ISSUES IN MARKETING MALAYSIAN HERBAL PRODUCTS

TABLE OF CONTENTS

1. Introduction..........................................................................................................1

1.1 Background.................................................................................................1

1.2 Problem Statement.....................................................................................2

1.3 Purpose and Objectives of This Paper......................................................3

2. Potentials of Herbal Product Market..................................................................4

3. Main Issues and Challenges of Herbal Products Marketing in Malaysia........6

4. Herbal Products of Malaysia...............................................................................8

4.1 BioFeld Products (Felda Herbal Corporation Sdn Bhd)..........................8

4.2 POLENS (Polens (M) Sdn Bhd)................................................................10

4.3 Easy Pha-Max (INS Bioscience)...............................................................13

5. Recommendations on Addressing Issues and Challenges of Herbal Industry

in Malaysia.........................................................................................................14

6. Conclusion..........................................................................................................16

References.....................................................................................................................17

1. Introduction

1.1 Background

The Malaysian herbal product market has shown a significant growth due to

public interest in the use of crude plant-based products as medication. Now,

more people are looking for alternative medicine such as herbal products.

Salleh (1998) reported that Malaysia consumes about RM1.2 billion worth of

imported herbal products annually. Surprisingly, more than 3.5 billion

people in the developing countries are relying in plants to treat various

ailments (Balick and Cox, 1997). According to Blumenthal et al. (2000), the

same trend is seen in developed countries whereby the retail sales of

herbal products in the United States of America amounted to over USD4

billion in 2000.

In other countries such as Canada, it was reported that 33 per cent of

Canadians were looking for complementary therapies annually (Jellin,

1998). According the Barrett (1998), treatment with herbal medicines in

Europe has become a well established part of health care that there are

more than 80 per cent of physicians in Germany regularly prescribing herbal

therapies.

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It might be surprising to know that more than 90 per cent of the raw

materials used in the manufacture of herbal products in Malaysia are

imported mainly from Indonesia, China and India (Ibrahim and Khorizah,

1996). The Statistics Department (1996) reported that import of medicinal

plants in 1986 was RM93.4 million, which increased to RM264,8 million in

1996. These figures show the growth of herbal product industry in Malaysia.

The government spurs effort to reduce cash flow due to import of raw

materials from other countries by encouraging the propagation of home-

grown herbs and the production of home-made herbal products. There have

been many attempts to cultivate medicinal plants such as Eurycoma

longifolia (tongkat ali), Labisia pumila (kacip fatimah), and Cinnamomomum

verum (kayu manis) on commercial scale by both the public and private

sectors (Ibrahim and Khorizah, 1996; Azizol and Ilham, 1998).

1.2 Problem Statement

The herbal product industry is a growing business in Malaysia. Ramlan

(2009) stated that there is a growing trend of people shifting from synthetic

allopathic drugs to herbal cures. Reasons for the shift include: a preference

for a wellness oriented self–administered healthcare, the prevalence of

chronic illnesses that cannot be cured by conventional drugs, and the high

pace of life which induces higher stress and reduced free time. 2

However, there are several issues related to herbal product marketing

in Malaysia. These are like: quality of herbal products and its

competitiveness with other herbal products from other countries such as

Japan, China, Hong Kong, Indonesia, Philippines and so on; the Intellectual

Property Rights with regards to herbal value in terms of indigenous species

and traditional usage.

Ramlan (2009) quoted a case involving turmeric and neem where

India successfully challenged the patents filed by the US highlights the

danger of not taking active steps to protect local knowledge and plants.

1.3 Purpose and Objectives of This Paper

This paper discusses the issues pertaining to herbal products marketing in

Malaysia. The objectives are:

(a) To determine the potentials of herbal products marketing in Malaysia;

(b) To identify the main and current issues and challenges of herbal

products marketing in Malaysia;

(c) To showcase some examples of herbal products produced and

marketed by Malaysian companies; and

(d) To provide recommendations on addressing issues of herbal product

marketing in Malaysia.

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2. Potentials of Herbal Product Market

The herbal-related market comprise of herbs used as food or food additives,

cosmetic ingredients, and herbal medicines. Ramlan (2009) stated that the current

estimates for this market ranges between USD 40 to100 billion with an average

growth rate of 15 to 20 percent annually. Most of the medicinal products in the

market come from plant sources. About 25 per cent of drugs prescribed worldwide

come from plants.

According to Ramlan (2009), Malaysia is well positioned to become a key

global player in herbal medicine industry because of its rich biological heritage,

cultural background and trade links. Malaysia is ranked 12th as the most bio-

diverse nation in the world and placed 4th in Asia, based on the existence of over

15,000 flowering plants and over 3000 species of medicinal plants. Presently, the

herbal and natural products market in Malaysia is estimated to be worth RM4.55

billion of which 90 percent of the raw material used was imported.

The Malaysian government is strongly supporting the development of

Malaysian herbal industry. The National Agricultural Policy (1998-2010) identifies

products and export oriented policy as one of the thrust areas–herbal cultivation

easily falls under this category. Also, the Ministry of Health released a

Traditional/Complimentary Medicine (TCM) Policy in 2000 with the emphasis of

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‘rational use’, the philosophy that traditional as well as modern medicines can be

used concurrently.

The Malaysian government also provides financial support to research work

related to herbs in term of Intensified Research in Priority Areas (IRPA) grants, the

focus areas by the National Biotechnology Directorate, as well as other grant

schemes. Research areas are focused on ethnobotany, phytochemicals,

processing, cultivation studies, biochemistry, pharmacology, and clinical trials. In

addition, there are several policies, laws, and regulations related to herbs include

Good Manufacturing Practice codes and Clinical Trial codes in Malaysia.

Bernama (2009) reported that the market value of the local herbal

supplements and cures industry is expected to increase to RM12 billion in 2009

compared to RM10 billion in 2008 because of increasing acceptance of herbal

medicine by consumers in the world. According to the chairman and founder of

Global Bio-Herbs Economic Forum Council, Datuk Yeat Sew Chuong, “demand is

increasing yearly because of better knowledge and information about these cures.”

It implies the market potential for herbal cures in Asia. The potentials of the

Malaysian companies can grow in the herbal supplements and cures are high

because Malaysia has a rich bio-diversity.

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3. Main Issues and Challenges of Herbal Products Marketing in Malaysia

There are several problems and constraints to the development of herbal products

as medicine and cosmetics in Malaysia. These are elaborated below.

(a) Insufficient supply of raw materials to cater to a growing industry

(b) Inconsistent quality of imported raw materials

(c) Lack of large scale cultivation/plantation of potential species of medicinal plants

(d) Lack of technologies in pest control, harvesting technologies, handling and

transportations

(e) Shortage of skilled labour in the plantation as well as in the processing line

(f) Lack of standardization and quality control measures within the small medium

industries (SMI) resulting in poor product quality, and

(g) Absence of scientific evidence (R & D) for health related claim (Rasadah and

Li, 2008).

Bernama (2009) stated that there are a lot of issues concerning the herbal

industry in Malaysia which include: patenting, safety, legislation, marketing and

new trends and opportunities related to traditional medicines. The Government,

through forums and seminars as well as other training programs should make local

farmers understand the benefits of adopting good agricultural practices (GAP) and

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would-be "herbal-preneurs" (herbal entrepreneurs) understand the need for good

manufacturing practices (GMP) and patenting. Such a forum was like “Asia Herbs

Global Wealth” organized in Kuala Lumpur last year which aimed at building a

research and development as well as a trade platform to pool key players in the

herbal cures industry, including herbal-preneurs and scientists to share their

knowledge, expertise and experience to advance the industry (Bernama, 2009).

During the forum, the relatively high cost to undertake clinical trials and R&D

were identified as challenges facing the industry. Therefore, there is a need for

government to allocate spending on R&D and boost the growth of herbal industry

in this country.

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4. Herbal Products of Malaysia

4.1 BioFeld Products (Felda Herbal Corporation Sdn Bhd)

Malaysia is currently producing local homegrown herbal products, which are

produced by several companies. One of the government agencies which

embark in herbal business is the Federal Land Development Authority

(FELDA). FELDA incorporated Felda Herbal Corporation Sdn Bhd (FHC) on

April 29, 2004. FHC Chief Executive Officer,, Hairuddin Md Bakri stated that

herbs are more of food supplement rather than for treatment. He mentioned

that Tongkat Ali, Kacip Fatimah, pegaga, peria (bitter gourd) and misai

kucing are some of the local herbs which are increasingly making a mark

these days.

Biofeld is the brand name used by FHC, which to date has 19 herbal

based products (Figure 1). They include maternity set, hair care, energy

drinks, herbal tea such as Khaffir Lime Leaf tea and Misai Kucing tea besides

extracts of pegaga, peria (bitter gourd) and hempedu bumi which are sold in

capsules. Biofeld products are marketed only after certification by the

National Pharmaceutical Control Bureau of the Health Ministry and fulfilled

the Good Manufacturing Practices (GMP) requirement.

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Currently, FHC is marketing Biofeld products using multi level marketing

(MLM) approach. One of the requirements of marketing under MLM is that

the products manufactured and sold through MLM must be of high quality

and thoroughly researched. MLM provides opportunity for FELDA settlers

with earning up to RM4,000 a month to those who made the effort in

marketing the products.

FHC’s CEO, Mr. Hairuddin stated that there are several levels of herbs

processing and in Malaysia the process involving standardized extract is very

few. The number of those being tested clinically is almost zero. Although

Biofeld is quite well known in Malaysia, but there are problem in getting

international recognition. There are efforts under way for R & D in order to

standardize extract which is a level below pharmaceutical. FHS’ main focus

is on herbs such as Tongkat Ali, pegaga (for blood circulation and anti-

oxidant) and hempedu bumi (effective for cough). Standardization is a

process in the production of herbal extract in which the potentials of active

ingredients in the product is guaranteed of its consistency.

FHC also acknowledged the problem of insufficient raw materials for its

herb production. Thus, FELDA has started to plant its own herbs. Currently,

there are 80 hectares of Tongkat Ali plantation due to huge market. Pegaga

and turmeric are also planted on smaller scale basis.

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Figure 1: Products under Biofeld (FHC)

4.2 POLENS (Polens (M) Sdn Bhd)

POLENS, which is an acronym for “Projek Lebah Negeri Selangor” is a

product brand under POLENS (M) Sdn Bhd, a wholly owned subsidiary of

Selangor Agricultural Development Corporation (SADC). The company

(POLENS) was incorporated on May 11, 1993 (http://www.polens.com.my).

Polens Sdn Bhd has a 40.5 hectare herbatorium located in the Selangor

Agro-forestry Park in Rawang, which carry out research and development

activities on the cultivation of local herbal plants to facilitate the production of

herbal products (Lanong, 2008). In this herbatorium, herbal plants such as 10

misai kucing, tongkat ali, belimbing buluh (Averrhoa belimbi), kacip fatimah,

mas cotek, pandan (Pandanus odorus) and serai (Cymbopogon citratus) are

cultivated here. Among its top-selling products are Misai Kucing Herbal Tea,

Mas Cotek Herbal Tea and Royal (Figure 2 and Figure 3).

Figure 2: Misai Kucing (Polens Sdn Bhd)

Figure 3: Mas Cotek Herbal Tea and Royal Fatimah Capsules (Polens Sdn Bhd)

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Polens acknowledges the importance of product safety and quality.

Polens products are endorsed by the Drug Control Unit of the National

Pharmaceutical Control Bureau (NPCB) under the Ministry of Health. Polens

production and packaging processes are also in accordance with Good

Manufacturing Practice (GMP) and Quality Assurance guidelines stipulated

by NPCB. Also, POLENS herbal products comply with Malaysian Halal

Certification procedures issued by the Department of Islamic Development

Malaysia (Jakim). Polens herbal products are available in pharmaceutical

stores and traditional cosmetics and jamu (medicinal herbs) shops in

Malaysia.

At the international level, Polen company is working closely with the

Selangor Agricultural Development Corporation (PKPS) to penetrate the

markets in neighboring Brunei, Singapore and Indonesia. Also, the company

is working to introduce its products to the Middle-east countries. In order to

be successful, Polen company must ensure that they comply with due

diligence and ensure high quality of products that meets international

standards.

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4.3 Easy Pha-Max (INS Bioscience)

Easy Pha-max Marketing Sdn Bhd is the subsidiary of INS Bioscience, which

is the marketing and distribution arm of Easy Pha-max brand of health

supplement in the local and international markets. Easy Pha-max, among

others, is leading in the biotechnology of herbal health supplement.

Easy Pha-Max is well known or its Wheatgrass products (Figure 4) but

now has expanded its product line to include functional foods, meal

replacement drinks for slimming products, trimming products, personal care

and skin care products as well as the Bio-Herbs health supplement to meet

the accelerating demand for herbal health supplements around the globe.

Figure 4: Wheat Grass product of Easy Pha-Max

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5. Recommendations on Addressing Issues and Challenges of Herbal Industry in Malaysia

Bernama (2008) stated that due to lack of evidence and research on safety,

efficacy and standardization of herbal products, ASEAN countries have lost their

share of the global industry worth US$200 billion. Germany led with 28 percent

market share while ASEAM accounted for 18 percent and Japan has about 13

percent. Also, despite herbal usage being common in Asia, the acceptance rate in

the region was low at only eight percent of the total population in Asia compared to

up to 20 percent in some Western countries. The higher acceptance rate is due to

the public being aware of the importance of natural medicine in maintaining their

health as well as the high level of research and development, safety and branding

involved in the herbal products.

In order to address the problems of the herbal industry in Malaysia, it is

important for the Malaysian public to use natural herbal products in order to boost

local sales. Also, industry players are encouraged to adopt the 3Gs - good

agriculture practices, good manufacturing practices and good laboratory practices.

Without adherence to the 3G concept, Malaysia faced problems of low quality

herbal products and most frightening, the incidence of fraud in the local herbal

market. One such example is the cancellation of registration of Orgacare Unik

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Plus-1, a traditional medicine supposedly to help slimming but which has been

adulterated with ingredients that can damage the health of users (Bernama, 2006).

Malaysia, as a rich bio-diversity country has a lot to offer in terms of providing

raw materials and exploration of herbal products from plant origin. Thus, it is also

recommended that the government as well as non-government agencies also play

their roles in R & D, to help local businesses to acquire standardization and high

quality levels of herbal products so that these can be imported to other countries.

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6. Conclusion

It is concluded that the herbal industry in Malaysia can become a potential growth

sector, given the biodiversity of this country. Malaysia has the capacity to compete

with current key players in herbal industry especially in the ASEAN region. There

should be more effort to research and develop this industry, encourage Malaysian

to use herbal products and promote more entrepreneurial activities in this industry.

The three companies presented in this paper, which currently and actively

are key players in Malaysian herbal industry, are examples that traditional

medicines practiced by our ancestors can make its way into the international

recognition and used by people from all over the world.

However, there are challenges and constraints which must be overcome so

that Malaysian can definitely grab the opportunity from this market.

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References

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Balick, M. J. and Cox, P. A. (1997). Ethnobotanical research and traditional health care in developing countries. In: Medicinal Plants for Forest Conservation and Health Care. Non-wood Forest Products 11, pp. 12-23. Food and Agricultural Organization of the United Nation, Rome

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