* China vitamins market seen worth $20 bln by 2019
* Business spurring M&A deals, boosting shares
* But being outstripped by traditional medicine sales
* Traditional cures seen worth more than $40 bln by 2019
* Vitamin firms draw on old-school marketing tips, recipes
(Updates to add video link)
By Adam Jourdan and Donny Kwok
SHANGHAI/HONG KONG, Sept 23 (Reuters) - China's much-hyped
market for vitamins and supplements is facing a steep challenge
from traditional remedies from ginseng to deer antler, even as
the sector's rise fuels billion-dollar deals and share price
surges.
The vitamins market is set to expand five percent a year to
$20 billion in 2019, half its pace of growth since 2009. It's
being outstripped by a traditional medicine business that could
be worth $40 billion by then - and is growing twice as fast.
That's prompted vitamins firms from direct seller Amway to
giant U.S. drugmaker Pfizer Inc (NYSE:PFE) PFE.N to look for inspiration
from traditional medicine recipes going back thousands of years
to succeed in China's increasingly pivotal healthcare market.
"We've tried to learn the heritage and marry it with modern
life sciences," Jia Chen, vice president of Amway's China
research and development division, told Reuters.
The firm offers products for memory and liver health drawing
on traditional ingredients such as ginseng and liquorice. It
recently invested around $13 million in a traditional Chinese
medicine research lab in the eastern Chinese city of Wuxi.
"Half of the population still believe in traditional ways
and still go to traditional doctors or hospitals. This is a way
of life and is passed from generation to generation," she said.
Pfizer broke ground in June on a $95 million facility in
eastern China to expand production of its Centrum and Caltrate
brands. It's now offering golden-hued gift boxes of vitamins,
playing into the trend of giving expensive traditional Chinese
medicines as presents.
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VIDEO: Supplementing tradition http://reut.rs/1Lv393X
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Traditional remedies are used in China to treat everything
from low energy to cancer, making for a business that's broader
than Western-style vitamins and health supplements. The
industry's ancient roots, along with rising disposable incomes,
greater health awareness and supportive government policies,
have helped stoke the market further.
It's a potentially lucrative model too, with shoppers
willing to splash out for natural ingredients boiled together to
create a curative brew. One Shanghai shopper said she had bought
a three-month skin treatment for 6,000 yuan ($942).
Leaders of the market for these remedies, like Beijing
Tongrentang Co Ltd 600085.SS , have products with snakeskin,
dried toad, centipede, scorpion and dandelion to treat swelling,
and others with oyster, ginseng and black-bone chicken for
menstrual pains.
"At the moment the real money-spinners are deer antler and
ginseng," said Yu Qiangmin, 51, a chemist in a traditional
medicine store in Shanghai.
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GRAPHIC: Vitamins vs traditional Chinese medicines
http://link.reuters.com/hah65w
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HEALTHY MIX?
Some vitamins suppliers say demand from safety-conscious
consumers for high-quality imports is robust enough to fuel
market growth. Hong Kong-listed Biostime International Holdings
1112.HK announced a billion-dollar deal last week for
Australian vitamin maker Swisse Wellness to build on strong
Chinese demand. ID:nL4N11N5NR
"Chinese consumers are prepared to pay a premium for our
products because they know that those products are
quality-checked before they're sent out to China," Christine
Holgate, Chief Executive Officer of Australia's Blackmores Ltd
BKL.AX , told Reuters in an interview.
Blackmores has seen its shares nearly quadruple in value
this year, accelerating after an 83 percent spike in annual
profit helped by booming demand in China. The firm has hired
Chinese tennis star Li Na to promote its pregnancy supplements
and help boost local demand. (http://bit.ly/1XJTnj9)
Vitamin makers are also looking to lure younger, urban
Chinese consumers who are less convinced by traditional methods
and willing to mix the old with the new.
Wen Zuolin, 21, a food safety student in Shanghai, has
swapped indigo woad root for vitamin tablets which she says are
more convenient, taste better - and she knows what's in them.
She admits she goes back to traditional cures from time to time.
"Older generations trust traditional Chinese medicines more.
Some of us youngsters still trust it too, but the majority
prefer Western-style medicines because they have a quicker
effect," she said.
In Shanghai, 82-year-old Li Dongmei wasn't yet convinced as
she scoured cluttered shelves and old wooden drawers in a
downtown medicine shop.
"I'm not sure about how effective it is, but I still take
traditional Chinese medicines every day," she said, laden with a
haul of two heavy bags of products which can cost hundreds of
dollars for a few months' treatment.
"Vitamins, I don't really trust yet."
($1 = 6.3694 Chinese yuan renminbi)
($1 = 1.3904 Australian dollars)