The European Herbal & Natural Products Market
European markets are on their way to harmonization, which will present new challenges and opportunities.
By Joerg Gruenwald & Cordula Mueller
The European market situation for herbal and natural products is a complex one. This is because the market is large and fragmented and encompasses natural products whether they fall under food or medicinal law. While the main product categories are herbals and plant extracts, there are a wealth of other natural products used in foods and medicines including items such as fish oils, vitamins and minerals.
The present European regulatory situation in herbal and natural products is characterized by a huge discrepancy between the tough regulators such as Germany and the liberal countries such as the U.K. Due to complicated legislation, it is nearly impossible for non-EU (e.g., Asian and U.S.) companies to market their herbal and natural products in an EU country. However, this situation will dramatically change within the next 10 years.
Pan-European regulations are expected within the next few years and this development will increase marketing opportunities for natural products. Specifically, the introduction of two directives by the European Community in the defined period will have a major impact on the market. These are:
•The proposed Traditional Herbal Medicine Product Directive (THMPD – Medicine Law) amending the directive for medicinal products 2001/83/EC and including herbs, combinations of herbs and combinations of herbs and nutrients.
• The Food Supplement Directive (food Law) currently restricted to vitamins and minerals is expected to be extended to include many natural products like plant and herbal extracts in the near future.
Both new product development and the further development of existing natural products will be shaped by these regulations in the future. Only those companies that have specialized knowledge and expertise in this sector can hope for success in the changing European market.
Reality & Trends
Today the market for natural and herbal products features a broad range of numerous different food and medicinal products. By the end of 2001, the world market sales for herbal medicinal products was reported to be $60 billion ((†60 billion). The growth has primarily been fueled by “hot” segments such as menopause, energy, arthritis, sexual performance and sports nutrition. Well known and top selling herbs such as ginkgo, valerian and echinacea have stable sales.
The herbals market in Europe is valued in excess of †4 billion, supported mainly by local products with few pan-European brands. In Europe, the legislation for foodstuffs and medicines is still in the process of harmonization of strict regulations and liberal law. New and innovative products can only be found in free markets, as opposed to closed markets, which have virtually no new products.
No Product is Uniformly Marketed Across Europe
The strongest and most stable markets are in Germany and France, with very few market openings. The open markets show high competition with price pressure due to generic products. In the main markets, new product launches are rare. But smaller markets such as Scandinavia and Eastern Europe are growing, although Eastern Europe has tough marketing regulations, similar to Germany.
Trends in global developments show that natural healthcare products will continue to be an internationally growing field but growth will slow. After the boom in the 1990s, market figures indicate consolidation and concentration due to several developments. One is the negative press coming from the U.S., specifically in relation to news of interactions and side effects from herbal preparations such as kava kava and St. John’s Wort. Two, there are only a few new herbs with thorough and convincing scientific documentation, and only herbs with strong documentation show promising growth rates. Third, government restrictions on re-imbursement interfere with strong market development. Finally, the industry faces continuous regulatory and trade barriers interfering with the creation of innovative products. Despite this, however, the future outlook is positive and the actual observable trends show that the importance of natural products in healthcare will increase.
Worldwide healthcare started with plants, and today 80% of the world’s population still relies on natural medicine as a main source of healthcare. As healthcare costs continue to rise and governments maintain support of self-treatment, the trend toward natural, often lower priced products in all areas of healthcare is growing, especially in the industrialized nations. Global health concerns include obesity, heart and bone disease, diabetes and diseases related to aging and an industrialized lifestyle. World Health Organization (WHO) activities also point in this direction by supporting the use of safe traditional herbal products from developing countries in order to support these countries and as a way for many countries to meet their healthcare needs.
In the past, natural plant-based ingredients have been successfully applied in functional foods, cosmeceuticals and cosmetics. These categories gained substantial market shares and the still growing variety of natural ingredients can stabilize and further promote their growth by providing new opportunities and creativity for solutions to all the needs of consumers.
European Regulatory Situation & Activities
The continuous high interest of the population in natural alternatives and traditional medicines speaks volumes about the market potential of natural products, and as the harmonization of EU-wide legislation is underway, it seems there are good chances for realization. Harmonized regulations will provide a further strong growth of plant-derived food and medicinal products, whereby liberal countries will loose some flexibility and tough countries will gain new opportunities.
Over the last five years there have been several important regulatory activities that have taken place in Europe: The establishment of an EMEA (European Agency for the Evaluation of Medicinal products) Working Party on herbal medicines in 1997; the directive on “well-established use” of medicines in 1999; the proposal for an official committee for herbal medicinal products (CHMP) in the EMEA in 2001; the proposal for a directive on traditional herbal medicinal products (THMPD) in January 2002 and the Directive 2002/46/EC on food supplements issued in July 2002.
The movement to harmonize the huge discrepancy between tough regulators like Germany and liberal countries like the U.K. will result in profound changes within the next 10 years. Beside the U.K., France and Germany have plans for ease of introduction of natural products.
Marketing Possibilities for Natural Products in Europe
In principle, natural products may be sold as food, food supplements or as medicine, whereby the complexity of the regulatory requirements increases with the need for evidence for claims made as medicinal status is reached.
The marketing of natural products as food supplements is limited by the following requirements of the EU directive: 1) To date, the food supplements directive lists only specific vitamin and mineral preparations; additional categories of substances like herbals may be included later but the time frame is not yet clear; 2) products containing vitamins, minerals and ingredients not listed must be removed from the market by December 2009 at the latest; 3) food supplements are not usable for medicinal indications and 4) only nutritional claims are permitted.
The addition of herbals with mainly medicinal use to foods is restricted, if allowed at all, to only very low non-pharmacologically active dosages. Therefore producers of herbal products are recommended to focus primarily on the marketing and development of traditional herbal medicines.
Regarding the medicinal path for plant-derived preparations, one has to bear in mind that the existing European Directive (2001/83/EC) requires that no medicinal product be placed on the market without having obtained a marketing authorization, on the basis of requirements that have been harmonized throughout the EU. Usually an application for marketing authorization must contain tests, clinical trials and detailed documentation showing quality, safety and efficacy. In addition, the products must be pure and contain defined constituents, requirements hardly possible to fulfil for most botanicals due to the complex matrix of plants and herbals. Full drug development of herbal products under pharmaceutical law (2001/83/EC) is therefore extremely costly and time intensive. Consequently it has not been very successful in the past.
A possible alternative may be the EU Directive 99/83 for products with “well established” medicinal use in the EU. It gives greater flexibility in the use of scientific bibliographic data instead of tests and clinical trials. As a period of at least 10 years of use as medicines in Europe is needed, it is not applicable for non-European herbal products.
The third and latest alternative, the proposed Traditional Herbal Medicine Product Directive (THMPD), was issued in January 2002. It allows, through a simplified registration procedure, the marketing of certain traditional medicinal products without requiring details of tests and trials on safety and efficacy. However, the product in question must have a period of at least 15 years of safe use in the European community.
At the moment there is still a global controversy about the regulatory status of herbals: Should herbals be regulated as food or as pharmaceuticals? The new EU food supplement directive is supposed to lower trade barriers but so far only vitamins and minerals are regulated. Therefore the marketing possibilities of herbals in food supplements will stay unclear for the near future. It is recommended that herbal product producers focus on the application of the THMPD.
Marketing of Herbals as Traditional Herbal Medicinal Products
The proposed THMPD amends the Directive 2001/83/EC,—being the main European legislation for human medicines—regarding traditional medicinal products. THMPD defines herbal medicinal products as any medicinal product, containing as active ingredients, one or more herbal substances or one or more herbal preparations, or one or more substances in combination with one or more such herbal preparations. In addition, the following eligibility criteria must be considered for herbal traditional medicinal products:
• Not harmful;
• Solely for indications without intervention of a medical practitioner (so-called minor indications);
• Evidence of traditional use of medicine or corresponding product(s) for 30 years in the EU, up to 15 (probably lowered to 10) of the 30 years may be from outside the EU;
• Bibliographic report on safety with an expert report (the regulatory authority could ask for additional safety data where justifiable);
• No requirement to demonstrate efficacy, but can be refused if efficacy is not “plausible” (efficacy plausible on the basis of longterm use and experience);
• With specified strength;
• Herbal preparations for oral, external use or inhalation;
• Not applicable for products which could have marketing authorization by full registration based on proven evidence of efficacy, safety and quality.
This means that there is no requirement to demonstrate efficacy with tests and trials in order to get the registration. The required evidence of traditional use for at least 30 years will indicate that there may well be some efficacy of the herbal product.
In contrast, the quality requirements are as demanding as for licensed medicines and all products have to be manufactured under pharmaceutical GMPs (Good Manufacturing Practices). This could act as a barrier to entry for some companies.
There will be a simplified registration procedure for products containing herbs included on a positive list without needing to prove their traditional use and providing bibliographic safety data. The applicant however, would still need to demonstrate quality. The CHMP as part of the European Agency for the Evaluation of Medicines (EMEA) will establish the proposed positive list at the community level. It will be an agreed list of herbal substances with therapeutic indications, specified strength, route of administration and any safety information. At the moment the list is still in development and the process of reviewing the medicinal potential of hundreds of herbs will continue at least until the middle of this year.
Regarding advertising and labeling of traditional herbal products, the general rules for medicinal products have to be applied. In addition, the labeling and user package leaflets should state that:
• The product is an herbal medicinal product for traditional use in a specified indication and that the efficacy of the product has not been clinically proven but relies on long-term use and experience.
• The user should consult a doctor or a qualified practitioner if the symptoms persist during the use of the medicinal product.
The advertising must also include the following statement: “…traditional herbal medicinal product for use in (specified indication) for which efficacy has not been proven.”
So what is the timeline of the proposed EU directive on traditional medicinal products? The draft directive is now proceeding through the various legislative stages within the EU, and it is likely to be some time before it becomes clear whether the draft Directive will be passed in its present form. Member states must implement the Directive into national law within two years after adoption. The intention at the moment is that it will be adopted into law by the end of 2003. Herbal products that are already on the market would need to comply with the directive within five years.
The introduction of the THMPD provides a new route to market for natural product manufacturers, which is an exciting opportunity, the significance of which should not be underestimated. Many potential advantages would arise for business, particularly for middle-sized and non-European companies to successfully market their herbal products in Europe. The current disincentive resulting from the sophisticated full licensing procedure for medicines would be strongly reduced. Additionally, the ability to make agreed medicinal claims would further improve marketing opportunities and the public confidence in herbalism would increase, especially in the ethnic medicines sector where current concerns exist in relation to quality. In the long run, the market for plant-based medicinal products would be stabilized and promoted.
Also, for the consumer numerous advantages would arise from the adoption of the THMPD. He/she would be assured of the safety and quality of such products. Besides clear product information, systematic public health protection (e.g. better arrangements where safety concerns arise) would guarantee health protection, thereby enhancing confidence in and usage of herbal products. Finally, it may improve the EU-wide access to herbal medicines currently available elsewhere, resulting in greater options as a wide range of herbal medicines have a traditional use in the EU.
However, the regulatory situation is still a dynamic process and for the next few years it will continue to be a rather complex “jungle,” which will slowly clear up. The successful development and marketing of new and old natural products will be shaped by these regulations in the future. Therefore only those companies that have a specialized understanding of the regulatory requirements can profit from these changing European regulations and market.NW