From street stalls to bourses, South East Asia's traditional medicine makers promise panacea
By Eveline Danubrata and Anshuman Daga
JAKARTA/SINGAPORE (Reuters) - On rainy days in Jakarta, a canny street merchant like Emi can sell two dozen sachets of herbal cold cure Tolak Angin to office workers and labourers sniffling by her roadside stall.
"Herbal medicine is good for the body because it's natural," says Emi, who goes by only one name. Laced with ginger, cloves and mint leaves, the traditional remedy Emi sells for 25 cents apiece is also good for business: The company that makes Tolak Angin went public this week and is worth around $850 million.
Shares in PT Industri Jamu dan Farmasi Sido Muncul Tbk jumped as much as 24 percent when it became the first herbal medicine company to list in Jakarta on December 18. With Chinese peers now trading at premium prices, Sido Muncul is just the latest in a crop of Southeast Asian traditional medicine firms with big plans to grow amid strong investor interest.
Global pharmaceutical companies from Pfizer Inc to Roche Holding AG have long pinpointed Asia as a source of future growth as incomes rise. The traditional medicine market of Southeast Asia is also coiled to leap as an increasingly health-conscious middle class rises in the region.
Stacked with products that claim to cure anything from rheumatism to sexual dysfunction, the market for traditional medicine in Southeast Asia is projected to grow to $3.9 billion by 2017, nearly 50 percent more than this year, according to research firm Euromonitor International.
While the ingredients in traditional medicines may be advertised as natural and enjoy historical acceptance in Asia, they don't meet with universal approval. Health regulators in places like Britain have warned of high concentrations of elements like mercury in some products, and conservation groups say some use ingredients taken from endangered animals.
Still, alongside the maker of Tolak Angin - 'Repel the Wind' in Indonesian - firms in the region including Singapore's Eu Yan Sang International Ltd and Malaysia's Power Root Bhd are drawing the attention of investors.
Shares in Eu Yan Sang and Power Root trade at 18.75 and 15.05 times their latest earnings, respectively. That's far below the average of 76.38 times for a group of eight listed Chinese traditional medicine makers, according to data from Thomson Reuters StarMine. Continued...