Environment for International Markets

Local exporters need to look further into the international markets’ environment for their trade. There is a market for natural products in herbal medicines. Natural ingredients as recognized by foreign importers are grouped into the following:

  1. Medicinal and aromatic plants
  2. Medicinal and vegetable saps and extracts and
  3. Vegetable alkaloids

Major importers of natural products come from Europe, of which, Germany, being the main importer of natural ingredients from developing countries. Other countries are France, Italy and the UK. New emerging markets at the global level include Brazil, Argentina, Mexico, India, China and Indonesia. In the past manufacturers of herbal medicines often purchased  their raw materials from traders but now they either have their own plantations or  obtained them directly from   the producers,  thus ensuring sustained supply as  well as  cost saving.

Large pharmaceutical companies usually carry out studies on plant materials and the effect of specific medicinal plants. Knowledge obtained from such studies is used in developing new medicines which can be patented. Successful development of herbal medicines will open new opportunities for exporters. Some importing countries such as the Netherlands are more interested in importing plant extracts rather than the raw plant materials, most developing countries are not able to supply extracts which conform to the requirements of the importing industries.

Besides pharmaceuticals,   herbal products or natural ingredients also find applications in other product groups such as cosmetics. Other groups consist of essential oils, vegetable oils, natural gums and resins and natural colors. These groups do not have specific medicinal activity and only small proportions of these products are traded and used in the pharmaceutical industry.

It is not easy to assess the volume and the value of the trade in herbal products since trade statistics do not identify all the plants individually or their applications. However, Malaysia has actively been exporting pharmaceutical products which also include herbal ingredients to its neighboring countries. According to Frost and Sullivan’s 2008 Malaysian Pharmaceutical Outlook Report, Malaysia’s    vitamin export market covers more than 30 countries including Africa and Central America. Major export destinations are Singapore, Vietnam, Brunei, Hong Kong, Taiwan, Japan and Germany. Local herbal content of Malaysia’s herbal market stands at about 5% in year 2000 and   the amount is expected to increase to 48% by the year 2010.

The global market for herbal products is estimated to be US$200 billion in 2008 and Malaysia should be able to capture at least 1% share of the industry.3 Among the industry’s weaknesses are, shortage of local raw materials, lacking of large-scale cultivation activities, undeveloped domestic grading and standards,   technological mechanization, is not widely used, lack of skilled human resources and absence of scientific evidence for health related claims.