The
              Report
No. 90: New Pharmaceutical, Nutraceutical and Industrial Products - The potential for Australian agriculture

The full report
This is a summary of a full report New Pharmaceutical, Nutraceutical & Industrial Products - The potential for Australian agriculture published by RIRDC (Pub. No. 00/173, WHP-4A) by Wondu Holdings Pty Limited. Phone: 02 9369 2735, Fax: 02 9369 2737, Email: michael@wondu.com, Web: http://www.wondu.com.
The report is available in hardcopy (under Resilinet Agriculture Programs) or downloadable from this site.

Australian farmers will have increasing opportunities this century to develop products emerging with the revolution in biotechnology, information technology and growing consumer awareness that diet is an important factor in health and quality of life.

A scoping study funded by the Rural Industries Research and Development Corporation (RIRDC) and headed by David Michael, from the Sydney company Wondu Holdings Pty Ltd, identifies these opportunities as providing raw material inputs for new pharmaceuticals, nutraceuticals, and industrial products.

The work points to increasingly segmented and polarised markets for the agricultural products and foods made from them. It also identifies a range of perennial plants with medicinal potential suitable for growing in drier Australian climates. Researchers say these segmented markets are likely to be more demanding, not only of producers, but also research organisations – in terms of the type of projects that will generate higher returns.

The Study

The scoping study’s aim was to identify the broad R&D opportunities for further investiga-tion, research and development by RIRDC, other research funding bodies and research providers.

Agricultural commodity-based R&D corpora-tions, CRCs, State and Commonwealth Gov-ernment Departments, private companies, industry associations, specialised research institutions, RIRDC program managers, and specialists from Europe and the United States were involved.

The three main tasks of the study were:

A major focus of the work was to establish the potential for Australian agriculture to produce these new raw materials over the next decade. Current pharmaceutical, nutraceutical and industrial products available from agriculture, literature on new products, public and private research nationally and globally, development of these new products, and planned R&D of private and public organisations are reviewed.

The study documents results of preliminary production and marketing of new products including management issues, and current and projected profitability.

It also looks at the suitability of infrastructure, institutional arrangements, public perceptions, and appropriate business structures, along with availability of markets and required managerial capabilities.

World nutraceuticals demand and growth, 1987-2002 in $Usmillion
 
Item 1987 1997 2002 Annual growth
x x x x 87/97 97/02
Nutraceutical demand x x x x x
Minerals & nutrients 1,139 2,385 3,305 7.7 6.7
Vitamins 686 1,380 1,935 7.2 7.0
Herbal extracts & others 517 1,735 2,960 12.9 11.3
TOTAL 2,342 5,500 8,200 8.9 8.3
Source: Freedonia Group, Inc., 1998
 
 

Ginseng roots
Oil Mallee plantation
Echinacea

Sea products and possible health benefits
 
Product Possible Health Benefit
Shark cartilagex Calcium supplement & inhibits blood flow to tumours
Shark liver oilx Anti-cancer, anti-wrinkles cosmeceutical
Squalenex Shark liver oil concentrate, for reducing cholesterol and fatigue, improving vision & blood circulation
Spirulina (blue green algae) Amino acid, for muscle building
DHAx Fish oil, used for heart disease-softens arteries
Beta carotenex Converted to Vitamin A by liver, helps vision
Glucosamine chondroitan (from shelfish) Strengthens bones
Salmon oilx High in Omega 3
Sea cucumberx Treats arthritis
Cod liver oilx Rich in Vitamins A and D
Seaweed beveragex Magnesium nutritional supplement
Other sea vegetables (arame, bladderwrack, dulse, hijiki, kelp, kombu, nori, sea palm, wakame) Carotenes, iodine, Vitamin B12

Source: Kopple, D.

The Results

The study identified ten positive factors for Aus-tralia in taking advantage of the new product opportunities. Among the positive factors is the expectation of continued growth in demand for natural materials, plants in particular, in the new pharmaceutical, nutraceutical and industrial products. Australia has an established capacity to supply many of the high quality products at inter-nationally competitive prices. The study also identifies ten constraints to taking advantage of the opportunities including economies of scale in processing, lack of domestic processing, access to development capital, environmental and an uncer-tain planning environment. An opportunity already exists for producing functional foods from various crops and animal products currently produced in Australia. These products include oats, soybeans, canola, flaxseed, tomatoes, garlic, broccoli and products, cruciferous vegetables, citrus fruits, cranberry, teas, wine and grapes, fish, dairy products, omega-3 eggs, medicinal honey, kanga-roo meat and beef. There may also be significant development potential in sea products.

Herbal plant species with good growth forecast for future sales
 
Therapeutic target "Established" plant used for treatment
Cholesterol/blood pressure Garlic
Physical/mental stimulation Ginkgo/Ginseng
Immune system Echinacea/Goldenseal
Depression St John's Wort
Prostate problems Saw palmetto

The best prospects for medicinal herbs are garlic, ginkgo/ginseng, echinacea/golden seal, St. John’s Wort and Saw palmetto. But the labour intensity of producing some of these crops – such as garlic – presents a challenge for local producers and researchers to find strategic solutions to improve labour productivity. Mechanical harvesting, quality control and improved safety and labelling stand-ards are essential for improved competitiveness.

The study finds that locally owned and foreign-owned food manufacturers in Australia are already capable of developing a competitive supply of functional foods. But manufacturing limitations constrain the prospects for developing a local market for agricultural materials used in making vitamin supplements, pharmaceuticals and industrials. A particular challenge exists in estab-lishing a competitive presence in local manufactur-ing of vitamins, including those used in feed for animals. Bioplastics have significant potential because of improved processing technologies, growing interest in biodegradable plastics and continued growth in consumption of polymers. In these industries, the solutions appear to rest with developing effective incentives and partnerships and alliances with large globally oriented pharma-ceutical and chemical companies.

Summary

The report lists 17 major areas for new re-search emphasising that the work is a scoping study. It says many of the products discussed require additional research before they can be considered ready for commercial production. Some require feasibility studies to determine if more detailed research is warranted.

In discussing comparative advantages, the report says Australian agricultural resources available for responding to the opportunities for new pharmaceutical, nutraceutical and industrial products are substantial in terms of native plants, land resources, production infrastructure and production management skills.

It comprises one of the world’s largest holdings of diverse native plants, about which much is both known and unknown.

Herbs with greatest potential for future development
Herb Ease of marketing Greatest need Possible novelty
Chamomile
y
x
x
Garlic
y
y
y
Ginger
y
x
x
Echinacea
x
y
x
Feverfew
x
  
x
Ginkgo
x
y
x
Hawthorn
x
y
x
Saw palmetto
x
y
x
Milk thistle
x
x
y
Valerian
x
x
y

Source: Tyler, 1988

At the manufacturing level, large well-resourced and often foreign-owned pharmaceutical and food manufacturing companies are critical to success.

These firms have varied resources and access to markets and technology.

Effective solutions to the processing gap are likely to involve increased use of partnerships and alliances with these firms.

The report says best immediate and mid-term prospects are for exploiting the capacity of the farm production sector to meet the demands of these more segmented markets. Human resource skills in Australian agricultural production are significant.

In horticulture alone there are about 81,000 growers, 1100 research scientists and 375 research centres.

But it is important to recognise that climatic constraints, limited rainfall in particular, create serious barriers to the development of commercially viable enterprises in many areas of Australia, irrespective of the product potential.

While this study points to the plant industries as the areas with most potential there are also significant opportunities in animal production. Kangaroo meat, beef (through anti-carcogenic fatty acid), shark cartilage, emu oil, cane toads, dairy whey, yoghurt, colostrum and various organs from a range of animals offer significant potential.


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