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2. Market potential of medicinal herbs greater.

Indonesia, a tropical country, is blessed with great natural wealth. The country is the second richest in the world in biological resources after Brazil. Indonesia has 30,000 of 40,000 species of herbal medicines found in the world. The country, however, has been able only to utilize 180 species as basic materials for medicines or medicinal herbs, although at least 1,260 of the 30,000 species are potential to be cultivated as medicinal herbs from the economic and medical points of view. Many of the various plant species could be mixed to produce herbal medicines that are not inferior in efficacy than modern patent products of chemical medicines. Many of them could also be used as basic materials for cosmetics already produced in large scale using modern technology in the country . Herbal cosmetics are known to have high efficacy used mainly as skin care cosmetics keeping the skin flawlessly smooth. One of major production centers for medicinal herbs is being developed in Central Java, which is also known as the main producer of herbal medicines in the country.

A number of large producers of herbal cosmetics have continued experiments, research, explorations to expand the use of medicinal herbs. They expand cultivation of herbal plants and modernize processing facility. Growing number of people have turned back to consuming the traditional medicines for fear of side effects of chemical medicines. Some traditional medicines prove to be more effective or safer than chemical medicines. In addition they are much cheaper. The turn in general appreciation including among modern community causes great change in the market favoring herbal medicines. As a result producing herbal medicines has become a modern industry. The industry is highly resilient and stood firm amid the crisis that has rocked the foundation of country's economy. Production of herbal medicines has continued to increase growing by 5%-10% annually. Herbal medicine factories and home industries need a supply of around 25,000 tons of fresh medicinal herbs a year. Difficulty, however, began with supply of raw materials falling far short of requirement.

The country, therefore, urgently needs to be serious in preserving or expanding cultivation of medicinal herbs to guarantee supply in the future. China gives a good example. That country has been successful in developing herbal medicine industry. In China industrialists establish cooperation with growers. Medical doctors in that country generally have good knowledge about pharmacy and traditional medicines to serve the public.

In Indonesia, there are still many hurdles hampering development of industries producing herbal medicines, traditional medicines used in alternative medication or also known as agromedicines. The government, therefore, needs to address this matter more seriously by issuing policy to facilitate development of the industry. The people should also be encouraged to use traditional medicines.

Exports in medicinal herbs said the prospects of business in traditional medicine industry are goods but support for the development of the industry is not yet sufficiently provided Business in herbal medicines has reached a turnover of Rp 1 trillion in the country although without sufficient support of high technology. Most producers still use traditional technology as labor intensive industry involving groups of workers including old people, and daily paid workers.

Currently Indonesia has 75 large producers and 833 small scare producers of traditional medicines all providing jobs for 145,000 workers including 37,529 in large factories and 107,622 in small scale industries. There are 400,000 more people employed in distribution.

Demand rising

With the growing "back to nature" campaigns, domination of market by modern medicine has been reduced. Traditional medicines have begun to gain substantial share of the market. Demands for traditional medicines are still high in many countries in Africa Latin America, and Asia. Herbal medicines are used as alternative and complement in Europe, North America and Australia.

In Indonesia, demand is also high for traditional medicines and alternative treatment including for imported products mainly from China. Amid growing demand, competition in the market of traditional medicines is tights in the country and abroad. Apart from China and Indonesia, Malaysia, Thailand, Hong Kong, South Korea, and Japan are expected to become potential producers of herbal medicines in 2010. A number of countries have become potential market of herbal medicines such as Malaysia, South Korea, and the Netherlands and Middle East. The market potential for traditional medicines in Malaysia is Rp 50 billion a year but sales so far average only Rp 2 billion annually. Supply of herbal medicines to Malaysia come mainly from South Korea, China and Japan. Indonesia is still a small supplier to Malaysia compared to the three countries.

Charles Saerang, chairman of the association of medicinal herb companies, said the increase in sales of medicinal herbs in the country was caused not only by growing demand on the domestic and international markets but also by the growing number of pharmaceutical companies producing herbal medicines. Exports are estimated to contribute 10% to the total sales of herbal medicines. The largest buyers are Malaysia and Saudi Arabia mainly because of the fact that many Indonesians live or work in the two countries.

The market prospects have encouraged farmers to produce medicinal herbs in Central Java in various forms including drink, syrup, tablet, capsule, powder and cosmetics to be exported mainly to Europe. PT Nyonya Meneer has so far exported 180 types of medicinal herbs or 30% of the types it produces. The country's oldest producer of medicinal herbs in Central Java is set to expand its export market and introduce e more of its products in international markets. The company laas 30 hectares of medicinal herb plantations in Ungaran in the regency of Semarang. Most of 34 scarce species of medicinal herbs listed by the health ministry are grown in the plantations.

PT Nyonya Meneer has established cooperation with the Biology Faculty of the University of Gajahmada to conserve a number of scarce species. It grows 14 species of medicinal herbs like cinnamon, genitri, jokeling, bidara lau, etc. Research is still made of scarce plant species such as paliasa, which is effective in maintaining the function of lever. It is not easy to multiply this plant vegetatively. So far PT Nyonya Meneer has produced 254 products of medicinal herbs including herbal tonic, herbal cosmetic, herbal medicines in the forms of powder, pills, tablets, capsules, extracts, syrup and fresh drinks. The basic materials used for the products total 60 species of medicinal herbs supplied by farmers in cooperation with the company.

The product of medicinal herbs in the form of fresh drink are Serbat Meneer Manis and Sari Asem. The product against rheumatic which has been clinically tested is Fitofarmaka Rheumaneer. The producers of medicinal herb products was established in 1919. It has spent Rp 1 billion for research.

Clinical test needed

The health ministry has said that the market of the products of medicinal herbs will expand if they prove effective after being tested clinically. Doctors will not hesitate to put herbal medicines in their prescription and more hospitals are expected to use herbal medicines. Exports are expected to increase such as to Europe. Among the herbal medicines which have been tested clinically is "Jati Belanda" which is used as a basic material for prolipid, a medicines used to reduce cholesterol' and "Daun Katuk" in capsule that could increase mother's milk productivity three times larger.
Sales of herbal medicines and modern medicines, 2003

World Sales

Natural medicines : US$ 50 billion
Modern medicines: US$ 310 billion
Natural medicines : R 2 trillion
Modern medicines R 17 trillion
 Market share
Natural medicines 10.5%
Modern medicines 89.5%

World Growth/year

Natural medicines : -
Modern medicines: -
Natural medicines : 20%
Modern medicines 12%
 Market share 2010
Natural medicines 16% (Rp 7.2 trillion)
Modern medicines 84% (Rp 37 trillion)

Source: LIPI
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Title Annotation:Industry
Publication:Indonesian Commercial Newsletter
Geographic Code:9INDO
Date:Jan 11, 2005
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