AGRICULTURE NKEA: HERBS SUB-SECTOR ENTRY POINT PROJECT (EPP) HIGH VALUE HERBAL PRODUCTS

February 2011

(LIMITED CIRCULATION)
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GNI CONTRIBUTION This initiative is projected to provide an increase in gross national income to the country amounting to USD1. OBJECTIVES Given the vast potential in market opportunities. the Entry Point Project for herbal products towards nutraceuticals with claims and high value botanical drugs has been identified.  To produce quality.016 billion or RM3. safe and efficacious high-end herbal products especially for the export markets.25 billion by 2020.INTRODUCTION Global trade of natural products. aimed as a coordinated national project with the following objectives:  To increase the gross national income (GNI) amounting to USD1. which amounted to RM777 billion in 2009. given our rich biodiversity.   To strengthen the supplies across the value chain. towards a preference for natural products with therapeutic value provides opportunities for Malaysia to become a significant global player. and To enhance R&D in herbs and secure the intellectual property rights from local herbs. and in support of providing alternative and complementary medicines to the masses for better healthcare and healthy living.016 billion or RM3. large investment required for clinical studies and difficulty in penetrating international markets.25 billion by 2020 with contribution from the Entry Point Project of high value herbal products and spin-offs from other business opportunities. currently the majority of local products are largely in the low-end market segment. denoted by global growth in nutraceuticals. is projected to triple by 2020. This EPP is a private sector-led initiative. However. such as fortified beverages. The shift in healthcare. Diversification towards high-end herbal products based on standardized extracts and validated by clinical studies remains weak due to lack of industry champions. 2 . weaknesses in local R&D.

commercialization of herbal products and finally to generate returns to increase the gross national income to the country within the agriculture NKEA herbal sub-sector. II.GNI Contribution EPP High value Herbal products Business opportunities : USD 1. Once fully disbursed.21 billion) : USD324 million (1.04 billion) COMPONENTS OF THE PROJECT OF HIGH VALUE HERBAL PRODUCTS I. The clusters are:      discovery. and pre-clinical and clinical studies) to be given to research institutions based on research requirements as requested by the participating companies.25 billion) : USD692 million (RM2. pre-clinicals and clinicals. The herbal fund is meant to be a seed grant. standardization & product development. Private sector manufacturing companies will invest in other capital expenditure (CAPEX) and operations expenditure (OPEX). crop production & agronomy. Clusters of R&D Centre of Excellence (CoEs). the private sector is expected to make further investment contribution to the development. Grants will be given to research institutions based on research requirements requested by the participating companies. and processing technology 3 .  R&D grants will be established to support: Upstream research activities (discovery and crop production & agronomy).  Downstream research activities (standardization & product development.016 billion (RM3.These clusters will coordinate research amongst public R&D organizations.

National Branding  Government will facilitate an integrated marketing approach to promote a national brand  Herbal products developed under the project will carry the national brand PRIVATE SECTOR LED The Government encourages greater participation from the private sector in driving the development of these high value herbal products NKEA initiative as a new growth area. The Government will facilitate and support this project through the set-up of a Malaysian Herbal Council. Standardized extract supply Extraction facilities in the country will be expanded. basic utilities. research capabilities and infrastructure will be improved. There are currently limited commercial-scale facilities.The main role of the R&D clusters is to accelerate and coordinate sustainable R&D activities for the NKEA projects. anchor companies will invest in equipment and machineries. Anchor companies will be selected to manage smaller farmers (out-growers) and ensure compliance with international standards on GAP and organic certifications. and a collection. As such. New facilities will be built.000kg per extraction cycle to supply the industry with reliable and premium quality extracts at competitive cost. Raw material supply To ensure adequate and consistent supply of raw materials. V. III. In return. Herbal Cultivation Parks will be developed in corridor areas where the herbs will be planted on a large commercial scale based on a contract farming model. The Government will provide the basic infrastructure i. processing and packaging center. 4 .e. each with a capacity of 1. IV. as well as manage and run the operations. Most are small or at pilot scale and not designed to operate commercially.

signed by the company management and attached with the company profile. kacip fatimah. Several popular Malaysian herbs have been identified as the focus. Companies wishing to participate will need to fill in the necessary documents as in the application procedures. Once approved. The target for each participating company is to develop and launch:   New nutraceuticals products by 2012 and 2013 New botanical drugs by 2016 Companies are expected to sell products overseas and hence need to comply with the requirements of foreign regulators. and to satisfy requirements. 3. 4. Works on the details of the R&D areas with the chosen COE/s for onward submission to the Herbal Development Office. sign a contract agreement with the Herbal Development Office. misai kucing. APPLICATION PROCEDURES The following are procedures that companies need to comply with: 1. 5 . to the Herbal Development Office.PARTICIPATION Malaysian herbal companies are invited to participate in this national program. Sign the non-disclosure agreement (NDA) with the Herbal Development Office. including tongkat ali. 5. 2. Submit a letter of intent. Submit the company’s business plan (including the brief proposal for R&D areas) as an appendix and present to the Herbal Development Office for evaluation and approval. hempedu bumi and dukung anak.

hempedu bumi and dukung anak) identified for EPP. March 2008 A botanical drug product consists of plant materials. treatment or prevention of disease in humans. Source: Nutraceuticals. macroscopic fungi. but this is subject to approval from the Herbal Development Office. 6 . What is defined as nutraceutical product and what is a botanical drug? Nutraceuticals are beneficial foods. which may include vegetables. cure. mitigation. Can companies participate in both nutraceuticals and botanical drugs? Yes. 4. Therefore. However. qualified companies can participate in both as long as the companies fulfill the -requirements. misai kucing. kacip fatimah. Source: FDA. both dietary supplements and functional foods are permitted to make health claims. any medical claims to prevent. if companies can justify focusing on herbs outside these five in order to generate high returns for GNI. algae. treat or cure disease cannot be made for nutraceutical products. currently classified as ‘foods’ and not ‘drugs’. Are the herbs confined to selected few? The listed herbs are the focus herbs (tongkat ali. However. US 2. which is intended for use in the diagnosis. or combinations thereof. they are welcome to present these business opportunities in their proposal. Inc.FAQs 1. Can companies submit more than one product proposal for nutraceuticals and / or botanical drugs? Yes. A Global Strategic Business Report. Global Industry Analysts. 3.

Guidelines for Research in Herbal Medicine including Preclinical safety evaluation: National Research and Development on Herbal Medicine Committee (NRDHM) http://www. non-Bionexus companies can participate in this program as long as the companies fulfill the pre-requirements of the evaluation criteria. 6. Good Laboratory Practices (GLP) for pre-clinical toxicology/safety testing as well as Good Clinical Practice (GCP) for clinical trials. http://nih. Can non-Bionexus companies participate in this program? Yes.my/ ii. Clinical evaluation and clinical trial: Clinical Research Centre (CRC) http://www.globinmed. Can companies choose their own research institutions? Yes. companies may engage with any research institutions under the particular clusters.my/ 7 . GMP and GLP practices: The National Pharmaceutical Control Bureau (BPFK) website http://portal. Further information are made available from the following websites: i. Ethical approval: The National Institute of health (NIH).bpfk. MOH Research and Ethical Committee (MREC).crc. which were prepared according to the respective international standards and requirements.gov.5.gov.com/ iv.my/ iii. 7.gov. These include product’s manufacturing as in Good Manufacturing Practice (GMP). What are the procedures or guidelines that companies need to adhere to in relation to the pre-clinical and clinical compliance by the Ministry of Health? Companies or individuals interested in venturing into upgrading the value of their herbal products are advised to comply with the guidelines determined by the Ministry of Health Malaysia (MOH).

Presint 4 62624 Putrajaya Tel: 03-8870 1000 Faks: 03-8888 6901 e-mail: hdo@moa.my 8 .my / sitihawa@moa.gov. Persiaran Perdana.gov.------------------------------------------------------------Address all enquiries and forms to Head Herbal Development Office Level 10. Wisma Tani Kementerian Pertanian dan Industri Asas Tani No 28.

2.1.3 1.1.GUIDELINES FOR APPLICANTS ELIGIBILITY CRITERIA 1. EVALUATION OF COMPANIES 1. 1.4 discovery crop production & agronomy pre -clinical and clinical standardization & product development 1.4 1.1 1.1 COMMERCIALIZATION CAPABILITY FOR NUTRACEUTICAL with CLAIMS and BOTANICAL DRUGS 1.3 1.3 FINANCIAL STRENGTH IN COMERCIALIZING HERBAL PRODUCTS LOCALLY & OVERSEAS 1.2.4 PREFERABLY COMPANIES ARE TO SOURCE THEIR RAW MATERIALS AND EXTRACTION FACILITIES LOCALLY 1.2.5 CORPORATE STRENGTHS/PROJECT MANAGEMENT 1.5.5.2 Company entity must have minimum paid-up capital of RM 1 million.1 All categories of companies must have a minimum of 51% equity held by Malaysians. Company applicant must provide the attested latest Form 49 Companies Act 1965 together with the audited three years Annual Report.2 1.1.2 1.2.1 1.2 SCIENTIFIC AND TECHNOLOGY CAPABILITIES (where applicable) 1.1. Company applicant must provide the attested latest Form 24 Companies Act 9 .5 market knowledge regulatory knowledge branding products distribution locally and international manufacturing 1.1.

5. liquidation or receivership. 24 and 49 Companies Act 1965 should be certified by the Companies Commission of Malaysia (SSM) prior to submission. 1. 1.3 None of the company directors have been convicted for any fraudulent activities. The target for participating companies is to develop and launch a minimum of:   Ten nutraceuticals products by 2012 and 2013 Five botanical drugs by 2016 10 . and Forms 9.6 PROJECT & APPLICATION DURATION The maximum project duration allowed is up to 10 years with good performance in line with the NKEA EPP.1965. nor has the company ever been into bankruptcy.

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