Markets and Marketing Issues

Modern Ayurveda

Ayurveda the Science of Life

Get Instant Access

Herbal medicine and natural pharmaceuticals are moving from the fringe to mainstream, with a larger number of people seeking remedies and health approaches free of the side-effects caused by synthesized chemicals (Fig. 1.2). This was considered one of the most vital and high growth industries of the 90s and is set to expand even further into the next century.

The increasing acceptance of herbal medicines in Australia is well supported by trends around the world. In Germany and France which together represent 39% of the $14 billion global retail market, herbal remedies known as phytotherapeutics are well established, and the cost for therapeutic use is covered by health insurance systems, and the quality criteria applied to regulation and manufacturing are comparable to those for chemical drugs.

The crude botanical raw materials for this industry have been grown for long and traded in many countries around the world. As the Australian market for herbal medicine develops, opportunities are arising for raw materials to be grown in Australia, both for local and export markets. Access to export markets may be facilitated by the "clean green' image that Australian agriculture presents to the world.

Botanical raw materials are comprised of dried plant materials in the form of roots, barks, herbs, flowers, fruits, seeds, and resins. These materials are traded in a whole form or, more commonly, are cut and sifted to a consistently even particle size. Market prices for raw botanical

Medicinial Plant Export

Health Consumers

Fig. 1.2 Herbal drug market. Source: Riewpaiboon (2003).

Health Consumers

Fig. 1.2 Herbal drug market. Source: Riewpaiboon (2003).

materials are usually determined by supply and demand, but generally tend to be stable.

At least 25% of medical prescriptions in recent times contain one active compound from plant species, Duke (1990) estimated that the value of drugs containing compounds from plant species is about US$ 10 billion in the United States alone (see Table 1.1). Most traded European materials are priced at source in the range of $2.00 to $6.00/kg. Prices for certified organic produce can be anywhere between $10.00 and $30.00/kg. This supply market is very limited, hence the high prices. Prices for difficult-to-grow, wild-harvested, or certified organic materials, usually North American botanicals, can range in price from $20.00 to $120.00/kg (Table 1.4).

Table 1.4 World market for flavor and fragrances (US$ m in 1990).





Essential oils & other natural extracts


Synthetic aroma chemicals


Source: Pearce (1988).

Source: Pearce (1988).

The principal primary market for these raw materials is to industries that manufacture:

• Liquid extracts and tinctures

• Concentrated soft extracts (for further industrial application)

• Concentrated dry extracts (for further industrial application)

• Plant-derived pure pharmaceutical drugs.

The pharmaceutical industry is both large and highly successful. Sales of plant derived drugs reached $30 billion worldwide in 2002. At present about 50% of the total plant-derived drug sales come from single entities, while the remaining 50% come from herbal remedies. Although the latter have greater volumes of consumption, the relatively low volumes of single entities, which are mostly prescription products, are more than compensated by their higher prices.

Single entity plant drugs, which mostly treat serious medical ills, include atropine, digoxin, morphine, paclitaxel, pilocarpine, reserpine, scopolamine, topotecan and vincristine, among many others. Several of the compounds have outlived their usefulness in light of better alternatives, and are exhibiting a decline in sales. On the other hand, as a consequence of new drug developments, single entities overall are projected to increase their market share of the combined total future dollar sales.

Table 1.5 Some major essential oils and their compounds.




Alpha-Pinene, Limonene

Clove leaf

Eugenol, Caryophylene


Geraniol, Citronellol





Lemon grass








Sales of these plant-based drugs in the U.S. amounted to some US$4.5 billion in 1980 and an estimated US$15.5 billion in 1990. Other drugs are derived from animals and microorganisms. Development of drugs from plants is a long and arduous process which involves many disciplines. It has been estimated that only 5 to 15% of the approximately 250,000 species of higher plants have been systematically investigated for the presence of bioactive compounds. In industrialized countries, substances in everyday use derived from plants are -digitalin, ephedrine, morphine, quinine and many more. While the ones used less often like reserpine, guggulipid and artemisinin are equally well known.

All 119 plant-derived drugs used worldwide in 1991 came from fewer than 90 of the 250,000 plant species that have been identified. "Each such plant is a unique chemical factory", according to Norman R. Farnsworth of the University of Illinois at Chicago, "capable of synthesizing unlimited numbers of highly complex and unusual chemical substances whose structures could (otherwise) escape the imagination... forever".

In other words, scientists may be able to synthesize these plant compounds in the laboratory. Commercially, these plant derived medicines are worth about US$14 billion a year in the United States and US$40 billion worldwide.

In 1990s, the U.S. National Institute earmarked US$8 million to screen 50,000 natural substances for activity against 100 cancer cell lines and the AIDS virus. China, Germany, India, and Japan, among others, are also screening wild species for new drugs.

The European market for herbal supplements is estimated at over US$ 2.7 billion and for herbal remedies, a further US$ 0.9 billion. Germany is by far the largest market. The market is growing rapidly at over 4% per annum for herbal remedies and considerably faster for herbal supplements. The US herbal market is nearing saturation and is expected to peak at US$ 6-8 billion in the next few years.

Table 1.6 Synthetic vs. phytomedicines.











Usually simple

Usually complex




Usually complex










Incidence of side effects

Higher, often unpredictable

Lower, usually predictable



Drastic changes in physiological events

Restore physiological balance


In vitro test

Often adequate






Source: Rajasekharan (2000).

Source: Rajasekharan (2000).

Their dietary herbal supplement market is estimated at US$4 billion and has been growing at 6-8% per annum. The main producers are manufacturers based in the developed countries, including the large multinational pharmaceutical companies. There are also smaller companies that specialize in herbal products and some have emerged to challenge the multinationals for market leadership in this field.

The main products sold are based on plants such as Echinacea and St. John's Wort that were known for their medicinal properties in the consuming countries. Recent research has helped propel the knowledge of other plants from around the world and this has helped accelerate the development of new supplements and medicines. The market share of herbal products made in developing countries remains comparatively low.

Chinese products, mainly in herbal supplements, have achieved major successes. The EU and the US regulations have special provision for herbal medicines that do not use mixtures of herbs. In this respect their regulations are, comparatively, relaxed. But if the exported products contain herbal mixtures and claim curative properties, the rules become much stricter. For medicines, product trials need to be carried out that cost several millions of dollars.

Scientific knowledge of the products produced in the developing countries, and of their systems of traditional medicine, is limited and this also restricts the market for their herbal products. As markets grow, the search for a wider variety of ingredients is increasing. Phytomedicines have already started to link traditional medicines with modern (allopathic) medicine, with research and development primarily funded by large pharmaceutical manufacturers.

Demand for medicinal plants is expected to continue to expand rapidly, fuelled by the growth of sales of herbal supplements and remedies. Their basic uses in medicine will continue in the future, as a source of therapeutic agents, and as a raw material base for the extraction of semi-synthetic chemical compounds such as cosmetics, perfumes and food industries.

Was this article helpful?

0 0
Maintaining The Body

Maintaining The Body

Get All The Support And Guidance You Need To Be A Success At Better Health With The Right Foods. This Book Is One Of The Most Valuable Resources In The World When It Comes To Everything You Need To Know About Having A Healthy Body With The Right Foods.

Get My Free Ebook

Post a comment