The European Herbal Market Is Growing Again

Herbals have struggled on the European scene over the last few years but growth is finally on the rise again.

By Joerg Gruenwald

The European herbal market experienced tremendous growth in the 1990s due to solid research and major success stories surrounding select herbs. These included products such as garlic, which was recognized for its lipid-lowering properties and St. John’s Wort, which became popular for its anti-depressive attributes. These herbs helped boost the acceptance of the entire category. In the major markets of Germany, France and Switzerland, many herbal products were even prescribed by physicians and reimbursed by some of the health insurance systems. This situation has changed over the last couple of years due to cost restrictions of the different governments. In fact, today only very few botanicals remain on the reimbursement lists in these countries.

These regulatory changes and the clear publicity campaigns directed against herbals caused major irritations in the market. These factors together halted the rapid growth in herbal products between 1999 and 2001, and eventually led to a restructuring of the herbal market in Europe. While the restricted drug markets in Germany and France did not show any overall growth, new segments for products emerged. These included some creative dietary supplements, so-called “balanced diets” and grey markets. The “grey” markets in particular were positioned outside the pharmacy environment and were intended to push products containing practically the same herbal ingredients as sold before in the pharmacy but now without a drug license.

Back in a Growth Pattern

There are several factors that indicate the overall herbal markets are back in a growth pattern. The growth is occurring mostly outside the pharmacies, in the non- or less-regulated categories like dietary supplements, but not in the drug category. According to market estimates, the overall growth of herbals category over the last two years ranged from 5-8%. These market estimates are based on the importation of herbal raw materials into Europe and the regions where herbal products are cultivated in Europe. Both figures indicate an increase of 8-10% during the last two years, but this is not directly reflected in the same percentage increase in the value of the products. Therefore, we estimated our market figures more conservatively. In general, dietary supplements and out-of-pharmacy products are 20-40% cheaper than the comparable pharmacy products. This price difference spurred growth in the overall value of herbal products by approximately 5-8%, and it spurred growth in volume of herbal products by about 8-10%. The reason for growth relates to the increasing acceptance of herbal products in the European markets. More and more herbal products are being sold and the prices for the products have come down. This is because the European markets have been reorganized from being a strongly drug-regulated industry in the major markets to a more open and flexible market all over Europe.

For the future, the industry should expect more changes since the Traditional Herbal Medicinal Product Directive (THMPD) will be implemented by October 2005 and many of the existing herbal supplements will have to be integrated in this category over time. This directive will allow a better exchange of European herbal products in the EU member states, especially a restrictive market like Germany, which may finally witness a return of product innovation.

The acceptance of herbal medicines is on the rise again internationally. Regulatory challenges and negative media campaigns only slightly interfered with the growth. However, it was not enough to end the self-care trend, as consumers continue to demand access to natural products in all categories, including food, dietary supplements and cosmetics in Eu­rope to help them lead better, healthier lifestyles.NW