry. Making an assessment of the size of each of these segments is not possible, but the earlier described market information has given us an idea of the end-market sizes.

Ingredients required by the pharmaceutical industry Around 80% of the conventional drugs on the market is plant-based, for which pharmaceutical companies are constantly looking for sources. Some well-known examples are morphine from opium poppy, atropine from belladonna, quinine from cinchona bark and benzyl penicillin.

Traditionally, pharmaceutical companies are large, vertically integrated corporations, which conduct the full range of activities, from creating libraries of compounds to marketing the drugs which emerge from their pipelines. However, since the 1980s the number of small pharmaceutical biotech companies has grown.

Ingredients required by the herbal medicine industryThe WHO “Global Atlas of Traditional, Complementary and Alternative Medicine” gives information on the status of this diverse and expanding field of medicine around the world.Several movements can be distinguished within the traditional herbal medicine industry, of which important on the European market are:

Traditional Chinese Medicine (TCM): is a range of traditional medical practices used in China which have developed over the course of several thousand years.

Ayurveda or ayurvedic medicine: is a 2,000-year-old comprehensive system of medicine, based on a holistic approach rooted in the ancient Indian Vedic culture.

Unani medicines: is a comprehensive system encompassing virtually all of the known healing systems of the world.

Western Traditional Herbal Medicine: the term 'Western' THM encompasses a number of similar, but unique and separate systems of herbal medicine. Western Herbal Medicine is also known as Phytotherapy, Phytomedicine and Botanical/Plant Medicine.

Homeopathy: is one type of alternative medicine, being particularly popular in Europe and India. Homeopathy rests on the premise of treating sick persons with therapeutic agents (drugs, remedies), which are deemed to produce in a healthy person, symptoms similar to those of the illness.



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Herbal medicines represent a range of product types. These include products sold as raw herb (dried or fresh), and others which are processed to varying degrees, including tinctures (an infusion of herbs in alcohol) and extracts (greater concentration of the active material of the plant with the aid of a solvent). Herbal medicines are part of larger markets, referred to in the USA, for example, as the ‘dietary supplement’ market. Dietary supplements encompass vitamins, minerals, herbs/botanicals, and other natural medicines.

1.3 Trends

Trends in (natural) pharmaceutical consumption and productionResearch shows that better health is what Europeans feel would most improve the quality of their lives. The search for a healthier life style increases the focus on healthcare issues and expenditure in new niche markets. In addition, rising healthcare demand is driven by a combination of socio-economic factors (e.g. population growth and ageing), rising health care expectations (people want to live healthier and longer lives), and technological progress (more diseases are being diagnosed and more diseases are being effectively treated).

Another more general trend concerns the production and innovation of pharmaceuticals in the European Union. Historically, European companies used to develop and produce the majority of new pharmaceuticals in the world. Recently, however, the pharmaceutical sector's centre of gravity has been steadily shifting from Europe to the USA. Whereas in Europe innovation is sometimes perceived as a threat to healthcare systems, US patients are better informed and more willing to embrace innovations (EFPIA, European Federation of Pharmaceutical Industries and Associations, 2007).

In contrast to the trend-sensitive cosmetic and food sectors, the pharmaceutical sector does not show the same pace of trends. As a matter of fact, the statement ‘natural’ is of less use for regular medicine than for food and cosmetic products. Since medicines are consumed as a result of, to some extent, urgent need, they are less sensitive to trends. Moreover, the herbal medicine market is a relative small market on its own, not much supported by the regular pharmaceutical industry as happens in the cosmetic industry. There, and in the food industry, the term ‘natural’ is used as a means of marketing, while in the pharmaceutical industry this is of less importance. Besides, publications showing negative outcomes of the use of natural medicines strongly influence the natural pharmaceutical market. Examples include the ban of Kava Kava on the EU market. This root, with relaxing and anti-depressive properties, was banned in the EU after reports linked it to some cases of liver damage. Moreover, the European pharmaceutical industry is in the hands of a few large players who, for a large part,define developments in the market.

Nevertheless, the general trend towards a preference for natural products is also influencing the herbal medicine market, enforced by the blurring of borders between pharmaceuticals and cosmetics (cosmeceuticals) and food (functional and health food).

The herbal medicine market is a relatively small market, but its significance is expected to rise globally. This upward trend is a result of the increasing popularity of natural-based, environmentally friendly products. The demand for herbal remedies, and especially their renaissance in the developed countries, is driven by the following factors (FAO, 2004): Increasing costs of institutional, pharmaceutical-based health care; Interest of consumers and national governments in greater self-reliance in health care; Interest of communities and national governments in small and large-scale industrial

development, based on local/national biodiversity resources; Increasing success in validating the safety and efficacy of herbal remedies; Legislation improving the status of the herbal medicine industry; Renewed interest of companies in isolating useful compounds from plants; Search for new drugs and treatments of serious and drug-resistant diseases; Marketing strategies by the companies dealing in herbal medicine.



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Other trends which have an impact on demand for botanical medicines and, consequently, the demand for natural pharmaceutical ingredients are the following: The entry of large pharmaceutical OTC companies has placed botanical medicines more

strongly on the mass market, thanks to increased advertising budgets. In December 2003, the EU parliament adopted new legislation that makes it easier for

traditional medicine producers to demonstrate efficacy in the European countries. Regarding limited therapeutic indications and in the absence of adequate clinical data, companies have to demonstrate safe use of a ‘traditional medicinal herbal product’ for 15 years within Europe and for 30 years in its community of origin. This enables the entry of new products into the EU market and has a positive effect on the demand for ingredients.

Consumers seek an alternative or complement to pharmaceutical drugs and modern healthcare, related to the “green” consumption movement. The entrance to the market of 'alternative' medicine from other cultures, such as Chinese herbal remedies and Ayurvedic medicines, has strengthened the positioning of herbal medicine.

Herbal remedies are sought by ageing populations afflicted by chronic diseases, for which modern medicine has few satisfactory treatments, or entails severe side effects.

Increasingly, consumers are turning to the Internet for self-diagnosis and to find healthcare solutions. There is, however, still a lack of knowledge about complementary treatments and many consumers indicate that they do not know enough about complementary medicines.

Research into rain forest biodiversity and other natural environments, by initiatives such as the Biotrade-programme of UNCTAD (United Nations Conference on Trade and Development), and publications such as “Amazon Your Business” help the development of natural medicines. The conventional pharmaceutical industry takes a more sceptical stance, seeing fewer truly significant contributions coming from these natural products.

Increased emphasis on safety, efficacy and quality has resulted in more research and development, a shift towards standardised products, and requirements for high-quality raw materials. This expanded research and development has improved the legitimacy of natural medicines. However, at a global level, government re-imbursement of natural medicines is decreasing.

Furthermore, an interesting upcoming trend in the market for natural pharmaceuticals is the growing demand for natural medicines for veterinary use. This trend is related to the growing demand for organic products and supports organic farming.

Trends in natural ingredientsTrends in the markets for pharmaceutical ingredients are dominated by the shift and increase of extract production in wealthy countries outside the traditional extract producer markets (e.g. Europe, North America and Japan). Regarding the demand for natural ingredients, this would signify an even more increasing demand for further processed ingredients from countries such as China, India and Brazil, but also Mexico, South Africa and Malaysia. Also, in the EU market this increase in the demand for natural ingredients is perceived, as East and Central European companies are increasingly taking over processing of raw materials into ingredients or even final products.

Most herbal medicines have a long history of traditional use, which confirms safety and efficacy, and their documentation is used in many regulatory systems to guide the approval of commercial products. This is, for instance, the case in the EU Directive Traditional Herbal Medicinal Products Directive (2004/24/EC). Moreover, driven by the increasing demand for active ingredients, more and more scientific research is being carried out on active ingredients of plant materials.

A future driver of growth in the demand for natural ingredients could be the increasing attention paid to products aimed at stimulating cognitive functions. Products launched in this sector have increased dramatically in the last five years. Products often featured were gingko biloba, ginseng (linked to improved memory), soy lecithin (linked to slowing down the progression of Parkinson’s) and St. Johns wort (combating depression) (Nutraingredients Europe, 2006).



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Currently, a lot of research is conducted in the field of plant-based anti-cancer medicine and it is estimated that cancer drugs will become the largest category of herbal medicine, surpassing those for respiratory diseases. Green tea (extract) is mentioned several times as a popular ingredient but also coffee, pectin and other fruit and vegetable extracts, such as broccoli. Moreover, there are also examples of anti-cancer natural products derived from vinca alkaloids, extracted from Catharanthus roseus (Madagascar Periwinkle).

The following natural ingredients for pharmaceuticals have been spotted as being increasingly popular and used in product innovations:

Blackcurrant and other anthocyanin compounds causing the red and blue colour of berries and other fruits, containing high anti-oxidant levels and used for supplements;

Echinacea, to prevent common colds and flues; Green tea extract, used for a broad range of medicines; Southern African plants, such as Namibian Devil's Claw, treating arthritis, look set to

come in vogue. In general, the demand for products that treat or mitigate stress, fatigue and a feeling of life running too fast - remains strong;

Artemisia annua has been mentioned by the industry for anti-malaria treatment. The alkaloid quinine has also been mentioned by the industry as a popular natural

ingredient for pharmaceuticals; There is also a growing demand for natural vitamins, as a result of growing concern

about the use of chemically composed vitamins.

In general, EU companies are reporting a shortage of raw plant material, specifically for non-cultivated plant species. Several reasons explain this shortage (Klaus Duerbeck and ProFound, 2007):

There is an increasing demand from the herbal and pharmaceutical industry in the producing countries themselves, due to increasing popularity and purchasing power of the consumers (especially in China and India);

On the other hand, the sector for natural ingredients for the pharmaceutical is facing competition from the growing attention to bio-fuels, making production of oil crops more interesting for farmers;

During recent years, the downward price spiral for raw materials made it increasingly unattractive for raw plant material producers and ingredient suppliers to market their products to European counterparts;

The trend to go for sustainable production and certification has promoted value addition activities in the countries of origin;

Collectors are moving out of the collection business, due to alternative income opportunities;

Destruction of the natural habitat is affecting an increasing number of species.

Clinical trialsClinical trials which are being conducted are a good indication of emerging product developments and species interesting for the medicinal industry. Globally, 748 clinical trials were conducted in 2007 on 96 plant species or their combination formulas. Hypericum perforatum (St John’s wort) topped the list with 177 clinical trials.

Furthermore, the number of patents is often a good indication of innovation concerning a product, including active ingredients and applicants. The table below presents the clinical trials until 2006, compared to the trials until 2007, as well as the number of patents in that same year.



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Table 1.5 Clinical trials of medicinal and aromatic plants in 2006 and 2007

Clinical trialsCultivation /

Wild-collection 2006 2007Patents

2007Hypericum perforatum (St John’s wort) C 52 177 24Ginkgo biloba (Ginkgo) C 28 166 6Allium sativum (Garlic) C 42 101 18Glycyrrhiza glabra (Liquorice) C / W 67 81 29Serenoa repens/serrulata (Saw palmetto) C 18 66 23Panax ginseng/quinquefolium (Korean/American Ginseng) C 26 59 53Echinacea sp. (Cone flower) C 11 47 20Valeriana officinalis (Valerian) C 11 42 17Piper methysticum (Kava) C 33 39 12Zingiber officinale (Ginger) C 18 38 31Silybum marianum (Milk thistle) C 23 37 7Ephedra sinica (Ephedra) W 24 35 4Plantago psyllium/ovata (Psyllium) C 22 30 26Aesculus hippocastanum (Horse chestnut) W 18 27 6Vaccinium macrocarpum (Cranberry) C 11 26 0Sanguinaria canadensis (Bloodroot) W 18 23 8Musa sp. (Banana) C 10 18 0Trichosanthes sp. (Tian Hua Fen) W 12 15 0Lavandula sp. (Lavender) C / W 14 14 7Borago officinalis (Borage) C 10 10 4Thymus vulgaris (common thyme) C / W 5 7 0Sambucus nigra (common elder) C / W 7 7 0Cynara scolymus aka Cynara cardunculus L (artichoke) C 6 6 2Humulus lupulus (hops) C 3 5 5Foeniculum vulgare (fennel) C 5 5 0Salvia officinalis (sage) C 5 5 0Ribes nigrum (blackcurrant) C / W 4 4 3Rosmarinus officinalis (rosemary) C / W 3 3 3Melissa officinalis (lemon balm) C 2 2 0Origanum vulgare (oregano) C / W 1 1 4Plantago major/lanceolata (plantain) C / W 0 0 7Angelica archangelica (angelica) C 0 0 0Source: HerbMed, 2007

It should be noted that it is rather difficult to give an overview of the ingredients which are currently in demand, due to the closed nature of the market. The above table mentions several ingredients which could be of interest, or properties which are sought by EU companies. However, these developments are difficult to quantify, and it is not known how significant demand is/will be. For a graphic representation of this, please refer to Figure 1.1, which shows the relationship between the volumes demanded on the EU market, the degree to which the trend is established on the EU market for pharmaceutical ingredients, and the stringency regarding the documentation needed.



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Figure 1.1 Representation of the natural trend in the market for pharmaceutical ingredients

Source: Adapted from Andrew Jones and Klaus Duerbeck, 2007

Corporate Social Responsibility (CSR)There is an increasing interest in social and environmental aspects when doing business in the EU market, especially when the final product is natural and/or organic. It should be noted that, for a product to be certified, detailed documentation over the organic and/or Fair Trade chain is needed for traceability purposes. Despite the fact that there is still CSR certification, social responsibility increasingly finds a way to the market. Various schemes focus on different areas along the supply chain for production, processing, trade, manufacturing and marketing:

Product quality certification - such as the legislative GMP (Good Manufacturing Practices), also GACP (Good Agricultural and Collection Practices). For more information please check http://www.who.int

Organic certification - organically certified raw materials and value-added products are increasingly being requested by European companies on the phyto-pharmaceutical market. This is, for example, used for the development of new products. The organic certification also serves as a guarantee for quality. For more information, please check the International Federation of Organic Agriculture Movements (IFOAM) - http://www.ifoam.org

Natural ingredients collected in the wild2 - are also increasingly organically certified. Currently, the following schemes have been developed: Organic Wild Collection (ISSC-MAP) - http://www.floraweb.de/map-pro; and FairWild - http://www.fairwild.org

Forest management certification – which supports the conservation of forests. For more information, visit the website from the Forest Stewardship Council (FSC) -http://www.fsc.org

Social certification - of which the most prominent is Fair Trade - http://www.fairtrade.net –although it is less interesting for pharmaceutical ingredients.

For CSR specifically, an interesting certification body is the Global Reporting Initiative (GRI) -http://www.globalreporting.org - which has developed a sustainability reporting framework. This framework sets out the principles and indicators that organizations can use to measure and report their economic, environmental and social performance.

1.4 Opportunities and threats

+ As became clear from this section, the pharmaceutical, especially the non-prescription market, as well as the natural pharmaceutical market, showed a growing demand during the review period. As a result, the European production of (natural) pharmaceuticals also

2 Appendix E provides an overview of advantages and disadvantages of wild collection as opposed to cultivation.

degree of establishment of trend

raw material from cultivation / wild-collection

CSR

certification

documented use in traditional medicine

natural ingredients

Ascending documentation

needed

Ascending volumes

http://www.who.int/

http://www.ifoam.org/

http://www.floraweb.de/map-pro/

http://www.fairwild.org/

http://www.fsc.org/

http://www.fairtrade.net/

http://www.globalreporting.org/



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showed some growth. Both consumption and production growth indicated opportunities for suppliers of natural ingredients for pharmaceuticals. Within the EU, the East and Central European pharmaceutical markets showed the highest market growth.

- On the other hand, East and Central European countries are also developing their (natural) pharmaceutical ingredient sectors in order to further process the raw materials, thereby posing a threat to suppliers in developing countries who want to enter the EU market.

- Moreover, Europe seems to offer fewer opportunities for innovation and a shift of pharmaceutical research and development is observed from the EU to the USA. This could pose a threat to developing country suppliers to EU pharmaceutical companies.

+ Natural ingredients not available within the EU, such as active ingredients from tropical fruits and vegetables, offer good opportunities for developing country suppliers. Moreover, since the process of domestication of wild-collected raw plant material is expensive, there is a solid demand for certain wild-collected plant species. Next to certain ingredients and wild-collected ingredients, there are increasing opportunities for processed and value-added plant material. In the past, this appeared to be more challenging for developing country suppliers; however suppliers from larger developing countries (i.e. China and India) have entered the market for processed ingredients.

+/- However, it should be stressed, that in almost all cases, the EU buyer will ask for well-documented ingredients, at least meeting GMP standards. Traceability and transparency in the supply chain is increasingly important in the global trade of natural ingredients, posing a threat to some suppliers.

+ In that sense, different kinds of certification standards, such as organic certification, could signify an opportunity. Regarding pharmaceuticals, certification is not so much used for actual marketing of the end-product, but as a proof of traceability. This could add value to the quality of the ingredient offered. Organic production is particularly attractive for growers in developing countries, since much of their production is already organic, although not certified (‘organic by default’).

+ The indicated clinical trials can also offer an opportunity, as they indicate new products and new applications for the medicinal industry. Plants which could be an opportunity are for example St Johns wort and Ginkgo which have undergone a large amount of clinical trials and, moreover, the trials have increased strongly since 2006. An increasing number of trials is an indication of possible growth in future demand for a product.

1.5 Useful sources

(Natural) pharmaceutical associations and other sector-related organisations offering market information are: The European Federation of Pharmaceutical Industries and Associations (EFPIA) -

http://www.efpia.org - provides information, national codes of practice and links to national associations.

The European Self-Medication Industry (AESGP) - http://www.aesgp.be - provides facts and figures on the European pharmaceutical, self-medication, and non-prescription market.

European Medicines Agency (EMEA) - http://www.emea.europa.eu European Herbal & Traditional Medicine Practitioners Association (EHTPA) -

http://www.ehpa.eu European Health Product Manufacturers (EHPM) - http://www.ehpm.org Interactive European Network for Industrial Crops and their Applications (IENICA) -

http://www.ienica.net - provides reports on commercial-industrial crops in the EU. The European Scientific Cooperative on Phytotherapy (ESCOP) - http://www.escop.com

Furthermore, Herb World - http://www.herbnet.com/associations_p1.htm - provides links to national associations of herbs and health product manufacturers in the European Union.

Also of interest are further market research organisations, especially those focusing on the pharmaceutical industries, which provide reports on a large number of industries. Examples are:

http://www.efpia.org/

http://www.aesgp.be/

http://www.emea.europa.eu/

http://www.ehpa.eu/

http://www.ehpm.org/

http://www.ienica.net/

http://www.escop.com/

http://www.herbnet.com/associations_p1.htm



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IMS Retail Drug Monitor - http://www.imshealth.com - published every month under ‘Press Room’ and ‘Top-line Industry Data’; it tracks monthly sales of medicinal products by retail pharmacy outlets in 13 key markets worldwide.

Piribo - http://www.piribo.com – is a reliable source of information for the global biotechnology, healthcare and pharmaceutical industries.

Espicom - http://www.espicom.com – is an interesting and reliable source of information for the pharmaceutical and medical devices market.

Useful trade press links providing market information are the following: Nutraingredients - http://www.nutraingredients.com/news - an interesting site with new

developments on consumption, companies and production. Nutraceuticals International - http://www.marketletter.com/nutra.htm - gives information

and tendencies for the nutraceuticals market CABI - http://www.cabi.org - is a non-profit organization specialized in scientific publishing,

research and communication. American Botanical Council - http://abc.herbalgram.org Nutrition Business Journal - http://nutritionbusinessjournal.com Pharma Marketing Service - http://www.fachzeitung.com Zeitschrift für Arznei- und Gewürzpflanzen - http://www.zag-info.de Agro Food Industry Hi-tech - http://www.teknoscienze.com Fitoterapia Journal - http://www.indena.com/pages/fitoterapia.php

Furthermore, Herb World - http://www.herbnet.com/press_p5.htm - is an interesting source of magazines in the field of medicinal herbs.

Three other interesting sources for market information are: Herbmed - http://www.herbmed.org - an interactive, electronic herbal database which

provides access to the scientific data underlying the use of herbs for health. Amazon Your Business - http://www.amazonyourbusiness.nl - an interesting new

publication on business opportunities for products from the Amazon, including medicines. PhytoLab - http://www.phytolab.com - an officially recognized laboratory for the testing of

plant-based products in Germany.

http://www.imshealth.com/

http://www.piribo.com/

http://www.espicom.com/

http://www.nutraingredients.com/news

http://www.marketletter.com/nutra.htm

http://www.cabi.org/

http://abc.herbalgram.org/

http://nutritionbusinessjournal.com/

http://www.fachzeitung.com/

http://www.zag-info.de/

http://www.teknoscienze.com/

http://www.indena.com/pages/fitoterapia.php

http://www.herbnet.com/press_p5.htm

http://www.herbmed.org/

http://www.amazonyourbusiness.nl/

http://www.phytolab.com/



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2 Production

2.1 Size of production

Medicinal and aromatic plants (MAP) IntroductionWorldwide, between 50,000 and 70,000 plant species are used in traditional and modern medicinal systems (Federal Agency for Nature Conservation, 2007). Medicinal and aromatic plant (MAP) material is obtained both from plants growing in the wild and from cultivation. Worldwide, about 80% of the species used is harvested in the wild. Unfortunately, around4,000 species are endangered by over-collection (WWF, 2007).

Traditionally, production of most herbs and spices has been concentrated in the temperate and semi-tropical regions of the world. This follows from the low wage rates of the labour intensive production and climatic considerations. The processing of medicinal herbs and spices remains concentrated in Europe, particularly in Germany and France, and in Asia (especially China and Korea). Other significant processing areas include Yugoslavia, Bulgaria and Hungary.

According to the wildlife trade monitoring network Traffic, the largest quantities wild-collected in the following countries are the MAP species: sage in Albania and Bosnia-Herzegovina; juniper in Bosnia-Herzegovina; dog-rose in Bulgaria; nettle in Croatia; field shave-grass (Equisetum arvense) in Croatia; and bilberry and raspberry in Romania. Furthermore, species like Yellow Gentian (Gentiana lutea) and Mountain Tea (Sideritis raeseri) have become endangered in the Balkans (Traffic, 2005).

The trade in former East European countries has changed in recent years from strictly organised, state-controlled systems, to free and diversified markets with an increasing number of competing private companies. This has also had negative effects on the sustainability and conservation of MAPs, because previous quotas and controls are now largely ignored (IENICA, 2005). Furthermore, in some East European countries, the production of medicinal herbs is stimulated through, for example, EU subsidies in Bulgaria (SAPARD - Special accession programme for agriculture and rural development, 2007) and a rural development programme in Hungary (MARD - Ministry of Agriculture and Rural Development, 2007).

Wild collection in the EUWild collection plays a vital role in the use of, and trade in, MAPs in Europe, since cultivation has not proved to be manageable and profitable for the majority of the plants traded. At least 2,000 medicinal and aromatic plants in Europe are used on a commercial basis, of which two-thirds (1,200-1,300 species) are native to Europe (Planta Europa – a network of independent organisations, 2007). Of the 2,000 species, about 130 plant species are cultivated in the EU and less than 500 plant species are cultivated worldwide (Duerbeck, 2005).

Nowadays, Eastern Europe is the most important region in Europe where medicinal plants are wild-collected (Kathe, 2006). Bulgaria and Albania are important producers of medicinal plants in this region; and suppliers in Romania are specialized in the wild-collection of Arnica, which is widely used in Europe and the United States.

The deregulation of state-controlled commerce of MAPs in new EU countries has resulted in an increase in wild-collection, which is becoming a problem for the environment. In Estonia, most herbs for health products are collected in the wild; in Hungary, approximately 25% of total production (120 plant species) is collected, with an output of 10,000-15,000 tonnes of dried plant material each year; in Romania around 155 varieties of medicinal and aromatic plants are collected in the wild (750-850 tonnes/year) (IENICA, 2005).



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Furthermore, according to the International Trade Centre (ITC), 26,000 hectares of wild-collection areas were organically certified in Europe in 2006, with a production of 32,600 tonnes. Worldwide, 9% of the production quantity was constituted by medicinal and aromatic plants, while this group covered 36% of the product area. When these numbers were applied to Europe, it meant that around 9,360 hectares of MAPs in Europe were certified, yielding a production of 2,930 tonnes (ITC, 20063).

Cultivation in the EUIn 2003, 2005 and 2006, the European Herb Growers Association (EHGA Europam) collected data on the production of 150 cultivated herbs in the EU. EHGA – Europam represents a total number of at least 21,000 growers/collectors, covering a total area of at least 100,000 hectares of which at least 4,700 hectares are organically cultivated. Table 2.1 shows the distribution of this area across Europe. As data from two different years is used, no total has been included. When looking at the countries for which data were available in both periods (2003 and 2005/2006), the area under cultivation seemed to have increased slightly. When only plants for pharmaceutical use (106 species) are included, the total area is more than 83 thousand hectares, with almost 13 thousand growers and 3,668 organic hectares. Please note that the percentage of this production used for pharmaceutical uses is unknown, as the majority of these plants is also used in either or both the food and cosmetic industry. Not all countries and producers are included and national data are incomplete, so the actual area is likely to be considerably higher. Moreover, wild collection areas are not included (except for Bulgaria).

Table 2.1 Total herbal crops cultivated in selected European countries, in hectares, 2003/2005/2006

Country Total area Organicarea

Growers Country Total area Organicarea

Growers

Austria 24,300 1,094 8,515 Ireland* 7 0 n.a.Belgium* 249 30 4 Italy 1,713 783 6,212Bulgaria** 1,101 5 n.a. Netherlands 2,884 116 1,130Denmark 9 24 101 Portugal* 38 0 5Finland 10,570 0 n.a. Romania* 9,968 0 n.a.France 35,500 0 n.a. Slovakia 623 70 68Germany 10,350 925 n.a. Spain* 716 0 0Greece 3,300 1,720 3,989 Sweden* 26 26 19Hungary 1,325 0 n.a. United Kingdom 9,600 4 175Source: EHGA Europam (2006/2003)* As no new data are available for 2005 and 2006, data from 2003 were used.** In Bulgaria, 6,200 tonnes of herbs are wild collected.

The top 10 pharmaceutical crops (out of 106) cover 86% of the total area for pharmaceutical use. These and the other major species are shown in Table 2.2. Leading species are: lavender (Lavandula spp.), squash (Cucurbita pepo), caraway (Carum carvi) and poppy (Papaver somniferum). France, Germany and Finland are among the largest producers in the EU. There is traditional cultivation in Germany, where leading producers of herbal medicines have their own plantations for popular products. Finzelberg, for example, cultivates St. John’s Wort and Echinacea in Germany. The area under cultivation, however, is not increasing since cultivation in East European countries is still much cheaper. In France, the large share in total production is due to the extensive production of lavender.

3 See ITC’s “Overview of World Production and Marketing of Organic Wild Products”



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Table 2.2 Top herbal crops with pharmaceutical use cultivated in Europe, in hectares, 2003/2005

Scientific name

Common name

Totalarea

Growers Organicarea

Scientific name

Common name

Totalarea

Growers Organicarea

Total pharm.l used herbs

-- 83,112 12,781 3,668 Chamaemelum nobile

Chamomile 241 5 1

Lavendula spp, Lavender 21,410 86 108 Melissa officinalis

Lemon balm 234 134 74

Cucurbita pepo Squash 15,100 5,000 300 Hippophae rhamnoides

Sea Buckthorn

206 50 20

Carum carvi Caraway 13,536 623 66 Fraxinus ornus Ash 200 110 0Papaver somniferum

Poppy 11,300 850 50 Hypericum perforatum

St Johns Wort

197 68 27

Borago officinalis

Borage 2,719 31 2 Oenothera biennis

Evening primrose

192 5 7

Silybum marianum

St Marys thistle

2,527 343 7 Nasturtium officinale

Watercress 179 1 0

Humulus lupulus

Hops (10% med./ 90% arom.)

2,133 275 13 Sambucus nigra

Common elder

172 42 31

Chamomilla recutita

German chamomile

1,809 110 258 Digitalis lanata Woolly foxglove

165 27 0

Salvia sclarea Clary sage 1,045 20 7 Rosmarinus officinalis

Rosemary 158 99 17

Mentha piperita Peppermint 967 153 40 Echinacea spp Echinacea 156 73 62Ocimum basilicum

Basil 834 1,505 20 Plantago lanceolata

Plantain 131 40 20

Foeniculum vulgare

Fennel 651 138 198 Fagopyrum esculentum

Buckwheat 131 75 35

Crocus sativus Saffron crocus

645 1,120 1,724 Helianthus tuberosus

Jerusalem artichoke

116 20 10

Thymus vulgaris

Common thyme

624 134 44 Melilotus officinalis

Yellow melilot

106 12 13

Origanum vulgare hirtum

Greek oregano

579 251 0 Cynara scolymus

Globe artichoke

92 6 5

Origanum marjorana

Marjoram 558 25 20 Anisum vulgare

Aniseed 83 15 69

Cannabis sativa Hemp 450 203 49 Plantago scabra

Plantain 82 0 0

Ribes nigrum Blackcurrant 446 12 9 Origanum vulgare

Wild oregano

81 60 14

Gingko biloba Maidenhair tree

430 0 0 Papaver somniferum

Opium poppy

76 11 0

Aromacia rusticana

Horseradish 380 180 7 Angelica archangelica

Angelica 75 4 0

Salvia officinalis Sage 289 156 58 Glycyrrhizaglabra

Liquorice 75 9 71

Valeriana officinalis

Valerian 281 51 16 Gentiana lutea Great yellow gentian

72 11 2

Mentha spp Mint 271 32 20 Plantago psillium

Ispagula 59 9 22

Allium sativum Garlic 263 295 5 Salix spp Willow 58 16 1

Source: EHGA Europam (2005)Please note that this table only includes data from 2005 (in which information was not provided for several of the countries included in Table 2.1 in which information from 2003 has been included). Therefore these tables cannot be compared.

Vegetable saps and extractsThe processing of medicinal herbs is concentrated in countries with strong herbal and traditional medicine. Significant production areas in Europe include France, Balkan countries, Germany, Poland and Hungary. Germany has a very large medicinal and aromatic plant extraction industry and the largest percentage of medicinal herbs is brokered through that country. The United Kingdom is one of the major centres of research and development in the field of tropical commodities and extracts, while China and Korea are the two major producers in the Asian region.



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Vegetable alkaloidsAccording to our sources, there is no production of cinchona or rye ergot in Europe. There are, however, companies such as Buchler GmbH - http://www.quinine-buchler.com - which process and trade these products. Germany, France and the United Kingdom, are important alkaloids extraction countries. Trading houses in Germany include Buchler GmbH and Henry Lamotte -http://www.lamotte.de; in the United Kingdom they include StanChem International -http://www.stanchem.co.uk. Alkaloids of opium are mostly produced in the UK and Germany. Production of opium is strictly regulated.

2.2 Trends

As mentioned before, trends in the market of pharmaceutical ingredients are dominated by the shift and increase of extract production in resource-rich countries outside the traditional extract producer markets. Recent trade shows an important shift of the extract manufacturers to the increasing dominance of manufacturers in China, India and Brazil, but also countries such as Mexico, South Africa and Malaysia are emerging as well-functioning sourcing networks. The availability of natural resources and raw material is an advantage in this. These new producing countries are not only producing for the Western markets, but also for the increasingly important local and regional markets, where consumers have found new interest in local therapies.

The same trend can be observed within the EU: East European countries are increasingly taking a more dominant position in the processing and manufacturing of (natural) pharmaceuticals. The fact that they are also the largest producers of raw plant material in the EU is adding value to this position. Established Western companies, however, retain a dominant position regarding the trading of (natural) ingredients and the marketing of end-products.

Cultivation and wild-harvestingSince the demand for cultivated plant material started competing with the demand for wild-harvested ingredients, various trends were triggered. No clear statement can be made as to which of the two is preferred on the EU market. In general, in all countries, the industry remains dependent on wild-collected plant material, particularly since wild-collected plant material can be procured from certified (organic) wild collection (Duerbeck, 2005). Other reasons for this are the high costs of domestication and cultivation (Bundesamt für Naturschutz - BfN, 2007). Moreover, cultivation is not necessarily the most beneficial production system for MAP species. Furthermore, wild-collection provides the main income forrural households, especially in lower income countries (BfN, 2007).

There is, however, a group of companies, focusing especially on the mass-market, which prefer cultivated material. Cultivated materials of important species provide: a reliable supply and volume, at an agreed price, guaranteed over time; quality control can be better assured (e.g. species authentication, unadulterated material,

known input of pesticides, fertilizers, good post-harvest handling); the active compound content can be standardized; and material can be certified organic or biodynamic.

For example, Weleda AG - http://www.weleda.com - in Germany cultivates around 250 species on its property, and seeks to bring more into cultivation. This production is conducted within the company, using its own investments. Outsourcing is less common and it is a slow development, with very limited numbers of species taken into cultivation each year. Moreover, production of more specialist plants is increasing, using organic or bio-dynamic cultivation techniques.

Smaller herbalist-based companies in Europe, which consume limited quantities of raw material (often wild-harvested species), also find it difficult to maintain direct sourcing

http://www.quinine-buchler.com/

http://www.lamotte.de/

http://www.stanchem.co.uk/

http://www.weleda.com/



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relationships for species outside their geographic area, given the costs involved in building these relationships and tracking the materials. Therefore, they prefer to source their raw material from the same region where they process pharmaceuticals.

Wild collection standardsOver-harvesting of medicinal and aromatic plants, land conversion and habitat loss threaten around 4,000 species worldwide. For these reasons, approaches to wild MAP collection, which balance the needs of local, regional, and international markets with the need for conservation and sustainable use, are urgently needed. It is essential, regarding any wild-collected source, to work towards developing sustainable sources.

In recent years, a number of initiatives has been launched to achieve a better framework for the sustainable use of biological diversity. These have been discussed in the previous section.

Other trendsOther trends in the production of medicinal plants are (Foster, 2006): increased attention to Good Agricultural and Collection Practices (GACP); increased attention to traceability; supplier and manufacturer accountability; and increasing opportunity for socially responsible direct farmer/supplier relationships (i.e.

consumers in rich countries want to “feel good” about the products they use).

Furthermore, EU companies are increasingly producing both conventional and organic product lines, and are offering ingredients destined for the cosmetic, food, OTC healthcare and pharmaceutical sectors. They are diversifying their product range to enter different sectors in the EU, although, of course, some companies still only offer ingredients to a specific sector. This shows the need for developing country suppliers to carry out more market research, to target the right company, or right division in a company, and to pay close attention to the sectors in which they are interested, before contacting companies in the EU.


+ Due to climatic conditions, many raw materials for natural ingredients for pharmaceuticals, especially non-temperate, cannot be grown in the EU, and have to be imported from elsewhere. Moreover, many raw materials require considerable labour input and can therefore be grown/collected more cheaply in developing countries. Taking only the competition from EU production into account, developing country exporters may find the best opportunities in the supply of exotic ingredients, or their (semi-processed) raw materials, for which the production conditions are not favourable in the EU. In contrast, exporters of temperate products or further processed products are threatened by EU producers. Moreover, production of further processed natural ingredients, such as saps and extracts, can lie outside of the scope of many developing country producers, but should nevertheless be explored. Increasingly, countries such as India and China are able to supply processed ingredients.

+/- Traceability of ingredients is increasingly required by companies and ingredient processors in the EU. Suppliers in developing countries, who have a system of tracing and tracking supported by documentation, have a competitive advantage in dealing with EU importers.

+ Increasing traceability also means that the downstream manufacturer (or retailer) might take an increasing direct interest in the origin of the raw materials. This provides the opportunity to target the downstream manufacturers (and retailers) with new ingredients. However, care is needed to ensure that what is presented meets the legal and market requirements for pharmaceutical ingredients. If the product supplied is still not ready for the market, then an alternative strategy is required, such as working with importers and distributors, who may be in a position to invest in research and development to bring the ingredient to the required standards.

- Over-harvesting of MAPs, poor land conversion and habitat loss pose a threat to developing country producers who do not work in a sustainable and environmentally friendly way.



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- When production shifts from using wild-collected to cultivated ingredients, prices of the final ingredients, such as saps and extracts and alkaloids, is expected to decrease. This is also a development currently taking place in Europe. The low prices in Europe can be seen as a threat to developing country producers.

- A threat to organic production of the products covered in this survey is the increasing problem of pesticide content from cultivated areas and species becoming mixed with certified materials.

2.4 Useful sources

The European Herb Growers Association (EUROPAM) - http://www.europam.net –provides an excel document showing all medicinal plants/herbs produced per country.

Traffic - http://www.traffic.org - offers interesting information on the use, trade and conservation efforts for European herbs and spices.

The World Wildlife Fund (WWF) - http://www.worldwildlife.org/trade/index.cfm - provides extensive information on medicinal plants.

Food and Agricultural Organization of the United Nations (FAO) - http://www.fao.org Active Pharmaceutical Ingredients Committee - http://apic.cefic.org Biotrade Initiative - http://www.biotrade.org

http://www.europam.net/

http://www.traffic.org/

http://www.worldwildlife.org/trade/index.cfm

http://www.fao.org/

http://apic.cefic.org/

http://www.biotrade.org/



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3 Trade channels for market entry

3.1 Trade channels

European-based companies and German ones in particular, dominate the global herbal medicine supply industry. Generally, the plant material is bought from collectors and cultivators by various types of traders, including local dealers, village cooperatives and district traders. It is then passed on to wholesalers, manufacturers or directly to retailers. Most companies follow this commodity model of raw material sourcing, which involves little or no contact with harvesters and producers. Overall, this makes purchasing herbal materials easier and more economic. Traders and brokers still fulfil the following important functions in this model: Purchase of natural ingredients throughout the world or from specific geographic areas; Analysis and quality control; Rectification of the ingredients to adhere to the commercial standards; Blending; Sell to users.

Manufacturing and marketing companies usually buy material from a large number of countries, dozens in many cases. This makes it very difficult to identify sources of materials and, for those at the start of the value chain, difficult to obtain information on value addition throughout the value chain and the actual value of their product.

Considering this, as well as the consequences of, for example, GMP requirements, transparency and traceability of ingredients are increasingly indispensable for European buyers. This results in a trend towards more direct sourcing, and some leading industrial users have their own purchasing department. A large number of manufacturing and marketing companies already has closer relationships with the sources of their raw materials, predominately growers, and some cultivate part of their own inputs. Furthermore, companies primarily work more closely with growers of high-volume or high-value species in order to guarantee quality, price, and supply over time and, in a few cases, as part of efforts to adhere to a company’s philosophy on sourcing.

Several partnerships have been created, based on the sourcing of raw materials. These partnerships often have specific standards, such as contributing to environmental and social objectives, and sharing commercial benefits. Examples are long-term sourcing contracts whichallow local producers to obtain credit, some (but limited) technology transfer, capacity building and market intelligence. A noteworthy example is the work of environmental NGOs which develop programmes to tackle, for example, degraded dry land and its rehabilitation in Sub-Sahara Africa, using commercially valuable medicinal species (Worldbank, 2004).

Major producers may be tempted to sell directly to industrial users, in order to be paid a better price for their natural ingredients. Harvesters and collectors of wild material – generally scattered over large areas and poorly organized – rarely deal directly with manufacturing or marketing companies, or even agents. However, being organised, for example through a co-operative, may help collectors in gaining more access to the market.

Trade structureThe figure below gives a schematic overview of the distribution channels, or the trade structure of the natural ingredients for the pharmaceutical industry discussed in this survey.However, it is important to note that the product groups covered in this survey differ in their level of processing; therefore, covering the whole trade structure poses certain difficulties. The products offered by producers of natural ingredients have a different starting position in the trade structure. Medicinal and aromatic plants are largely unprocessed, whereas the other two product groups have already undergone processing in earlier stages of the supply chain.



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The structure of the industry and trade presented is most relevant for the product group ‘medicinal and aromatic plants’. Processed products falling under the product group ‘vegetable saps and extracts’, used to be directly traded with traders or with manufacturers of finished ingredients, but increasingly are processed in producing countries. The supply chain of ‘alkaloids’ generally consists of only a few links, but it is not a very transparent chain. Please refer to the country surveys for contact details of companies and more detailed distribution information on the country level.

Figure 3.1 Distribution channels for export of natural ingredients for pharmaceuticals to the EU

Cultivation or wild-collection of plantsThe majority of plant material is traded in dried form. Drying methods must bring moisture content down to less than 14%, while retaining the chemical composition of the plant. A minority of plant material is traded fresh, or preserved in alcohol.

Exporters/importers/wholesalers/brokers/tradersThe plant material is purchased either directly from wild-crafters or cultivators, or after it has passed through a number of traders (e.g. local dealers, village co-operatives, district traders). Brokers and agents act on the behalf of purchasing companies. Wholesalers, importers and exporters may specialise in a few raw materials, or in a few thousand, which they sell as commodities to a number of different companies, namely the processing industry.Wholesalers/distributors may also process raw plant material. In addition, some companies apply testing, or use voucher specimens at this stage, to ensure correct species identification and quality.

Bulk ingredient suppliers and processing companiesThe processing industry buys raw ingredients and processes them before selling them to the end-product manufacturers. In the case of saps and extracts and alkaloids from developing countries, second-step processing may take place by processing industries or by

Cultivation & Wild-Collection of MAPs,cleaning, (drying)

Local traders:-Dealers

-Communities-District traders

Processing industry, extraction and testing

Intermediate traders:-Brokers

-Wholesalers-Importers/Exporters

Pharmaceutical manufacturers Herbal medicine manufacturers

Retail & Consumer Sales



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wholesalers/distributors in the EU. Regarding plants, plant material is firstly tested for contamination (e.g. pesticides). Then, it is formed into a bulk ingredient, coarsely cut, rasped, or grounded into powder (for use in crude herbal products and in the preparation of extract). Due to consolidation in the industry, the production of bulk ingredients is often undertaken by wholesalers/traders. Further processing in the form of extraction, particularly standardised extracts, is undertaken by processing companies (and by exporters of alkaloids or saps and extracts), many of which produce branded lines, and sell directly to distributors or retail outlets.

Manufacturers of pharmaceuticals/herbal medicineBulk and processed ingredients are supplied to companies which manufacture (e.g. might add excipients to extracts to make tablets and capsule products, based on in-house formulae), label and package products for retail sales. Some sell lines directly to health professionals, others sell directly to consumers, through multi-level marketing and mail order. Some companies use brokers or distributors to supply their products to retail outlets, while others market directly to specialty outlets.

Pharmaceutical industryPharmaceutical companies are traditionally large (and, through mergers, increasing in size), vertically integrated corporations. They conduct the full range of activities, from creating libraries of compounds to marketing the drugs which emerge from their research pipelines. However, since the 1980s, the number of small pharmaceutical biotech companies has increased rapidly.

There is a growing opportunity for partnerships, since large, traditional drug firms increasingly outsource research and development through alliances, collaborations and joint ventures with smaller drug companies, universities, and research institutions.

The majority of companies does not conduct field collections, but relies instead on existing in-house collections of material, or buying in-compound or culture collections. Most companies outsource, or contract to others, the acquisition of samples for their screening programmes. They obtain samples through brokers, agents, and also through research institutes.

Advances in research techniques have allowed the pharmaceutical industry to conduct large-scale natural product screening programmes, which over the past decade have increased demand for natural product samples, many collected from the biologically-rich tropical countries. Biodiversity prospecting generally involves two or three direct relationships: that between the company and the contracted collector (usually described in a contract

which is legally binding under the law of the country in which the company is situated); that between an outside collector and in-country collaborators (usually more informally

defined, although increasingly detailed in agreements of some kind, and regulated by national legislation);

that between an ethno-botanical collector and local communities which provide traditional knowledge on collected samples, which will subsequently be supplied to commercial companies.

Herbal medicine industryThe traditional herbal medicine industry is diverse, regarding the different herbal medicine movements which offer products on the EU market (e.g. traditional Chinese medicine andAyurvedic medicine), but also regarding the structure and nature of participating companies. The company size and function vary widely. Some companies require standardised, proven effective and safe products, while others place little emphasis on proven product efficacy and sometimes little focus on quality; still others incorporate environmental and social concerns into their business practices. Although the industry does not depend upon large numbers of samples for screening programmes, a trend exists towards uniformity in the global herbal medicine market, as a result of increased emphasis on quality control, safety and efficacy. As a result, relationships between processing and manufacturing companies and the sources of their



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raw material are becoming closer. Increasingly, companies seek high-quality, reliable supplies of cultivated material, although wild-collection continues to play a significant role in the industry.

Retail/consumer salesThe bulk of finished products is sold through retail outlets, either mass market (e.g. chain pharmacies, supermarkets) or speciality companies (e.g. health food stores).

3.2 Price structure

Different prices and margins apply throughout the various trade channels. Moreover, these differ widely across the different product groups discussed in this survey, as well as within these groups, depending on whether or not the product is traceable and well-documented or not, whether it is organic or not, whether it is a new product, the level of processing, if there is a market price and the development therein, its availability and so on. Prices paid for materials increase significantly along the value chain. As the ingredients market is not transparent, it is difficult to determine prices and margins. Prices for alkaloids, and therefore profits, vary from time to time and from alkaloid to alkaloid, but the overall mark-up between production price and retail price is invariably steep.

Figure 3.2 General margins applying for natural ingredients for pharmaceuticals

Source: Adapted from estimations by ProFound and Klaus Duerbeck (2007) and details from RIRDC (2001).

Figure 3.2 presents an overview of an estimation of general margins applicable in the sector for natural ingredients for pharmaceuticals. It becomes clear from this figure that the largest margins can be found at the final stages of the value chain, when an ingredient is manufactured into a final (natural) pharmaceutical product.

In all cases, it is essential that the producer or exporter focuses on his area of expertise and maintains detailed information on costs of production and returns on investment, clearly identifying the value-added proposition and competitive advantage. He should also be aware of what his competitors are doing (benchmarking).

3.3 Useful sources

Exporters should also realise that the Internet is an important medium in the sourcing of raw materials for herbal products. Many importers have their own Internet site, where interested parties can find more information on the field in which these importers are active. A number of users/traders of natural ingredients mentioned that they use the Internet in order to find new suppliers. Interesting links are: HerbWorld - http://www.herbworld.com Ingridnet - http://www.ingridnet.com

Raw material

Ingredient

Final product

Processing into:

Manufacturing into:

1-5% per ingredient, of which:10-35% harvesting costs10-35% weed/disease management10% nutrition

5-15% per ingredient, of which:60-75% for extraction

100%

http://www.herbworld.com/

http://www.ingridnet.com/



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Pharma & Bio Ingredients - http://www.pharmabioingredients.com Greentrade - http://www.greentrade.net Indiamart - http://www.indiamart.com

Organisations working with pharmaceutical companies in bio-prospecting arrangements are referred to the Earthscan publication ‘Biodiversity and Traditional Knowledge’ (by Sarah A. Laird) - http://www.earthscan.co.uk - this practical manual demonstrates how to arrive at equitable and successful arrangements on access to, and commercial development of, genetic resources.

Moreover, a trade fair is a good way to get gain contact with companies from all over the world. Please refer to the Export Guidelines for natural ingredients for pharmaceuticals, for more information on trade fairs. Also the Exhibitor sections of the Internet sites of interesting trade fairs in this sector show names of potential buyers. An example is: Cphl Worldwide - http://www.cphi.com – the pharmaceutical ingredients event.

For more detailed information on a country level, as well as names of interesting players in European countries, exporters should consult the country surveys of the target market for natural ingredients for pharmaceuticals of their interest.

http://www.pharmabioingredients.com/

http://www.greentrade.net/

http://www.indiamart.com/

http://www.earthscan.co.uk/

http://www.cphi.com/



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4 Trade: imports and exports

4.1 Total EU imports

According to Piribo, an online research group for the BioPharma industry, the global pharmaceutical market grew by an annual average rate of 10% between 1999 and 2006, to € 409 billion. However, growth slowed to 6.8% in 2006, mainly as a result of increased competition from generic products and the effects of continued healthcare cost restraints in major markets. Nevertheless, the market for medicinal plants is expected to increase until 2011. This coincides with the increase in EU imports of medicinal and aromatic plants, vegetable saps and extracts and vegetable alkaloids (Piribo, 2007).

It is not useful to give an indication of total imports of natural pharmaceutical ingredients, as it concerns three widely different product groups. Moreover, they each have a very different price/volume ratio, and they are each used in different industries - next to the pharmaceutical industry. Besides ‘medicinal and aromatic plants’, ‘vegetable saps and extracts’ and ‘vegetable alkaloids’, there is a range of natural products used as ingredients by the pharmaceutical industry, including essential oils, vegetable oils, natural gums & resins and natural colours. These ingredients, however, do not have a specific medicinal application and only a small proportion of the total trade in these products is used by the pharmaceutical industry. Therefore, these ingredients are not discussed in this market survey. For more information on these ingredients, please refer to the CBI EU Market Surveys ‘Natural Ingredients for Cosmetics’, ‘The natural colours, flavours and thickeners market in the EU’ and ‘The spices and herbs market in the EU’.

4.2 EU imports per product group

Medicinal and aromatic plantsTable 4.1 shows the imports and the leading suppliers for medicinal and aromatic plants. Mostimports occurred within the European Union, but the share of developing countries is almost the same. In general, imports of medicinal and aromatic plants increased by approximately 4.6% annually between 2003 and 2007. All country groups showed an increase in value. The leading suppliers were Germany, Poland, China and the USA. Imports from Poland increased strongly during the review period, by 17%, whereas imports from the USA and Francedecreased by 1.3% and 1.2%, respectively. China became the third largest supplier, with an annual average increase of 6.5% between 2003 and 2007.

Table 4.1 EU imports and leading suppliers of medicinal and aromatic plants2003 - 2007, € million/thousand tonnes, share in % of value

2003 2005 2007 Leading suppliers to EU in 2007 Share€ mln Vol. € mln Vol. € mln Vol. Share in % (%)

Total EU Of which from:

356 139 372 150 426 148

Intra-EU 160 60 165 62 184 63 Germany (9%), Poland (8%), France (6%), Bulgaria (4%), Belgium (2%)

43%

Extra-EUex. DC*

57 9.3 65 15 66 12 USA (7%), Israel (6%) 16%

DC* 139 69 142 73 175 73 China (7%), India (4%), Morocco (3%), Egypt (3%), Turkey (3%), Kenya (2%), Chile (2%), Albania (2%), Brazil (1%), Tunisia (1%)

41%

*Developing CountriesSource: Eurostat (2008)

http://www.cbi.eu/marketinfo/cbi/?action=showDetails&id=3439





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The most important product in this group was ginseng roots. The total value of imported ginseng roots amounted to € 13 million in 2007, a stable value of imports compared to 2003.Developing countries accounted for approximately 61% of total imports, where China was by far the largest supplier (55% market share). Imports of coca leaves amounted to € 541 thousand / 96 tonnes in 2007, whereas imports of poppy straw amounted to € 505 thousand / 7 thousand tonnes. Imports of ‘other’ medicinal and aromatic plants (including liquorice roots)amounted to € 411 million in 2007, an annual average increase of 5.5% between 2003 and 2007. The leading suppliers were extra-EU4 countries, of which the most important one wasthe USA with a market share of 7%. Furthermore, imports of ‘other’ medicinal and aromatic plants from developing countries increased by 7.5% between 2003 and 2007. China was the leading developing country supplier, accounting for 6% of the market, followed by India (4%).

Vegetable saps and extractsTable 4.2 presents the imports and leading suppliers of vegetable saps and extracts. In general, the imports of saps and extracts showed an annual increase of 10% between 2003and 2007. Most imports came from within the European Union (42% market share in 2007). The leading EU suppliers were Spain and France. However, imports from developing countries showed the largest increase, an annual average rate of 22%. Notable was the annual average increase in imports from Iran (20%) and the annual average decrease in imports from China (-5%) and India (-23%).

The most important product group was ‘vegetable saps and extracts from liquorice’, with an imported value of € 47 million / 12 thousand tonnes, showing an annual increase of 7% between 2003 and 2007. Most imports came from extra-EU countries (39%), and 26% came from developing countries. The leading suppliers were the USA (27%), Iran (18%), and France(15%). Imports from the USA and Iran increased during the review period, by an annual average rate of 5% and 20%, respectively, whereas imports from France decreased by 2%.Imports of ‘vegetable saps and extracts of opium’ totalled € 22 million / 188 tonnes, with an annual increase of 17% between 2003 and 2007. Remarkable was the increase in imports from developing countries, 76% annually, to a market share of 42% in 2007. This increase in market share was mainly an outcome of the increase on imports sourced in Turkey, the leading developing country supplier, which accounted for 41% of total supplies in 2007.

Table 4.2 EU imports and leading suppliers of vegetable saps and extracts2003 - 2007, € million/thousand tonnes, share in % of value



48 11 40 11 69 12

Intra-EU 23 3.7 15 3.2 29 3.6 Spain (18%), France (10%), Germany (4%), The Netherlands (4%), United Kingdom (2%)

42%

Extra-EUex. DC*

15 3.0 16 3.3 18 3.5 USA (19%), Israel (5%), Japan (2%), Switzerland (1%)

27%

DC* 9.6 4.1 9.5 4.0 21 4.9 Turkey (13%), Iran (12%), China (5%), Pakistan (1%), India (1%)

31%


It is interesting to note that the United Kingdom accounted for 97% of total EU imports of ‘vegetable saps and extracts of opium’ in 2007. This took place simply because in the EU only a few companies have the legal right to import and process this product group and they are mainly located in the UK.

4 Excluding developing countries.



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Vegetable alkaloidsTable 4.3 presents the imports and leading suppliers of vegetable alkaloids. In general, the imports of vegetable alkaloids increased by an annual average rate of 2% between 2003 and 2007. Imports intra-EU and from developing countries increased by an annual average rate of 11% and 5%, respectively. Most imports occurred within the European Union (59% in 2007), probably meaning that re-exports played an important role in the trade of vegetable alkaloids; especially when observing that export prices by far exceeded import prices in 2007. The leading EU suppliers were Germany, Switzerland and Austria. Imports from Germany increased by an annual average rate of 29%, imports from Switzerland by 2% and imports from Austriaby 20%. Regarding developing countries, imports from China increased by an annual average rate of 12% and imports from India by 0.3% between 2003 and 2007.

Table 4.3 EU imports and leading suppliers of vegetable alkaloids2003 - 2007, € million/thousand tonnes, share in % of value



361 2.2 401 1.4 392 1.7

Intra-EU 151 1.5 222 0.6 230 1.1 Germany (17%), Austria (9%), UK (9%), Ireland (5%), France (4%)

59%

Extra-EUex. DC*

185 0.3 148 0.2 132 0.2 Switzerland (16%), USA (8%), Australia (6%), Japan (2%)

34%

DC* 24 0.4 31 0.7 30 0.5 India (2%), China (2%), Indonesia (2%), Brazil (1%), Mexico (1%), Taiwan (1%)

7%


The most important product group was ‘alkaloids of opium’, with an imported value of € 113million / 337 tonnes, and an annual increase of 2% between 2003 and 2007. Leading suppliers were the USA (22%), Australia (19%), France (13%) and the United Kingdom (11%). Although the role of developing countries was small (a market share of 3% in 2007), their exports increased by an annual average rate of 11%. The second largest product group was ‘alkaloids of rye ergot’, totalling € 53 million / 127 tonnes in 2007, but with an annual average decrease of 4% between 2003 and 2007. Most imports came from extra-EU countries and from intra-EU countries. Leading suppliers were Switzerland (65%) and the Czech Republic (17%). Developing countries played a negligible role in this trade. The third largest product group was ‘alkaloids of cinchona’, with an imported value of € 20 million / 253 tonnes, but with an annual average decrease of 8% between 2003 and 2007. Leading suppliers to the EU were Germany (29%), Indonesia (29%) and India (14%). EU imports of ‘alkaloids of cinchona’ from developing countries increased by an annual average rate of 16% during the review period. Imports of ‘other vegetable alkaloids’ increased by an annual average rate of 5% between 2003 and 2007, totalling € 206 million / 1.0 thousand tonnes in the latter year. The main sources were Germany (27%), Austria (18%) and Switzerland (13%). Developing countries played a very small role in this trade.

Please note that information about the imports per product group by individual member states is given in the country surveys.

4.3 The role of developing countries

Table 4.4 presents EU imports of medicinal and aromatic plants from developing countries, which increased between 2003 and 2007. The leading importer was Germany with imports amounting to approximately € 60 million, an annual average increase of approximately 6% and a market share of 34%. The second largest importer was France, with a value of € 26 million in 2007, an annual average increase of 7% and a market share of 15%. Other countries which were interesting for developing country suppliers were Italy, Spain and The Netherlands.Furthermore, two East European countries showed a high growth rate in imports from



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developing countries. These were Romania (annual growth rate of 28%) and Latvia (annual growth rate of 27%). Countries which declined in importance were Luxembourg, Estonia and Hungary. The leading developing country suppliers of medicinal and aromatic plants to the EU were China (7% market share in 2007), India (4%), Morocco (3%), Egypt (3%) and Turkey (3%).

Table 4.4 Imports of medicinal and aromatic plants from developing countries2003-2007, € thousand / tonnes

2003 2005 2007 Average annual

% change in value

value volume value volume value volume

Total EU 139,444 69,184 141,907 72,891 175,055 73,049 5.9%Germany 47,744 25,183 46,472 25,100 59,679 27,194 5.7%France 20,190 12,164 22,987 13,206 26,189 12,145 6.7%Italy 16,270 5,765 12,598 6,080 19,010 5,849 4.0%Spain 11,505 7,477 14,173 9,390 18,998 9,829 13.4%The Netherlands 13,291 3,102 14,827 3,702 16,309 3,085 5.2%United Kingdom 9,305 3,643 11,745 3,984 9,399 2,607 0.3%Poland 5,644 3,698 4,877 4,480 7,323 3,710 6.7%Belgium 3,970 2,573 3,153 1,751 6,126 2,861 11.5%Ireland 1,338 609 2,673 1,144 1,763 935 7.1%Denmark 1,149 374 1,181 442 1,725 449 10.7%Austria 946 278 1,161 296 1,623 410 14.5%Greece 760 841 562 485 1,433 1,015 17.2%Slovenia 1,153 601 787 317 1,213 527 1.3%Sweden 578 215 571 184 896 301 11.6%Czech Republic 1,573 737 679 269 715 289 -17.9%Finland 424 285 466 369 626 529 10.3%Bulgaria 717 326 554 334 580 496 -5.2%Romania 192 119 507 299 515 371 28.0%Slovakia 111 37 44 31 224 58 19.3%Lithuania 254 100 103 50 213 130 -4.3%Portugal 343 242 195 118 150 81 -18.6%Hungary 1,080 326 1,168 572 142 37 -39.8%Latvia 54 14 355 260 140 122 26.7%Cyprus 29 8 33 12 37 13 5.9%Malta 75 9 3 1 25 4 -24.0%Estonia 108 31 16 13 2 1 -64.0%Luxembourg 643 430 18 1 - - -100.0%Source: Eurostat (2008)

Table 4.5 shows EU imports of vegetable saps and extracts from developing countries. Overall, EU imports from developing countries increased by 22% annually between 2003 and 2007. The most important EU importer was the United Kingdom, with imports amounting to € 9 million,an annual average increase of 229% since 2003 and a market share of 43% in 2007. The second largest importer from developing countries was Germany, with imports amounting to approximately € 7 million, an annual average increase of 14% since 2003 and a market share of 31% in 2007. Countries of which imports decreased considerably during the review periodwere Denmark, the Czech Republic, Slovakia and Estonia. The leading developing country suppliers of vegetable saps and extracts to the EU were Turkey (13% market share in 2007), Iran (12%) and China (5%).



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Table 4.5 Imports of vegetable saps and extracts from developing countries2003-2007, € thousand / tonnes

2003 2005 2007 Average annual

% change in value

value volume value volume value volume

Total EU 9,557 4,101 9,469 4,041 21,471 4,904 22%United Kingdom 78 36 52 20 9,182 74 229%Germany 3,980 2,054 4,067 2,124 6,679 2,750 14%France 2,460 839 2,562 955 2,668 1,140 2.0%Spain 868 155 1,257 191 1,032 171 4.4%Italy 1,344 620 866 415 887 328 -9.9%Belgium 156 77 232 109 535 223 36%The Netherlands 549 284 343 192 455 210 -4.6%Sweden 0.0 0.0 0.0 0.0 17 4 n.a.Romania 0.0 0.0 0.0 0.0 16 4 n.a.Ireland 0.0 0.0 0.0 0.0 0.1 0.0 n.a.Denmark 1.9 0.5 24 14 0.0 0.0 -100%Portugal 0.0 0.0 0.0 0.0 0.0 0.0 n.a.Greece 0.0 0.0 0.0 0.0 0.0 0.0 n.a.Austria 0.0 0.0 0.0 0.0 0.0 0.0 n.a.Poland 0.0 0.0 0.2 0.0 0.0 0.0 n.a.Czech Republic 27 8.1 4.3 0.3 0.0 0.0 -100%Hungary 0.0 0.0 0.0 0.0 0.0 0.0 n.a.Bulgaria 63 20 60 20 0.0 0.0 -100%Finland 20 5.9 0.0 0.0 0.0 0.0 -100%Slovakia 4.7 1.3 0.0 0.0 0.0 0.0 -100%Estonia 3.1 0.7 0.0 0.0 0.0 0.0 -100%Slovenia 0.0 0.0 0.0 0.0 0.0 0.0 n.a.Latvia 0.0 0.0 1.1 0.2 0.0 0.0 n.a.Lithuania 0.7 0.4 0.9 0.5 0.0 0.0 -100%Cyprus 0.0 0.0 0.0 0.0 0.0 0.0 n.a.Malta 0.0 0.0 0.0 0.0 0.0 0.0 n.a.Luxembourg 0.0 0.0 0.0 0.0 0.0 0.0 n.a.Source: Eurostat (2008)

Table 4.6 shows EU imports of vegetable alkaloids from developing countries. Overall, EU imports increased by an annual average rate of 5% between 2003 and 2007. The leading EU importer was Germany, with imports amounting to approximately € 11 million, an annual increase of 5% during the review period and a market share of 35% in 2007. Notable was the development of imports by the United Kingdom, of which imports increased by approximately 40% annually. Other countries which showed a large increase in imports of vegetable alkaloids from developing countries were Italy and Ireland. Countries with a substantial decrease in imports from developing countries were France, Slovakia and Spain. The leading developing country suppliers of vegetable alkaloids to the EU were India (2% market share in 2007), China (2%) and Indonesia (1%).

Table 4.6 Imports of vegetable alkaloids from developing countries2003-2007, € thousand / tonnes

2003 2005 2007 Average annual % change in

valuevalue volume value volume value volumeTotal EU 24,408 431 31,332 667 29,757 497 5.1%Germany 8,507 171 11,325 232 10,538 209 5.5%United Kingdom 1,256 29 4,634 81 4,831 77 40%The Netherlands 3,414 61 3,774 75 4,487 69 7.1%France 5,232 13 4,674 6 4,206 7 -5.3%Italy 341 10 1,341 16 1,476 13 44%Ireland 18 0 1,017 114 1,090 21 178%



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2003 2005 2007 Average annual % change in

valuevalue volume value volume value volumeFinland 277 0 421 1 499 0 16%Slovakia 1,377 85 980 70 485 33 -23%Belgium 311 2 659 10 465 29 11%Spain 917 43 665 26 399 20 -19%Romania 40 0 70 0 267 0 61%Czech Republic 497 1 127 0 256 0 -15%Poland 0 0 319 20 253 18 n.a.Sweden 61 0 211 0 200 0 35%Greece 113 0 0 0 125 0 2.7%Hungary 2 0 4 0 120 0 194%Bulgaria 309 1 423 2 28 0 -45%Slovenia 1,256 2 0 0 16 0 -66%Austria 61 0 20 0 9 0 -37%Denmark 63 9 14 1 7 0 -42%Portugal 16 0 3 0 0 0 -100%Estonia 0 0 0 0 0 0 n.a.Latvia 0 0 0 0 0 0 n.a.Lithuania 1 0 0 0 0 0 -100%Cyprus 341 4 650 14 0 0 -100%Malta 0 0 0 0 0 0 n.a.Luxembourg 0 0 0 0 0 0 n.a.Source: Eurostat (2008)

Overall, the imports of all three product groups increased between 2003 and 2007. The largest product group was the ‘medicinal and aromatic plants’, followed by the ‘vegetable alkaloids’.Please note that information about the imports per product group by individual member states is given in the country surveys.

4.4 Exports

The EU export data must be interpreted and used with caution. It must be understood that a substantial amount of the products imported are further processed in the EU and re-exported at a higher value. This is revealed when comparing import value and export value.

Table 4.7 presents the EU exports of medicinal and aromatic plants, which increased by an annual average rate of 3% between 2003 and 2007, totalling € 288 million / 75 thousand tonnes in the latter year. Most exports occurred within the European Union. The largest exporters were Germany (27% market share), Poland (14%) and France (12%). The most important export product group was ‘ginseng roots’.

Table 4.7 EU exports of medicinal and aromatic plants, 2003-2007, € million / 1,000 tonnes

2003 2005 2007 Averageannual change

in value %value volume value volume value volume

Total EU, of which from 256 89 263 79 288 75Intra-EU 191 73 201 64 214 58 74%Extra-EU 65 16 62 16 74 17 26%Developing countries 15 4.3 18 5.2 23 6.3 8%Source: Eurostat (2008)

Table 4.8 shows the EU exports of vegetable saps and extracts, which increased by an annual average rate of 13% between 2003 and 2007, totalling € 27 million / 6.5 thousand tonnes in the latter year. Also in this product group, exports mainly occurred within the EU. The largest exporters were France (52% market share in 2007), Germany (20%) and The Netherlands



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(10%). The most important export product group was ‘extracts of liquorice’, which had an export value of € 47 million in 2007.

Table 4.8 EU exports of vegetable saps and extracts, 2003-2007, € million / 1,000 tonnes

2003 2005 2007 Average annual change


Total EU, of which from 17 4.2 23 5.3 27 6.5 13%Intra-EU 13 3.5 16 4.0 18 4.3 8%Extra-EU 3.8 0.7 7.1 1.4 9.6 2.2 26%Developing countries 1.7 0.4 3.4 0.6 3.5 0.6 20%Source: Eurostat (2008)

Table 4.9 presents the EU exports of vegetable alkaloids, which increased significantly by an annual average rate of 5% between 2003 and 2007, amounting to € 1 billion / 1 thousand tonne in the latter year. The leading exporter was Germany (76% market share), followed by Belgium (8%) and Spain (3%). The most important export product groups were ‘alkaloids of opium’ and ‘alkaloids of rye ergot’.

Table 4.9 EU exports of vegetable alkaloids, 2003-2007, € million / 1,000 tonnes

2003 2005 2007 Average annual change


Total EU, of which from 837 1.1 731 0.9 1,018 1.0 5.0%Intra-EU 201 0.7 190 0.5 174 0.7 -3.5%Extra-EU 636 0.4 541 0.4 843 0.3 7.3%Developing countries 74 0.2 68 0.3 75 0.1 0.3%Source: Eurostat (2008)


+ The EU imports large amounts of natural ingredients for pharmaceuticals from developing countries, especially medicinal and aromatic plants and vegetable saps and extracts.

+ Moreover, imports from developing countries are increasing for all product groups.+ Overall import prices for vegetable saps and extracts increased during the review period.

Besides, the developing countries’ share of this product group is increasing. As mentioned before, certain developing countries are increasingly active in the field of further processing of raw materials, such as extracting, thereby giving them a higher price.

+ Medicinal plant imports by East European countries from developing countries showed a substantial increase. This increase is the strongest for Romania and Latvia.

- The imports of many products (within a product group) are dominated by a few countries. Examples are poppy straw, ginseng roots, saps and extracts from opium, and alkaloids of rye ergot.

- Most imports of the product groups discussed take place within the EU, making it more difficult for extra-EU countries, including developing countries, to enter this market.

Exporters should take into account that the same trend can be an opportunity for one exporterand a threat to another. Please, review these opportunities and threats according to your own situation.

4.6 Useful sources EU Expanding Exports Helpdesk http://exporthelp.europa.eu go to: trade statistics Eurostat – official statistical office of the EU

http://exporthelp.europa.eu/



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http://epp.eurostat.ec.europa.eu go to ‘themes’ on the left side of the home page go to ‘external trade’ go to ‘data – full view’ go to ‘external trade - detailed data’ Understanding Eurostat: quick guide to easy Comext http://epp.eurostat.ec.europa.eu/newxtweb/assets/User_guide_Easy_Comext_20080117.pdf



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5 Price developments

5.1 Price developments

The prices of natural ingredients for pharmaceuticals can fluctuate widely, depending on the raw material.

The price level of natural ingredients is influenced by: Quality factors: determined by the country of origin, the climate, the crop, the

concentration of the active ingredients and the extraction method. Economic factors: based on supply and demand. The supply depends on the size of the

current crop, the carry-over from previous crops and the existence of synthetic substitutes.

There is a general shortage of ingredients. Therefore, as long as an attractive price is offered, a continuous supply can be guaranteed. Other products are not supplied constantly and are subject to high-price volatility.

Moreover, prices of natural ingredients for pharmaceuticals can be influenced by an increase in the demand for the same ingredients for cosmetics and/or (functional) foods. Furthermore, an increase in the demand of the ingredients in supplying countries - in the light of growing popularity of traditional medicines - can influence prices in the EU market.

In general, prices for ingredients in the EU are among the lowest worldwide, due to post-colonial relationships with natural ingredient supplying countries. The indications of prices given here or in the sources provided in section 5.2 do not differ much across Europe. Actual prices are dependent on negotiation with buying companies, also with regard to specific wishes of the buyer. Regarding prices of drugs in general, many European countries regulate the price in different ways, to keep costs of medicines affordable.

Table 5.1 shows prices of some vegetable extracts, but should be considered purely indicative as it reflects the price of a specific phytochemical characteristic from a specified origin. The level of marker compounds (for chemical standardisation of extracts) referred to in quotes is those commonly found in the industry. They do not imply any sort of trading standard. Moreover, as the products are bought by bulk, these prices vary according to negotiation with the companies.

Table 5.1 Indicative bulk prices of botanical extracts and oils, June 2008,€ per kg including % of quality standardisation

Product Origin Standard(%)

Price (€)

Bilberry fruit (Vaccinium myrtillus) Europe 25% Anthocyanins 364-386Ginkgo leaf (Ginkgo biloba) Europe 24%/6%

Flavonglycosides/Lactones 158-190

St. John’s wort herb (Hypericum perforatum) Europe 0.15-0.25% Hypericins 29Black cohosh rhizome (Actaea racemosa) Europe 2.5% Triterpene glycosides 40

Source: ITC (June 2008) average June exchange rate € 0.63 = US$ 1 (Oanda - http://www.oanda.com)

The price of bilberry has decreased since 2007, from € 373-522 to € 364-386. This decrease is attributed to an increase in supply. The maximum price paid for gingko leaf also decreasedsince 2007, from € 149-224 to € 158-190, however, the minimum price increased.

Table 5.2 provides information on selected botanical raw materials. Standards for most of the listed medicinal herbs are published in the European Pharmacopoeia (PhEur). This table should be considered purely indicative, as it reflects the price from a specified origin.



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Table 5.2 Indicative prices of botanical raw materials, June 2008€ per Kg

Product Origin Price

(€)

Caraway fruit (Carum carvi) The Netherlands 1.8Fenugreek seed (Trigonella foenum-graecum) Turkey 0.7Purple coneflower root (Echinacea purpurea) United Kingdom 5.7Source: ITC (June 2008) average June exchange rate € 0.63 = US$ 1 (Oanda - http://www.oanda.com)

Finally, Table 5.3 provides price information for crude drugs and herbs and spices, obtained from The Public Ledger. Some of these herbs and spices are, next to the pharmaceutical industry, also used in the food industry.

Table 5.3 Prices of raw products, Jan-July 2007, €* per Kg or tonneJan-July

HighJan-July

LowCrude drugs, € per kg €/kg €/kgBalsam, Canadian spot 48.67 48.67Bayberry root bark, spot 12.50 12.50Cascara bark, spot 4.65 4.65Cochineal, Peru silver grey, Amsterdam/Rotterdam/ Antwerp cif 25.00 22.50

Echinacea Angust root, spot 37.50 37.50Echinacea Purpurea root, spot 5.75 5.00Hydrastis roots, spot 105.00 105.00Sarsparilla roots, spot Hamburg 6.50 6.50Slippery elm powder, spot 15.00 15.00Witch hazel leaves 7.50 7.50Herbs and spices, € per tonne €/tonne €/tonne Cassia lignea, China, whole cif 1,277 1,277Caraway seed, Dutch ex store 876 876Garlic flakes, c&f main European ports, current crop 1,387 1,076Garlic granules, c&f main European ports 1,350 876Garlic powder c&f main European ports 1,131 803Ginger, Nigeria split, cif 1,003 1,003Ginger, Cochin, cif 1,314 1,314Ginger, China whole cif 1,387 1,387Poppyseed, Euro blue, fob 2,043 1,168Source: The Public Ledger (August, 2007)* Calculated using the exchange rate of the monthly average of July 2007 (Oandahttp://www.oanda.com)

The price of cassia lignea from China increased between 2006 and 2007, from € 748 to € 1,277, probably because of a shortage of supply. All types of garlic decreased in price. Garlic flakes for example decreased from € 1,912 to € 1,387 and garlic granules decreased from € 1,642 to € 1,350. Also, all types of ginger decreased in price between 2006 and 2007. The price decrease of both garlic and ginger were a result of over-supply.

Prices for natural ingredients for pharmaceuticals on the EU market were in 2007 among the lowest worldwide. This was mostly due to increasing percentages of a number of plant species- used for the production of vegetable saps and extracts and vegetable alkaloids - being cultivated. Production developments were mostly related to the access to raw ingredients.

In the coming years, production of raw material is expected to shift from wild collection to (large-scale) cultivation, and prices of the raw ingredients used for the processing of alkaloids are expected to decrease. However, specific developments within the product groups are stillvery difficult to discern. Also, due to different composition of imports in different EU countries (order size, type of products) these developments are highly differentiated across the EU.

http://www.oanda.com/




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Great care should be taken when comparing prices of medicinal plants and extracts from different origins, as the form, structure and biochemical activity may differ considerably between very similar products.

Furthermore, price margins could provide very useful information for exporters in developing countries in determining the sales price of their products. However, more important is to know the cost price of the product and from there on determine the sales price. Unfortunately, data for the calculation of the raw material cost is often difficult to obtain. For more information on costing and pricing, please refer to the CBI Export Planner.

5.2 Useful sources

Internet can be a good source for obtaining an idea of retail prices for raw materials. At some sites, professional users can request samples and offers for ingredients. However, Internet is not always a reliable source for obtaining commercial prices for natural ingredients. In general, Internet marketers often publish only consumer and retail pricing schedules, for example, for less than 1 kg quantities. Useful links are: Green Trade - http://www.greentrade.net – is an online market place for organic natural

ingredients. The Public Ledger - http://www.agra-net.com - prices for raw materials are published

weekly. The Market News Service (MNS) for Medicinal Plants and Extracts is a quarterly publication

available from the International Trade Centre (ITC) - http://www.intracen.org. It provides indicative tonne pricing of selected high-demand medicinal herbs and extracts from several major world markets including North America, Western Europe, Eastern Europe, Northern Africa, China and India.

The Association of the European Self-Medication Industry (AESGP) - http://www.aesgp.be -provides individual Country Profiles from its study “Economic and Legal Framework for Non-Prescription Medicines”. The building up of prices is described in these reports. The report is available at € 150.

Herb World - http://www.herbworld.com Raintree Nutrition - http://www.rain-tree.com/bulkprice.htm

http://www.greentrade.net/

http://www.agra-net.com/

http://www.intracen.org/


http://www.herbworld.com/

http://www.rain-tree.com/bulkprice.htm



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6 Market access requirements

As a manufacturer in a developing country preparing to access EU markets, you should be aware of the market access requirements of your trading partners and the EU governments. Requirements are demanded through legislation and through labels, codes and management systems. These requirements are based on environmental, consumer health and safety and social concerns. You need to comply with EU legislation and have to be aware of the additional non-legislative requirements that your trading partners in the EU might request.

For information on legislative and non-legislative requirements, go to ‘Search CBI database’ at http://www.cbi.eu/marketinfo, select your market sector and the EU in the category search, click on the search button and click on market access requirements.

The unit Pharmaceuticals, at the European Commission, Directorate General Enterprise and Industry, offers much information on a broad range of issues relating to the pharmaceutical sector, including legislation at http://ec.europa.eu/enterprise/pharmaceuticals/index_en.htm

A very useful publication for exporters of medicinal and related products, including natural ingredients, is the “Economic and Legal Framework for Non-Prescription Medicines” of June 2008, covering the EU in general. It can be ordered for €150 at AESGP - http://www.aesgp.be

Packaging, marking and labelling of herbal raw material is principally carried out according to the requirements of the buyer. At present, general requirements are part of the ‘Good Agricultural and Collection Practices for Medicinal and Aromatic Plants (GACP)’. The product should be preferably packaged in new, clean and dry sacks, bags or containers. The label must be clear, permanently affixed and be made of non-toxic material. In general, legal requirements for raw materials specify that the fabrication material must be indicated on the label and the label must also indicate from which batch the material comes from. Further, it is highly recommended to include the name and address of the producer/exporter, the net weight and suggested storage conditions.

In the period before transportation, packaged dried materials should be stored in a dry, well-aerated building, in which the daily temperature fluctuations are limited, and good aeration is guaranteed. Fresh products (except basil) should be stored between 1°C and 5°C, while frozen products should be stored below –18°C. As a protection against pests, birds, rodents and domestic animals, the window and door openings should be protected (e.g. by wire netting). It is recommended that the packaged dry crop should be stored as follows: in buildings with concrete or similar easily cleanable floors; with sufficient distance from the wall; with thorough separation from other crops to avoid cross-contamination; and organically certified products must be stored separately.

The transportation volume must be as efficient as possible and a high level of uniformity is desirable. Packaging design should take into account proper storage and transport, standard packaging sizes and recyclable materials or two-way systems: Organic certified raw material: as mentioned in the previous Section, guidelines for the

production, processing, labelling and marketing of medicinal plants and products from organic farming have been established within the work of the CODEX ALIMENTARIUS of FAO/WHO and the EU organic products regulation EC 834/2007 (of 28 June 2007 on organic production and labelling of organic products), which repeals the former regulation EEC 2092/91. For more information visit the EU Organic Farming website -http://ec.europa.eu/agriculture/organic/splash_en.

Extracts: regarding the trade in value-added medicinal plant products, the principles and guidelines of good manufacturing practice for medicinal products for human use (Commission Directive 91/356/EEC) are applicable, reflected in the National Legislation of the EU Member States Annex 7 ‘Manufacture of Herbal Medicinal Products,’ which explains

http://www.cbi.eu/marketinfo

http://ec.europa.eu/enterprise/pharmaceuticals/index_en.htm


http://ec.europa.eu/agriculture/organic/splash_en



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in detail the specific requirements for packaging, marking and labelling. Council Directive 92/27/EEC, on the labelling of medicinal products for human use and on package leaflets,applies in this context as well.

Additional information on packaging can be found at the website of the International Trade Centre (ITC) on export packaging - http://www.intracen.org/ep/packit.htm

Information on tariffs and quota can be found at http://exporthelp.europa.eu

http://www.intracen.org/ep/packit.htm

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7 Opportunity or threat?

This survey on the market for natural ingredients for pharmaceuticals has discussed several opportunities and threats. In general, we noticed a growing demand for natural ingredients, offering good opportunities for developing country suppliers. Entering a niche market couldalso be an opportunity. Fewer than 100 plant species dominate 80% of the market in the medicinal and aromatic plants segments. This increases opportunities for specialization in products of high quality, which address a niche market.

Not yet discussed in this survey, but a positive development with respect to herbal medicinal products, is European-wide legislation which enables easier access for traditional medicinal products to the EU market (amendment 2004/24/EC to Directive 2001/83/EC). This could also have positive effects for producers of natural ingredients for pharmaceuticals. Normally, the application for a market authorisation has to contain the results of tests and trials on quality, safety and efficacy of the products. However, for many herbal medicinal products, which have been used for a long period, sufficient published scientific literature is not available so that a well-established medicinal use cannot be demonstrated (a list of herbs basically qualified for the preparation of herbal medicinal products of well established use can be found in Appendix D). The Directive provides for a special (simplified) registration and, hence, the marketing ofcertain traditional herbal medicinal products, without requiring particulars and documents on tests and trials on safety and efficacy.

On the other hand, there may be consequences which are less desirable for suppliers and may restrict consumer choice. According to PhytoLab, a laboratory for the testing of plant-based products in Germany, these consequences are possibly: costly licensing requirements, which will cause the disappearance of some herbal products,

and subsequent misleading labelling if the herbal product is alternatively placed on the market as a food product;

difficulties with supplying evidence: that a herbal medicinal product is traditional in view of the 30 year requirement; that the reference for an application is characterised by the same active ingredients, the same or similar intended purpose and equivalent strength.

In other words, a trend or development could offer opportunities to certain (developing country) exporters, but at the same time pose a threat to other exporters. As an exporter, you will need to analyse if the development provides an opportunity for or a threat to your business. This will depend on your specific situation.

Another example is the increasing documentation required behind the ingredient offered. This will need investment in terms of time and skills, but possibly also adaptations of your harvesting or processing system. Not all suppliers will be able to meet this standard. On the other hand, it will pay off when, next to a good quality product, you are also able to offer the documentation behind it. Traceability is an important issue in the pharmaceutical market nowadays.



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Appendix A Product characteristics

Product groupsThere are different definitions of ‘natural’ in relation to chemical ingredients. In this survey, the definition of “Naturally Occurring” as specified by REACH5 is used, namely “a naturally occurring substance as such, unprocessed or processed only by manual, mechanical or gravitational means, by dissolution in water, by flotation, by extraction with water, by steam distillation or by heating solely to remove water, or which is extracted from air by any means6”. This definition is used because it conforms best to the products produced by the developing country suppliers targeted in this market survey. Also, it is important to note that this definition is applied to the ingredients when they are exported from the country of origin. It excludes products refined by using chemicals, even though most of the industry uses refined vegetable oils and would also consider those products to be classically natural. In some cases, developing country producers also supply the EU with refined ingredients.

The natural ingredients discussed in this market survey fall under the following groups: Medicinal and aromatic plants (examples are ginseng roots, poppy straw and St John’s

Wort, but the variety is enormous, covering over 50,000 species used for medicinal purposes worldwide);

Vegetable saps and extracts (examples are liquorice extracts, aloe, hop extracts, agar-agar and guava, but here also the variety is very large);

Vegetable alkaloids (an alkaloid, strictly speaking, is a naturally-occurring amine produced by a plant. Examples are cinchona, opium and rye ergot).

These natural ingredients are used by the pharmaceutical industry and the herbal medicine industry. However, the products also find applications in other product groups such as cosmetics and food. The trade of natural ingredients for pharmaceuticals is rather complex. This complexity was already illustrated in the 1982 ITC report on Medicinal Plants and their Derivatives, from which we quote: ‘…it is not possible to assess the volume or value of the trade in all botanicals that are used medicinally, because trade statistics do not identify all the plants individually and, of those listed, the statistics do not identify medicinal and other uses separately. Products reported as medicinal plants often include gums, spices and plants used in the food industry; certain plant products include those used for teas and infusions; large volumes of plants such as pyrethrum are used in the manufacture of insecticides; plants used by the cosmetic industry are also included’.

Moreover, there is a range of natural products, which is used as ingredients by the pharmaceutical industry, including essential oils, vegetable oils, natural gums & resins and natural colours. These ingredients, however, do not have a specific medicinal activity and only a small proportion of the total trade in these products is used by the pharmaceutical industry. For more information on these ingredients, please refer to CBI’s market surveys ‘Natural Ingredients for Cosmetics’, ‘The spices and herbs market in the EU’ and ‘Natural Colours, Flavours and Thickeners’, the latter two focusing on food ingredients. Since the food sector is using the largest quantities of excipients, these products are covered in those surveys.

Regarding the classifications used in this market survey, several denominations are used for the sector of herbal medicine. The term herbal medicine is common in Europe, while in the USA the term botanical medicine is used. Other terms used are phyto-pharmaceuticals, herbal medicaments and natural pharmaceuticals. In this report, the term herbal medicine is mostly used but, when referring to specific reports, the term used in the report is quoted.

5 REACH is a new European Community Regulation on chemicals and their safe use (EC 1907/2006). It deals with the Registration, Evaluation, Authorisation and Restriction of Chemical substances. The new law entered into force on 1 June 2007.6 Taken from the Council Common Position, June 2006.




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Furthermore, other raw materials, such as natural vitamins and hormones, are not included in this market survey. Although these products partly include natural products or entities derived from natural products, the exact components cannot be determined. Moreover, according to EU trade data, only a few developing countries (e.g. Brazil, China and India) play a significant role in the trade of these products.

Statistical product classification

Prodcom and Combined nomenclature (CN)In this survey two different sets of statistical data are used. Both sets have been provided by Eurostat, the statistical body of the EU.

The first set is derived from Prodcom. The term Prodcom is derived from PRODucts of the European COMmunity. This is a survey based on products whose definitions are standardised across the EU to allow comparability between the member countries’ data. Prodcom covers some 4,800 products which are assigned to some 250 industries (subclasses) as defined by the Standard Industrial Classification (SIC). Prodcom data contain production, imports and exports. In this survey, Prodcom data are used to indicate production in some of the leading EU country surveys. However, it is important to note that Prodcom data include only production of ‘vegetable alkaloids’ on specific EU countries.

The second set is the trade data based on the Combined Nomenclature. The abbreviation CN stands for Combined Nomenclature, which contains the goods classification prescribed by the EU for international trade statistics. The CN is an 8-digit classification consisting of a further specification of the 6-digit Harmonised System (HS). HS was developed by the World Customs Organisation (WCO). The system covers about 5,000 commodity groups, each identified by a six-digit code. More than 179 countries and economies use the system. In this survey, CN data are used to indicate imports and exports.

Please note that not all countries follow apply the HS Codes. Some countries have different codes for their natural ingredients for pharmaceuticals. India, for example, has an extended list specifying more natural ingredients, which apparently is not harmonised in the context of the HS Code system (e.g. 1211 9093 Unab - Indian jujuba or Chinese dates).

Statistical data: limitationsTrade figures quoted in CBI market surveys must be interpreted and used with extreme caution. The Prodcom data used in Chapters 1 and 2 of some country surveys, are less reliable than the import and export statistics used in Chapter 4, as they are not part of official data collection for Customs. Companies only have to send in their data on an annual or quarterly basis. The figures sometimes show a discrepancy between years (e.g. a large fall or extraordinary growth). These problems are caused by inaccurate, inconsistent and untimely reporting by companies. However, Prodcom data are the only official source for production and apparent consumption data, displaying numbers at product group level and describing the different EU markets in detail. Therefore they are useful to obtain an indication of size and trends within those markets. For decision making, however, these figures are not accurate enough and should be used in conjunction with further market research.

In the case of intra-EU trade, statistical surveying is only compulsory for exporting and importing firms whose trade exceeds a certain annual value. The threshold varies considerably from country to country, but it is typically about € 100,000. As a consequence, although figures for trade between the EU and the rest of the world are accurately represented, trade within the EU is generally underestimated.

Furthermore, the information used in CBI market surveys is obtained from a variety of sources. Therefore, extreme care must be taken in the qualitative use and interpretation of quantitative data; it puts limitations on in-depth interpretation of relations between consumption, production and trade figures within one country and between different countries.



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The HS classification given differs from the product groups and products mentioned in the paragraphs above, this puts limitations on in-depth interpretation and of the possible relations between import and export figures on the one hand and consumption and production figures on the other hand.

HS code Product description Names in chapter 41211 Plants and parts of plants (including seeds and fruits)

of a kind used primarily in perfumery, in pharmacy or for insecticide, fungicide or similar purposes, fresh or dried, whether or not cut, crushed or powdered.

Medicinal and aromaticplants

1211 20 Ginseng roots, fresh or dried, whether or not cut, crushed or powdered.

Ginseng roots

1211 30 Coca leaf, fresh or dried, whether or not cut, crushed or powdered.

Coca leaf

1211 40 Poppy straw, fresh or dried, whether or not cut, crushed or powdered.

Poppy straw

1211 90 Other (including Liquorice root, previously under HS code 1211 10)

Other medicinal and aromatic plants

1302 Vegetable saps and extracts, whether or not modified, of which only the following are included:

Vegetable saps and extracts

1302 11 - opium Saps and extracts of opium1302 12 - extracts of liquorice (excl. that with a sucrose

content by weight of >10% or in the form of confectionery).

Saps and extracts of liquorice

2939 Vegetable alkaloids, natural or reproduced by synthesis, and their salts, ethers, esters and other derivatives.

Vegetable alkaloids

2939 112939 19

Concentrates of poppy strawAlkaloids of opium and their derivatives; salts thereof (excl. concentrates of poppy straw)(Previously combined in HS code 2939 10)

Alkaloids of opium

2939 20 Alkaloids of cinchona and their derivatives; salts thereof (Previously divided in HS codes 2939 21 and 2939 29)

Alkaloids of cinchona

2939 612939 622939 632939 69

Ergometrine inn and its saltsErgotamine inn and its saltsLysergic acid and its saltsOther alkaloids of rye ergot and their derivatives; salts thereof.

Alkaloids of rye ergot

2939 99 Other vegetable alkaloids, natural or reproduced by synthesis, and their salts, ethers, esters and other derivatives.

Other vegetable alkaloids

This market survey focuses primarily on the main product categories (i.e. 1211, 1302 and 2939) and, whenever relevant, also on the specific sub-products. However, on the sub-product level, hardly any relevant information is available, especially regarding consumption and production. Furthermore, it is important to note that the HS Codes used in this survey are from the list of 2007. This is relevant to note because during the review period (between 2003 and 2007) some changes have taken place regarding the products and codes. Therefore, a short explanation was included in the product description. For example, until 2006 the information on ‘Liquorice root’ (formerly HS code 1211 10) was treated separately by the WCO. However, in 2007 ‘Liquorice root’ was included in the product description of ‘Other’ (HS code 1211 90). Meaning that, if data from 2007 is downloaded, ‘Liquorice root’ will be included in ‘Other’, while data from 2003 will treat the product apart. As a result, the information given before 2007 in this market survey is the sum of the 2 different codes, in order to better explain the development of the market.

Different changes have taken place for other product groups. For example, ‘Alkaloids of opium’ are now divided into 2 different sub-product groups (HS codes 2939 11 and 2939 19), whereas



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previously they were included in only 1 sub-product group (formerly HS code 2939 10). Therefore, in this market survey the information given in 2007 is the sum of the 2 different codes, in order to better explain the development of the market.



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Appendix B Introduction to the EU market

The European Union (EU) is the current name for the former European Community. Since January 1995 the EU has consisted of 15 member states. Ten new countries joined the EU in May 2004. In January 2007 two more countries – Bulgaria and Romania - joined the EU. Negotiations are in progress with a number of other candidate member states. In this survey, the EU is referred to as the EU27, unless otherwise stated.

Cultural awareness is a critical skill in securing success as an exporter. The enlargement of the EU has increased the size of the EU, and also significantly increased its complexity. With more people from culturally diverse backgrounds, effective communication is necessary. Be aware of differences in respect of meeting and greeting people (use of names, body language etc.) and of building relationships. There are also differences in dealings with hierarchy, presentations, negotiating, decision making and handling conflicts. More information on cultural differences can be found in chapter 3 of CBI’s export manual ‘Exporting to the EU (2006)’.

General information on the EU can also be found at the official EU website http://europa.eu/abc/governments/index_en.htm or the free encyclopaedia Wikipediahttp://en.wikipedia.org/wiki/Portal:Europe

Monetary unit: EuroOn 1 January 1999, the Euro became the legal currency within eleven EU member states: Austria, Belgium, Finland, France, Germany, Italy, Ireland, Luxembourg, The Netherlands, Spain, and Portugal. Greece became the 12th member state to adopt the Euro on January 1, 2001. Slovenia adopted the Euro in 2007, and Cyprus and Malta adopted the Euro in January 2008. Since 2002, Euro coins and banknotes replaced national currency in these countries. Denmark, United Kingdom and Sweden have decided not to participate in the Euro.

In CBI market surveys, the Euro (€) is the basic currency unit used to indicate value.

Table 1 Exchange rates of EU currencies in €,average yearly interbank rate

Country Name Code 2007 August2008

Bulgaria Lev BGN 0.513 0.512Czech Republic Crown CZK 0.036 0.041Denmark Crown DKK 0.134 0.134Estonia Crown EEK 0.064 0.064Hungary Forint HUF 0.004 0.004Latvia Lats LVL 1.436 1.433Lithuania Litas LTL 0.290 0.292Poland Zloty PLN 0.265 0.305Romania Lei RON 0.301 0.285Slovakia Crown SKK 0.030 0.033Sweden Crown SEK 0.108 0.106United Kingdom Pound GBP 1.462 1.263Source: Oanda http://www.oanda.com (September 2008)

http://europa.eu/abc/governments/index_en.htm

http://en.wikipedia.org/wiki/Portal:Europe




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Appendix C List of developing countries

OECD DAC list - January 2006When referring to developing countries in the CBI market surveys, reference is made to the group of countries on this OECD DAC list of January 2006.

Afghanistan Gabon Nepal UruguayAlbania Gambia Nicaragua UzbekistanAlgeria Georgia Niger VanuatuAngola Ghana Nigeria VenezuelaAnguilla Grenada Niue VietnamAntigua and Barbuda Guatemala Oman Wallis & FutunaArgentina Guinea Pakistan YemenArmenia Guinea-Bissau Palau ZambiaAzerbaijan Guyana Palestinian Admin. Areas ZimbabweBangladesh Haiti PanamaBarbados Honduras Papua New GuineaBelarus India ParaguayBelize Indonesia PeruBenin Iran PhilippinesBhutan Iraq RwandaBolivia Jamaica SamoaBosnia & Herzegovina Jordan Sao Tome & PrincipeBotswana Kazakhstan Saudi ArabiaBrazil Kenya SenegalBurkina Faso Kiribati SerbiaBurundi Korea Rep. of SeychellesCambodia Kyrgyz Rep. Sierra LeoneCameroon Laos Solomon IslandsCape Verde Lebanon SomaliaCentral African Rep. Liberia South AfricaChad Libya Sri LankaChile Macedonia St. HelenaChina Madagascar St. Kitts NevisColombia Malawi St. LuciaComoros Malaysia St. Vincent & GrenadinesCongo Democratic Rep. Maldives SudanCongo Rep. Mali SurinameCook Islands Marshall Islands SwazilandCosta Rica Mauritania SyriaCote d’Ivoire Mauritius TajikistanCroatia Mayotte TanzaniaCuba Mexico ThailandDjibouti Micronesia, Fed. States Timor-LesteDominica Moldova TogoDominican Republic Mongolia Trinidad & TobagoEcuador Montenegro TunisiaEgypt Montserrat TurkeyEl Salvador Morocco TurkmenistanEquatorial Guinea Mozambique Turks & Caicos IslandsEritrea Myanmar TuvaluEthiopia Namibia UgandaFiji Nauru Ukraine



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CBI countries – January 2008:

CBI supports exporters in the following Asian, African, Latin American and European (Balkan) countries:

Afghanistan AlbaniaArmeniaBangladeshBeninBoliviaBosnia-HerzegovinaBurkina FasoColombiaEcuadorEgyptEl SalvadorEthiopiaGeorgiaGhanaGuatemalaHondurasIndiaIndonesiaJordanKenyaKosovoMacedoniaMadagascarMaliMoldovaMontenegroMoroccoMozambiqueNepalNicaraguaPakistanPeruPhilippinesRwandaSenegalSerbiaSouth AfricaSri LankaSurinameTanzaniaThailandTunisiaUgandaVietnamZambia



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Appendix D List of herbs basically qualified for the preparation of herbal medicinal products on the EU market

Agni casti fructus Hamamelidis aqua Psyllii semen Allii sativi bulbus Hederae helicis folium Rhamni purshianae cortex Aloes Hippocastani semen Rhei radix Calendulae flos Hyperici herba Salicis cortex Cardui mariae fructus Lavandulae aetheroleum Sennae folium Chelidonii herba Lini semen Sennae fructus acutifoliae Cimicifugae rhizome Matricariae flos Sennae fructus

angustifoliae Crataegi folium cum flore Melissae folium Serenoae repentis fructus Cucurbitae semen Menthae piperitae

aetheroleum Symphyti radix

Cynarae folium Passiflorae herba Tanaceti parthenii herba Echinaceae purpureae

herba Pelargonii sidoidis radix Thymi herba

Eleutherococci radix Petasitis rhizoma/folium Urticae folium Eucalypti aetheroleum Piperitis methystici

rhizome Urticae radix

Frangulae cortex Plantaginis ovarae semen Valerianae radix Gingko biloba Plantaginis ovatae testa Visci albi herba Ginseng radix Primulae radix Zingiberis rhizoma

Source: Phytolab (2005)



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Appendix E Cultivation versus Wild CollectionWILD HARVESTING VERSUS CULTIVATION OF MEDICINAL AND AROMATIC PLANTS

A summary of: advantages; disadvantagesFOR SPECIES AND ECOSYSTEM IT IS BETTER TO…

WILD HARVEST BECAUSE… it puts plant populations in the continuing interest of local people it provides an incentive to protect and maintain wild populations and their habitats and the genetic diversity of MAP populationsbut… uncontrolled harvesting may lead to the extinction of ecotypes and even species common access to the resource makes it difficult to adhere to quotas and the precautionary principle in most cases knowledge about the biology of the resource is poor and the annual sustained yields are not known in most cases resource inventories and accompanying management plans do not exist

CULTIVATE BECAUSE… it relieves harvesting pressure on very rare and slow-growing species which are most susceptible to threatbut… it devaluates wild plant resources and their habitats economically and reduces the incentive to conserve ecosystems it narrows the genetic diversity of the gene pool of the resource because wild relatives of cultivated species become neglected it may lead to conversion of habitat for cultivation cultivated species may become invasive and have negative impacts on the ecosystem reintroducing plants can lead to genetic pollution of wild populations

THE MARKET DEMANDS…WILD HARVESTED PLANTS BECAUSE… they are cheaper since they do not require infrastructure and investment many species are only required in small quantities that do not make cultivation economically viable for some plant parts extra-large cultivation areas are required (e.g. arnica production for flowers) successful cultivation techniques do not exist, e.g. for slow-growing, habitat-specific taxa no pesticides are used it is often believed that wild plants are more powerfulbut… there is a risk of adulterations there is a risk of contaminations through non-hygienic harvest or post-harvest conditions

CULTIVATED MATERIAL BECAUSE… it guarantees a continuing supply of raw material it makes reliable botanical identification possible genotypes can be standardized or improved quality standards are easy to maintain controlled post-harvest handling is possible production volume and price can be agreed for longer periods resource price is relatively stable over time certification as organic production is possiblebut… it is more expensive than wild harvest it needs substantial investment before and during production

FROM A PEOPLE’S PERSPECTIVE IT IS BETTER TO…WILD HARVEST BECAUSE… it provides access to cash income without prior investment it provides herbal medicines for health careneeds it maintains the resources for rural populations on a long-term basis (if done sustainably)but… unclear land rights create ownership problems this income and health care resource is becoming scarce through overharvesting

CULTIVATE BECAUSE… it secures a steady supply of herbal medicines (home gardens) it provides in-country value-addingbut… capital investment for small farmers is high competition from large-scale production puts pressure on small farmers and on wild harvesters benefits are made elsewhere and traditional resource users have no benefit return (IPR)

Source: Schippmann, U., Leaman, D.J. & Cunningham, A.B. 2003.



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Appendix F References

AESGP, “Economic and Legal Framework for Non-Prescription Medicines” of June 2008 -http://www.aesgp.be

Interactive European Network for Industrial Crops and their Applications - (IENICA) publications available at - http://www.ienica.net

Kathe, Wolfgang (2006). Conservation of Eastern European Medicinal Plants: Arnica montana in Romania.

“Medicinal Plant Biotechnology. From Basic Research to Industrial Applications” (2007) Oliver Kayser and Wim J. Quax (2007), Medicinal Plant Biotechnology. From Basic Research

to Industrial Applications. Pharmaceutical Pricing and Reimbursement Information (PPRI) publications available at -

http://ppri.oebig.at RIRDC (2001), R&D Plan for Essential Oils and Plant Extracts 2002-2006. Sarah A. Laird, ‘Biodiversity and Traditional Knowledge’, Earthscan publication -

http://www.earthscan.co.uk Schippmann, U., Leaman, D.J. & Cunningham, A.B. 2003. Impact of cultivation and

gathering of medicinal plants on biodiversity: global trends and issues. In FAO, Biodiversity and the ecosystem approach in agriculture, forestry and fisheries. Rome, FAO -http://www.fao.org/DOCREP/005/Y4586E/y4586e08.htm#P1_0

WHO (2005), Global Atlas of Traditional, Complementary and Alternative Medicine.


http://www.ienica.net/

http://ppri.oebig.at/

http://www.earthscan.co.uk/

http://www.fao.org/DOCREP/005/Y4586E/y4586e08.htm#P1_0

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