Herbal Industry

In Malaysia
The Challenges & Opportunities

Datuk Dr. Ahmed Tasir Lope Pihie

Executive Chairman
Malaysian Herbal Corporation
 Herbs are plants or parts of
plants or preparation
Thereof used for health and wellness reasons

a. Medicinal plants

b. Aromatic plants / Essential Oil Crops

Successful Herbs
•Ginkgo (USA)

• The world's largest plantation of

Ginkgo trees is in Sumter, South
Carolina - over 1000 acres
• Schwabe’s Tebonin – best selling
supplement in Europe:
>USD200mil/yr sales
 Successful Herbs
•Ginseng (USA)

• Hsu Ginseng Farms owns over 1000

acres of virgin ginseng farmland in
Marathon County, Wisconsin, USA
• Pharmaton’s Ginsana sales at
>USD50mil / yr in Europe
 Successful Herbs
•Ginseng (USA)

 A caffein-free herbal tea

 Scientifically tested health benefits
from polyphenols and
antioxidants
 Delay ageing process
 Protect against heart attack
and certain types of cancer
 Market Sales
Overall Sales in US only
US$Billion
6
 U.S.
5
5.5
 Europe (Germany biggest
4 market)
CAGR
3  Canada
16%
2  Japan
1 1

0
1993 2003
 Herbs have multiple
subsectors…
There are huge global opportunities for herbs based business

Phytopharmaceuticals Herbal drugs

Modern drugs MAPs Herbal drug preparation
Drug leads Herbal Med production
Drug intermediates
MAPs MAPs
Traditional medicines
Insect repellants
Complementary Alternate
Insecticides
Medicines
Pesticides
House hold remedies
Fungicides MAPs GLOBAL MAPs

Pharmaceutical Aids
OPPORTUNITY Nutraceuticals
Gums FOR BUSINESS Functional foods
Mucilages MAPs MAPs Food supplements
Edible dyes Beverages
Sweeteners

Essential Oils MAPs MAPs Extracts

Flavours
Fragrances
Perfumes
Cosmetics
 Companies can choose from
Lower Lying Fruits to High-End
Products
• Fast growing High
industry and
require
26.6b Nutraceuticals
25b Cosmeceuticals/
Cosmetics
investment
to become 4.7b
Functional
leader with 5.9b Foods
short time to
enter market Herbs/Botanicals 36b
5%
Growth Phytomedicines
Rate
Require big
investment
17.3b and
• Slow growing resources
Flavors & 16.4b in the high
industry with Fragrances
short time to growth
Dietary
market that supplements market with
require less long time to
investment enter
market
Low
Short time Time to market Long time
Rising Demand for Herbal
Products Globally
Global Demand for Herbal Products
(US$ Billion)

5000
Preference for Natural
Products
 Rising middle income class
Health awareness
Drugs are expensive,
yet with side effects

60 210 600

Source: Burrill & Co 2007 & Malaysian Herbal Industry Outlook 2004
 Market for Herbal Products
are huge worldwide
…matured markets mostly in developed countries

Europe
38.2%
Japan
United 13.4%
States
23.3% Asia
18.1%

RoW 7%

Source: Burrill & Co 2007 & Malaysian Herbal Industry Outlook 2004 Source: Global Business Sales Report 2001
Market Gaps:
Opportunities for Malaysia

Major markets looking for new

ingredients

Scientifically verified (safe & efficacious)

herbs are in demand…opportunities for
tropical herbs

Commercialisation of traditionally
proven herbs

Weak supply chain of value-added

products from tropical herbs for global
market
Antioxidants:
Opportunities for Malaysia

Consumer interest in and awareness

South Africa capitalize this by
introducing Roibos Tea to the market
to capture the US market
(US$5.5 billion a year)
of the health properties of
antioxidants has been rising in
recent years. Not only has this
increased global sales of
antioxidants, but demand for foods
recognised as being naturally rich in
antioxidants is also growing.

Malaysia has it’s own plant rich with

antioxidants – Misai Kuching.
Imagine what can we do with
antioxidants reach misai kuching for
the world market!
… in fact,
Hundred of popular
Malaysian herbs in waiting
Drug with Botanical
Precursor “Taxol”
• Bark of Pacific Yew Tree discovered by US National
Cancer Research Institute in 1967 for cancer
treatment
• Bristol-Myers Squibb sales peaked at USD1.6B in
2000
• Now in generics form

Functional Food Superstar

“XANGO”
• Started in 2002
• Joe Morton, President of XanGo discovered
mangosteen whil he was working in KL.
• Annual sales more than $500m in 2008.
• Raw material source from Thailand

Pegaga
• Used centuries in India (Brahma manduki, Gotu Kola)
and China (Ching Chow Sui)
• High demand in French cosmetic & supplement for
brain.
• Standardize extract : RM3,800/Kg!!
• Malaysian variety more potent & good potential
(USM Study)
Malaysia is Rich
In Bio-Resources
 The oldest rainforest
in the world

 One of the 12 mega

biodiversity countries
MALAYSIA
 Ranked 4th in Asia

 Endemic to more
than 15,000 plant
species

 1,200 known to have

medicinal value

 Multi ethnics culture

with different use of
herbs

“TREMENDOUS POTENTIAL”
for discovering useful and valuable products
 Traditional Knowledge
and Multi Ethnics Culture
With Different use of Herbs

Ayurvedha and Sidha Malay Principles Traditional Chinese Medicine from Hundres of Orang Asli
from India, adapted • Balance China also use lalang and misai tribes with their own
to use some local • Temperature kuching healing traditions and
herbs (petai and kacip • Taste principles
fatimah) • Combination
• Food as Medicine
• Life Stages
Success Stories

Misai Kuching Nano

for Cancer (UNIMAP)
(USM)
Development Research
of local findings
Kaduk for Active Ali
products anti-obese (USA)
(USM)

Sales of Misai Kuching,

Dukung Anak, Tongkat
Ali overseas
 Malaysia: Insignificant
Downstream Activities….
Botanical Product Types
Drugs
RM7mln/Kg
RM150/
Standardised Phytomedicines bottle
Extracts Eurycomanone as marker
RM2,500/Kg
Spray/Freeze RM120/
Drying Cosmeceutical bottle
RM1,500/K
Anti-wrinkle cream
g
Crude Extracts Dietary RM80/
RM1,000/Kg
supplements bottle

Dried Normal pills, e.g. tongkat ali capsule

RM18/Kg

Functional RM30/
Fresh foods box
RM2/Kg

Processing of Tongkat Ali - E.g.. Tongkat ali tea, energy drink,

food ingredient

(Source: MARDI 2004, MHC)

 Our Neighbors are already
taking positions in the
Herbal Space
PHILLIPINES
THAILAND
• Major supplier essential oils: ylang
• Global producer of mint, citronella, ylang, patchouli and citronella
eucalyptus, mint and jasmine oil – flavors &
• High priority in research
fragrances
• Products have penetrated Japan market
• Becoming known globally - strong support
from govt on trade exhibitions

INDONESIA

• Known for Jamu traditional

medicines, e.g. Mustika Ratu exports
VIETNAM to over 20 countries around the world

• Target to produce medicines indigenously by

year 2010 MALAYSIA???
• Set up Institute Materia Medica – an
integrated research center SINGAPORE
• Organised large scale cultivation for export
• Among the top 12 major exporting country of
medicinal plants
• Positioned as a major clinical trial center: over
150 clinical trials a year
• Allocation of S$2billion for herbal research

(Source: ICS UNIDO, 2003; Focus Group Discussions)

Malaysian are still focusing on
Low-End Products

High

26.6b Nutraceuticals
25b Cosmeceuticals/
Cosmetics

4.7b
Functional
5.9b Foods

Herbs/Botanicals 36b
5%
Growth Phytomedicines
Rate

17.3b
Flavors & 16.4b
Fragrances
Dietary
supplements

Low
Short time Time to market Long time
Yet the Presence of
Malaysian Herbs in the
Market Place is insignificant
Perception of herbal sector as backyard industry

No major global player

- Despite having 150 small local GMP manufacturers

No strong brand names in the global market place

66% of raw materials are imported

No clinical study has been completed (expensive)

Low investment & uncoordinated R&D

Regulatory Issues
Not helping the industry… old rules persist

Product registration took

a long time
Not
helping Unnecessary, difficult and
cumbersome export documentation
the
Easy importing procedures for
developme products from overseas, making
nt of the local products uncompetitive

industry Disorganized research activities

Herbal are treated at par

with medical
Only 7 Patents Granted so
far to Malaysian Researches
A case of “bio-piracy” : Lemba
Japan patents (18)
Curculin, taste modifier composition, chewing gum,
composition for oral cavity, beverage
-Inventor & applicants: Japanese

US patents (8)
Curculin, taste modifier composition, chewing gum
-Inventor & applicants: Japanese

Europe patents (3)

Taste modifier composition, chewing gum
- Inventor & applicants: Japanese
Lemba
(Curculigo Latifolia)

…and many more

Source: Biotropics Malaysia
 Development of Herbs as a
new source of growth has
long been recognised…
3rd NATIONAL BIODIVERSITY
VISION 2020 AGRI. POLICY POLICY

•Herbal sector •Herbal is •The importance of

could maximize recognized as the sustainable use of
the utilization of New and Emerging biological
bio - resources Industry resources

NATIONAL BIOTECHNOLOGY
S&T POLICY POLICY ON T/CM (2000) POLICY (2004)
•Need more •Encouraged
research for •Integration of intensive R&D and
potential T/CM into the biotechnology
development of Malaysian application to
the traditional healthcare upgrade herbal
medicine system products
market.
 ..yet there is no champion

MDTCA Matrade
MRE MOTOUR
Private
MOSTI MRRD FAMA license
wholesalers

Marketing
MOH MITI Support &
Distribution

State
MOA Policy Govts MINT
MPOB MARDI

FRIM SIRIM

Professional
Industry
Associations
IMR UNIVERSITIES

NGOs MEDIA
BIOSTAQ Technology
Information KULIM & Service CEPP UTM
HIGH TECH Support
 Malaysia’s Offerings:
“Myherbs for Global Wellness”
Empowered to spearhead Accelerate and coordinate R&D
downstreaming activities and with IP protection
ensure ALL strategic proposals Intensification
being implemented of R&D
Develop
professionals in
critical areas
Establish an
Capacity
empowered
Building
entity
HIGHLIGHTS
Promote Malaysia’s OF IDEAS Establish clusters of
biodiversity and herbs raw material
traditions to and ingredients
establish our own production
Marketing
healing identity Sustaining
(Ramuan) akin to &
Feedstocks
Ayurveda and Promotion
Traditional Chinese
Medicines REGULATORY REFORMS
 Establish
An Empowered Entity
-Empowered to  Empowered to spearhead the initiatives
spearhead
downstreaming  Drive and ensure ALL strategic recommendations
activities and being implemented
ensure ALL
strategic
proposals being  To strengthen coordination between all involved
implemented parties

 Centre for services provider

Intensification
of R&D
Accelerate  Establish national program to coordinate research amongst public
R&D organizations and facilitate collaborations with industries
and especially for herbs standardised extracts.
coordinate
R&D with IP  Establish a strategic framework to protect and manage access to
biodiversity and Traditional Knowledge
protection
 Validate safety & efficacy of products through pre-clinical and
clinical trials by both Government hospital and qualified private
medical centers

 Establish fund for research into general industry interests such as

toxicity studies, standardization, monographs and pharmacopeias.

 Facilitate the development of Good Laboratory Practices (GLP) in

public & private research organisations
 Capacity Building

Develop  Device academic programs in tertiary institutions to include

herbal related subjects into conventional disciplines
professionals
in critical  Include relevant phytotherapy courses as a subject for
areas - medical students
herbalists
 Establish regular program to train farmers in Good
Agriculture and Collection Practices (GACP), and organics,
supported by extension program

 Include herbal experts in approving product registration

 Facilitate & support entrepreneurial initiatives including

incubators programs
 Sustaining
Feedstocks
Establish  Facilitate & support contract farming models and
clusters of cultivation practices for small-holders
herbs raw
 Encourage intercropping with perennial crops
material and
ingredients  Facilitate certification of internationally recognized
production standards, e.g. Global GAP, organics, sustainable
collection

 Establish not-for-profit processing facilities in

research organizations for R&D and service to
industry, e.g. UTM’s Chemical Engineering Pilot Plant
(CEPP)
 Marketing
& Promotion
Establish  Establish Malaysia’s own beauty and healing identity
platforms for (Ramuan) akin to Ayurveda, by capitalizing on
the local biodiversity and rich multicultural traditions
industry to
access and  Leverage on Halal to capture wider market
compete in the penetration
global
marketplace
 Market access through Government-to-Government
arrangements (e.g. MOH – US FDA)
 Strategic Benefits
To Malaysia
Anyone can participate in the industry from low end tea products to high end drug
Industry development
transformation Putting Malaysia on the global map for innovative products from exotic ingredients

Impact to many industries: agriculture, healthcare, spa, agro-tourism, agro-chemical,

food & beverage, manufacturing, cosmetics, pharmaceutical

Establishing unique identity of Malaysia’s healing traditions based on multi-cultures

Impact on Existing
Upgrade of services from mere trading and packaging to high end manufacturing of
Businesses innovative formulations

High-quality extracts opens up opportunities to develop wide range of products

 Strategic Benefits
To Malaysia
Maximizing Claim ownership to Malaysia’s own diversity thru IP protection generated from advance
Research R&D

Potential Research programs are designed and coordinated towards market needs, while
reducing overlaps among institutions

Rural Job creation in rural areas from cultivation of herbs (as the main or supplementary
source of income)
Transformation
Potential forfarmers to move up the value-chain into primary processing (drying,
grinding, packaging)

Knowledge transfer on Good Agriculture & Collection Practice (GACP) and organic
farming give additional 50% to 100% of value to the crops
And has vast
distributive benefits
From low end products (tea) to high end products
(drugs)
Benefits to
Benefit to: farmers, smallholers, scientists,
manufacturers, companies, etc.
What if we don’t do?

Lose the opportunity to capitalize on Malaysia’s biodiversity

– Malaysia’s true possession for competitive advantage

Biopiracy will continue to benefit other nations

and foreign companies

Lose opportunities to harvest low hanging fruits in the

near future

Lose opportunities to harvest low hanging fruits

in the near future

Industry players will exit

Immediate strategic
action plans

SET UP REFORM
EMPOWERED POLICIES &
ENTITY REGULATIONS

PRIORITY AREA IN
10TH MALAYSIA PLAN
Thank You