European Herbal Market Update

Growth has slowed somewhat; distribution channels are changing.

By Joerg Gruenwald

The European herbal market has been positively influenced by the growing interest in complementary and alternative health care solutions. The media is showing high interest in new clinical data from herbs but also any critical findings about interactions and side effects. The overall very good growth rates during the majority of the last ten years has slowed down in some markets such as Germany and France, while other markets, such as the U.K. and Scandinavia, show better growth.

In 1999 we estimate the world market for herbal remedies at the retail level to be approximately $20 billion. Europe is the largest nation with $7 billion, followed by Asia with $5.1 billion, North America with $3.8 billion and Japan with $2.2 billion. Latin America follows with $600 million, Eastern Europe with about $400 million and the other parts of the world add another half billion to the total of $19.58 billion worldwide (Table 1).

Within Europe, Germany keeps its leading position with $3 billion in sales, followed by France with $1.8 billion, Italy with $0.8 billion, the U.K. with $0.7 billion and Spain and Scandinavia with $0.2 billion each, followed by The Netherlands with $0.1 billion and the others to the tune of about $7 billion in retail price in Europe (Table 2).

Growth rates to be expected in the next two years are in the range of approximately 8–10% per year. In Europe we expect smaller markets like Scandinavia, The Netherlands and the U.K. to show double digit growth, while large markets like Germany and France will stay in the single digits.

In Germany we see a shift out of the pharmacies. Historically 90% of herbal products were sold over pharmacy counters and half of them are prescribed and reimbursed. This figure is decreasing while the market outside the pharmacies in drugstores, in Reformhäuser (like health food stores), supermarkets and even gas stations is increasing, but at a much lower price level. In these channels, there are products sold as “non-pharmacy only” drugs or as dietary supplements. The regulations are still very strict that the herbs, which are monographed by Commission E, have to be registered as drugs, but can be sold in or outside pharmacies, while new herbs, especially if they have food use, like cranberry, borage, evening primrose and, in exemptions, also artichoke, are sold also outside the pharmacies as dietary supplements.

The mail-order business is growing as well, while Internet sales are still small. It will be a matter of time until consumers feel safer about sending their credit card numbers through the computer.

Due to strict regulations, many in­ternationally well-accepted herbs and natural products like feverfew, American ginseng, gotu kola, glucosamine and melatonin are not available without prescription in Germany in the local pharmacies or other outlets. Therefore, an increasing number of companies use mail-order as an opportunity to have products sent from the U.S., the U.K. or The Netherlands, where these products are legally sold as dietary supplements, into Germany directly to the consumer. Even though the legality of this procedure is questioned in Germany, these companies are expanding and offering German customers toll-free order numbers as well as bank accounts in Germany to which they can send the money.

The French market is also opening up, with herbal products sold outside the pharmacy as para-pharmaceuticals. In many other Southern European countries the deregulation process is opening up new avenues for companies interested in risk taking. Since the harmonization of regulations is progressing very slowly, the speed of the market shows the opposite tendency. This situation opens new opportunities for American companies to close partnerships or cooperation within Europe, which still is the most interesting market for herbal remedies.

NW

Dr. Joerg Gruenwald is president of PhytoPharm Consulting, Institute for Phytopharmaceuticals, a specialized business consulting company for herbal medicine and dietary supplements. He can be reached at PhytoPharm Consulting, Olafstr. 6, D-13467 Berlin, Germany; 49-30-405-999-40; Fax: 49-30-405-999-32.; E-mail: [email protected].