Nov 1, 2007: In March 2007, Tongjitang Chinese Medicine Company, a “traditional Chinese medicine” (TCM) manufacturer, made its debut on the New York Stock Exchange, becoming the first traditional Chinese medicine company to list on the world’s biggest exchange. It owns seven patented herbal drugs, including Xianling Gubao for the treatment of osteoporosis and Zaoren Ansheng for neurasthenia. Its net income in 2006 amounted to $17.2 million, up 20 percent from 2005. Tongjitang earlier offered 9.87 million American Depositary Shares (ADS) at an estimated price range of $15-$17 a share in a bid to raise as much as
$168 million.

This indicates that TCM has been winning greater recognition among Westerners as an alternative health care supplement. At the same time, listing overseas help the Chinese companies boost the international reputation for TCM.

The popularity of TCM has been gaining ground in last few years—and not just in Asia but in the US and Europe as well. The TCM has been accepted by more than 120 countries in the world. In Britain alone, more than 3,000 clinics of TCM have opened. Around 2.5 million Britons have been receiving TCM treatment including Chinese herbal medicine, massage, and acupuncture every year. In France, there are 2,600 clinics of TCM with 7,000 to 9,000 acupuncturists. The number of TCM clinics in the Netherlands too has increased to 1,500. In America there are more than 20,000 traditional Chinese acupuncturists and 400 companies specialize in the sale of Chinese herbal medicine.

According to a market report, to promote TCM, at least 40 countries have opened schools on acupuncture, a part of TCM treatment. Over 50 medical agreements signed between China and other countries contain cooperation in TCM clause. Traditional Chinese Medicine has been accepted and protected by laws in Australia and South Africa, and TCM products have been exported to 135 countries.

More than 3,000 enterprises in China are engaged in TCM processing. About 3,000 Chinese hospitals provide TCM and see 234 million patients each year. The industry is growing by 20 percent a year. In 2004, the TCM industry generated about $11 billion (90 billion Yuan) of output value, accounting for 26 percent of China’s entire pharmaceutical section.

A recent Helmut Kaiser Consultancy study says TCM market is rapidly developing since late 1990s. In 2005, the output value of TCM amounting to about $15.60 billion (110.3 billion yuan), accounted for a quarter of the overall output value in China’s medical industry. The net yield and profits of TCM production is much higher than the average for the country’s medical industry. The total TCM market in China will rise to $26.65 billion in 2015.

The study also says China is the country which is rich in medicinal resources with more than 6,500 Chinese herbs determined. There are over 600 herb bases to produce the Chinese medicinal raw materials. China exports 240,000 tons of medicines annually, of which 200,000 tons are raw herbs. The exported raw herbs accounted for 20 percent of the country’s annual harvest. The plantation has become a new source of income for some Chinese farmers. Many provinces such as Hebei, Guizhou, Yunnan, Sichuan, Shaanxi and Shanxi have designated traditional medicine as a pillar industry.

Considering the opportunity and interest about TCM in western countries, one of the leading TCM producer and retailer TongRenTang announced its plans to expand its overseas chain to 100 stores by 2008. It already has 22 shops in 14 nations and now looks to expand the overseas market for its medicines. During 2006, the company exported to more than 40 countries and regions achieving about $8.9 million (70 million Yuan) in overseas sales. This 300-year-old TCM producer is preparing for online sales too.

Similarly China Shenghuo Pharmaceutical Holdings, the first TCM maker on the American Stock Exchange, specialized in panax notoginseng—used to treat wounds, bleeding and even internal blood disorders—has announced its plans to raise as much as $300 million in the coming years to build a large, modern pharmaceutical company producing traditional herbal medicine.

The companies have now realized the importance of innovation and brand building to reach out to wider masses locally and internationally.

Popularity drivers 
There are many reasons for this rapid growth and popularity of TCM in Far West. Amongst the general public there is a growing disillusionment with Western medicine, which, despite impressive results in the areas of surgery and many acute diseases, is often unable to deal adequately with many long-term, chronic ailments. Many patients are also reluctant to take strong medication, the long-term side effects of which are not always known or understood. In recent years, the popularity of TCM has formed part of an increased interest in the cultural traditions of both China and the Far East as a whole. Though the name includes traditional but modern TCM is no longer made in small workshops and tasted by experts but manufactured to international standards on production lines. Its medicinal effects are widely recognized internationally and is being developed using the new technologies.

In China, too, TCM is still popular choice of medicine because evidence suggests the old remedies are effective. Many poor people in rural areas rely on it because they have no access to western-style healthcare. Even the wealthy, modern Chinese like to complement Western treatments with a holistic approach. The rising incomes of young urban professionals have seen spas pop up all over the cities like Beijing, many of them offering therapies inspired by TCM. These are said to have fewer side effects than Western drugs.

However, there are still many issues that are coming in the way of acceptance of TCM. This is because very little clinical research relating to TCM has taken place. There is a large amount of data in China, but it often isn’t translated into English and many Western physicians don’t regard it as ‘scientific’ from a Western medical point of view. However, the companies involved in the manufacturing of TCM have been taking active role in promoting TCM with the support of the Chinese government.

As ever with research, one of the bottlenecks is funding. In order to recoup their investment, most pharmaceutical companies are only interested in funding research, which will leave them with a marketable product. Given that Chinese herbal medicine in its traditional form use compounds, i.e., prescriptions containing a number of different herbs, which are likely to be altered through the course of treatment, there is little scope for a standardized end-product and there are few companies that are interested in funding research in this area.

To establish an international standard for TCM, the World Federation of Chinese Medicine Societies (WFCMS) was founded in China. All Chinese TCM clinics, practitioners and academic institutions across the world follow standards set by the WFCMS. The State Drug Administration (SDA) under the Ministry of Health in China has laid down guidelines to ensure that manufacturers and herbal farmers are following Good Manufacturing Processes and Good Agricultural Processes.

Government funds TCM
To support the TCM, which is an inseparable and important component of China’s health care system, in March 2007, the Chinese government came up with a document, “Outline for innovative development of TCM.” Prepared jointly by 16 central government ministries and other official bodies, the document states that the government would strongly support the development of TCM and the folk medicine of ethnic minorities and give full play to their important role in preventing and treating illness.

The government will fund scientific research into TCM to improve the standards and to study new applications in order to expand its appeal abroad as an effective alternative to western medicine. It also set a goal to help traditional healing methods and herbal medicines gain a footing in overseas mainstream healthcare system markets by 2020. And to give TCM a better footing in the world market, the government  is setting up “a system of standards” for medical treatments, medicine production, teaching, scientific research and market entry. Such a system of standards would help boost TCM’s “recognition and understanding” throughout the world.

To encourage more innovation, China will invest more money in the area and encourage international cooperation in the TCM research field. Over the past five years, the government has invested $92.5 million (740 million yuan) in TCM research and development. In the coming years, the central and local governments would increase funding for TCM scientific research and actively seek investment from domestic businesses and overseas sources.

China has signed inter-governmental protocols including TCM cooperation with 70 countries and regions. China now aims to launch international research programs to promote TCM and establish two influential traditional medicine research institutes and information exchange centers. It also plans to carry out academic exchanges with 50 overseas medical institutes. The research was prompted by the International Traditional Chinese Medicine Program for Cooperation in Science and Technology, which was launched in Beijing in 2006.

China is working with international scientists to research a wide range of new treatments using TCM. China together with international researchers will test TCM in treating AIDS, cancer and psychosis and cardiovascular diseases. In the last couple of years many organizations started conducting clinical trials for TCM drugs. These initiatives will definitely help the growth of TCM market.

Increase in growth of TCM market due to advantages of using TCM, shifting to alternative medicine in Western countries and support of the Chinese government to the TCM sector in establishing international co-operation in doing research and development will help the industry to focus on developing modern TCM products that meet the demand of the international market.