Deforestation Impacting Pharmaceutical Industry

07.01.15

Deforestation Impacting Pharmaceutical Industry

07.01.15
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By Christian Hellwig for Global Risk Insights

The knowledge about potential drugs that can be extracted from rainforests remains in its infancy. Despite this, the clearing of global rainforests has dramatically accelerated over the last decade, posing the risk of losing the vast reservoir of groundbreaking medicine hiding there.

Yet, it will prove difficult to tap the rainforests’ nearly infinite resources anytime soon. This is due to the current high pace of deforestation and species eradication, which is faster than scientists could ever learn about the plants’ properties, leading to a projected extinction rate of more than 50 percent of all rainforest flora, fauna and animals until 2100.

Against this backdrop, it is estimated that less than 1 percent of the plants found in rainforests have been tested for their medical properties so far (for comparison: about 140 rainforest plants become extinct every day).

According to the Food & Agriculture Organisation of the United Nations (FAO), Latin America in total records the world’s largest net losses of rainforests amounting to an estimated 4.3 million hectare a year. Moreover, over the last 25 years more than 70 percent of the rainforests in Cambodia, Vietnam and Laos have been cut down. In Indonesia, the rate exceeds 80 percent accounting for 28 million hectare being destroyed which equates the geographical size of Germany. Between 2020 and 2025, rainforests are expected to vanish in Indonesia completely.

Presently, the planet has only six coherent forestal areas remaining which include the North American primeval forests in Alaska and Canada, the Amazon region, the Chilean mountain forests, the Russian forests and the rainforests in Central Africa and Indonesia.

When it comes to biodiversity, Indonesia’s rainforests belong to the planet’s oldest and most diverse ones. Focusing on plants (which can contain new agents and active pharmaceutical ingredients) Indonesia alone makes up around 10 percent of the world’s flora and fauna. In this context, the Amazon rainforests rank number one. In total, all planetary rainforests harbor roughly 50 percent of the world’s known plants and animals.

Key issues associated with accelerated rainforest deforestation are unsustainable use of arable land, the EU policy of subsidizing biofuel and foreign ‘re-colonisation’ since the availability of arable land for agriculture and livestock farming in Europe, China or America has reached a level of saturation, sometimes already a decade ago.

The unknown treasures hiding in the rainforests

The number of medicines retrieved from rainforests, including multiple drugs such as anti-cancer drug Taxol, is consistently rising, but in total, still low. Around 120 prescription drugs derived from rainforest plants are sold worldwide and used to treat cancer, leukaemia malaria, heart diseases, bronchitis, rheumatism, diabetes, arthritis or tuberculosis.

Moreover, compounds of rainforest plants and other organisms serve as key design templates from which scientists and researchers can chemically synthesize drug compounds. Rainforest plants also promote research as certain compounds enable scientists to under-stand how cancer cells grow, while others serve as testing agents for potentially harmful food and drug products.

Due to the limited knowledge about the potential healing properties of tropical rainforest plants, indigenous tribes can act as important business partners since they have studied their environment over centuries or longer to a degree that cannot be picked up by modern science within a short period of time.

All in all, the global market for botanical and plant-derived medicines mounts up to $32.9 billion and records annual growth rates of 11 percent on average.

Yet, the overall percentage of natural pharmaceutical products are constantly shrinking since the 1990s (from over 80 to 40 percent).

Why pharmaceutical companies need to tap new markets

The world’s leading pharmaceutical companies currently face profound strategic challenges, which range from stagnant or even declining revenue growth to competition from highly specialized biotech firms as well as contract research organizations (CRO), generic drug companies, high-tech firms (such as Google) and food industries (such as Nestlé).

Furthermore, the industry’s overall annual growth rate until 2020 is expected to slow down in comparison to the years 2000 – 2010, which is mainly due to a decline in demand in Europe and North America and a stalled Chinese economic engine.

Although pharmaceutical research & development spending hit new peaks in 2013 and 2014, at the same time, the failure rate of drug candidates in costly phase III studies remains high, leading to a smaller number of approved drugs per year. Simultaneously, expenses for marketing are skyrocketing.

And with high-revenue drugs coming off-patent, generics are sure to siphon off a share of profits. Pricing pressures will also intensify due to competitors outside Europe and the U.S. offering more and more down-market medicines.

How pharmaceutical companies are responding to deforestation threat

Since the mid 2000’s, sustainability has become an integral part of the industry’s corporate identity. To live up to their corporate social responsibility, top pharmaceutical firms including Merck & Co., Pfizer, Novartis, Bayer, Sanofi or Roche have committed themselves to adhering to international treaties such as the Convention on Biological Diversity (CBD), to ensuring international minimum supply chain and environmental standards, or to reducing carbon dioxide emissions and water consumption.

In particular, global governance initiatives such as the Nagoya Protocol (as a part of the CBD) facilitate bioprospecting, stipulate compliance standards, biodiversity indicators and best practices for extracting and using natural resources and promote the creation and re-adjustment of protected biodiversity zones in cooperation.

However, the overall impact of the Nagoya Protocol is presently still limited since global ratification is stagnating and business support for putting binding measures and policies into practice remains in theory.

Besides, the majority of natural product programs in high biodiversity countries run by pharmaceutical companies including Merck & Co., Bristol Myers-Squibb, AstraZeneca and GlaxoSmithKline have either been put on hold or completely closed, mainly due to cost factors and the global shift in natural drug research. The latter is now conducted primarily by small and highly specialized biotech firms, semi-governmental or governmental entities or universities.

With global demand for biological and organic products currently on the rise again, deepening regional partnerships with indigenous tribes, local authorities and NGOs would lead to a distinct competitive edge. This new source of business opportunity will become even more important in the nearer future if the global superbug crisis of multi-resistant bacteria continues to spread as predicted by the World Health Organization.

Lastly, by making a stronger commitment to rainforest protection, the pharmaceutical industry would also create important opportunities on other ends such as reputation building, impacting public debates and societal norms or increasing business diplomacy capacities when forming private-public partnerships.

All in all, whilst the worldwide potential for drug discovery from rainforest plants and other natural sources is huge, little time remains to discover this rapidly diminishing resource.

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