Phytomed Medicinal Herbs has invested long and hard to ensure its products meet all regulatory requirements in overseas markets. Now it’s payback time.
When I visited Phytomed’s Avondale factory in early April, the place was buzzing. The company was days away from launching its Kiwiherb product line into Australia, and there was much to be done.
Managing director Phil Rasmussen greets me in a reception area crowded with various production-related boxes – “it’s not normally like this,” he assures me.
Phytomed is poised for major export growth, but Rasmussen would be the first to agree that it has not been an overnight success story. Where they are today is the result of many years investment in acquiring the necessary product licences to access overseas markets.
Phytomed Medicinal Herbs is a producer of premium herbal medicines for qualified health practitioners – with emphasis on the word ‘premium’. And to understand Phytomed’s unwavering commitment to product quality, you first need to understand the history of the company and its founder.
Phil Rasmussen’s life revolved around medicinal herbs right from an early age – as a child growing up near Gisborne he was introduced to plants by his parents, who were keen gardeners. He studied pharmacy (has a masters degree in pharmacology from Otago University), dabbled in homeopathy and, while living in the UK, became interested in herbal medicines, and began growing his own medicinal herbs on an ‘allotment’ and selling herbal ointments.
He qualified as a medical herbalist (aka ‘phyto-therapist’) and over his career worked in all three areas of pharmacy – hospital, drug information and retail/community.
Phytomed was founded in 1998 and began trading around three years later from Rasmussen’s backyard – it took that long to write all the necessary documentation, he says, but it was to prove a wise investment.
“The documentation was, still is, required under the pharmaceutical code of Good Manufacturing Practice or GMP – that’s the international standard for pharmaceutical companies, and is required for export.”
Rasmussen had noticed that many of the ingredients for Western herbal medicine were based on plants indigenous to North America, Europe and Africa, and many were on the endangered list. So he was keen to utilise flora and fauna native to New Zealand in products. He says the chemistry of New Zealand’s plants had been relatively well researched since World War Two. What was missing was the pharmacology – what they do medicinally.
New Zealand not only has unique flora – it also has a great growing climate, says Rasmussen – the right soil, location, agronomy (the science of optimal growing) and horticultural science input. “You can grow pretty much any premium quality plants you want to here. Western herbs such as echinacea, ginkgo and ginseng, we grow locally because the quality here is the best in the world.”
Export focus
Rasmussen says Phytomed differs to other New Zealand natural health product exporters in that their focus is currently not Asia. “Our products are mostly Western herbs, and to create awareness and educate consumers on our products in Asian countries such as China would require huge resources. It’s much quicker and easier to educate consumers in the UK, or Ireland or California about the qualities and benefits of medicinal herbs such as echinacea.”
He says their current export focus is two-pronged: UK/Europe and Australia. That’s big enough for a small (20 staff) but growing company (sales grew by 40 percent in 2011) that specialises in premium products. They’ve invested significantly in meeting regulatory requirements in those markets – particularly Europe. Not many New Zealand natural product companies are exporting to Europe like Phytomed, and Rasmussen puts this down to the fact that he lived in the UK for many years and has contacts there; plus it’s easier to gain brand awareness in those markets.
He sees good long-term opportunities in countries such as Germany and Holland.
“The regulations have recently become much tougher in Europe,” says Rasmussen. “There are stringent pharmaceutical stability studies to ensure that your product maintains its qualities throughout its shelf-life – along with extensive product information requirements.
“If you’re serious about export full traceability is crucial he adds. “And you need to guarantee that what’s stated on the label is, in fact, what’s in the bottle.”
Rasmussen believes Europe and the UK, despite economic challenges, is still a lucrative long-term market opportunity for Phytomed. People there are discerning, looking for lower- cost alternatives to traditional drugs, and antibiotic resistance is becoming a major issue. There’s a need for a new paradigm, he says, “in terms of building immunity and controlling infectious diseases.”
He says for all sorts of reasons the use of effective herbal products everywhere has increased during the recession, and their take-up will be fuelled even further as countries switch to user-pays health services. “People will be forced to take more responsibility for their own health.”
Kiwiherb for Aussies
As well as its bulk herbal extract sales on both sides of the Tasman, Phytomed has been exporting its organic-certified Kiwiherb medicinal herb range to the UK and Ireland, and a small amount to Asia, for some time, and is starting its push into Australia with the brand in May (hence the extremely busy office!). To achieve TGA (Therapeutic Goods Administration) GMP certification in Australia, Phytomed had to fly auditors to New Zealand at its own expense. “The lack of an MRA between the two countries definitely slowed our growth,” he admits. “That’s been the toughest aspect, to be honest.
“We’re starting in Australia with an exclusive distributor in New South Wales and our own local rep on the ground,” says Rasmussen, “so we only bite off as much as we can chew.” And they’re going for the ‘low-hanging fruit first’ he says – to pharmacies, where the most market growth is happening, and health food stores.
Exports equate to around 35 percent of total sales, but with the Kiwiherb launch into Australia and the first of its new product licences about to be secured in the UK, Rasmussen’s predicting that figure to reach over 50 percent in the next financial year. “We should do well in Australia, provided we get the distribution model right and can control marketing and distribution as much as possible.”
Looking ahead
Having a sound board of directors has been instrumental in steering the company forward, says Rasmussen. The board includes industry notable Graeme Boyd, the former CEO of Comvita. The result has been more time spent on strategy and managing the company’s robust growth.
Rasmussen sees increased regulation and the rationalisation of brands and products impacting on the global medicinal herbs industry. He believes the market will continue to grow, particularly for products that work. “Proof of effectiveness will become more of a requirement of both purchasers and regulators too – that’s a global trend,” he says, and he predicts that clinical trials will become increasingly necessary.
Meanwhile, with key senior management being appointed, Phytomed is entering an exciting growth phase. Rasmussen keeps a close eye on any new industry research and stays committed to what he believes are the three keys to the company’s sales success: quality in terms of levels of active ingredients and dose; staying away from the ‘me too’ market and producing innovative products (such as combining manuka honey with herbs); and providing good customer service – “all three sales reps in New Zealand are trained practitioners of herbal medicine and can ‘talk the talk’.”
As for personal testing of his own products, he never leaves the country without a good dose of echinacea to boost his immune system. He’s living proof of his products’ effectiveness.
Glenn Baker is editor of Exporter.
