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close this bookMedicinal plants: Rescuing a global heritage (WB, 1997, 80 p.)
close this folder1. The global background
View the document(introductory text...)
View the documentEconomic issues
View the documentPolicy issues
View the documentRegulatory issues
View the documentSocial issues
View the documentConservation Issues
View the documentAgricultural issues
View the documentForestry issues
View the documentVeterinary issues
View the documentThe international research base

Economic issues

The potential world market of phytomedicines or herbal medicines is very large, but its significance to the global economy can at this point only be inferred from a few sources of diverse and inadequate data. The World Health Organization estimated in 1980, for instance, that the world trade amounted to $500 million a year. However, information from diverse sources suggest that the overall trade in botanicals has since then greatly increased. This has been accelerated by a renewed interest in traditional medicines in many developing countries and especially in Europe and North America.

The developing countries, particularly those in Asia, are the main suppliers to the developed countries of plants used in pharmacy. However, in Africa and Latin America local and regional trade in medicinal plants is growing rapidly along with an increasing demand by international plant traders hoping to discover new "wonder" drugs.

Germany is one of the largest importers of medicinal plants. The Convention on International Trade in Endangered Species (CITES) has determined that Germany's imports include at least 40 threatened or endangered species. Many were originally listed in CITES to protect them from heavy exploitation for the ornamental trade. However, it became apparent that many of these were also used for medicinal purposes.

There is a reason for Germany's imports of medicinals. Of all the western nations, Germany has made the greatest progress in bridging the gap between traditional and Western medicines. Every medical student there is taught about phytomedicines and more than 80 percent of all German physicians regularly use herbal products. The government requires that plant drugs must be standardized and of proven safety and efficacy. Safety of long-used natural products is generally assumed, if no side effects have been reported. Clinical experience noted by physicians, scientific evidence published in technical journals, and data supplied by manufacturers are the basis for the doctrine of "reasonable certainty," which Germans accept as a substitute for strict clinical trials. The German experience is being closely watched by both industrialized and developing countries as it offers an example of how to integrate the two systems.

The global demand for medicinal plants is expressed from four identifiable sources: (i) pharmaceutical industries, (ii) traditional healthcare systems; (iii) individual traditional health practitioners, and (iv) women in family home care. The money values involved depend not only on the extent to which barter or non-monetary exchange is a factor, but also the degree to which the production and sale are concentrated in visible locations, regulated and taxed.

Gauging the extent and growth of the global trade in herbal ingredients is made difficult by unpredictable fluctuations in price. Such fluctuations - typically over six to nine year periods - are common as the availability of many wild medicinal plants goes from oversupply to scarcity very quickly and then slowly stabilizes again. Variations in price due to supply conditions make it difficult to determine the extent to which demand is increasing. Government(s) and the local private sector would probably be more willing to fund research on the extent of existing and potential supply of medicinal plants if they had a better idea of the potential (and existing) market. From that they could tell how much could be sold, at what price, and therefore what profit was to be made.

The regulated trade provides all the present data on the market value of medicinal plantsfrom raw material to finished product. The unregulated market includes all manner of medicinal plants where there is no market accounting (largely because the government draws no benefit from these sales). This informal use of medicinals includes home use, exchange between neighboring families, collecting and sale in rural markets, use by traditional health practitioners and other undocumented transactions.

The most complete data are, unsurprisingly, available from the official Chinese and Indian healthcare systems, but even that is incomplete. Even where there are local pharmaceutical industries, the figures on general herbal drug sales to the public are often unavailable. Assessing informal medicinal product sales by traditional health practitioners and vendors, primarily peddled by women in local markets, would be very difficult due to a lack of records. Similarly, products grown in home gardens and administered to family members have an unknown value. It is this cultural value, that is rarely, if ever, captured in economic analysis. Yet it is likely to represent a significant portion of the total economic benefit provided by these plants.

A number of Asian countries (including China, India, both Koreas, Thailand, Indonesia and the Philippines) have the technical background, knowledge, and existing pharmaceutical industries to process raw materials and market finished products. However, the majority of developing countries in Latin America and Africa lack the industrial base and financial resources to expand this market rapidly. As a result, 86 percent of finished health products are still manufactured in Europe and North America. 6 In virtually every developing country, local healthcare needs are satisfied primarily using raw materials from plants. The majority of people just cannot afford to purchase imported pharmaceutical products.

Not much has been done to assist developing countries to develop their medicinal-plant resources. However, two organizations - the International Organization of Chemical Sciences in Development (IOCD), Falls Church, Virginia, USA, and Biotics Ltd., University of Sussex, UK - have taken an active role in this. IOCD has helped establish the Network for Analytical and Bioassay Services in Africa (NABSA), which links cooperating laboratories with capabilities to provide services in chemical spectroscopy and biological evaluation. Services currently offered by NABSA Centers are in Ethiopia (Addis Ababa), Kenya (Nairobi), Madagascar (Antananarivo), and Botswana (Gaborone). Biotics Ltd. provides access to high technology screening through training of phytochemists. As a result, a number of independently-owned companies have been created in developing countries to prepare plant extracts.