Production and Delivery of Traditional Medicines and Supplements
Production and Delivery of Traditional Medicines and Supplements
Business Model Description
Invest in B2C and B2B models engaged in manufacturing and distribution of traditional or herbal medicines and supplements. Some of the companies that are active in this space are:
Life Balance LLC was established in 2020 by TESO Group, one of the biggest group companies in Mongolia. They are manufacturing around 30 traditional supplements using forest berries and other herbs that grow only in Mongolia under the brand "MANA" with the ISO standard 9001, 22000, and 50001.
MONOS Foods was founded in 2012 by MONOS Group and became a public company in 2019 offering 30 percent of its share. It produces 87 products under 13 brands using traditional dairy products and herbs and distributes them through 6000 points in 21 provinces of Mongolia with ISO 9001:2015, FSSC 22000, 140001, 30400. They have been exporting their products to China and Japan since 2018.
Odi Tan LLC, established in 2015, grows 50 types of medicinal herbs for commercial purposes and produces 110 types of traditional medicine, 16 types of traditional supplements, and 20 types of traditional pharmaceuticals. Their 3 types of medicines and 2 types of medicinal teas are used for COVID-19 treatment.
Mong-Em LLC, established in 1990, has the capacity to produce 4 tons of traditional medicine of 270 types using various herbs for which they also have 28 hectares of plantation. Since 2012, Mong Em LLC started planting rare medicinal herbs in order to sustain the ecological balance. They also export their traditional medicine to Russia, Ukraine, and Poland upon request.
Expected Impact
Sustainably produce traditional medicine and supplements using local and native herbs to contribute to the overall well-being of the people.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Mongolia: Ulaanbaatar
- Mongolia: Umnugobi
- Mongolia: Uvs
Sector Classification
Health Care
Development need
Mongolia has one of the highest mortality rates in the Western Pacific due to high prevalence of non-communicable diseases (NCDs), (1) which account for 85.9 percent of all deaths in Mongolia. (2) The highest rate of cancer deaths for men and women combined was in Mongolia at 175.9 people per 100,000. (3)
Policy priority
Regarding health, Vision 2050 aims to encourage citizens to practice healthy habits and an active lifestyle, and to develop a quality, accessible and effective healthcare system. (4)
Investment opportunities introduction
Mongolia prioritizes improving the health system by aligning financing of the health sector with the quality of healthcare and services. (7) Thus, investment towards the health sector is highly encouraged.
Key bottlenecks introduction
As Mongolia is sparsely populated country in a vast land, providing quality health care to disadvantaged and remote communities has been challenging in Mongolia.
Biotechnology and Pharmaceuticals
Development need
Medicine prices in Mongolia are one of the highest in Asia meaning that 2.25–5.56 times higher than international reference prices and there is a huge difference between the fully subsidized medicines of inpatients and outpatients. Pharmaceuticals market in Mongolia is highly dependent on imports, producing only 30% of the domestic market demand. (8)
Policy priority
Vision 2050 states that Mongolian traditional medicine will be developed in combination with modern medicine to make it a "brand" to support export. (4)
Gender inequalities and marginalization issues
The Health Insurance Fund (HIF) covers medicines prescribed to inpatients or people who are hospitalized in public and private hospitals. However, this does not apply to outpatients, where only a few medicines are fully subsidized by the state and distributed free of charge directly to registered patients.
Also, middle-and low-income families in Mongolia spend 70 percent–96 percent of their healthcare expenses on medicines alone. (8)
Investment opportunities introduction
The number of medicine imports increased from USD 90 million in 2020 to USD 146 million USD in 2021, (9) implying the market opportunity to invest in domestic medicine and pharmaceutical manufacturing.
Key bottlenecks introduction
There is no single medicine authority organization in Mongolia which leads to highly fragmented regulation over the sector and brings down the growth of the medicine sector (8)
Biotechnology and Pharmaceuticals
Pipeline Opportunity
Production and Delivery of Traditional Medicines and Supplements
Invest in B2C and B2B models engaged in manufacturing and distribution of traditional or herbal medicines and supplements. Some of the companies that are active in this space are:
Life Balance LLC was established in 2020 by TESO Group, one of the biggest group companies in Mongolia. They are manufacturing around 30 traditional supplements using forest berries and other herbs that grow only in Mongolia under the brand "MANA" with the ISO standard 9001, 22000, and 50001.
MONOS Foods was founded in 2012 by MONOS Group and became a public company in 2019 offering 30 percent of its share. It produces 87 products under 13 brands using traditional dairy products and herbs and distributes them through 6000 points in 21 provinces of Mongolia with ISO 9001:2015, FSSC 22000, 140001, 30400. They have been exporting their products to China and Japan since 2018.
Odi Tan LLC, established in 2015, grows 50 types of medicinal herbs for commercial purposes and produces 110 types of traditional medicine, 16 types of traditional supplements, and 20 types of traditional pharmaceuticals. Their 3 types of medicines and 2 types of medicinal teas are used for COVID-19 treatment.
Mong-Em LLC, established in 1990, has the capacity to produce 4 tons of traditional medicine of 270 types using various herbs for which they also have 28 hectares of plantation. Since 2012, Mong Em LLC started planting rare medicinal herbs in order to sustain the ecological balance. They also export their traditional medicine to Russia, Ukraine, and Poland upon request.
Business Case
Market Size and Environment
USD 100 million - USD 1 billion
5% - 10%
Middle and low income families spend 70–96 percent of their healthcare expenses on medicines alone. (8)
According to expert consultations, market size for this IOA is estimated to be ~USD 101 mn.
Indicative Return
15% - 20%
> 25%
Experts engaged in manufacturing businesses reported average IRRs of ~16.5 percent.
According to Monos Foods JSC's financial statement in 2021, revenue grew by 51percent year on year and gross profit margin was 45 percent.
Investment Timeframe
Medium Term (5–10 years)
As per experts, traditional medicines and supplements take a long time to gain approval; thus, the investment timeframe is between 5 and 10 years.
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Market - High Level of Competition
Business - Supply Chain Constraints
Market - High Level of Competition
Impact Case
Sustainable Development Need
In Mongolia, one in every two deaths is attributable to either cardiovascular diseases or cancer in 2021, according to the national statistics office data. (14) High-quality traditional medicines and supplements could contribute to the prevention of these diseases.
Use of locally produced traditional medicines and supplements would reduce out-of-pocket healthcare costs. Mongolian households have a high out-of-pocket (OOP) health expenditure share reaching almost 1/3 of the total health expenditure and contributing to an 8 percent increase in poverty levels. (15)
Gender & Marginalisation
In 2021, 58.3 percent of the deaths due to cardiovascular diseases and 56% of the deaths due to cancer were those of men. (14) Proper use of high-quality traditional medicines and supplements could help in preventing these diseases.
The use of more affordable locally produced traditional medicines could lower the incidence of NCDs which are higher in rural and last mile areas of Mongolia compared to Ulaanbaatar. (11)
Expected Development Outcome
Increased traditional medicine and supplements with better quality would improve the overall health of the population and reduce the NCD rates.
Increase local producers' income and the proportion of locally produced medicines and supplements.
Gender & Marginalisation
Increase in proportion of financially vulnerable population with access affordable medicines and supplements.
Healthcare sector employment is dominated by women with 82 percent of women in the workforce. (11) Traditional herbal medicine and supplement production can increase the income of women.
Primary SDGs addressed
3.4.1 Mortality rate attributed to cardiovascular disease, cancer, diabetes or chronic respiratory disease
3.1.1 Maternal mortality ratio
3.2.1 Under‑5 mortality rate
3.8.2 Proportion of population with large household expenditures on health as a share of total household expenditure or income
3.2.2 Neonatal mortality rate
As of 2021, 43.1 per 10,000 people (11)
As of 2021, 94 per 100,000 people (11)
3.2.1 Under‑5 mortality rate: As of 2021, 13.9 per 1000 births.
3.8.2: Middle and low income families in Mongolia spend 70%–96% of their healthcare expenses on medicines alone. (8) 2/3 of the population is middle and low income in Mongolia. (16)
3.2.2: As of 2021, 8.2 per 1000 births
To reduce premature mortality from NCDs in 2030 by one-third. (17)
70 per 100,000 in 2030
3.2.1 Under‑5 mortality rate: Information not available as of Feb 2023.
3.8.2: Information not available as of Feb 2023.
3.2.2: 8 per 1000 births in 2030
Secondary SDGs addressed
Directly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Indirectly impacted stakeholders
People
Gender inequality and/or marginalization
Planet
Corporates
Public sector
Outcome Risks
Inappropriate management and use of natural herbs could cause more desertification.
Lack of regulation may cause unfair trade practices, for instance, substandard products or unregistered products.
Desertification may cause a lack of raw materials which would lead to inconsistent production and supply.
Gender inequality and/or marginalization risk: If prices go up in relation to the liberalization of medicine prices, financially vulnerable households would struggle to purchase them.
Impact Risks
Improper use (i.e. wrong dosage or overuse) of traditional medicines may lead to negative side effects on health.
Overusing raw materials to meet the growing demand for herbal medicines may lead to extinction of some herbs and plants.
Gender inequality and/or marginalization risk: Local governments could ban the cultivation of medicinal herbs in areas that are more prone to the risk of desertification.
Impact Classification
What
Improved production of traditional medicines and supplements, leading to improvement in overall health of the population, increased domestic production and decreased imports.
Who
Consumers relying on traditional medicine and supplements; and those relying on imported medicines.
Risk
Traditional medicine industry requires heavy investment of time and money in R&D, which may entirely be in vain if regulatory approvals are not obtained.
Contribution
Out of pocket share (~38 percent) of total healthcare costs would be reduced in relation to affordable traditional herbal medicines. (15)
How Much
Middle- and low-income families in Mongolia spend 70percent –96 percent of their healthcare expenses on medicines alone. Affordable traditional medicines could reduce these expenses. (8)
Impact Thesis
Sustainably produce traditional medicine and supplements using local and native herbs to contribute to the overall well-being of the people.
Enabling Environment
Policy Environment
In Vision 2050, clause 2.2.3 states that the production of traditional medicine will be combined with modern technology and further will be made into "brands" for exporting. Clause 2.2.4 states that Unified Drug Regulatory organization will be established. (4)
In Five-Year Development Guidelines 2021-2025, clause 2.2.1 aims to solidify the prevention system for communicable and non-communicable diseases, and clause 2.2.7 aims to enable the provision of safe medicine and medical equipment. (18)
In the Government of Mongolia's medium-term development plan, 2020-2024 and its Action Plan, clause 2.1.8 aims to ensure the quality and safety of drugs and medical devices and increase their availability, creating an electronic registration and control system
Financial Environment
Financial incentives: XacBank received a financing of USD 130 mn from International Finance Corporation for the purpose of funding women-led MSME and green loans. (22) This loan is applicable to traditional medicine manufacturers led by women.
Fiscal incentives: R&D costs incurred for traditional medicines and supplements are subject to VAT exemptions. (23)
Other incentives: Government-funded SME loans are available from the Development Bank of Mongoliа for traditional medicine and supplement manufacturers.
Regulatory Environment
Law on Drugs and Medical Devices regulates all matters of production, exports/imports, distribution, usage, and monitoring of traditional medicine and supplements. Clause 22.7.9 states that raw materials for traditional medicine are not to be registered in State Registry. (19)
The Mongolian Agency for Standardization and Metrology issued general requirements for traditional powder medicines (MNS 5585: 2006) for the preparation, production, inspection, receiving, analysis, packaging, labeling, storage, and transportation of traditional medicine. (20)
Marketplace Participants
Private Sector
Corporates: Monos Pharma, Monos Foods, Life Balance LLC, Oditan LLC, MANBA DATSAN Mongolian Traditional Medicine Training Center, Mong-Em LLC Investors: Monos Group, Teso Group LLC
Government
Ministry of Health, The Human Medicines Council, General Agency of Specialized Inspection, National Center for Public Health
Multilaterals
World Health Organization (WHO), United Nations International Children's Emergency Fund (UNICEF), Asian Development Bank (ADB), European Bank of Reconstruction and Development (EBRD)
Non-Profit
Mongolian United Medicines Association
Public-Private Partnership
Mongolian National Chamber of Commerce and Industry
Target Locations
Mongolia: Ulaanbaatar
Mongolia: Umnugobi
Mongolia: Uvs
References
- (1) WHO. (2022). Mongolia: crafting essential country-specific tools to tackle NCDs. [online] Available at: <https://www.who.int/news-room/feature-stories/detail/mongolia-essential-country-specific-tools-to-tackle-ncds#:~:text=Mongolia%20has%20one%20of%20the,cancer%20(24.6%25)%20in%202018.>[Accessed 16 October 2022].
- (2) Government of Mongolia. (2019). Mongolia Voluntary National Review Report 2019: Implementation of the Sustainable Development Goals. Ulaanbaatar"
- (3) WCRF International. (2022). Global cancer data by country | World Cancer Research Fund International. [online] Available at: <https://www.wcrf.org/cancer-trends/global-cancer-data-by-country/>[Accessed 16 October 2022].
- (4) Government of Mongolia, (2020). Vision 2050
- (5) United Nations Development Programme. (2020) Briefing note for countries on the 2020 Human Development Report, The Next Frontier: Human Development and Anthropocene. in , UNDP,
- (6) National Committee on Gender Equality. (2019). Study on sexual and reproductive health rights of girls and women with disabilities.
- (7) Government of Mongolia. (2018). Three-Pillar Development Policy.
- (8) Jigjidsuren A,, Oyun B. (2022). SUPPORTING THE REGULATION OF MEDICINES IN MONGOLIA, No. 49/ ADB EAST ASIA WORKING PAPER SERIES 13-14 < https://www.adb.org/sites/default/files/publication/799026/eawp-049-supporting-regulation-medicines-mongolia.pdf> accessed 17 October 2022. "9) National Statistics Office of Mongolia. Imports by goods. https://1212.mn/tables.aspx?tbl_id=DT_NSO_1400_010V2&13999001_select_all=0&13999001SingleSelect=_T1_T2&IMPORT_select_all=0&IMPORTSingleSelect=_29&YearM_select_all=0&YearMSingleSelect=&YearY_select_all=0&YearYSingleSelect=_2021_2020&viewtype=table"
- (10) “OTC Pharmaceuticals - Mongolia: Statista Market Forecast” (Statista) <https://www.statista.com/outlook/cmo/otc-pharmaceuticals/mongolia>accessed October 17, 2022
- (11) Health Development Center (2022) Health Indicators. Available at: http://hdc.gov.mn/media/uploads/2022-05/ERUUL_MENDIIN_UZUULELT_2021.pdf.
- (12) Kameoka, R & Yasufuku, N & Omine, Kiyoshi & Marui, A & Furukawa, Zentaro & Tuvshintogtokh, Indree & Mandakh, B & Bat-Enerel, Banzragch & Yeruult, Y. (2013). Geo-environmental field survey with cultivation of licorice in Mongolian arid land for combating desertification.
- (13) Khukhnokhoi K. (2022). Herbal Remedies Grow Popular Again, Thanks to Pandemic. https://globalpressjournal.com/asia/mongolia/herbal-remedies-grow-popular-thanks-pandemic/>accessed October 18, 2022
- (14) National Statistics Office of Mongolia. Deaths by causes. https://1212.mn/mn/statistic/statcate/573056/table-view/DT_NSO_2100_011V1"
- (15) Batbold O, Banzragch T, Davaajargal D, Pu C. (2022) Crowding-out effect of out-of-pocket health expenditures on consumption among households in Mongolia. Int J Health Policy Manag. 2022;11(9):18741882. doi:10.34172/ijhpm.2021.91
- (16) National Statistics Office of Mongolia. Household income categories. https://www2.1212.mn/tables.aspx?tbl_id=DT_NSO_1900_032V1&Location_select_all=0&LocationSingleSelect=_1&Revenue_select_all=0&RevenueSingleSelect=_1_2_3_4_5_6&YearY_select_all=0&YearYSingleSelect=_2021&viewtype=table" "17) World Health Organization. (2017) The prevention and control of noncommunicable diseases in Mongolia. https://apps.who.int/iris/bitstream/handle/10665/259627/WHO-NMH-NMA-17.55-eng.pdf"
- (18) Government of Mongolia. (2020). Five-year Development Guidelines To Develop. https://legalinfo.mn/mn/detail?lawId=15584
- (19) Government of Mongolia, (2010). Law on Drugs and Medical Supply. https://legalinfo.mn/mn/detail/85
- (20) Mongolian Agency for Standard Metrology. (2006). General requirements for traditional powder medicines.
- (21) Mongolian Agency for Standard Metrology. (2015). General requirements for for the granting of a special license for the production of traditional medicines. "22) International Finance Corporation. (2022). Summary of Investment Information - XacBank Syn 2022. https://disclosures.ifc.org/project-detail/SII/47455/xacbank-syn-2022"
- (23) Government of Mongolia, (2015). Law on Value Added Tax
- (24) Magsar, U., Baasansuren, E., Tovuudorj, ME. et al. Medicinal plant diversity in the southern and eastern Gobi Desert region, Mongolia. j ecology environ 42, 4 (2018). https://doi.org/10.1186/s41610-018-0064-5
- (25) Uvs Seabuckthorn Cluster Group Webpage. About us: PURE SEA BUCKTHORN WILDCRAFTED FROM UVS, MONGOLIA. http://uvscluster.mn/eng/index.php/about-us"