PRODUCT MARKET STUDY: HERBAL PRODUCTS

Date: October 2005

1.0 Product Definition

There is no specific classification code for herbal products. In UK herbal

products could be defined and classified under the health products as in
foods or in herbal remedies. It is also generally accepted as part of
wellbeing range of products. The UK Health Food Manufacturers’
Association (HFMA) include herbal products as one of the sectors under
health products. The most popular herbal products in the UK are:

o Echinacea – sold as stimulant for strengthening the immune

system
o Ginko Biloba – used for relief of specific circulatory problems
o St Johns Wort – used as anti-depressant
o Ginseng
o Green Tea – New research shows that green tea fights cancer,
health disease, cholesterol and obesity
o Saw Palmetto
o Valeria

2.0 Overview

• The retail sales of herbal remedies are forecast to rise from

£126 million in 2003 to £163 million in 2007, while homeopathic
remedies are estimated to grow from £58 million to £71 million over the
same period

• In UK, positive factors, such as the recommendation of the

House of Lords Report on complementary medicine, should support the
continued growth of product sales. The report supported the professional
development of the market as a whole through encouraging better
scientific research, consolidation of professional associations, better
training and accreditation and stimulating traditional practitioners to
embrace alternative medicine.

• Other positive factors will include UK the growing number of

UK ageing population who are really looking at alternative healthcare
and there are perception of fewer side effects involve, in comparison with
taking tradition products and medicines.

• The impending EU regulation on the permitted sale of various

herbal food products and remedies will to a large extent affect the

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 availability and sale of herbal products in the UK and other EU countries.
One of the objectives of the new EU regulation is to licence as many
traditional established’ herbal products as is practicable, and to remove
many unlicensed ones. This action may cause for the slower growth for
the market and is likely to affect manufacturers and suppliers, especially
from Malaysia.

3.0 Market Trends

• Herbal products have always been popular in the UK as part of

the wider consumer trend towards increased health awareness. Health
awareness covers concern for physical health, external beauty, mental
health and environment which herbal product claim to improve.

• The UK consumers become more involved in everyday

lifestyles and takes responsibility for self medication.

• Alternative medication and food supplement becomes more

important to UK consumers as they struggle to cope with the rising
stresses of modern life and they are concern about the impact of high-
paced, busy and pressurised modern lifestyle on health.

• UK consumers are also more aware and concern about

modern diets – increased concern about the nutritional content and
levels of artificial ingredients in the modern diet of processed food and
drinks.
• Rapid development of the UK functional food sector
encourages market growth in this sector.

• In UK now there is a move towards more ‘natural’ food so as to

eliminate the possible negative effects of artificial ingredients. Other
reasons for such popularity of wellbeing products such as herbals are:

- Greater levels of scientific evidence linking modern

dietary habits with ailments such as heart disease, cancer and
osteoporosis.
- Longer life expectancy – growing realisation that
longer life expectancy may put extra strain on the body if it is
not sustained by changes in healthy food intake.
- Dissatisfaction with modern medicine when the
emphasis is in cure rather than presentation.
- Interest in alternative medicine and traditional
remedies.
- Increasing health care costs in the UK and growing
concern with the long-term effect of ill health and the rising
medical care.

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 • The UK cosmetics and personal care sector is also being
driven by health and wellness awareness, spurred on by both the media
and governments. Cosmetics and toiletries manufacturers have taken
advantage of the increasing global and health and wellness trend by
launching a wide ranging of hair care and skin products containing
natural herbal ingredients

4.0 Distribution

The key channels of herbal products distribution in the UK are:

a) Chemist and drugstores

• This channel is the key to distribution of herbal products

as they are built around solving or remedying ailments. UK
consumers have traditionally turned to the chemists and
drugstores as a means of getting specialised advice, which places
them in a stronger position.

• The UK retailer Boots, which has one of the widest

health-driven portfolios, is looking to capitalize by expanding their
product range and reach to consumers through its web site and
digital television channel.

• Boots has over 1,300 outlets, of which 1,268 have in-

store pharmacies and a turnover of £4 billion per year. Boots sells
branded and other generic herbal products, many from Peter
Black, Gerard House, Hofels, Lanes, Potter’s, Lichwer Pharma
and Medic Herb. It also offers arrange of 34 Boots Alternatives
own-brand herbal products for adults and children

• Superdrug is the principal drugstore in the UK, with

sales of £840 m and 706 stores, of which 228 have in-store
pharmacies. The outlets also sell branded and generic as well as
a small range of own-brand herbals, including St.Johns Wort,
gingko, water relief, Quiet Night for insomnia, Be Calm for stress,
aloe vera and peppermint oil.

• Other large chemists chain in UK are:

- Lloyds Pharmacy with 1,321 outlets

- Moss Pharmacy with 773 outlets
- United Norwest Co-operatives and
- L Rowland & Co with 300 branches

b) Health food/specialist stores

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 Holland & Barrett is by far the largest health store operator in the
UK,with approximately 460 outlets. It offers an extensive range
of own-label herbal remedies under the Holland and
Barrett, Good ‘N’ Natural, Herbal Authority, Herbal tech and
Herbal Classic brands. The company also sells the full range of
branded and generic herbal products.

c) Supermarkets

• TESCO which now claims 26% of the

grocer market, stocks wide range of vitamins, supplements
and herbal and homeopathic remedies in its larger store.
TESCO has around 759 outlets and 210 in-store pharmacies.
The company has also teamed up with The Nutri Centre, a
retailer and information centre for healthy foods.

• Other major grocery multiples are:

- Sainsbury, with 485 stores, 107 in-store
pharmacies and a 17% grocery market share
- ASDA, with 258 stores, 80 in-store
pharmacies and 16% share of the grocery market
- Morrisson (merged with Safeway) around
600 stores and 105 in-store pharmacies

d) Mail order/direct sales

Direct sales are a key distribution channel. Consumer direct sales,

which includes direct mail/catalogue sales, sales from
representatives and direct from television, is the largest distribution
channel for dietary supplements and herbal products

e) Online channels – Internet and digital television

Herbal products are no longer confined to specialist outlets. Their

popularity means that they feature in distribution channel such as
on line and digital television.

5.0 Regulations And Legislations

Current position of herbal products in the UK

- Licensed Herbal Products

• Approximately 500 products in the market

• Majority have Product Licenses of Right (PLR)
and had been on the market before 1968

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 • Majority for minor self-limiting condition suitable
for self-diagnosis and treatment.
• Not strictly compatible with the EU law

- Herbal Products exempt from Licensing

• Section 12 of the UK Medicines Act allows certain

herbal remedies to be exempt from normal
licensing requirement
• Exemptions only apply where product consist of
herbal active ingredients
• Exemptions not strictly compatible with the EU
legislation
• Herbal remedy supplied following a face to face
consultation and the remedy is made or assembled on
premises occupied by the herbal practitioner
• Remedy made by simple processes (dried, crushed
or comminute)
• No brand name on product; can only refer to plant
name and process used
• No written recommendation for use
• No requirement for a consultation with practitioner –
can be sold in shops

- Herbal products marketed as food supplements (e.g

garlic, peppermint, chamomiler)

• If the products fall into the food category, it will be

regulated, subject to the provisions of European Union
and food law, in accordance with its function i.e food
ingredient or flavouring. If it is a food ingredient,
evidence of its sale in the EU is a key factor in
determining whether a safety assessment before its
sale is required.

• Based on regulation/legislation, herbal products are either

herbal product of no medicinal value or product of medicinal value.

Herbal Products of No Medicinal Value

o Many herbal products can legally be sold in other regulatory

categories, such as foods, cosmetics or general consumer products.
However, the new EU directives, could reclassify some herbal food
supplement as of medicinal value. The UK Consumer for Health
Choice (CHC) Association is opposed to this directive in that a perfectly
legal and safe food supplements will suddenly be reclassified as

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 medicines and having to comply with expensive and inappropriate
licensing requirement intended for the pharmaceutical drugs.

o According to the British Herbal Medicine Association, there are three

categories of herbal products and each is covered by different rules.

- The first are licensed remedies which are proven and pass strict
quality controls, or traditional remedies in use when controls were
used in 1968. Packs can say what medical condition they are for and
include a PL (product licence) or a PLR (product licence by right)
number
-The second category covers herbs with a medicinal function but no
licence. Manufacturers are banned from saying what they are for.

Suppliers to UK must contact the Medicines and Healthcare

Products Regulatory Agency (MHRA).

Contact details:

Borderline Unit, Inspection & Enforcement Division

MHRA
Market Tower
1 Nine Elms Lane
London SW8 5NQ
Tel: 020 7084 2602/2759
Fax: 020 7084 2676
Email: info@mhra.gsi.gov.uk

Herbal Products of Medicinal Value

According to the British Herbal Medicine Association, there are two

categories of herbal products and each is covered by different rules.

- The first are licensed remedies which are proven and pass
strict quality controls or traditional remedies in use when controls
were used in 1968. Packs can say what medical condition they
are for and include a PL (product licence) or a PLR (product
licence by right) number.

- The second category covers herbs with a medicinal function

but no licence. Manufacturers are banned from saying what they
are for.

The current regulatory options open to herbal suppliers in the UK are:

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 • Obtain a marketing authorisation by demonstrating that the
product meets the requirements of medicinal products. This can
be achieved by means of a full application or one based on well-
established use.

• Market the product without a marketing authorisation providing

no efficacy claims for the products are made. This is currently the
practice of many herbal manufacturers.

• Or the product can be manufactured and sold exempt from a

licence under section 12 of the UK Medicines Act, which the
process to which the plant(s) are subjected consists only of
drying, crushing or cominuting; the herbal product is sold without
any written recommendation as to its use; and the herbal products
is sold under a name which only specifies the plant(s) and

• the process, and does not apply any other name as to the
remedy

As many herbal medicinal products have been available for centuries it is

not considered necessary for them to undergo the rigorous requirements
applied to new chemical entities, in order to licence the product. Many
herbal manufacturers do produce their products to a high quality but can not
provide extensive literature documenting the safety and efficacy of the
products as required for well established use application. This leaves the
suppliers with the option of selling without a licence and making no
medicinal claims, meaning the regulatory Authorities have no control over
the quality of such products.

New EU directives on Traditional Herbal Medicines

Overview

• The majority of herbal products are currently on sale in the UK under

Section 12 of the 1968 Medicines Act as ‘medicines exempt from
licensing’. Although acknowledged as safe, these products are regarded
by some regulators as technically illegal under EU law.
• Led by regulators from the UK Department of Health, the Traditional
Herbal Medicinal Products Directive (THMPD) has been adopted by the
EU Parliament and was published in the Official Journal of the
European Union on 30th April 2004. The Directive requires all Member
States to comply with the Directive by 30th October 2005.
• Discussions continue with regulators on a number of topics including
the options for legal categorisation and the types of product claims
available.

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 • The THMPD would allow a marketing authorisation (product licence)
to be given to medicines without proof of efficacy provided :

- Safe
- They have been in traditional medicinal use throughout a
period of at least 30 years preceding the date of application.
At least 15 of the 30 years must relate to the European Union.
- are produced to standards that are more appropriate to
pharmaceutical drugs than to naturally occurring substances..

• The legislation does not apply to homeopathic medicinal products

eligible for licence.
• There remain problems with the text of the Directive. THMPD would
impose unduly onerous burdens on industry, for smaller businesses in
particular and jeopardise the future of many safe, popular and effective
herbal remedies.
• The THMPD specifically excludes herbalists from its remit, so whilst
pharmaceutical manufacturing standards are to be imposed on the
manufacturers and health food shops, herbalists can carry on making up
bespoke remedies in their kitchen or elsewhere.
• The THMPD could have been a major step forward and of real benefit
to consumers. Instead, it has been so substantially changed from the
first draft that it will no longer help. Particularly at risk are blends of herbs
with vitamins and minerals, which the Medicines and Healthcare
Products Regulatory Agency (MHRA) argues should be classed as
medicines requiring a full licence if the herbal ingredient is at therapeutic
levels.
• It remains CHC’s position that:
• the 30 year qualifying period is too long
• the proposals would do nothing for products
which are mixtures of herbs and nutrients
• as currently drafted the burdens of
compliance

• The EU Directive on Traditional Herbal Medicinal Products

(agreed in April 2004) will come into force on 30th October 2005.
There will be a transitional period for products legally on the market
on 30 April 2004, giving them protection until 2011.
• The Directive requires traditional, over-the-counter herbal remedies
to be made to assured standards of safety and quality and for
regulations to be standardised across Europe.
• Some medical herbalists believe the Directive will have a beneficial
effect overall, both for practitioners and consumers. Because:

- It provides a secure legal basis for herbal medicinal

products and the practice of herbal medicine.

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 - It is likely to have a beneficial impact on the quality of
over the counter herbal medicines.

- The MHRA (UK Medicines and Healthcare Products

Regulatory Agency) have declared their intention to
implement the Directive in a sensitive manner -
interpreting it to allow the continuance of systems such
as Traditional Chinese Medicine and Ayurveda.

• But others have concluded that some consequences could be less

desirable and may restrict consumer choice. These include:

Licensing requirements

- At present many herbal products sold in the UK are exempt from

licensing. The new regulations mean that manufacturers will have to
apply for a licence for every product, and each must comply with the
official published standards.

- The cost to a manufacturer of licensing an individual herbal product

is prohibitively expensive.

- This means that many popular herbal products, such as garlic and
ginseng, may still be commercially viable, but others may disappear
from sale because it is not worth the expense of getting them
certified.

- Herbal products, without licences, must currently be sold as 'food

products'. These are not subject to the same quality control or
restrictions as 'medicinal products' and there have been instances in
the past of misleading or erroneous labelling, such as in one
instance feverfew tablets which contained no feverfew.

The 30-year rule

- The Directive also demands that a traditional herbal medicinal

product must be shown to have been in use for 30 years in the EU
(or at least 15 years in the EU and 15 years elsewhere) for it to be
licensed and obtainable over the counter.

- The effect of this is that some herbal remedies of 30 years ago,

which are no longer in widespread use, could still be sold. But that
valid new herbs such as Peruvian cat's claw, which was only
specified in the 1970s and not much found in the shops in the
1990s, may be withdrawn from sale.

- It could also mean that some traditional herbal medicines which

were in common use more than 30 years ago, but have since fallen
into disuse, may not be licensed.

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 • Other problematic consequences of the Directive concern:

Imported goods

- Imported US herbal products are subject to almost no quality control,

and some combine herbal medicines with vitamins and minerals.
Some medical herbalists hope that US companies will reformulate
their products to comply with the new EU regulations within the 5-7
year implementation period.

Restricted herbs

- The supply of some herbs - such as lobelia, belladonna and

ephedra spp - is currently restricted to registered herbal practitioners
only. There are likely to be more herbs, such as wormwood, poke
root and mistletoe included in this category. This might reduce
choice but could protect the consumer from buying herbs with
potentially harmful properties over the counter.

- The Directive could also mean that due to licensing requirements,

there will be fewer herbs available to practitioners as well.

6.0 Import

• There is no specific data available on the import figures of herbal

products for both medicine and food into the UK. However, research
estimated that the value of herbal products sales in the UK is some £50
million a year and growing. The British spent a total of £400 million on
vitamin and supplements annually.

• Competition has intensified as the interest in herbal products has

risen steadily in the UK and worldwide and especially when all the
large drug companies are starting to manufacture pharmaceutical
products from natural ingredients.

• Malaysia’s main competitors are China, Thailand and India. Due to

its sheer size, China is reportedly has over 1,000 plants producing
herbal products. China has also been striving to get all these plant up
to the EU standards to penetrate the huge EU market. India is also
reportedly been cooperating with foreign research institutes, especially
those in Germany, to improve the production standard of herbal
products

7.0 Current Requirement For Importers

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 • A company which imports traditional herbal medicines from a
non-European Community (EC) or third country will need a
wholesale dealer’s (import) licence (WI). To obtain a WI, you will
need to meet approved standards of Good Distribution Practice
(GDP) and the relevant elements of Good Manufacturing Practice
(GMP) in respect of batch release. You will need to submit a
wholesale dealer’s (import) licence application form to the
Medicines and Healthcare Products Regulatory Agency
(MHRA).The application form should be completed clearly
and one copy submitted to the MHRA address on the application
form. It should be signed by the applicant and the relevant
page(s) should be signed by the nominated Qualified Person.
Article 16(g)1 of Directive 2004/24/EC applies Articles 49-52 of
Directive 2001/83/EC to the importation of relevant products. All
holders of a wholesale dealer’s (import) licence for relevant
products are required to have available the services of a Qualified
Person (QP). The QP must be a resident in the UK and must be
named on the wholesale dealer’s (import) licence

• To get the correct status of the products, Malaysian suppliers

can get an advice from the Food Standard Agency (FSA), by
sending further details of the products to
herbals@foodstandards.gsi.gov.my. Malaysian suppliers should
at least provide the following information when writing to the FSA:

- the name, including the Latin name

- the form in which it is to be consumed (e.g. extract,
dried, concentrate), the intended dose and country of
origin
- details of how the products or ingredient is produced
- the intended use (e.g. food supplement, food
ingredient, flavouring)
- details of previous consumption in the EU

8.0 Opportunities

• Herbal medicinal products are becoming increasingly popular

and market studies show that sales of herbal medicinal products
are on the increase. The mixed findings on traditional suppliers
such as vitamins and other supplement to a certain extent has
pushed the consumers to seek alternative products. Vitamins in
the UK, as early as last year was given a very bad publicity with
adverse report on its usage, based on the so call scientific
findings. This episode alone cost pharmacies outlets such as
Boots, Superdrug and others a substantive loss. The consumers
were really taken aback with the findings and for a while did stay
away from the vitamin and supplements counters.

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 • The worldwide explosion of the Internet has also meant that
many herbal products are widely available from all over the world
and thus increasingly difficult to regulate. Orders could just be
made and products are shipped or air freighted all over the world
without much hassle from the custom authority and not being
scrutinised very closely.

• Malaysia is blessed with huge tropical rainforest resources.

Dubbed as the “Heart of the Oldest Rainforest in the World”, the
potential for discovering useful and valuable products and extracts
for preparation of phyto-medicines, herbal remedies, health foods,
cosmetics and toiletries is tremendous. Plants have always been
a major source of medicine for humankind, World Health
Organisation (WHO) report recognised that 80 per cent of the
world’s population depends on herbal medicine. Tropical forests
contribute 25% of the world’s medicinal products and nearly half
of the prescription drugs are plant-derived.

• Though we have the raw material and resources but the real
challenge is to manufacture the products up to the expected
standards and quality. Malaysian herbal products therefore must
possess the highest standard of manufacture, safety, quality and
efficacy and be affordable to the ordinary people in order to be
competitive in the domestic and global market. It must also be
supported with extensive scientific research and findings.
Collection of data is critical to support any claims that are being
made on the products. Continuous R&D should be a part of the
outfit.

• To support the herbal industry, systematic and scientifically

planned large scale cultivation based on mechanised and
automated system must be in place to ensure the production of
quality raw materials needed for high quality herbal products.

9.0 Threat To Malaysian Exporters

• The effect of The Traditional Herbal Medicinal Products

Directive (THMPD) will no doubt drastically reduce the availability
of herbal products in the UK. In the UK most herbs have until now
been classified and regulated as foods. Some of them have now
classified as medicines and access restricted on the THMPD
basis.

• The directive requirement that to be eligible for registration a

herbal product must have been in use as a traditional medicine for
a period of thirty years, fifteen years of which must have been in
Europe is very prohibitive especially for Malaysian companies.

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 This policy would act as a trade barrier and would exclude most
un-established small companies

• The THMPD seeks to impose pharmaceutical standards on the

manufacture and quality of herbal products. Adequate quality
control testing of raw material is desirable and necessary, but the
quality control testing required by the directive of the finished
product is excessively onerous, prohibit expensive, and a severe
impediment to the marketing, hence, availability of herbs.

• The financial cost of registering even a simple herbal products

and preparing the supporting documentation will be costly. UK
industry estimates that registration and documentation will cost
minimum £10,000 per product and much more for a complex
product. If this is a correct appraisal, a company marketing 100
herbal products will therefore have to invest at least £1 million
merely to meet the registration requirements of the THMPD.
Additionally, industry estimates that the quality control to
pharmaceutical standards that will be required for each of
products manufactured will cost approximately £2,000 per batch.

• Should the herbal products are to be classified as food and of

health benefits, sales of the products in the EU should also
comply with the proposed regulations, which stipulate that all
health claims must be scientifically proven and verifiable. The
regulation also ban psychological and behavioural claims, as well
as more general espousals of non-specific benefits relating to
good health or well being, such as references as to refreshing
body and soul or restoring natural balance. There is also ban on
endorsement by charities or the medical profession. An existing
ban on claims about prevention, treatment and cure will be
retained, although claims that a product could reduce a particular
disease risk will be permitted.

• The regulation could become a barrier to innovation and new

product development by Malaysian manufacturers especially
those targeting the EU market. Meeting the new requirements are
going to be difficult, not only for Malaysian company but other
companies as well.

9.0 Exibition

Name: NATURAL PRODUCTS EUROPE

Date: 9-10 April 2006
Venue: Grand Hall Olympia, London

Organizer: Full Moon Communications

58 High Street

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 Steyning West Sussex
BN44 3RD, England
tel +44 (0)1903 817300
fax +44 (0)1903 817310

10.0 Useful Addresses

1) The National Institute of Medical Herbalists

Elm House
53 Mary Arches Street
Exeter EX4 3BA
Tel: 44 01392 426 022
Fax: 44 01392 498 963
Email: nimh@ukexeter.freeserve.co.uk
www: wwww.NIHM.org

2) Medicines and Healthcare products Regulatory

Agency (MHRA)
16-109, Market Towers
1 Nine Elms Lane
Vauxhall, London
SW8 5NQ
Contact person: Mr. Paul Hargreaves
Tel: 020 7084 2599
Email: paul.hargreaves@mhra.gsi.gov.uk

3) Department of Environment, Food & Rural

Affairs (DEFRA)
Nobel House
17 Smith Square, London
SW1P 3JP
Tel: 020 7238 6000

4) Food Labelling & Standards Division

Food Standard Agency
Room 115B, Aviation House
125 Kingsway
London WC2B 6NH
Tel: 020 7276 8143
Fax: 020 7276 8193

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MATRADE LONDON
13 July 2005

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