In late 2015, Chinese researcher Tu Youyou was awarded the Nobel Prize for creating anti-malaria drug, using Traditional Chinese Medicine (TCM). Artemisinin, an active compound extracted from an aromatic herb sweet wormwood (which has been in use for treating malaria in China for more than 1,500 years now) was the key ingredient in preparing the prize-winning drug.
Based on herbs and other natural ingredients, the traditional medicines in China treat a range of health conditions, including common cold, pain, gastrointestinal ailments, and chronic illnesses, among others. TCM sector, fully supported by the Chinese government, has its own ecosystem in the country comprising dedicated practitioners, educational institutes, and the pharmaceutical companies manufacturing traditional medicine products.
Despite having been in use for more than 2,000 years (as claimed), domestic market for traditional medicines is smaller in comparison to that of conventional prescription and Over-The-Counter (OTC) drugs. The sector requires competitive TCM products for market expansion. However, this looks a distant possibility, as TCM-based clinical trials account for only about 5% of all trials (open studies) in China at present. This can be attributed to dearth of large organized TCM players with enough funds to invest in R&D. It also suggest that majority of Chinese consumers of traditional medicines rely on time-tested legacy preparations.
The State Council (the highest administrative body in China) meeting held in February 2016 asked for strengthening the sector through policy initiatives, such as increasing the number of traditional medicines in national essential medicine list, ensuring higher quality supervision (farm-to-factory), promoting modern production techniques, and consolidating a largely unorganized sector at supply side. The plan is also to support research and development and to look for ways to hasten industrialization and export of TCM.
Amid the urgency shown by the State Council, and in the light of recent Noble Award, it would be interesting to see if traditional medicines have the potential to provide alternative to conventional medicines at global stage, or will they largely remain a domestic (Chinese) phenomenon.
EOS Perspective
Though policy makers in China see enough potential still waiting to be tapped, the traditional medicines sector needs to overcome challenges in overseas as well as domestic market.
It is apparent that the Chinese government’s efforts to promote traditional medicines overseas in foreign markets have not yielded desired results. For instance, to boost TCM trade, the government announced a program in 2012 to establish 10 TCM trading centers worldwide. While there are no updates available on proposed plans to set up these TCM trade centers, in 2015, the first center of traditional Chinese medicine in Central and Eastern Europe was opened in a Czech hospital, as a pilot project.
The policy makers in China need to work around the fact that the expansion of traditional medicines beyond China is constrained due to doubts about their efficacy and possible side effects. One of the ways to allay fears of non-Chinese consumers (in order to ensure wider acceptance) is to get recognition through Western regulatory bodies, such as FDA. However, this can be a time consuming process, as evident from the history of TCM registrations outside China.
At present, the best approach seems to be to strengthen domestic TCM sector while identifying the TCM-friendly overseas markets and the therapeutic segments with potential to be successful abroad.
For competing at global level, TCM sector requires more TCM-focused companies, such as Dihon, Chinese herbal and OTC manufacturer (which was acquired by Bayer in 2014 with Bayer’s intent to strengthen its position in Chinese OTC market that currently consists of about 50% of herbal medicines). Dihon boasts of a strong TCM portfolio, including its star product Dan E Fu Kang, which is marketed as a gynecological medicine for women’s health indications. Dihon-like companies that have a few best-selling TCM drugs under their belt are exactly what the Chinese TCM sector needs in order to develop and expand abroad.
If successful, the envisaged state policies might lead to creation of a number of large TCM companies, with enough financial power to invest in research and development, thereby creating a robust traditional medicine portfolio. At present, only few known large players, such as Traditional Chinese Medicine Co. and Jiangsu Kanion Pharmaceutical, are operating in the Chinese market.
TCM sector’s international expansion should focus on OTC drugs with safety and success record proven in China, and introducing these drugs in markets where regulatory requirements for market approval are less stringent e.g. in Asia and Africa. Manufacturers of TCM can also look for complementing the existing conventional medicines (instead of replacing them) for life threatening diseases e.g. cancer. While not treating the actual disease, traditional medicines can contribute to providing a wholesome treatment. For instance, past studies in China suggest that TCM is effective in treating side effects, such as radiation injury and inflammation, nausea, and gastrointestinal disorders due to radio/chemotherapy.
It may take long for TCM to challenge conventional medicines and make commercial impact at global level. Till it happens, the traditional medicine market will remain China-centric. Only disruptive policy interventions will make the sector dominant at domestic level, thereby setting the stage for a global take-off.