Traditional Chinese Medicine is a thorne in the side of many pharmaceutical companies. Its effectiveness is in doubt and in competition with synthetically manufactured drugs. But this medical science – which includes herbal treatments and acupuncture – is full of tradition and very popular worldwide: most notably in Japan, the US and Africa where demand for naturopathic treatments has increased. Forecast for the industry is a double-digit growth until 2015 when it will reach a business volume of $90bn. Therefore, and in the light of high research and development expenses, more and more companies try to examine whether real healing power can be attributed to the mysterious essences.
Now Swiss food producer Nestlé wants to give Traditional Chinese Medicine a try and has set an exclamation point in doing so with the foundation of a joint venture. Employing their healthcare division Nestlé Health Science the company wants to establish a 50/50 joint venture with Chinese group Chi-Med. The joint enterprise named Nutrition Science Partners Limited (NSP) is supposed to take care of drugs and nutrition with active herbal ingredients.
At first, focus is supposed to be on development of drugs for treating gastrointestinal ailments. In the future drugs for treating disorders of metabolism and neurological diseases like Alzheimer’s will be contemplated. Nestlé will not announce how much it tends to invest while purchasing Chi-Med’s know-how. But it is certain that Nestlé has access to the comprehensive botanic library of Chi-Med in which 50,000 herbal essences and 1,200 different medical plants are listed.
In the course of this venture Nestlé – moving into this business segment (which is located somewhere between drugs and nutrition) only two years ago when it founded its subsidiary Nestlé Health Science – follows another trend: the Chinese health care market which is developing at a tearing pace. Like Chi-Med (turnover in 2011: EUR 39bn), Nutrition Science Partners Limited could benefit from increasing government spendings with regards to the Chinese health care system. Those spendings have increased tenfold from 2001 to 2010.