Headquartered in a traditional courtyard in downtown Beijing, Tongrentang (TRT), a pharmaceutical giant with a history of more than 300 years, is increasing its international reach with its legacy products: traditional Chinese medicine (TCM).
TRT began expanding abroad in 1993 and currently runs 90 stores in 17 countries and regions around the world, including the United States, the United Kingdom, Australia and Southeast Asia.
TRT deputy general manager Ding Yongling said the company plans a new round of international expansion with 100 outlets abroad by 2015.
TRT uses its own pharmacies and Chinese physicians who are licensed by local authorities to promote TCM products as well as TCM culture. The company sets up museums to showcase the best of traditional Chinese medicine and cooperates with Confucius Institutes to conduct lectures and offer free TCM consultations.
"The core strategy of our international development is to foster enthusiasm and trust in TCM among foreign patients by showcasing its effectiveness and relatively few side effects. We have sensed a widespread acceptance of and growing demand for TCM, " Ding said.
TRT epitomizes traditional Chinese medicine's increasing international presence.
Growing international demand is driving a steady increase in exports. According to the China Chamber of Commerce for the Import and Export of Medicines and Health Products, exports of TCM in the first three quarters of 2013 reached $2.27 billion, a year-on-year increase of 26.11 percent.
Aside from TRT, which has tapped into its time-honored brand, other TCM companies have developed their own paths to international growth.
Instead of taking the easy option of registering TCM products as foods or food supplements, Tasly, a pharmaceutical company dedicated to modern TCM, has made great efforts and investments to have their products approved as medicines. Their signature product, Danshen Plus Capsule, is currently undergoing phase 3 testing by the US Food and Drug Administration (FDA) and, if it passes, will enter US pharmacies.
Dai Biao, general manager of Tasly International Marketing Holdings Co Ltd, said TCM must gain international recognition, such as approval from authorities like the FDA, so it can establish a reputation as being scientific and effective.
"We encountered many barriers in the FDA phase 2 tests, as local medical professionals and insurance companies are suspicious of TCM safety and effectiveness. But after we enlarged our sample and did 120 successful clinical trials instead of the requirement of 90, things went smoothly in phase 3. We are quite confident of successfully finishing phase 3 by the end of this year," Dai said.
"In the US and some other Western countries, doctors and patients have little cultural exposure to TCM. They are results-oriented and only believe in clinical results published by professional medical agencies. Regardless of a product's nationality or ideology, if the result is convincing, it can win customers."
Chinese TCM companies are increasingly eager to register their products as patented drugs in high-end markets. Di'ao Xin Xue Kang was classed as a therapeutic medicine in the Netherlands in April 2012, paving the way for its development in the European market. In November 2013, Fuzhenghuayu, a capsule for liver ailments, became the latest TCM treatment to successfully complete FDA phase 2 tests.
Liu Zhanglin, vice-president of the China Chamber of Commerce for the Import and Export of Medicines and Health Products, considers this trend a necessary step for TCM's long-term international development, but cautions that TCM will struggle to gain the same approval and recognition abroad as it has in China.
"The export of TCM is more complicated than other products as it is subject to local medical authorization requirements, which vary from country to country. It might take a lot of effort and investment to enter each market. Few companies can bear the burden of the research and registration fees for patented drugs," Liu said.
TRT adopts a diversified strategy for different markets, selling TCM as medicines in countries such as Singapore and Australia, while it does not push its products as patented drugs in the US and European countries.
"Producing patented drugs in some mainstream markets is in our company strategy, but currently we are cautious about the huge investment and have decided to expand one step at a time. We are doing deep research into local medical policies and hope to find a solution through localization and more international cooperation," Ding said.
"We are considering setting up a research and manufacturing operation center in the US and redesigning our products according to local standards through extensive cooperation with local universities, research institutions and governments, which might help increase recognition of our products."
In April 2012, a joint proposal was issued by 14 Chinese government authorities, including the Ministry of Commerce and the State Administration of Traditional Chinese Medicine, to boost TCM's global reach. It proposes a market strategy over five years that is "in line with the direction of the international market," including building 10 trade centers worldwide by 2015.
Ding thinks TRT can benefit from those support policies.
"We are expecting a more favorable international environment for TCM exports," she said. "We hope to win wider acceptance and have more say in TCM's global market."
