Germany Moves to the Forefront of the European Herbal Medicine Industry by Robert Yuan, Ph.D. and Jorg Grunwald, Ph.D. (Genetic Engineering News, April 15, 1997) Medicine in the U.S. is being profoundly affected by two contradictory trends. One is the increasing number of biotechnology products and processes, and the other is the growing use of herbal medicines. While relatively novel in the U.S., herbal medicines have a long history in Europe, where for over 100 years their quality control and good manufacturing practices have been comparable to those of conventional drugs. The global market for herbal medications in 1996 was estimated at $14. Billion, distributed in the following manner: Europe; $7 Billion, Japan; $2.4 Billion; North America, $1.6 Billion; and the rest of the world, $0.3 Billion. Economically and technologically, Germany has the most developed herbal medicine industry and the single largest market ($3.5 Billion), followed by those of France ($1.8 Billion) and Italy ($0.7 Billion). The reason European consumers show such a strong preference for herbal remedies largely is due to an aging population afflicted with chronic diseases for which modern medicine has few satisfactory treatments. Consumers, who offen reject conventional drugs with their potentially severe side effects, often prefer natural alternatives. In Germany, consumer attitudes fit into a medical establishment that accepts the use of herbal medicines (i.e. phytopharmaceuticals). Courses in the use of herbal medicines are a regular component of medical and pharmacy curriculae, and since 1993 this subject has been a regular component of medical and the German medical examination. More than 70% of general practitioners prescribe herbal medicines, most of which are reimbursable by the public health insurance system. Germany differs from the U. S. in two other important respects: its regulatory environment and marketing system. The German Medicines Act of 1978 allowed for the issuance of Standard Licenses for herbal products, subject to the publication of a monograph that provides qualitative and quantitative information about each product. These monographs are produced under the jurisdiction of a special body, known as Commission E, and provide information on indications, contraindications, side effects, interactions, dosages, manner of use and effects. As of July 1988, there were 200 monographs, including 140 drug monographs. The overall focus in the German system is on individual herbs. This approach has now been accepted by the European Union. The existence of a legal firamework for herbal products has certain important consequences: they can be sold as drugs with both labels and inserts providing the necessary information; they can be prescribed by physicians; they are reimbursable through medical insurance schemes. In Germany, herbal medicines can be sold through apothekes (which also sell prescription drugs), pharmacies (which sell OTC products and cosmetics) and natural food stores. In the future, this system is likely to undergo major changes, since Commission E has been disbanded and new EU regulations will require herbal medicines to be treated in the same way as chemical products or be sold only as a traditionally used drug. The largest categories of herbal medicines sold in Europe are cardiovascular and respiratory treatments, tonics, and digestives. Most of these products would fall into the OTC drug category in the U.S., with the exception of cardiovascular and some of the respiratory products. In 1994, German sales of non-prescription drugs totaled DM 11.9 Billion ($8. l Billion), 70% of which were conventional products. Of the remaining 30%, $14% were OTC herbal medicines, and 16% were prescribed semi-ethical herbal medicines. In other words, in an environment in which herbal medicines are part of the established medical practice, half of these products are sold for self treatment and the other half by medical prescription. MAJOR DISEASE CATEGORIES German market data provide an insight into those disease categories for which customers are most likely to use herbal remedies. The five top categories are antiarteriosclerotics, gynecologicals, cold/cough preparations, hypnotics/sedatives, and laxatives, some of which capture more of the market than their pharmaceutical counterparts. The list of German herbal medicines shows the dominance of such prescribed products as those derived from the Gintgo biloba, even though those are now decreasing in sales. Another major product over the past two years has been St.John's-wort (i.e. Hypericum) which has been the mostpopular herbal antidepressant since 1995. Such developments have attracted the attention of major European Multinationals- and include companies such as Boerhinger Ingleheim, Boerhinger Manaheim, and Bayer- that see the potential of what are called "green pharmacouticals.'' Bayer's strategy was to jointly market their existing pharmaceutical antidepressant alongside their herbal counterpart, thus giving the physician the option of treating mild depression with botanical products (with few side effects) and severe depression with chemical products. The herbal product was obtained through collaboration with Zeller AG, which has a long history of collaboration with Ciba-Geigy (now Novartis). This paftern, in which major multi.naJionals own or have strategic alliances with herbal medicine companies. is likely to grow along with fhe market sector. At present, most of the German companies are privately owned and have sales ranging from $20 million to over $100 million. These are a growing target for acquisition of both European and U.S. multinationals. The latter are interested in establishing a foothold in this growing and profitable PHARMACEUTICAL business Until recently there has been much less interest in the much smaller US market. However. the optimistic projections for a future U.S. herhal medicine market have led the two major German companies, Schwabe and Madaus to establish a joint venture called Nature's Way in the U.S. Other companies like Lichtwer Pharma or Pharmaton (a member of the Boerhinger Ingleheim Group). have subsidiaries in the U.S. The scientific data and the manufacturing qualilv associated with German herbal products makes it likely that more American companies will enter into alliances. mergers ana acquisitions with their German counterparts as this industry continues to grow. (End) Ahout the authors: Robert Yuan, Ph.D. is a professor of microbiology at the University of Maryland in College Park and president of Biotechnology International, a biotech consulting firm. Jorg Grunwald is CEO of Phytopharm Consulting. Institute for Phytopharmaka GmbH (Berlin Germany) a specialist business consultancy for herbal medicine and dietary supplements.