Chinese Herbal remedies make China a fertile ground for Drug makers- NVS

Unlike their counterparts in the technology and web business, drug manufacturers all over the world are moving in to Chinese market in an attempt to skim the growing middle income group. A Bloomberg industry specialist, Sam Fazeli the Chinese market with over $1.3 billion with the shared mindset that  “traditional medicine are good enough” could be more engaged into buying a product under a renowned brand, over a “something that’s boiled up in a vat somewhere”.

Overall an average annual growth rate of 18% is expected to lead the country to grow into a $165 billion pharmaceutical market by year 2016. Out of this $13 billion is attributed solely to market for mild herbal extracts which is expected to grow annually by 14% in the coming five years. Pharmaceutical companies like Nove Nordisk and Merck are already spending millions to study diseases prevailing in the market.

GlaxoSmithKline Plc wants to focus its efforts on herbal drugs for immune system disorders like psoriasis. Without going into specific details Zhang Xun, who is lead in R&D for global natural products unit, the company eagerly awaits to start “clinical development ….by collaborating with domestic companies”. The global head of China Research and Development Jingu said the company will be integrating “traditional knowledge of disease” with “modern drug discovery technology”. The company is also planning to develop a remedy for digestive tract inflammation.

Nestle has also signed an agreement with Li-Shang controlled Hutchison China Meditech Ltd. (HCM) to develop drugs for gastrointestinal problems.

The relaxation of requirements for approving botanical treatments under FDA’s latest Regulations (released in 2004) has lifted a huge barrier for expanding pharmaceuticals into the Chinese market. The agency has received more than 500 applications for drug testing in pursuance of the amended regulations and most of these have received approval for human trials.

Shaw Chen, head of FDA’s botanical review team explained that it is difficult to have a “Full characterization “for complex natural botanical compounds. “Flexibility in regulatory approach” was necessary “to facilitate more development of new treatments” he said. In an email response to queries, on the matter, Chen revealed that many of the drugs were in phase three trials one step before final approval. He declined being more precise than that.

French drug manufacturer, Sanofi SA (NYSE:SAN), is also considering to venture into manufacturing traditional medicines. Frank Jiang, the head of Asia Pacific research and development at the company disclosed that talks are underway with The Hong Kong University of Science and Technology to collaborate for the launch of “modernized” versions of Chinese medicines focused at Chinese market.  A company “may have less issue with getting approved,” a medicine that is “better than a placebo” for treating the disease, Jiang said. Once approved from Chinese market the company will get the drugs registered in the US market.

Since the $520.6 million acquisition of Beijing- based Beijing- based, BMP Suntone Corp. in October 2010 Sanofi’s  consumer health portfolio includes many traditional Chinese therapies including Ephedra (mahuang ) based cough mixture, under the Ha Wa Wa, or Good Baby brand.

President of Beijing University of Chinese Medicines Gao Sihua, the previous attempts at modernizing Chinese medicines failed as those were concentrated on only s single ingredient while most Chinese remedies get their botanical value from the combination of herbs they utilize.

Chinese medicines are known for their efficacy in treating both chronic and acute ailments alike with minimal side effects. A few of these medicines like Artimisinin based Coartem have even been approved by FDA as safe for use in U.S.A. The drug was the result of scientific research by Lasker award winner Tu Youyou, which was marked by Novartis AG (ADR) (NYSE:NVS). In laboratory controlled experiments at University of Minnesota‘s cancer research center another drug lei gong teng (translates to thunder god vine) showed remarkable results to cure pancreatic tumors in mice. The product awaits human trials yet.

The share price of Novartis AG (ADR) (NYSE:NVS) were down by 0.17% to close at $58.75.

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Published by Viraj Shah

Viraj Shah has done M.Com (Finance) and currently pursuing CFP. He is a technical analyst who tracks US markets along with other global markets like India very closely. He is very passionate about stocks and believes that money can always be made in market.

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