4 Sept 2013
Legislation, synergisation and market segmentation: the many challenges facing the modernisation of Chinese Medicine
With Hong Kong recently playing host to the 12th International Conference and Exhibition of The Modernization of Chinese Medicine & Health Products (ICMCM), attendees expressed boundless optimism and frustration in equal measure.
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"It won't be take place in my generation," said Dr Albert Wong, addressing the likelihood of the modernisation of Traditional Chinese Medicine (TCM). On the surface, it's a strange assertion, especially given that Wong is speaking in his capacity as the Founding President of the Modernized Chinese Medicine International Association.
While acknowledging that latter-day advances, notably the adoption of patient-friendly granular formats, have helped popularise TCM, Wong still sees true modernisation as a long process – something he blames, at least partly, on the legal approach adopted by the Hong Kong authorities.
According to Wong, the local government applies the same strictures to Chinese medicine that it applies to Western medicine. This has seen manufacturers banned from producing TCM products as a result of a lack of clinical testing. Expressing his frustration, Wong said: "Part of our industry is dying because of these government requirements and they won't offer the funding support to remedy it."
It is a sentiment that was widely expressed at the 12th International Conference and Exhibition of The Modernization of Chinese Medicine and Health Products (ICMCM), held at the Hong Kong Convention and Exhibition Centre in August of this year. Many of the concerns of attendees centred around the local government's insistence on equating TCM with its Western counterparts.
One attendee and keen TCM advocate was Whelan Wong, a retired lawyer. Explaining his own dissatisfaction with the status accredited to TCM locally, he said: "For 2000 years we have used Chinese Medicine as a daily health supplement in order to prevent getting ill. It's crazy that the government now approaches it like Western medicine."
Overall, Wong would prefer the Hong Kong administration to follow the lead of Japan and focus less on efficacy issues. He says: "In Japan, they regard TCM as home medicine. The Japanese government only regulates the sector in terms of product safety. Their view is: 'If the herbs don't work, they won't sell', making it very much the producer's problem."
Currently, in Hong Kong, it is illegal to stock any proprietary Chinese medicine that has not been legally tested. As a result, many ICMCM exhibitors were banned from showing samples at the 2013 event, despite its remit covering traditional remedies from China and across the world.
Wong said: "Banning the presence of samples is anti-commercial. There's a clear imbalance here in terms of the protection of the citizen and the protection of Hong Kong as an international trade centre. Legislation is pushing us out of the market."
Falling under the auspices of Hong Kong's Food and Health Bureau, Chinese Medicine isn't supported by the Commerce and Economic Development Bureau, a factor which many see as hampering its commercial prospects.
Despite the concerns of the sector's legal status, however, others are quietly confident as to the viability of TCM. Angela Choy, General Manager of Wisecare Health Services, a Hong Kong-based alliance of practitioners of alternative and complementary treatment, believes the market is clearly growing. She says: "Insurance companies are now willing to cover some of the treatment costs of alternative therapies, while the spread of TCM chain stores, notably the Beijing Tong Ren Tang franchise, offering standardised services and ready-made products, proves the demand is there.
"At the moment, many customers are concerned about the reliability of mainland products, leading them to opt for High Street brands, such as Watsons. Mainlanders now come to Hong Kong to buy Chinese medicine because they trust local regulations. They can afford it because the Yuan is strong and they know that, if they buy a counterfeit product, they can complain to an official here."
According to Choy, the most popular products are those that promote general 'wellness', rather than those targetted to specific ailments. She said: "Ginseng is popular for its association with longevity, but its price has now gone up, especially for the granule version. With many brands investing heavily in marketing, this inevitably forces the price up."
Assessing this year's fair, Choy said: "This is my third year here and I'm looking for new ready-made products. Overall, though, there seems few big differences this year and the event seems smaller than the first time I attended."
As well as cost and legislation issues, another problem facing the industry is a shortage of ingredients. With most products sourced from traditional mainland farmsteads, the country is struggling to meet demand, leading to inflated prices and concerns over adulteration. Ginseng, for instance, has risen in price from just over Rmb350 per kg to more than Rmb600 since February this year.
Part of the concerns focus on the fact that any of the herbs used in Chinese medicine are only grown in China. Sabrina Lau, a sales account representative for NutraLab, a Canadian contract-based manufacturer, says that 80% of her company's raw ingredients, such as Goji berries, are only available from mainland sources.
Wong, though, doesn't see the industry's reliance on mainland agriculture as any likely bar to growth. He said: "China's economy is sound and resources are being allocated to Chinese Medicine. If the mainland isn't already leading this movement, it will be soon. There is a great awareness of the opportunities and the potential that just one herb has, especially as it can be used in so many different ways."
It will be of some reassurance to many in the industry that the green farming practices and low-carbon initiatives that are vital to the future of TCM are stipulated under the terms of China's 12th Five-Year Plan. Speaking at this year's conference, Cheng Yung-chi, Professor of Pharmacology at Yale University's School of Medicine, welcomed these greater moves toward agricultural safety. Addressing delegates, he said: "High quality and consistency are the key elements here. The minimal use of pesticides and the adoption of good manufacturing practices can only be good for the industry. Overall, taking an organic approach is important, after all, what virgin soils are there in China?"
International quality assurance
For many, modernisation necessarily entails globalisation. To this end, traceable quality assurance has become a pivotal issue in the sector, a development clearly championed by Wong. He says: "Mass production requires social responsibility. To this end, it is important that the purity and durability of any exported herbs are ensured. We have to protect this element of Chinese culture that the world is not yet familiar with."
While many fear quality control comes a poor second to profit margin on the mainland, Professor Li Da-ning, Vice Commissioner of China's State Administration of Traditional Chinese Medicine, argues that a sustainable future means affordability as well as consumer safeguards.
With regard to competition in the sector, Wong says: "China will face increasing competition when it comes to product development and research in this sector. Japan, for instance, already purchases a great deal of mainland-sourced herbs for manufacturing traditional remedies. As a result, Japan is now seen as taking the lead in research into natural medicines."
The rise of Japan in the sector and the potential this offers to third party countries has not gone unnoticed. Andrew Pan, Head of International Business at the Taiwan Direct Biotechnology Corp, is keen to secure business with Japan. He said: "Thanks to our low labour costs, we can manufacture products for Japanese brands at attractive rates. Partnerships are our main business opportunity. For us, we see the market as ever growing and continually getting better."
Despite his enthusiasm for establishing closer Japanese ties, Pan sees the mainland as, by far and away, his most important market, followed by the US and Southeast Asia. He said: "China will undoubtedly be a good market for us in the coming year. Hong Kong is important to us too. Despite its relatively small population, the sector is active here and we want to enter the market. At the moment, though, we don't know quite how to, largely for legal reasons."
Pioneer Mao, an associate of Pan's, was keen to emphasise Taiwan's growing strength in the sector and its investment in several well-regarded research centres focussing on Chinese herbal health supplements. He said: "We have policies and a commitment by our universities to support scientific research in this sector. It is, however, a challenge for us to import certain ingredients from China."
According to Pan, his company's biggest sellers are those products said to reduce joint pain and the collagen-containing items that promote healthy skin. For Lau, it is the same story in Canada. At present, though, many of NutraLab's products are only available in Canada, despite emerging demand across Asia for the company's fast-acting liquid treatments.
Significantly, Canada was one of the few non-Asian countries represented at this year's fair. According to Lau, this was partly to new domestic legislation that has boosted the sector. She said: "Under our new legislation, consumers are guaranteed authenticated product information, allowing them to feel truly confident."
Wong confessed himself envious of the enlightened approach being adopted by the Canadian government. He said: "With many items now certified as Natural Health Products by Health Canada, manufacturers are free to assert their health benefits and specify their individual properties, which is far better when it comes to building consumer trust."
As well as the domestic Canadian market, Lau says her company is focussing on growing demand in the Middle East. She said: "Chinese medicine is increasingly popular in many Middle Eastern countries and I think it will grow hugely over the next year.
"I'm actually surprised there aren't any exhibitors here from the Middle East this year. The market there is far from saturated and they buy in very big volumes. Our only concern is that a product must contain less than five herbs in order to be legally sold there."
With clear interest in some North American markets and in the Middle East, Europe is also apparently awakening to possibilities in the sector. At present, the authorities on the mainland are working with their EU counterparts to explore standardisation measures related to Chinese Medicine. In total, some 80 TCM variants are under discussion, with a meeting set for October to consider approval under EU law. In similar moves in the US, a number of herbs are set to secure approval from the country's Food and Drug Administration (FDA).
Completing its inroads in to the world's markets, there is also said to be growing interest in TCM in Central and South America. According to Jack Palasay, Founder of Cura Fuel, a South American TCM trading company, support for the sector is set for rapid growth. He said: "This year, I'm here looking for health supplements and see far more coming on the market. It's a boom time."
At present, Cura Fuel sources finished products from Colombia and Venezuela, all of which are manufactured using ingredients imported from China. Assessing the potential in the region, Palasay said: "The emerging markets, like South America, are increasingly wealthy and have huge potential. They're still learning, but the people there do care more about their health and natural living. My best market, though, does remain the US."
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Looking to the future, Wong sees emerging research into the synergistic properties of Chinese and Western medicine as an important way forward. Explaining the theory, Wong said: "Various herbs have one active ingredient, while a single product with multiple herbs has a number of active ingredients acting in synergy, which is something of new concept in Western medicine. If we can identify each synergistic component, Western and Chinese herbal medicines can really start to work together. It could lead to a whole new approach."
As well as a synergy between active ingredients, synergy is also emerging in terms of international, academic and commercial collaboration. NutraLab, for instance, has entered into a research partnership with the University of Guelph, an educational institution in east-central Canada. Explaining the focus of the research, Lau said: "We really want to understand the synergy effect."
The ICMCM 2013, the twelfth edition of the fair and conference, took place on August 15th to 17th at the Hong Kong Convention and Exhibition Centre. Co-organised by Hong Kong Trade Development Council and the Modernized Chinese Medicine International Association Ltd (MCMIA), this year the event attracted 139 exhibitors. According to the organisers, this year's event enjoyed a 20% rise in attendance.
Vickie Chan, Special Correspondent, Hong Kong