A member of staff prepares medicine in a hospital in Bozhou, East China's Anhui Province. Bozhou is China's largest TCM trading center, with numerous markets and more than 1,000 shops selling the medicine. Photo: CFP

China has lagged behind Japan and South Korea so far in exporting its traditional medicine around the world.

China has abundant natural resources to produce traditional Chinese medicine (TCM), but it has only a 5 percent share of the global market for traditional medicine and its related products, which has a global annual sales revenue of more than $30 billion, China Business Journal reported Saturday.

However, Japan and South Korea together command 80 to 90 percent of the global market share, even though 75 percent of the raw materials they use to make their traditional medicine products are actually imported from China, according to the newspaper.

Several of China's TCM companies have been trying to go through the expensive and time-consuming approval process that the US Food and Drug Administration (FDA) carries out, but no China-made herbal TCM or patent Chinese drugs have yet gained FDA approval.

Chinese TCM companies face many administrative and financial hurdles to export their products abroad, pharmaceutical experts told the Global Times, while Japan and Korea have many advantages such as more advanced technologies to conduct standardized manufacturing.

A difficult process

In November, Fuzheng Huayu Pian, a TCM product made by Shanghai Sundise Traditional Chinese Medicine Co, passed the second phase of the US FDA's clinical testing, seven years after the company submitted its application to the US government.

Before this, only one other TCM product - Compound Salvia Droplet Pills made by the Tasly Group based in North China's Tianjin - had cleared the second out of three clinical testing phases before the medicine can be launched in the US.

Zhong Hongyue, a health sector expert at consultancy Frost & Sullivan, told the Global Times Sunday that it usually takes a decade for the US FDA to approve a traditional herbal medicine product.

"The US FDA needs to test the TCM in accordance with the Western principles of clinical pharmacology and explain how their products work in the Western style," Zhong said. "That is very difficult because TCM and Western drugs work in completely different ways."

In fact, the UK has made moves recently to restrict any local use of TCM. In early December, the UK announced a ban on sales of Chinese patent drugs and herbal TCM, effective from April 30, 2014, according to the country's Medicines and Healthcare Products Regulatory Agency.

The UK said that traditional herbal medicinal products must have been in use for 30 years to be licensed and sold over the counter. No Chinese patent drugs have such a license and it would be hard for companies producing TCM products to afford the high costs involved in getting one.

Local rivals leading

Japanese pharmaceutical companies that produce TCM-related products have created their own version of it, named "Kampo medicine."

One of the major Japanese companies that produces Kampo medicine is Tsumura & Co, which made net income of 7.07 billion yen ($67.12) in the second fiscal quarter ending on September 31, 2013, nearly double the previous year's profit of 3.8 billion yen in the same period. According to the company's website, in March 2013, 94.1 percent of its sales came from prescription Kampo products.

Tsumura & Co imports 80 percent of the raw materials it uses to make the medicine from China, China Business Journal reported, and the company has established more than 70 herbal planting bases in China in accordance with the Good Agriculture Practice (GAP), an internationally recognized set of methods for safe production.

By comparison, one of China's leading TCM producers, Beijing-headquartered Tongrentang, has only eight GAP planting bases in the country, which is still more than any other domestic TCM company, China Business Journal said.

South Korea started developing its traditional medicine industry in the late 1990s, and it now accounts for 15 percent of government health expenditure, the newspaper said.

Yu Mingde, chief of the Chinese Pharmaceutical Enterprise Association, told the Global Times Sunday that Japan and South Korea both have more advanced technologies compared with China. That allows drug makers to standardize their production process and ensure the quality of their products, Yu said.

"Western authorities such as the US FDA require every batch of medicine to have identical ingredients and the same effects," Yu said.

That is very difficult for TCM because the effects of herbal medicine are highly dependent on the natural environment they grow in and on the physical conditions of the patients, Yu noted.

"Therefore, advanced technologies are needed to standardize and control the qualities of the TCM products. But China lags behind Japan and South Korea in that respect," he noted.

Road ahead

Yu said it is difficult for TCM producers to enter the Western market, because a TCM drug contains many herbal ingredients and it is very hard to explain how each element works in accordance with Western rules.

TCM sometimes works in unexplainable ways and its effects are largely based on thousands of years of experience accumulated by Chinese people when using the medicine, Yu said. But that is not acceptable in the highly standardized and scrutinized Western medical market, he said.

Zhong agreed with Yu, adding that it is easier for Japanese and South Korean companies because their pharmaceutical markets are better regulated and the companies are more careful about controlling the ingredients of the drugs.

"Many China-produced TCM products do contain mercury and sulfur, which are considered hazardous in Western countries," Zhong said. "And Japan and South Korea are much more experienced in preventing products containing such chemical elements from entering the Western market."

According to the China Investment Promotion Agency (CIPA) under the Ministry of Commerce, China's TCM industry is worth more than 410 billion yuan ($67.63 billion).

However, China only exported $2.5 billion worth of TCM products in 2012, according to the CIPA.

The cost for a company to get US FDA approval could easily reach over 100 million yuan, Zhong said, so the firms need support from the Chinese government to get the approval.

"TCM producers should be aware that it's highly risky to go global. So if they are not very confident that their products, if approved by foreign authorities, will fill an obvious void in the Western market and will definitely sell well, they should not go West," Zhong said.