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R IS S I P R OJ E CT R E P OR T S

Local Innovation and Production System in Indigenous Medicine: The Case of Ayurveda in Kerala, India

May 2013

Report prepared by: K J Joseph (Centre for Development Studies, Thiruvananthapuram) Dinesh Abrol (National Institute of Science, Technology and Development Studies, New Delhi) Harilal Madhavan (Azim Premji University, Bangalore)

Local Innovation and Production System in Indigenous Medicine: The Case of Ayurveda in Kerala, India1
K J Joseph (Centre for Development Studies, Thiruvananthapuram) Dinesh Abrol (National Institute of Science, Technology and Development Studies, New Delhi) Harilal Madhavan (Azim Premji University, Bangalore)

Abstract
This paper analyses how the local system of innovation and production in indigenous medical knowledge operates in the state of Kerala in India and locates varied spaces of exclusions therein. The local production networks, innovation capabilities and social innovation process are explored within Indigenous medicine sector of Kerala through an analysis of fifty firms in Thrissur and an Ayurvedic cluster namely CARe Keralam. Additionally, a few indigenous healers and medicinal plant collectors are interviewed to explore the supply chain nodes and geography of labour. The study argues that the policies during the early period, especially colonial period favoured biomedical paradigm and excluded indigenous system. The post-independent policies have largely nourished the commercial aspects of the indigenous system, while ignoring the therapeutic values, hence resulting in an elusive inclusion. The geo-political context of scientific dominance sustained this exclusion. It also argue that unlike the given notion, innovations could have global as well as local implications and it does not necessarily be given from outside. The industrial transformation of indigenous knowledge has diversified the use of knowledge into not only medicine, but nutraceuticals and cosmetics, representing the most demanded global commodities. The sector , while putting forward a strong local and production system (LIPS-IM continues to face multiple exclusions and institutional bottlenecks. At the same time, there is evidence to indicate that the traditional practitioners are mainly making use of local health knowledge for public health benefits, based on trust and time tested efficacy. This challenges the perceived notion of published scientific evidence for acceptance of medicine and underlines the importance of outcome based evidence system. The study describes the importance of getting institutions right for an inclusive commercialization of traditional medicine/knowledge. The potential of LIPS-IM is highlighted by addressing varied infirmities like weak institutional architecture, like low level of interactive learning along with low investment in R&D and scarcity in raw material supply.

Key words: Ayurveda, local Innovation System, health innovations, India, Kerala

The senior authorship is shared by the three authors. We sincerely acknowledge the help extended in the field by Dr. Hareesh, Dr. Ranjith, Dr. Ramanathan, Dr. Sheela Karalam, Mr. Raman Karimpuzha among many others.

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Contents 1. Introduction: The Background 2. Analytical framework 3. Active Exclusion to illusive Inclusion: National and International Context of IM 3.1 International Context 3.2 National Context 4. IM in Kerala: Evolution, growth and Present structure 4.1 Institutional Mechanism for the development of Ayurveda in Kerala 4.2 Kerala Ayurveda in Transition 4.3 Present scenario 4.4 Changing Production Relations and Multiple Markets 5. The innovation and Production Linkages: the empirical evidence 5.1. Institutions, Labour and Cost in Raw Material Nodes 5.2. Employment Structure of the Industry and Traditional Physicians 5.3. Dynamics of interactive Innovation 5.4. Networking, up-gradation and Social innovations: CARe Keralam Case 6. Cases of Inclusion 6.1 Innovations and Disease categories 6.2 Family Linkages, Niche Market and Capacity Creation 6.3 Social Inclusion through Livelihood: A Revisit to the Jeevani Case 7. Conclusion and Policy Directions 8. References

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1. Introduction: The background It may appear paradoxical that there is heightened concern on growing inequality in a context wherein economies across the world are being driven by greater access to science, technology and innovation. Scientific and technological development has created immense capabilities in the current world, which however, coexist with growing poverty rates, poor living and health conditions for a significant part of world population. This tends to suggest that the benefits of science and technology to development are neither automatically nor equally distributed among or within countries. Therefore, besides the current broad recognition of the relevance of science and technology for promoting economic development and competitiveness, it becomes imperative to advance in such debate in order to include their role for fighting inequality and promoting social inclusion (Soares; Scerri; Maharajh, forthcoming). Since the benefits of modern science and technology are not automatic, institutional changes and incentives will have to be designed appropriately to upgrade the local systems of innovation and production. Further, it is also recognized that the interventions are going to be framed in the context of ongoing globalization of the systems of production and innovation. Keeping this context in view the present study explores the dynamics of development of the local system of innovation and production in Kerala Ayurveda. Analysis of the Indian experience, suggests that the extent to which the innovation system reinforced or undermined inequality has been governed to a great extent by the forces that drive the innovation system (Joseph et al 2013). During the first phase of the evolution of Indias innovation system, driven by the state with the declared objective of growth with equity, there were a number of institutional arrangements that helped mitigating inequality. Achievements in the sphere of equality, however, turned out to be at the cost of growth. During the second phase of its evolution, wherein innovation system was driven by market forces with a view to facilitate growth for equity, there appears to have been a tendency towards the weakening of institutions working for equity. Indeed there has been a remarkable turnaround in growth but at the cost of equity. No wonder, the issue of inclusive growth today figures at the centre stage of development discourse and the focus of policy pendulum shifted from growth to inclusive growth wherein the local systems of innovation and production are expected to play a critical role. The pioneering work on national system of innovation (Freeman 1987, Lundvall 1992, Nelson 1993) and the subsequent developments in the literature on systems of innovation at regional (Asheim and Gertler, 2004), sectoral (Malerba, 2004) technological (Carlsson and Stankiewitz 1995) and corporate levels (Granstrand 2000) deviated from conventional linear approach to technological progress and placed innovations at micro, meso and macro level as the driving forces behind growth. The moot question is; if innovation breeds growth, could it also be instrumental in fostering inclusive development? While the linkage between innovation and growth appears fairly straight forward, the issue becomes more complex when it comes to innovation and inclusive development or its twin foundations (in) equality and poverty. As argued by Cozzens and Kaplinski (2010) while innovation is of course not the only or even main influence on inequality, it is nonetheless often causally linked to poverty and inequality through many different economic, social, and political processes - but not in just one direction. Hence if innovation were to promote inclusive development, the underlying innovation system has to be quintessentially inclusive. The RISSI project, while recognizing the role of innovation system, underlines the fact that the search for the factors and forces that give rise to varied spaces of exclusion has to be at the micro level with focus on local innovation and production system as a society embedded process. The present study focuses on the local system of innovation and production by examining the Society and State embedded processes in the case of the development of Indigenous medical system in Kerala. Keralas development experience has attracted world attention on account of its human development indicators comparable even to the developed countries with a low per capita income. This has often been attributed to public action and varied social sector innovations and those pertaining to governance. Amartya Sen (1999) observed that thanks to public provisioning, despite the very low levels of income, the people of Kerala, or china or Sri Lanka enjoy enormously higher levels of life Page | 4

expectancy than that of the much richer populations of Brazil, South Africa, Namibia and others. He further observed that while Keralas impressive achievements in low fertility, high life expectancy, high literacy and so on are worth celebrating and learning from, the question remains as to why Kerala has not been able to build on its success in human development to raise its income levels as well which would have made its success more complete. However, the impressive growth in GDP in the recent years notwithstanding, the State could hardly generate enough resources to pay for the social sector expenses to sustain the legacy of high social development. The shrinking resources of a fragile economy, marked by a high degree of governance deficit have ultimately led to a decline in the quality of public services. While the development failed to address the needs of weaker sections of the society - SCs, STs, fishermen and artisans and they remained as outliers, other marginalized segments of the society like the mentally and physically challenged had to contend with the state of neglect as ever. Second generation problems like ageing, along with new diseases have surfaced in such high magnitude calling for additional social sector expenditure. Though private participation in social sectors like health and education increased overtime, issues in equity and excellence have surfaced. While the better endowed became more affluent by exploiting the opportunities offered, among others, by globalization, the less privileged got further immiserised. Thus, a state known for its equity has become the most iniquitous state in the country. The estimated value of Gini coefficient using the NSS consumption data in Kerala declined from 0.35 in 1983 to 0.32 in 1993 and was comparable to that of all India average (0.31). But by 2009-10 it increased to 0.48 in Kerala as compared to the national average of only 0.36. Going by the available data, along with increasing interpersonal inequality inter regional (districts) inequality also has been on the upward trend. All these cannot be delinked from the varied spaces of exclusion. Along with inequity in consumption inequality in the access to health care services also accentuated especially in a context wherein the state, given the financial constraints, has been increasingly withdrawing from the public provisioning of health care services with increasing role being assigned to the private sector. In Kerala, many developments such as growing literacy, increasing household income and population ageing (leading to increased numbers of people with chronic afflictions), probably fuelled the health care demand. Since the government institutions could not grow in number and quality at the required rate, health sector development in Kerala after the mid1980s was dominated by the private sector (Kutty and Panikar 1995) 2. This seems to have an impact on the affordable healthcare. In a recent survey, Jean- Frederic Leveque et al (2007) noted that hospital care involves paying admission fees in 68 per cent of cases involving hospitalisations (98 per cent in private and 20 per cent in public sector) in urban Kerala. Poor households and those headed by casual workers show significantly lower levels of health expenditure and a higher proportion of healthrelated loss of income than other social groups. The utilization of public services by the poor accounts approximately to their share in population (Mahal et al. 2001) and health expenditure pattern suggests that the Kerala health system favours the rich (Kutty 1989). Table 1 shows that recently, private sector contributes more than 82 percent of medical institutions and 57 percent of the beds, reversing the situations of two decades back. This has to be read along with the fact that while the government sector has made available only 25 per cent of its beds in rural areas, that of by the private sector in the rural areas is as high as 53 per cent (Kannan et al 1991). Since private sector has a greater number of hospitals and a large per cent of these have inpatient facilities (45.66 per cent in 1995), it is obvious that it is the private sector, which ensures adequate inpatient facilities for rural population. While the government has deployed only 64 per cent of their
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It is argued elsewhere that the expansion in private facilities in health has been closely linked to developments in the government health sector. Public institutions play by far the dominant role in training personnel. They have also sensitized people to the need for timely health interventions and thus helped to create demand. At this point in time, the government must take the lead in quality maintenance and setting of standards. Current legislation, which has brought government health institutions under local government control, can perhaps facilitate this change by helping to improve standards in public institutions (Kutty 2000).

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health staff in urban areas, the private sector has 50 per cent of their staff in rural areas. Thus the private sector has stepped into mitigate the impact of urban bias of the government sector. So one of the stated purposes of the government intervention (serving the rural households), appears to have lost its purpose (Sadanandan 2001) with its implications on inclusive health care service provision. Table 1: Distribution of Institutions and Beds: Public and Private Sector (in %)
Year 1976 1986 1995 2005 Public Institutions 53.32 23.23 22.7 17.27 Beds 58.82 40.5 36.22 43.09 Private Institutions 46.68 76.77 77.3 82.73 Beds 41.18 59.5 63.68 56.91

Source: Government of Kerala, 1985, 1995, 2005 It is also evident that in terms of beds availability the ayurveda has been increasing over time both in the private and public sectors. Table 2 indicates that during 1986-2004 the availability of bed per 10000 population in allopathy has declined marginally and that of ayurveda increased nearly three times albeit from a low base indicating increased preference for ayurveda by the people. It is also observed that much of this increase was on account of the private sector wherein the number of beds availability per 10000 population recorded more than threefold increase as compared to twofold increase in the public sector.

Table 2: Beds per 10,000 People in Kerala


Systems of Medicine Allopathic Ayurvedic Homoepathy Others all systems Number 1986 Public 12.7 0.6 0.3 0 13.6 36278 Private 18.4 0.5 0.1 0.1 19.1 50766 Total 31.1 1.1 0.4 0.1 32.7 87024 2004 Public 11.9 1.2 0.4 0 13.5 44192 Private 17.4 1.7 0.2 0.3 19.7 64491 Total 29.4 2.9 0.6 0.3 33.2 108683

Source: DES (1989 & 2004), State Planning Board (1986 & 2005) Note: Private Bed from DES; Public Beds from State Planning Board It is seen that in many districts like Idukki and Wayanad, where the public provision of health resources remained poor, the private sector has favoured in filling the gap. The absence of government legislation relating to hospital start-up, running and profit generation has been a feature Kerala shared with most states in India, but high demand for healthcare in Kerala probably provided the impetus for private sector to correct the government failure in the provision of health services until recently. But, this invariably, may increase the cost of healthcare access. Since the credit for better health indicators of Kerala has often been attributed to public action and varied social sector innovations and those pertaining to governance, there is also the suggestion from scholars that the factors like education, political participation and biomedical interventions do not operate in conflict with ayurvedic health culture and a part of this credit should go to the practice of ayurvedic health culture in Kerala (Abraham, 2009). In such a context a study of the local system of innovation and production in ayurveda wherein Kerala has profound claims of tradition, practice and institutional build-up assumes added significance. Studies have shown that indigenous medicine has a balancing role during escalating healthcare costs and it is quite evident that for long term and short term morbidity, a substantial number of people prefer traditional healers especially in the rural areas (NCAER 2009). Despite formally recognising Indian systems of medicine, state has not formulated Page | 6

any clear policies to utilize its services in providing public health care in India, even though it represented in the recent National Rural Health Mission. Although marginalised by the medical discourse and neglected by the State for over a century, Ayurveda and other ISMs not only survived but has emerged as a powerful sector in the field of health care. 2. Analytical framework Traditional Indian Medical System3 has a coexistence of many expert and lay perspectives on health and disease embedded to constitute a pluralistic healthcare system. Within each system of medicines, there are number of agents whose work, complement each other and contribute to better health outcome. These interactions and exchanges bring in changes in the operations and functioning of the system over time. Contemporary transformation in Ayurvedic healthcare system 4 is mostly led by agents such as mass manufacturing firms, graduates in Ayurvedic medicine, practitioners who often belongs to prestigious family- lines of traditional healers, government research and scientific organizations, civil society and the state institutions. The LIPS framework in the indigenous medicine sector in Kerala (LIPS-IM) is presented in Fig 1.

Traditional Indian Medicine (TIM) refers to systems like, Ayurveda, Siddha, Unani and other folk systems in India. The terms traditional Medicine and indigenous medicine are used in the article interchangeably unless specified. In India, such system together is under the national government, department of AYUSH (Ayurveda, Yoga, Naturopathy, Siddha, Homeopathy and Tibetan Medicine). The term modern medicine, biomedicine, allopathy are used in various contexts to denote conventional medicine. 4 Ayurveda is often referred to as the oldest system of medicine in India. Its origins can be traced back to Vedic and Buddhist medical knowledge, which might have in turn originated from folk healing traditions. The texts that crystallized Ayurveda in its present form were Sushruta Samhita by Sushruta (probably before 700 BCE), Charaka Samhita by Charaka (1st century CE), and Ashtangahrdayam by Vagbhata (8th century CE). Ayurveda is based on the concept of the tridosha that are a set of parameters, which are physico-chemical and functional in nature, imbalances in which are thought to result in various ailments. Materials of plant origin were primarily used in the preparation of medicines, while those of animal and mineral origins were also utilized.

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Figure 1: The LIPS-IM in Kerala


International and foreign policies in Indigenous medicine Industrial Policies, biodiversity Act, ISM&H Policies National S&T infrastructure

Geopolitical, social and international context Productive infrastructure

State medicinal plant Funding from Govt. of boards Kerala, AYUSH and others Ayurveda Colleges and Traditional practitioners Research organizations Consultancy centres, NGOs etc

Raw material collectors/ traders or cultivators

Ayurvedic Manufacturing Companies

Market for Ayurvedic drug, distribution and commercialization

Final consumer / patient

CARe Keralam (the cluster)

Flow of goods and services Main Productive chain

Information flows Social, political and civil organizations LIPS

The major stakeholders at the core are Ayurvedic manufacturing firms, medicinal plant collectors, traders and other middle men, the cluster - Confederation of Ayurvedic Renaissance (CARe Keralam), the marketing outlets and agencies and Consumers etc. The Ayurveda, Yoga, Unani, Siddha, Homeopathy and Tibetan medicine (AYUSH) centres, research councils, traditional knowledge holders, state medicinal plant boards and Ayurveda colleges also work as important stakeholders. In the case of Ayurveda, CARe Keralam is one of the major bonding institutions, as it represents a public-private consortium dealing with promotion of Ayurveda, offering raw material supply, standardization and intellectual property access, technology assistance etc. These major actors are influenced by the policies of the central and state governments, guidelines of international organizations and conventions like WHO, WIPO and CBD and policies of destination or importing countries etc. Very often, even the innovations of products are incentivized and shaped by these international stakeholders. Due to the stringent regulations on scientific evidence, many traditional medicine drugs are not entering the foreign market as medicinal products, but as nutraceuticals, which needs only standardization and toxicity checks but not efficacy claims. If drugs are entering the European markets and US markets as nutraceuticals or food supplements, the formalities of drug efficacy and evidence of strong published documents could be circumvented. Since there are a number of actors involved in the local health system, it is important to explore nature of productive interactions between different stakeholders like government organizations, academic community and other, the nature of innovative activities undertaken and their outcomes and more generally how the system coevolves in response to changing institutional context and demand conditions. Given the national and international background of bourgeoning demand for herbal products, we attempt to look beyond the phenomenon of pharmaceutical episteme 5 (Banerjee 2009)
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Banerjee (2009) describes that the new developments in Ayurveda are mostly oriented towards a pharmaceutical episteme, in which the commodified forms of ayurveda is getting dominance in national and international scene and most of the policies in Ayurveda also pushing the idea of production, while ignoring the entity of systemic knowledge.

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in Ayurveda with a close analysis of the sector in Kerala in general and Thrissur district of Kerala specifically, to map the positioning of ayurvedic medicine in terms of innovations, production networks and promotion of social inclusiveness. There is growing demand for ayurvedic medicines and related products in the Indian market. During 1992-2005, the industry in Kerala registered a compound annual growth of 10-12 percent and contributed around three percent value addition annually to the manufacturing sector (Madhavan 2009). There is modernization within the sector due to various types of innovations driven by demand both from within and outside the country for ayurvedic products and hence new structures are created. At the same time a parallel niche market for traditional ayurvedic care depending on its legacy is also serving a large public. These two structures, complementary to the mainstream biomedical paradigm, have a large number of stakeholders, while interact themselves, though minimal very often, under the changing organization and policy contexts, also creates spaces on social exclusion. Innovations6 in the case of ayurvedic sector could be of three types: First in terms of varieties and range of products in the market. They are mainly; i) Shastric innovations, where the textual formulae of classic ayurvedic texts are used to develop ayurvedic drugs, which follows the mode of preparation and adhere to the dietary regimes prescribed in those. These medicines are produced both by organised manufacturing units or unorganised traditional physicians. Innovations could be in the form of introducing the known formulations from the traditional texts in a nuanced form, which serves palatability or shelf life. (E.g.: bottled dasamoolarishtam, lehyams, asavams, arishtams, various forms of capsules etc). ii) Proprietary products, where, innovations are mainly in the form of new processes or new combinations or new markets. These products hold exclusive marketing rights, but mainly focusing on the middle income groups. This is mainly produced by slightly altering the basic textual formulations (E.g.: Dabur chyawanparasam, Kamilari, Pankajakasthuri granules etc.) iii) this is very recent trend in some of the ayurvedic pharmaceutical companies, which is called reverse engineering in ayurvedic formulations, in which the ingredients of the formulations, its properties and actions are identified, analysed separately for their role in pathological research in Ayurveda and hence come up with new formulations which fits in to the allopathic nosology iv) Poly-herbal combinations, through ethno-botanic knowledge, where innovations are in the form of new products based on the knowledge provided either by traditional tribal groups or physician families (Jeevani). We have historical evidences of local innovations in the ayurvedic system in the Kerala state, developed by Kottakkal Arya Vaidya Sala, in the case of Vishuchikari, during 1960s, which contributed to the public health interventions during the cholera epidemic time (Varier 2002). Importantly many ayurvedic pharmaceutical firms in Kerala are known for their product brands and have at least one flagship product. This targets and caters to the larger middle and lower class market. Besides the contribution of a large number of medicines, many celebrated food supplements available over the counter. Surprisingly, it does not confine to the domestic market, but found an entry into many overseas markets with strong Diaspora presence. This leads to the second category of innovations; i.e. finding new markets. Ayurvedic medicine has overtime transformed from a very patient-centered medicine to a rejuvenative healthcare therapy projecting more of its health and beauty promotional aspects to suit the global markets.

Along with the definition of LIPS definition of innovations, this study uses innovation in a Schumpeterian (1934) sense to analyse the broader identification of innovative activities; It could be; 1)The introduction of a new good or of a new quality of a good, 2)The introduction of a new method of production, which need by no means be founded upon a discovery scientifically new, and can also exist in a new way of handling a commodity commercially, 3) The opening of a new market, that is a market into which the particular branch of manufacture of the country in question has not previously entered, whether or not this market has existed before, 4) The conquest of a new source of supply of raw materials or half-manufactured goods, again irrespective of whether this source already exists or whether it has first to be created and; 5) The carrying out of the new organization of any industry, like the creation of a monopoly position (for example through trustification) or the breaking up of a monopoly position.

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The third segment of innovations is in the organizational linkages. When the market dominated as the prime element of expansion and recognition of ayurvedic system, the production relations got redefined, the curriculum and training got redesigned and institutionalized, research methodologies got integrated and also new forms of production network got formed. This has major implications in treatment methods, pricing policies, targeted consumer groups and even in the presentation of health system itself. The analysis highlights two levels of inclusiveness/ exclusiveness of the system; first is through cost effective healthcare access and the second refers to the nature of inclusion of traditional physicians in the course of new forms of integration. Here innovation is understood as localized, context specific and socially determined process reflecting the cultural and historical trajectories. To Nelson (1993), innovation should be understood as the process by which firms master and implement the design and production of goods and services that are new to them, irrespective of they are new to their competitors domestic or foreign, is particularly important for the analysis in less developed countries. Here, the firm was re-conceptualized as an organization embedded within a broader socioeconomicpolitical environment reflecting historical and cultural trajectories. This understanding helps to avoid an overemphasis on R&D in the innovation process, encouraging policy-makers to take a broader perspective on the opportunities for learning and innovation in small and medium-sized enterprises and in the so-called traditional industries (Mytelka and Farinelli, 2003). Here, innovation as a localized, context specific and socially determined process implies, for instance, that acquisition of technology abroad is not a substitute for local efforts. Local Innovation and Production System (LIPS) would be a distinctive framework to analyse the complex interactions within the sector. LIPS framework is defined as an analytical framework for understanding the processes of generation, dissemination and use of knowledge and the productive and innovative dynamics. It encompasses an ample set of economic, political and social actors and their interactions, including: producers of final goods and services; suppliers of raw materials, equipment and other inputs; distributors and marketers; workers and consumers; organizations focused on education and training of human resources, information, research, development and engineering; support, regulation and financing; civil society, cooperatives, associations, unions and other representative bodies (Redesist 2008). To the extent that the present study intends to locate varied spaces of exclusion within LIPS, it is also of relevance to reflect the plausible analytical categories of exclusion. Neither exclusion, both economic and social, nor the attempt towards understanding its dynamics is new. When Adam smith talked about not being able to appear in public without shame, he was referring to nothing but exclusion. In the Indian context, though the term inclusive development has become fashionable only in the recent years, the need for socially and economically equitable growth has been underlined in her constitution and directive principles and was at the heart of different five year plans. Since economic and social exclusion is the problem we want to address, Amartya Sens taxonomy of exclusion appears to be especially illuminating. Sen (2000) considers four situations; (i) constitutive exclusion happens when being excluded is in itself a deprivation which can be of intrinsic importance on its own; (ii) instrumental exclusion refers to causally significant exclusions that may not be impoverishing by themselves, but can lead to impoverishment of human life through consequences of great instrumental importance; (iii) active exclusion happens when exclusions come about through policies directly aimed at that result; (iv) passive exclusion is the result of policies that have not been devised to bring about that result but nevertheless have such consequences. Of the four above the first two appears to be based on the outcome where as the latter two are based on the causes of exclusion. Viewed in terms of the nature of exclusion we could also have sustained exclusion vs transient exclusion. Very often development strategies might necessitate certain extent of exclusion especially if unbalanced growth strategy is adopted as proposed by Hirschman (1958). Such strategies might result in an inevitable exclusion of some for some time. This may be termed as transient exclusion. However, if exclusion do not remain as a short term phenomenon and excluded remain as excluded for long we have cases of sustained exclusion which is socially more painful. We Page | 10

could also have subordinated inclusion and illusive inclusion depending on how the inclusion takes place and how the returns to inclusion are being distributed. The former occurs when inclusion takes place in such a way that the gains from inclusion are not equally distributed. Instances of subordinated inclusions could be observed in wide range of contexts from international agreements to local level policy-decisions concerning ordinary citizens. While it could also result from the inability of those included to take advantage of the benefits due to lack of capability, in its ultimate analysis it could be the manifestation of the power relations in the society. Illusive inclusion occurs when inclusion is ensured but the outcome is not different from that of being excluded. To the extent that those included hardly derive any benefits inclusion is illusive. Here the systems work in such way that the benefit of inclusion is confined to select privileged. We must hasten to state that these conceptual categories are not always mutually exclusive. For scholars involved in exploring innovation system from the perspective of inclusive development these conceptual categories might serve as pedagogical scaffoldings to understand varied spaces and exclusion and their multifaceted dimensions (Joseph 2012). Survey and Method In this study, as mentioned in the outset, we look at the state of Kerala in general and the district of Thrissur in particular (Thrissur is one among the 14 districts of the state of Kerala) to analyze the system of production and innovation, interactive learning, the bottlenecks of innovation, agential transformation and resultant new networks in bringing up an alternate health innovation system, which is more inclusive in nature. Then we attempt linking the potential of an inclusive development and initiation of pro-poor healthcare system by effectively tackling the dents. To explore the local innovation and production system, we have undertaken a primary survey of 50 ayurvedic firms in Thrissur district (see fig 2). The sample selection was facilitated by the information on the firms from Ayurveda Manufacturing association of India (ADMA) and Confederation of Ayurvedic Renaissance (CARe), the Kerala consortium for promotion of Ayurveda. Since these two organizations represent the manufacturing companies all over Kerala, the basic contact details of firms were collected regarding the companies in Thrissur district. Out of the total 155 firms, a stratified sampling was done based on criteria like market share (to represent both small and large companies); the regional balance in Thrissur, the traditional families, new physician families and business groups. We have taken of sample of 50 firms keeping in mind the broad categorization of large, medium and small size in terms of turnover. Both objective and open-end questions are used to elicit information like turn over, exports, types of drugs produced; human resources or labour used; the usage, source and problems of collection and cultivation of raw material etc. For the specific purpose of the study, a detailed analysis has done on the interaction, collaborations and learning, R &D and innovation, source of risks, standardization and problems of three firms like Vaidyaratnam, Oushadhi and SNA Oushadhasala through interviews and focus group discussions. Interviews with secretary of AIDMA and director and chief of Care Keralam (the consortium of ayurvedic medicine manufacturers) were useful to explore the practical difficulties in management. A few medicinal plant vendors were also interviewed to study the channels of supply. Vaidyamatom, a major traditional ayurvedic family was visited to explore how a traditional sector has been negotiating the perceived change in the sector. The study interviews and field visits were undertaken during November-December 2012. Figure 2: The LIPS Territory: Kerala and Thrissur

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The selected units were classified as small, medium and large based on their annual sales turnover, i.e., less than ten million (small), between 10 and 30 million (medium) and more than 30 million (large) Table 3). Thrissur forms a typical representation for analysis, due to the following factors: the presence of traditional physicians in large scale, growing number of ayurvedic medicine manufacturing companies which constitute highest in the state of Kerala, the well-established medicinal plant market and raw material delivery system, the effective inter-linkages between the communities, state, firms and other stakeholders of the sector. This phenomenon actually led to a very many nuanced development in the sector, including the herbal cluster formation and many corporate entry into the system. In the study, we mostly concentrate on Ayurvedic sector. Table 3: Distribution of Sample Firms by Turnover 2010-11
Turnover (in Million Rs) Number of sample Firms Less than Ten Million (small) 32 (127) Between 10 and 30 M (medium) 5 (20) Above 30 M (large) 3 (8) No Response on Turn over 10 Total 50 (155) Note: Figures in the parenthesis indicate total number of firms Source: Primary Survey (2012)

Most of the firms (90%) in Thrissur are small firms with the annual turnover of less than Rs. 10 million. A few firms like Oushadhi (publically owned), Vaidyratnam and Seetharam are able to find external markets and hence diversified production into many new proprietary and other categories of products like nutraceuticals, beauty enhancing products. Still the industry produces a large number of classical medicines. Unlike the firms in other places and different states, it may be argued that Thrissur firms are even now concentrate more on the traditional formulations 7. Still Thrissur has a
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The major Classical products are Arishtams7 (Dasamooolarishtam, Jeerakasrishtam, Abhayarishtam, Balarishtam etc), Bhasma (Calicinated drug), Churna (Powdered herb), Ghrita (Ghee based), Gulika (Pill),

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major share in the Rs. 6000 million Kerala ayurvedic industry and the lone Kerala governments Ayurvedic firms, Oushadhi is situated in the district. But compared to the south of Kerala, Thrissur Ayurveda does not have much influence from the opportunities of health tourism. Table 4: Year of establishment and family lineage
Establishment Before 1950 Between 1950-80 Between 1980-2000 After 2000 Total Number 11 17 15 7 50 Having a family Lineage 11 16 9 2 38

Source: primary survey (2012) This may be due to the fact that large number of contemporary firms in Thrissur can trace back their lineage to the familial practice of pure traditional Ayurveda and gurukula 8 education. Table 4 which highlight the family lineage suggest that out of the 50 firms surveyed 38 are having family lineage. Between the 13thand the 17thcenturies, with generous royal and individual patronage, a fertile intellectual milieu developed around temples in Kerala, especially in the Nila valley region in Malabar (in and around Thrissur), where scholarship and scientific research on medicine, mathematics and astronomy made significant progress. The Ashtavaidya culture evolved in this environment (Menon and Spudich 2011). Diabetes (prameha), blood pressure, hypertension, hypotension, rheumatoid arthritis (amavatham) , vatharaktham , asthma (thamaka swasam) , infertility (anapathyatha) , life style and degenerative diseases , etc. are most often confronted diseases in Ayurveda, as mentioned by the units and hence efforts are also for the betterment of treatment in these categories. It needs to be stated that the response in general was poor from firms in general especially the smaller ones were not willing to share the firm specific information that we have asked for. Nonetheless, most of the firms were willing to share their concerns and highlight the issues that they confronted in day today operation.

3. Active Exclusion to Illusive inclusion: International and national background As Banerjee (2004) mentioned, the case of ayurvedic pharmaceuticals in the globalised period is not a story of debris of an industry, which is ruined by the entry of a large number of global goods and it is also not a story of opening of an infinite gains in the world market with globalisation. It is argued that it did not undermine the opportunities certainly found, but with a large number of weak negotiations and acceptance of the biomedical templates compromised the highly valued cultural alternative views, and relegated it to a marginal player. And even though many international and national organisations have constituted a large number of taskforces and committees to enquire into the possibility of inclusion of indigenous systems in mainstream healthcare, it largely rest in the paper. For instance, the traditional birth attendance found importance in many countries policy documents, at the implementation level, it was completely ignored. We, here, briefly look into some of the attitudes and
Kashaya (Decoction), Lehya (Electuary), Rasakriya (Collerium), Thaila / Kuzhampu (Oil based) etc. The proprietary drugs are of many types and most of the firms have one flagship products in the proprietary category. The anti-diabetic drug of Vaidyaratnam namely Mehanil, Pramehaushadhi for Oushadhi and balasudha for Balasudha ayurvedics etc are some of the examples. 8 Gurukula is a type of school in India, residential in nature, with pupils (shishya) living near the guru, often within the same house. In a gurukul, shishyas live together as equals, irrespective of their social standing, learn from the guru and help the guru in his day-to-day life. The guru-shishya tradition (parampara) is a hallowed one in Hinduism and appears in other religious groups in India, such as Jainism, Buddhism and Sikhism.

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concerns of international and national institutions in terms of traditional medical knowledge as a source of healthcare. 3.1 International Context: Until the 1980s, development planning was usually based on very negative assumptions about indigenous knowledge societies. But slowly, they became major part of many developing country policy networks due to their cultural richness, their sophisticated natural resource management expertise, and their agricultural and health-related knowledge9. The more enlightened attitudes towards the knowledge, skills, and subsistence practices of rural communities in developing countries emerged, according to Adams, as part of a liberal and populist reaction against the unsuccessful technological triumphalism of rural development practice. These attitudes have become increasingly mainstreamed in academia and among international development and conservation agencies. Since the 1990s many multilateral and bilateral donor agencies, including the World Bank, have come to recognize and actively promote the role of local knowledge in sustainable rural development programs. Local knowledge is mostly intrinsically motivated and devoid of any external impact. Also, many conservation and development agencies consider what the 1992 Convention on Biological Diversity refers to as the knowledge, innovations and practices of indigenous and local communities embodying traditional lifestyles as a hitherto barely tapped source of ideas and techniques that can be harnessed to pursue more sustainable paths of development. In this context, there is a recent recognition on the need to develop the innovations based on the Traditional medicine and 61st World Health Assembly of WHO has reiterated on the same with a focus on the issues. It says; Supporting policies that will promote innovation based on traditional medicine within an evidencebased framework in accordance with national priorities and taking into account the relevant provisions of relevant international instruments, the emphasis is on: (a) Establish and strengthen national and regional policies to develop, support, and promote traditional medicine (b) Encourage and promote policies on innovation in the field of traditional medicine (c) Promote standard setting to ensure the quality, safety and efficacy of traditional medicine, including by funding the research necessary to establish such standards (d) Encourage research on mechanisms for action and pharmacokinetics of traditional medicine (e) Promote South-South collaboration in traditional medicine (f) Formulate and disseminate guidelines on good manufacturing practices for traditional medicines and laying down evidence-based standards for quality and safety evaluation. The World Health Organizations Commission on Intellectual Property a nd Innovation in Public Health has recognized the role of traditional medicine in drug development for affordable health solutions. Development of standardized, synergistic, safe and effective traditional herbal formulations with robust scientific evidence can also offer faster and more economical alternatives. For instance, Ayurvedic texts include thousands of single or poly-herbal formulations. These have been rationally designed and have been in therapeutic use for many years. Sufficient pharmaco-epidemiological evidence, based on actual clinical use, can be generated to support their safety and efficacy. Systematic data mining of the existing formulations huge database can certainly help the drug discovery processes to identify safe candidates and synergistic formulations. At the national institutional level, there are research studies to discover tropical drugs for addressing the poor 10.

Elaborating on this is not in the purview of this study . We have various documents available with International organizations like WHO, WIPO and WTO. 10 In an attempt to pull industry and academia together to explore the potential of herbal drug development, CSIR, under the national network project known as New Millennium Indian Technology Leadership Initiative (NMITLI), has instigated drug development projects on psoriasis, osteoarthritis, hepatitis and diabetes (Patwardhan 2009)

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Being told this, it is important to mention that, there are efforts to debilitate the potential of indigenous systems at different points. The emergent international political economy and geopolitics actually reworked in the case of indigenous systems to sustain the exclusion it once confronted. It seems that while the public has been eager and at times politically assertive in pushing for greater acceptance of Ayurveda as a knowledge system, the mainstream scientific community have been lukewarm due to the lack of systematic evidence. While the lack of efficacy details remains partially a problem, another reason for the diminished enthusiasm for Ayurveda from the scientific community may be fear of loss of medical dominance. While doctors have traditionally been the final arbiters of medicine and healthcare, the potential role of Ayurveda to acquire more authority is a barrier to its acceptance. The regulation of indigenous medicines has been piecemeal. Herbal medicines can currently be licensed through the conventional procedures for drug approval; the 2004, however, EU regulation on traditional herbal medicines shows, to achieve a European traditional use licence, an applicant must demonstrate through bibliographic or expert evidence of the medicinal use of the product in EU for 30 years. This is a herculean task for any new entrants, though they have been practicing in the home country for hundreds of years. In the context of World Bank-driven (or motivated) health reform (World Bank 1993), services such as those provided by traditional medicine lie clearly in the private sector. The new pressures traditional medicines face will likely relate to the operation of the private market and this will have impact on quality of services, and access to care, including medicines. With World Bank policy as the basic blueprint, governments will be motivated to exercise some measure of regulatory control and indigenous medicines in many countries will likely find themselves transformed in the competitive atmosphere of the private sector, where they must (and all else being equal) compete for patient fees, sell medicines and support clinical facilities. This competitive process asks for a powerful incentive for professionalisation, i.e. for setting standards (to produce a standard product), licensing practitioners, and controlling and/or disciplining colleagues and, in short, restricting competition in a way (Starr 1982). Furthermore, there is also a tendency for the organisation of a medical system (regardless of epistemology or structural dominance) to order itself to the market in such a way as to maximise use, rather than to maximize service. Practitioners, clinics and hospitals will be allocated according to the distribution of economic resources, than according to the distribution of epidemiologically defined need or demand (Janes 1999). This policy frame may not work well for alternate systems like Ayurveda, when they enter the market against already established systems. Significant role of traditional medicine is first recognised by the WHO is at the landmark Alma Ata (Health for All by 2000) Declaration of 1978. Low cost and accessibility made them an ideal strategy for the public healthcare delivery programmes of developing-country governments. It was assumed, however, that these systems would be integrated into the system such that they follow the norms and structures of the modern medical system. WHO left the detailed institutionalisation idea to individual country governments, and kept its focus limited to guidelines for the manufacture, assessment, clinical evaluation, appropriate use and quality control of herbal medicinal products and medicinal plant materials (Banerjee 2004). The radical changes in European and US markets and subsequent policy developments effected by the EU, UK and US governments, transformed the status of traditional medicine worldwide. This made these governments set up task forces and advisory committees, instituted formal research laboratories, and recognised herbalists and their associations as important stakeholders in the policy process, thereby elevating these systems from the bottom run policy option of developing countries to those with great credence in the developed world. It was only by 2002 that the WHO found it important to bring out a separate document on traditional medicine policy. This overall acceptance is relevant in the context of increasing iatrogenic diseases worldwide11.
11

The editor of the British Medical Journal (BMJ) noted in 1995 that only 15 per cent of biomedical interventions are supported by solid scientific evidence. In August 2004, the British Medical Journal published

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The integration of traditional medicine with national healthcare systems, as appropriate, by developing and implementing national policies and programmes, is one of the stated objectives in the WHO document (2002:5). In a footnote, the term appropriate is explained to refer to Traditional medicine healthcare that does not cost more and which is no less safe and efficacious than recommended biomedical care for the disease or health problem (2002:43). There are two points here: that of cost and the other of safety and efficacy. In the political economy of overall developing countries, one would be hard put to find the biomedical system offering cheaper means of healthcare, except where the industry around indigenous medicine has to compete openly in the market with it, as is the case of Ayurveda. The WHO document, however, refers also to the large numbers of people in developing countries who have access to the practice of TM that is not dependent on the market at all, which would certainly be cheaper than biomedicines. Tying the strict safety and efficacy factors to alternative medicine targets and warns those bodies and products which enter national and international markets for competition. It originally reiterates that those drugs will not be accepted until the standards set by biomedical and pharmaceutical research have been met. The history of research and the contestations of the terms of research in both India and China, to take but two examples, is more than half a century old. In both countries, these contestations have been recognised, but different resolutions have been arrived at by both the scientific community and the TM practitioners and researchers. What is interesting is that the Chinese pattern is recognised by WHO to be a possible yardstick for its standards, along with the newly established research centres and programmes of the US and UK. This, we argue, is related to the larger point on integration. Chinas model of integration of its TM into the public health system reflects an acceptance of the framework of research and the worldview of the treatment of biomedicine rather than battling the differences. It makes a space for traditional medicine practice, but on the terms set by biomedicine, where the TM has surrendered its perspective and philosophy of healing, while simply continuing the use of the remedies. This is most amenable to WHO capacity for actively taking traditional medicine on board. It allows for the hegemony of continuing while making a respectable space for the traditional. Insisting that the latter should be evidence-based, must be accessible and be governed by principles of rational use makes the space for the dominant establishments of science, industry and regulators respectively, to continue to exercise their power (Banerjee 2004). This is complemented with the development of what authority in Europe wishes to define as borderline products, those that the industry worldwide is happy to position as nutraceuticals and cosmeceuticals, simply names for dietary supplements and cosmetics. For some time now, herbal products, even medicines, have been marketed in this category, because the legal structures of their definition allowed benefit to the Ayurveda companies. However, this is going to have a serious impact on the export orientation of ayurvedic companies, inasmuch they would not be exporting medicines at all. For reasons different from the national level therefore, Ayurveda will be losing credibility in the international market as a medical system and will have to become a supplier of nutraceuticals and cosmetics simply in order to remain viable (Banerjee 2004). With regard to the public funding of these medicines, the picture is diverse: many are available Over the Counter and are so inexpensive that there is little public provision. In some countries like Germany, these therapies are widely provided from public funds. In others, the lack of a strong

an analysis of the first results came from the National Patient Safety Agency. This agency draws together reports of errors regarding the safety of patients and systems-failures that are provided by health professionals across England and Wales. The report incredibly, found that, About 850,000 medical errors occur in NHS hospitals every year, resulting in 40,000 deaths. Yet, only 4000 misadventures are reported per annum, and only 2.2 per cent of all hospital episodes contain any mention of an adverse event. The conclusion is stark: the medical profession is not being honest with itself or with the public and 516 extent of lethal error in its own practice (Aylin et. al 2004).

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evidence base for their efficacy has discouraged their provision (Mossialos et al 2004) 12. Many of the insurance providers in the West have not considered Complementary and Alternative Medicines as the potential source of inclusion into their purview. This is one of the major reasons for Ayurveda being kept out of therapeutic choices by patients in many European countries. In UK, it is clear that state power views herbal traditions as outside the system and have therefore created alternative frames for describing medicines as well established medicines, which in principle gives greater flexibility in the use of bibliographic data for this category of medicines to meet the requirements to demonstrate safety and efficacy. The department of health of the British government has also an important role in these interventions. Its work was supported by the setting up of the Lord Hunt commission on traditional medicines, which has set up dialogues with many members of the herbal sector, including that of Ayurveda. It listed Ayurveda among those traditional medicines as unscientific13. In response, many groups of both scientists and industry have made representations to the committee, revealing the deep differences and fissures within them. But for the first time, this issue is openly in the realm of international politics as it never has been before. In response to this grouping the Government has recognised the point made that the Report had separated some practitioners of identical practices, such as Chinese herbal medicine and acupuncture, into separate groups apparently as a result of effective lobbying by practitioners, or a rejection of underlying medical models, rather than on the basis of the actual medical methods involved. The Response shared by the government with the Report on CAM shows a basic attitude that traditional medicine is something to be tolerated, controlled, regulated, and made safe not because of its potential health benefits, but solely because patients want it. Examples include the following (Wujastyk 2004) statement, We recommend that familiarisation should prepare medical students for dealing with patients who are either accessing or treating Complementary and Alternative Medicines (CAM) or have an interest in doing so. This familiarisation should cover the potential uses of CAM, the procedures involved, their potential benefits and their weaknesses and dangers (Response, p. 12) However, in the matrix of power, with respect to the decision-making on agendas for research that will influence policy, it is the various bodies in the governments of the US, UK and EU that continue to play the most important role. These governments also control international trade regimes, the legitimising trends of consumer products, as also the markets for herbal medicinal products. Therefore, the scientific and commercial parameters for the participation of the Indian herbal medicine industry, or indeed that of other parts of the developing world will be firmly set by them. Even, most of the WHO works on CAM during the recent periods are ignored, when the regulative structure is analysed and the status and policy frame is decided. This needs to be reconsidered in order to nullify the negative effects found from the international pressure groups and lobbying. The mainstreaming efforts of ayurvedic and Chinese medicine are facing an extensive threat from the lobbies. Even though, we feel that Ayurveda and other indigenous systems are been considered in the global map of therapeutic ailments, what actually making this presence feel is the products that dominates the herbal market. This illusive inclusion is no more different than the active exclusion in the initial period; unless it kick-start a detailed therapeutic enquiry. 3.2 National Context

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Elias Mossialos, Monique Mrazek and Tom Walley (ed.) (2004)) Introduction, in Regulating pharmaceuticals in Europe: Striving for Efficiency, Equity and Quality, Open University Press 13 Ayurveda here was listed in the third group. The third group was described as one which embraces those other disciplines which purport to offer diagnostic information as well as treatment and which, in general, favour a philosophical approach and are indifferent to the scientific principles of conventional medicine, and through which various and disparate frameworks of disease causation and its management are proposed (House of Lords select committee on Science and Technology, 2000).

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It may be important to note that all these systems of health which were indigenously developed in India were predominantly practiced in the country even during the British Period. In the modern India also, the Congress Party at its Nagpur Session in 1920 was strongly in favour of choosing the best from our indigenous systems as well as Modern Medical System to develop an integrated system of health in the best interest of the ailing humanity. The Health Manpower & Implementation Committee, popularly known as Bhore Committee (after the name of its Chairman, Dr. Bhore), which formed the basis of the present Health care system in the country, also suggested in 1946 that the services of the persons trained in indigenous systems of medicine should be freely utilized in the countrys health care infrastructure. Though several committees constituted by Union government in Independent India, from time to time, to look into different aspects of health care delivery system in the country, also suggested integration of all these systems and giving due importance to indigenously developed health systems, it was only in 1978 that the first Community Health Workers Manual incorporated the use of Ayurveda, Unani, Sidha, Homoeopathy, Yoga, Naturopathy & medicinal plants to treat minor ailments. The first National Health Policy of 1983 wanted to initiate organized measures to enable these systems to develop in accordance with their own genius with planned efforts to dovetail the functioning of the practitioners. While the Bajaj Committee on National Education Policy for Health Sciences recommended a healthy & mutual respect for qualified practitioners of different systems of medicine for effective health manpower utilization, the Expert Committee on Public Health systems in 1996 wanted the practitioners of these systems to be appropriately involved in further strengthening the public health system in the country (Mehrotra, 2011). 3.2.1 Current Scenario at national level Though a separate Department of Indian Systems of Medicine & Homoeopathy was created in 1995 (Redesignated as AYUSH in 2003) to ensure the optimal development & propagation of the AYUSH Systems of Health Care, the budgetary allocations of the department have remained to be abysmally low and have never been more than 3% of the total health budget of the Union Ministry of Health & Family Welfare. It is ironical that its budget during the 11th Plan (Rs. 3988 Cr.) has been lesser than the budget of NACO (5728 Cr.), which deals with threat of only one disease condition or even lesser than that of a single Institution of Allopathy, namely AIIMS. The National Health Policy of ISM&H had recommended that the allocation to AYUSH be raised to 10% of the total health plan at the central level and further growth to be designed to climb at the rate of 5% in every five year plan. There has been slight increase in its allocations due to some funding from NRHM Flexi pool and a few measures which have been introduced for Mainstreaming of AYUSH in the health care system. The National Health policy of 2002 noted that the Alternative Systems of Medicine ..have a substantial untapped potential and wanted its use by encouraging evidence based research to determine their efficiency, safety ..to enable a wider popular ac ceptance of these systems of medicine. The National Policy & Programs of AYUSH in 2002 further strengthened the Department to promote good health & expand the outreach of health care to our people, besides integrating AYUSH in health care delivery system & National Programs and ensuring optimal use of the vast infrastructure of its hospitals, dispensaries & physicians. The National Policy on ISM&H, 2002, had emphasized the need for integration of ISM&H with the Allopathic services as well as strengthening the ISM&H services in the public health service system. It had spelt out strategies for: Integration of ISM&H with the National Health Programmes and Primary Health Care delivery system. Operational use of ISM&H in Reproductive & Child Health (in areas of ante natal, natal and post-natal care). Revitalization of Local Health Traditions. Making Available Home Remedy Kits (with herbal medicines). Page | 18

Inter-Sectoral Co-operation (School education, industry, culture, tourism). Promotion of herbariums for local health care as well as sources of livelihood (being propagated by the AYUSH department, Bio-technology dept. and by NGOs). Administration of the ISM Sector. Exposing the Indian & Foreign Allopathic /Modern graduates to Indian systems of Medicine Building awareness for AYUSH systems Intellectual property rights and patents

3.2.2 National level efforts for the upgrading of Ayurveda The Department of AYUSH was set to coordinate all efforts in this sector, though the support has been only marginal. Since the First Five Year Plan, AYUSH has been getting only 2-4% of the National Health Budget. In the tenth plan, the cumulative expenditure of the Department of AYUSH was approximately Rs.11000 Million. This is 2.75% of around Rs.40, 0000 Million that was spent for the allopathic sector. The 97.5% of public fund expenditure on Health goes for Allopathy. This huge gap and disparity is not only responsible for poor maintenance and development of ASU systems, rather is also the cause of overall frustration and apathy among ASU professionals. Even in the eleventh plan, the outlay for AYUSH (around Rs.38000 Million) is still less than 3% of the health budget for the allopathic sector (Rs 120,0000 Million). But the 12th plan commmitte has suggested that the department should align its programmes and policies with the National Health outcome Goals of reducing IMR, MMR, TFR, Malnutrition, Anemia, Population Control and Child Sex Ratio, etc. The Department of AYUSH must also contribute to ongoing schemes of other departments such as Janani Suraksha Yojana (JSY-AYUSH), ICDS-AYUSH, Reproductive Child Health (RCH), growth monitoring of children, ante and post natal care, etc. Interventions of AYUSH may either be in the form of preventive, promotive or curative care. (Steering Committee Report on AYUSH for 12 th Plan, 2011). However, towards enhancing competence of herbal resources, which are the main potential base of AYUSH, National Medicinal Plant Board has been set up with about 1% budget of AYUSH. It is proposed to integrate about one million existing village-based healers in the form of either traditional birth attendants or herbal healers who possess useful knowledge related to medicinal significance of biotic and plant genetic resources. 3.2.3 National Level Policy Support for Education and research While there have been some increase in budgetary inputs, in the last decade in the area of AYUSH, these have not been adequate. If we compare our efforts with China, it may be noted that China focussed on a few plants, besides ensuring that their efficacious products of public health interest are standardised to the desired levels of quality and introduced at all levels of health care. On the other hand, Indian R&D efforts have been scattered and lacked coordination among concerned departments of research, quality control & health care. As recommended by the National Health Policy of ISM&H the allocation to AYUSH remains to be raised to 10% of the total health plan at the central level and further growth to be designed to climb at the rate of 5% in every five year plan. Adequate support also remains to be provided by the states also to implement the recommendations of the NRHM guidelines of 2006. Achieving international standards requires considerable effort especially for small and medium enterprises and there is a need for providing funding, either grants or soft loans, to them to obtain the requisite counselling/training services, bear the accreditation costs and most importantly undertake infrastructure development. 3.2.4 Assessment of national level efforts in R&D and innovation Though Ayurveda has globally rekindled curiosity of man searching for an answer in Traditional Systems of Medicine due to emerging dissatisfaction with prevalent treatment modalities of Modern Medicine, particularly for chronic or refractory diseases, due results have not been achieved due to various reasons. While the concept of reverse pharmacology has been applied and the experts Page | 19

formulated time-bound goal-oriented projects on traditional remedies for Anal fistula, Diabetes mellitus, Viral hepatitis, Bronchial asthma, Urolithiasis, Filariasis, Kala-azar and Wound healing, some encouraging results have also been obtained. Kshaarasootra, a medicated thread used for Anal fistula has been found to be a safe, ambulatory and cost-effective alternative to surgery and has since been practiced in many places around the country. Even the Russians showed keen interest in adopting this method. Similarly, a major breakthrough was achieved with the hepatoprotective drug, Picrorrhiza kurroa at the CDRI, Lucknow which has also been taken up for global marketing. If we look at the Research Priorities of AYUSH as described in its website (Box 1, 2, 3 & 4), it is obvious that issues of primary health care, including malaria, filariasis or public health concerns get lower priority as compared to areas like Diabetes mellitus including neuropathy, Peptic ulcer, Psoriasis, Benign prostate enlargement Preventive cardiology-hypertension, obesity, Urolithiasis, General Health Promotion Rasayana/Medhya Rasayana, Mental Health/memory relating disorders, Sports Medicine or Liver Disorders (Hepatitis B). While Secondary & tertiary health care relating issues get lowest secondary priority, Identification and evaluation of promising and widely accepted practices and skills of traditional healers in rural and tribal areas or Research on the preventive and promotive aspects of AYUSH practices and therapies get very low priority. There are no specific support programs to promote research on Type II or Type III diseases in AYUSH. Nor have there been many serious studies to identify specific needs for research in relation to Type I diseases. As described above, the creation of a separate deptt. Of AYUSH has made some difference but little efforts have been made to promote evidence based traditional medicine except through some scattered projects supported by various Research Councils, Agencies as well as Planning Commission through a project of Golden Triangle. Priorities in research have been more in the readily available strengths of AYUSH, which are to handle Type I lifestyle diseases (Cancer, Obesity, Diabetes, CVD and hepatoprotectives, particularly Hepatitis B) or neurological disorders and brain stimulating and Strength giving /immunomodulators drugs etc. Some work has been done on other diseases, which are refractory to allopathic drugs, viz., Psoriasis, Arthritis, and Bronchial Asthmaetc. However, the research priorities in AYUSH Research Councils have often been decided on readily available leads, rather than desired areas of public health needs. While a few products have emerged from Ayurvedic plants for CVS (Gugulip), Memory enhancer (Bacopa monieri), contraceptives like Consap cream, Isaptent (cervical dilator) from CSIR lab, a contraceptive and local anti bacterial-viral cream from NII have all been for Type I diseases. An antiasthma product has also been developed by IICB, Kolkata. Early stage drug development has been made to develop modules of ethical conduct of research and standards for various single ingredient as well as polyherbal formulations. Legislation on Good Manufacturing practices has also been introduced and being implemented to ensure the quality of the products in the market, which is as yet being handled largely by small scale industry sector. While some efforts have been made by ICMR to streamline clinical trials in the country and initiate the system of Institutional Ethics Committees at all levels, the clinical trials of AYUSH products are yet to be really streamlined. Some products under a coordinated program NMTLI have reached advanced stages of development, viz on Diabetes, Osteoarthritis, Hepatoprotective, Psoriasis (Type I), while some work on anti TB (Type II) is also significant. The only disease on which some significant work is being done on Type II disease is Malaria. The work has been done in some CCRAS Labs (Polyherbal-Ayush-64) and Arteether/artemether in CSIR Labs (CDRI, CIMAP, Lucknow & III,Jammu). Some basic work has also been done on several medicinal plants products at IISc Bangalore and elsewhere, with ICMR support. Page | 20

Some work has also been done on Leishmaniasis (RRI, Puducherry), TD Medical College, Alapuzzha and IICB, Kolkata. An important protocol has been developed for management of Lymphadenopathy due to Filariasis (or otherwise.) Some work on anti diarrhoeals (FMR, Bombay), ICMR and amoebiasis (Bose Institute, Kolkata) in collaboration with DBT & ICMR. Some work has also been done on Leprosy (Karigari) and Kalajar at PGI, Chandigarh with ICMR, besides HIV at Pune and Dengue at ICGEB, Delhi. Some work has been done by CCRAS and CSIR-NMITLI on anti TB products also. Some products have been introduced under RCH program for selected diseases under primary health care needs as affordable products of sound therapeutic efficacy. However, quality standardisation of many of these products is still under way. Only a few, viz., HIV/AIDS, Malaria, filariasis, T.B., Leishmaniasis (Kalaazar), Psoriasis, Leprosy and Dengue etc In AYUSH, four new important dimensions have been added during 11th Five Year Plan. These are (i) Role of AYUSH in public health (ii) Technology upgradation of AYUSH industry (iii) international cooperation (iv) Revitalization of community based local health traditions the folk or Prakrit roots of AYUSH. India has a vast treasure of both codified and un-codified traditional knowledge of medicine in Sanskrit and other Indian languages. To pin down misappropriation of Indian traditional knowledge and formulation at global level, an official database of such traditional information in the form of TKDL Traditional Knowledge Digital Library) has been institutionalised in collaboration of AYUSH and CSIR at NISCAIR, New Delhi.
Box 1: First Level Research Priorities of AYUSH Diabetes mellitus including neuropathy Peptic ulcer Psoriasis Malnutrition Reproductive Child Health (RCH) including infertility & contraceptives Benign prostate enlargement Preventive cardiology-hypertension, obesity Urolithiasis General Health Promotion Rasayana/Medhya Rasayana Mental Health/memory relating disorders Sports Medicine Liver Disorders (Hepatitis B) Primary health care relating issues Malaria Filaria Rheumatoid arthritis Menstrual disorder Reproductive tract infection. Box 2: Second Level Research Priorities of AYUSH Bronchial asthma Common ailments affecting children Improvement of quality of life in end of life conditions like cancer, HIV, AIDS Fever Upper respiratory tract infection Diarrhoea (including dystentery) Indigestion and anorexia Skin Diseases Cancer, HIV infection Secondary/tertiary health care relating issues Box 3: Third Level Priorities of Research in AYUSH

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Research on fundamental principles of AYUSH Pancha Mahabhuts Tridosa Prakriti, Agni, Srotas, Saptadhalu, Ojas, Ama Rasa, Guna, Virya, Vipaka and Prabhava Similar areas of Siddha, Unani, Homoeopathy, Yoga & Naturopathy. Identification and evaluation of promising and widely accepted practices and skills of traditional healers in rural and tribal areas Research on the preventive and promotive aspects AYUSH practices and therapies Revival of ancient literature-Survey, collection, transcription/translation, editing and publication of classical literature and text books E. Medico-historical investigations of AYUSH Sample survey of contemporary requirements of AYUSH Issues relating to the use of Modern Technology to develop the Drugs of AYUSH & Efficacy, Safety, Standards etc Box 4: Research Projects funded by Indian Council of Medical Research during 2007-09 (270) Medicinal Plants (16): Quality Standards-4+1; Diabetes-4; Carcinoma-2 (Others 1 each) MCH- 4/15 (Home level delivery-3, Referral-1) CVS-2/15 (Dietary Habits & Adivasis) Pharma Physio- 2/5 (A-oxidant, Structure) Nutrition-0/16 (Carbonated drinks) Social Behaviour-0/15 Anti viral-0/27 Orthopaedics-0/5 Oral Health-0/2 Source: Mehrotra N N (2012), Needs and Gaps in Delivery and Access of Medicines of AYUSH Health Systems: Analysis of its Public Health Potential, in Abrol, Dinesh (2012) GSPOA Implementation: Status and Proposals, Report prepared by NISTADS for WHO India, NISTADS, Delhi

Ayurveda was located successfully in the market by constructing it in a way that makes it accessible to the consumers and secondly by constructing the drugs and cosmetic market so that it can position the tradition in a way that it sells (Banerjee 2002). This has helped the sector to surpass easily the basic issues of shuddh tradition, at least in manufacturing. This actually made the bifurcation or trifurcation of the Ayurvedic market into medicine, nutraceuticals and cosmetics necessary. In the transnational context, Ayurvedas encounters with the West were not actually restricted to biomedicine alone, but mostly by global healthcare trends such as the interest in holistic medicine etc. However, what we mentioned as circumvention strategy to deal with the problem of being less scientific is not long lasting. On the contrary, the situation demands proof for what so far claimed as cultural and original. This new trend of growing international demand works as both support and hindrance for the circumvention strategy. While the increased trust and demand works positive for the market growth of a particular section, this in turn, puts pressure on the institutions to develop more standardization and qualitative regulations in the practices of herbal systems. As of now, in many manufacturing firms the branded products including the beauty and cosmetic products constitute a major share (as much as 90-100%) in the product lines. Bode showed that Himalayas entire production is branded products and Dabur has only 3% of classical products share (Bode 2008). As many countries do not entertain ayurvedic formularies in the medicine category, finding the way through nutraceutical and cosmetic categories, can easily forgo the regulative regimes. This, in turn, also helps them to be relatively less concerned in terms of efficacy of the product. Many companies product pattern over time shows that they have undergone a shift from Shastric medicines to cosmetic category in due course of growth (Madhavan 2011). This does emphasise that, the turnaround in the nature of products that ayurvedic companies offered have much to do with the policy frames within which national governments supported ayurveda, the pressure and demand from external markets and also the regulative regimes that destination countries followed.

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Ayurvedic Industry in India includes both organized and unorganized sector now. Generally it is shown that the market is concentrated (see table 5). In the organized sector, the major firms are Dabur, Himalaya, Zandu, Baidyanath, Aravaidya Sala Kottakkal etc. According to the Office of the Drug Controller General of India, there are around 8,000 licensed pharmacies who manufacture herbal drugs. The structural breakdown of the licensed pharmacies in terms of large and small companies is unknown, making it difficult to access the level of concentration of the market. The herbal sector in India is, at the moment, quite fragmented and constituted for the majority by these small/ medium enterprises.

Table 5: Distribution of 7000 Ayurvedic Manufacturers in India


Number of Licensed Ayurvedic Units 10 large units 25 medium units 965 small units 6000 very small units Turnover > 12.5 $US Million (Rs. 50 crores) Between 1.23 and 12.5 $US Million Between 250000 and 1.25 $US Million < 250000 US dollars (Rs. 1 crore)

Source: Ministry of Health and Family Welfare (2001) In addition to these licensed pharmacies, there are a number of small-scale processing enterprises that are unlicensed and operate in the informal sector. The unorganised sector includes practicing ayurvedic experts (vaidyas) and micro-units manufacturing only a few products and operating at the local level. A reputed vaidya generally prepares hisown formulations for treatment. A large number of ayurvedic medicine manufacturing units can be attributed to comparatively low infrastructure cost, access to raw material, simple manufacturing process, and lack of standardization of quality and efficacy of medicines. The world market of herbal products, including herbal medicines and raw materials is estimated to have an annual growth rate between 5 and 15 percent. Total global herbal health products market is estimated to be 62 billion US $ and is expected to grow to 5 trillion US $ by the year 2050. Ayurveda contributes Rs.3,5000 Million s (813 million US $) annually to the internal market. The Indian medicinal plants-based industry is growing at the rate of 7-15 percent annually. The global trend of increased demand for medicinal plants for pharmaceuticals, phytochemicals, nutraceuticals, cosmetics and other products is an opportunity for Indian trade and commerce (Pushpangadan and Govindarajan, 2005). In India, there are about 8,000 firms manufacturing traditional medicines and a major amount of medicinal plants (90 per cent) used by these manufacturing units are collected from the wild. We argue that what indigenous medicine need to be worried about is not only its promotion in terms of scientific validation, homogenization or targeted policies at various levels, but a deep rooted political takeover at national and international context. Even if there is growing curiosity and acceptance in the international platform, an underlying political economy is at work to nullify the efforts. The institutional response at least from the national level should not fall into the trap of market regimes, where biomedical paradigms are dominant, unless it is pro-active and responsive to the methodological concerns of indigenous systems. 4. IM in Kerala: Evolution, growth and present structure

Kerala has been considered as the home of traditional ayurvedic system, with a rich bio-diversity and natural ingredients based on plant species. The second largest number of manufacturing units is in Kerala after UP (9-10 percent of total manufacturing units). In the late 19th century, the system underwent multi-fold changes in the state, to suit the present global market. In the earlier days, Page | 23

production was confined to families and petty outlets and lack of transport facilities, unsophisticated communication facilities were all obstacles to large-scale production (Varier 2002). In Kerala, a transformation from home based no-remunerative ayurvedic sector to proto industrial or petty commodity production to a capital intensive sector could be traced through the history of 200 years till 1920s (Madhavan 2008). In the south of Kerala, institutionalisation of Ayurveda is spearheaded with the demand for local medicine due to the epidemics spread out during the late 19 th century. The initial attempt like the institutionalisation of training through the establishment of Thiruvananthapuram Ayurveda College, grant in aid system for traditional healers to initiate district production, regular monitoring from the states in terms of quality were some of those. The state support to the Ayurveda was equally good or better than that of modern medicine at that time. In the central Kerala, Kerala Ayurveda Samajam was one of the pioneers in institutionalising Ayurveda (Payyapallimana et al 2010). In the Malabar region the effort of institutionalisation was mainly led by the Arya Vaidya Sala (AVS) and its founder PS Varier. He even attempted an integrated curriculum and special training for making medicine to the ayurvedic students. As stated earlier, an early institutionalization started from 1920s onwards. Prior to that generally gurukula14 education was followed. Prior to 1900, there were three ayurveda patasalas (colleges) in Kerala, Punjab and in Uttar Pradesh. The first formal one was established in Thiruvananthapuram in 1886. In Kerala, Andhra Pradesh, Orissa and UP the public sector has the upper hand. In the case of Ayurvedic research, there are new initiatives and the number of colleges offering post graduate courses being set up. Thus the manufacturing and educational institutionalization is a combined outcome of the efforts from the side of government and private to promote the system in a much more comprehensive and acceptable manner. In the case of a centralized standardization procedure government has started efforts for an official formulary and pharmacopeal standards. Till now three volumes have come out. With the completion of this, a uniform formulation code will be established for the items produced in different parts of the country. For example, the dasamularishtam15, which is produced by different companies, has to base on these formulations. Then the major efforts should proceed to external front, to make the importing country to convince the same formulary. Institutionalization is very important because this set the background for further growth of Ayurvedic sector. The internal contradiction became evident when there was more demand for medicines and under supply. Thus, mechanisation was adopted as a strategy to overcome the supply bottlenecks. In Kerala, AVS was the pioneer in institutionalisation and mechanisation efforts, commencing from 20th century (see tabe 6) The changes in ayurvedic pharmacy during the past half a century focused mainly on three factors: 1. enhancement of potency, bulk production, 2. gaining convenience and 3. providing palatability. A close look in the product pattern of many companies shows that there is a shift from ayurvedic shastric or traditional formulations to nutraceuticals and recently a shift again from nutraceuticals to cosmeceutical market or more of consumer brand goods. This actually represents the nature of the industry due to the change in the demand pattern. The firms have export presence in most of European nations, US, Canada, Malaysia, Singapore and other Middle Eastern Countries. Table:6 Chronological Order of Mechanisation in Kottakkal AVS
Year 1949 1950 1952
14

Mechanisation Initiative Installation of AC generator Installation of counter line grinding system Wet grinders for gulika

A 'gurukul' (Sanskrit guru "teacher" or "master"; kul domain, from kula, "extended family") is a type of school in India, residential in nature, with pupils shishya living near the guru, often within the same house. In a gurukul, shishyas live together as equals, irrespective of their social standing, learn from the guru and help the guru in his day-to-day life, including the carrying out of mundane chores such as washing clothes, cooking, etc. 15 Dashmoolarishta is a liquid Ayurveda medicine and contains 10 natural herbs for rejuvenation. It is a general tonic to improve ojus, general health and vitality, effective in case of all vata diseases, anaemia, Jaundice and sexual weakness. Mild pathya will be necessary. It is a good expectorant.

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1952 1967 1967-80 1968 1977 1987 1987 2000

Installation of additional AC generator Steam boilers of one and half ton capacity Setting up of steam plant and its expansion An engineering department Fully automatic filling system at Kottakkal Setting up of a new arishtam plant at Kanjikkode Fully automatic tableting system Setting up of a new semi-automatic leham/choornam plant at Kanjikkode

Source: Varier (2002) 4.1 Institutional mechanisms for the development and maintenance of Kerala Ayurveda It is clear that throughout the world traditional medical systems are becoming part of mainstream healthcare. India is one of the few countries where different medical traditions have coexisted for centuries. With centuries-old indigenous medical systems and a strong presence of modern biomedicine, India is uniquely placed to pioneer such a medical revolution. However, it needs to be recognized that as a local system of production and innovation, Kerala Ayurveda as a distinct form is known to have emerged in terms of the theoretical framework of ayurveda by encapsulating certain medical and cultural elements unique to its specific socio-historical contexts. Abraham suggests that the analysis of Kerala Ayurveda in Mumbai shows that ayurveda as medicine and as culture are difficult to delineate and that the historicity of this relationship cannot be ignored. Recognising that how the factor of specific contribution of kerala migrants has played a role in the protection of niche space for Kerala ayurveda all over the country, Abraham (2009) suggests that out of naadu Kerala Ayurveda carries special significance for the migrant population, as a marker of community identity simultaneously providing cultural links with their homeland. Notions of purity and authenticity of culture and medicine associated with ones culture are embodied in Kerala Ayurveda, where medicines and practitioners come from Kerala. Abraham (2009) also refers to the existence of institutional mechanisms that reinforce the perceived authenticity of culture and medicine. Both the open institutional practices (of record keeping and disclosing ingredients and sources on the labels of medicines) and the closed professionalism among the practitioners operate in a manner that preserves the identity of Kerala Ayurveda and helps maintain the cultural boundaries of the practitioners. The institutional arrangements and the cultural ideology that supports the practice of Kerala ayurveda as well as its ability to contextualize a specific tradition into a cosmopolitan biomedical context create a strong niche for ayurvedic practice in Mumbai. In the view of Abraham (2009), the notion that the state and market are the most effective regulatory agencies in the field of healthcare and that provide the foremost sites for institutional and secular practice of indigenous medicine is also questionable. Similarly, Abraham (2009) also refers to how the analytical fragility of the use of binaries and typologies of modernity/tradition, nation/community, medicine /culture in the understanding of indigenous medical systems in contemporary India needs to be questioned. Kerala ayurveda challenges the perception that views ayurveda through the lens of Hinduism and Brahmanism. A perception that associates religion with Kerala Ayurveda is wrong. This analysis also clearly shows that it is not correct in contemporary times to subordinate all of ayurveda and Kerala Ayurveda to only certain chauvinistic trends that appropriate a few elements from it for narrow political and commercial interests. Because of historical diversities and its inherent rational epistemic status and the role of social organizations and human agency Kerala ayurveda as a local system of production and innovation is capable of being reproduced through democratic, secular public spaces. Abraham (2009) analyzes the diffusion of Kerala Ayurveda as a case of transplant under creation outside the state of Kerala in Mumbai. Her own analysis of Kerala ayurveda in Mumbai points to the significant role of societal organizations in mediating indigenous medicine. The diffusion of the cognitive content of ayurveda into culture, the scholarly practice of ayurveda across social groups, its secular and cosmopolitan orientation together provided the historical and cultural conditions for the Page | 25

creation of Kerala Ayurveda and also for its migration outside Kerala. Further, in this view the case of Kerala Ayurveda illustrates that the efforts to reconstitute ayurveda as a unified national system through modern processes of institutionalization and professionalization since the early 20 th century have not erased certain cultural traditions within ayurveda (Abraham (2009). 4.2 Kerala Ayurveda in transition However, as there is also evidence of the rapidly growing incidence of degenerative diseases, high degree of allopathic self-medication and overutilization of allopathic services in Kerala, Abraham (2009) herself also raises the other important issue in the case of Kerala ayurveda a) that whether the Kerala society is moving away from its culture and b) that whether the practitioners of Kerala are also required to take the responsibility. Developments in Kerala ayurveda during the past two centuries through organized production of medicine, institutionalization of education and professionalization of clinical practice have often been developing in parallel to, or a response to developments in biomedicine in India. Manufacturing in Kerala ayurveda has evolved from small scale physician outlet to petty/cottage production and later to the industrial scale. Madhavan (2009) brings out how the Kerala ayurvedic sector is becoming medicine-centered as opposed to its basic orientation that was patient centered, which Banerjee (2002) described as a key feature of ayurveda. Among the challenges facing the sector, many scholars have noted that the fast depletion of medicinal plant is a major concern. As far as solutions to the problem of depletion of medicinal plants are concerned, Madhavan (2009) saw a solution to the problem of raw material availability emerging through the achievement of higher vertical integration in the case of Kerala Ayurvedic industry. While indicating that there are higher incentives for a) R&D and b) sustainable use of raw material through the establishment of further linkage with medicinal plant cooperatives and successful cluster promotion, Madhavan (2009) also refers to the other major concern emerging on account of the change in product pattern and importance given by most of the firms towards nutraceuticals and cosmetics, and the failure of regulation systems, which may hamper the spread of ayurvedic therapeutic tradition and its clinical value in future. Suggestion is made that conscious efforts are needed to promote the therapeutic aspects of Kerala ayurveda as a system of local production and innovation. Madhavan (2009) notes that Kerala ayurveda is also being pushed by the interested forces to push it as a supplier of some safe herbal r emedies for the international markets seeking complementary and alternative medicines. Sindhu Joseph (2010) discusses how with the destination firmly established as the wellness capital of Asia the challenge to be realized by Kerala is equally one of achieving world class status and putting this goal firmly on the national agenda. Recognizing that Kerala started about 10-12 years back with the task of promoting Ayurveda on a larger scale, Sindhu Joseph estimates that about 30% of the foreigners coming to Kerala avail themselves to Ayurvedic care and about 40% of the States tourism revenue is generated from the same. As a result, the Kerala government is also required to give attention and assurance to spa guests and visitors to the state. Safety, hygiene, service quality and quality assurance are also required to be achieved through the introduction of quality standards, registration, certification, and regulation and legislation. The comprehensive intervention should include guidelines and measures to ensure fair pricing. Stress is laid on the fact of that how it is also vitally important to create confidence in the products Kerala offers. The practice of Kerala Ayurveda is changing under the impact of forces of commodification and globalization. Menon and Spudich (2011) suggest that abridged and simplified versions of Ayurvedic therapeutic methods are supplanting age-old, established procedures, and that such simplified versions are gaining popularity throughout the world. Traditional diagnostic methods are being abandoned and modern biomedical terms and techniques of analysis are replacing them in the day-to-day practice of Ayurveda. Major changes are also taking place in the educational system and transmission of Ayurvedic knowledge in order to comply with the norms of modern biomedicine. Given that such transformations are happening to this traditional medical culture, the time is appropriate to examine and evaluate the consequences of such modernization to the integrity and future of traditional medical Page | 26

systems, and their validity in general and Ayurveda in particular, and their place in contemporary health care. 4.3 The present structure A list of the Ayurvedic medicine manufacturing units has been collected from the office of the Ayurvedic Medicine Manufacturers Organisation of India (AMMOI), Thrissur and Drug Controllers Office, Thiruvananthapuram. The number of pharmaceutical firms having drug license is 713.A district-wise analysis of the distribution of Ayurveda firms is important to understand the reference concentration of manufacturing units (see table 7). A large number of manufacturing units is concentrated in Thrissur. There are 155 manufactured units in Thrissur mainly because of the concentration of the Ashtavaidya families16. This region has a major market for medicinal plants also. Ernakulam follow with 94 units and account for 22 percent and 13 percent of the total units respectively. Wayanad, idukki and Kasargode districts have only a small number of licensed ayurvedic manufacturing units.

Table 7: District wise registered Ayurveda manufacturing units, 2010


Sl.No 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Name of the districts Thiruvananthapuram Kollam Pathanamthitta Kottayam Idukki Alappuzha Ernakulam Thrissur Malappuram Wayanad Kozhikkode Kannur Palakkad Kasargode TOTAL Small 56 58 19 33 9 37 83 127 51 3 60 49 51 4 640 Medium 4 3 0 2 3 0 9 20 2 1 2 1 4 0 51 Large 2 0 0 3 1 2 2 8 2 0 0 0 2 0 22 Total 62 61 19 38 13 39 94 155 55 4 62 50 57 4 713

Source: Drug Controllers office, Thiruvananthapuram. Today, almost all leading ayurvedic firms have their outlets and regional monopoly all over Kerala: especially Kerala Ayurveda Limited (KAL) (formerly known as Kerala Ayurvedic Pharmaceutical Limited, KAPL), Oushadhi, Sitaram, AVS, SD pharmacy, Arya Vaidya Pharmacy (AVP) etc. Seemingly, the different pharmacies in Kerala have created a brand loyalty and niche market: North Kerala (Malappuram, Kasargode, Palakkad) Kottakkal Arya Vaidya Sala (AVS); ThrissurErnakulam belt Sitaram of Thrissur, Arya Vaidya Pharmacy of Coimabatore and Vaidya Ratnam of
16

Between the 13th and the 17th centuries, with generous royal and individual patronage, a fertile intellectual milieu developed around temples in Kerala, especially in the Nila valley region in Malabar, where scholarship and scientific research on medicine, mathematics and astronomy made significant progress. The Ashtavaidya culture evolved in this environment, blending the Ayurveda of Ashtangahrdayam with the knowledge and practices of local healers. Among the healers of Kerala, the Ashtavaidyas represent the Brahmin scholar physicians who were masters of the eight branches (Ashtanga) of Ayurveda mentioned in classical texts. Ashtangahrdayam, the primary text of the Ashtavaidyas [Table 1], deals with these eight branches of therapy. According to tradition, initially eighteen upper caste families of Kerala were designated as Ashtavaidyas. Each Ashtavaidya family developed its own therapeutic specialties and its specific methods of transmission. Although many of the specialties were guarded as family secrets, students outside the family were accepted as disciples. This helped disseminate their knowledge beyond the family circle and create new lineages of transmission (Menon and Spudich 2011).

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Thrissur; and South (Ernakulam and southward) Nagarjuna Herbal concentrates of Thodupuzha, SD Pharmacy of Aleppey, Oushadhi, Pankajakasthuri essentially caters to all regions of Kerala. As in the case of India, ayurvedic market in Kerala is also a concentrated one. Ayurvedic Manufacturers in Kerala could be broadly categorized under the following three types: Household small manufacturing centres mostly indigenous Vaidyas selling medicines necessary to serve the village needs. These are largely self-regulated entities, growing based on the record of accomplishment and credibility. Large-scale manufacturing units strictly following the Ayurveda texts and only manufacture ayurvedic medicines. Many a times, these companies draw upon traditional knowledge with or without fully following. They have the ability to grow, partly by accepting modern technology. Firms mainly concentrating on the nutraceuticals 17and cosmetics along with the ayurvedic medicines. However, they face regulatory problems, have relatively longer gestation and are more expensive.

This is not different from the earlier classification, as the third additional type of firms is the new emerging category, which is successful in producing new pattern of products along with bioprospecting drugs like Jeevani18. Arya Vaidya Pharmacy (AVP) markets this revitalizing tonic, in collaboration with the Kani tribe. However, such examples of bioprospection hardly seen in the industry now might be due to higher cost and lack of proper benefit sharing mechanism. Nevertheless, mostly, they concentrate on second category products. At the outset, it is necessary to clarify that in the case of Kerala, the medicinal segment of Ayurveda still forms a dominant portion, unlike other states, where the nutraceuticals and cosmetics markets are dominant. The first category is usually small units, which sell low cost medicines, have a low turnover, and started by traditional Vaidyas. Generally, registered (under company act) companies fall mainly in the second and third categories and they produce nutraceuticals and cosmetics along with ayurvedic medicines. While considering the second and third categories of organised large manufacturers, their market structure is one of monopolistic competition because each firm produces products of similar character in different categories except for some difference in the formulation or the combination. The price system is also very competitive and the entry is easy. The product range of the firm constitutes traditional ayurvedic medicines, food supplements, ayurvedic cosmetics etc. For example, food supplements and cosmetics constitute almost 90 percent of Pankajakasthuris product range and medicines like arishtams, asavams, ghruthams, lehyams, thailams, choornams, kerams etcconstitute 100 percent of the AVS product range. The price revisions largely depends on the leader AVS in the medicine sector, but is now mostly decided by market forces. AVS has also led technology innovation in the sector. Now nutraceuticals and cosmeceuticals form the major attraction of the ayurvedic market. We have other examples of huge success of many ayurvedic formulations, which are promoted as nutraceuticals like Kamilari liver tonic, Kandamkulathi Eladi Lehyam, Benatone etc. The prevalent practice in the industry is a large number of proprietary products, which is either a small addition or subtraction from the specified original formula to make it a branded one (case of Chyawanpras). Drugs and Cosmetic Act of 1940 is silent on this emerging class of products, even when they are being consumed in large quantities 19. This gives companies an easy escape from the regulative hurdles of medicines like stringent efficacy and toxicity tests. When they are promoted as nutraceuticals, they
17 Nutraceuticals are those products, which have its origin in traditional medicine, are used as food and include in the category of food supplements, functional foods and food for special dietary purposes. 18 This has developed from Arogyappacha (Trychopus Zylanicus), a plant known for revitalization and was considered to be the private knowledge of Kani tribe till TBGRI commercially developed it into a herbal product with the consent of this community. 19 The Drugs and Cosmetic Act, 1940 specifies that an ayurvedic drug is a medicine intended for internal or external use or in the diagnosis, treatment, mitigation or prevention of disease or disorder in human beings or animals and manufactured exclusively in accordance with the formulae subscribed in the authoritative books of Ayurveda specified in the act. It lists 54 texts, including Charakasamhita.

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fall into the lower tax category. Many ayurvedic companies use aqueous as well as hydro-alcoholic extracts for proprietary products, with in-house standardization, based on markers. The current firm distribution and market share ie presented in table 8 which indicates that a single firm accounts for over 33 percent of the market indicating the high level of market concentration. Table8: Ownership and Market Share of Ayurvedic Firms in Kerala
Firm Kottakkal Arya Vaidya Sala Kerala Ayurveda, Ernakulam Oushadhi Nagarjuna Herbal Concentrates Vaidya Ratnam Santhigiri SD pharmacy Pankajakasthuri Sitaram Ayurvedics Other small Manufacturing Units Total Ownership Private Trust Public Private Market Share, 2005 (percent) 33.02 11.79 27.37 Market Share, 1996 (percent) 33.33 10.01 26.63

Mostly private

27.82 100

30.03 100

Source: Ayurveda Medicine Manufacturers Organisation of India Table 8 presents the trend in the profitability ratios 20 of the ayurvedic industry. Here three profitability ratios are used, return on net assets, return on net worth and return on total capital employed. For estimating the profitability ratios, the numerator used is gross profit. Net asset is equal to total fixed assets plus current assets net of liabilities. Net worth is equal to share capital plus reserves. All profitability ratios declined in 2001-02 after an improvement in 2000, which shows that the rate of growth of profit is less than the growth of assets and net worth. Again, the companies witnessed a spurt of growth in all the ratios in the recent years. Table 9: Profitability Ratios for the Industry
Year Gross Profit (in Rs. lakhs) 303.79 531.50 628.71 887.14 742.78 1012.45 Net Assets (in Rs. lakhs) 1502.39 4291.16 4332.53 4355.64 5253.24 5638.75 Net Worth (in lakhs) 341.86 769.50 1397.51 1609.83 1446.09 1621.06 Return on Net Assets (percent) 20.22 12.39 14.51 20.37 14.14 17.95 Return on Net Worth (percent) 88.86 69.07 44.99 55.11 51.36 62.45 Return on Capital Employed (percent) 19.35 11.50 14.94 16.12 10.76 14.61

1992-93 1994-95 1997-98 1999-00 2001-02 2004-05

Source: Madhavan (2009)


When one considers the health scenario of the state, an analysis of the private provisioning of healthcare services by systems of medicines shows that only 34 percent of the private medical institutions in Kerala (in 1995) were biomedical medical institutions (see table 10). While Ayurveda has 39 percent and 24.7 homeopathy, share of other systems of medicine (mostly Unani, Siddha, etc.)

20

Here two profitability indices are used, i.e. the return on capital employed (net asset gross of tax and interest, net of depreciation or productive capital) and the return on net worth (net of tax, interest and depreciation). First ratio arrives at a calculation of return independent of the composition of capital in terms of own and borrowed funds. The latter ratio, which provides profitability net of tax and interest, provides a yardstick for measuring the rate of return on the shareholders own capital represented by paid-up capital and reserves.

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is marginal even though in terms of bed strength, allopathy constitutes major share as Ayurveda primarily serve the outpatient care. Table 10: System wise Institutions, Availability of Beds and Patients Treated in the Government Sector for 2007
System Institutions 2006 1279 871 561 2711 2007 1279 871 561 2711 Beds 2006 45405 3940 1170 50515 2007 45553 4020 1170 50743 Patients Treated (2006, in lakhs) IP OP 23 461.77 0.57 209.9 0.21 127.6 23.78 799.27 Patients Treated (2007, in lakhs) IP OP 20.27 468.11 0.5 222.47 0.25 135.33 21.02 825.91

Allopathy Ayurveda Homoeopathy Total

Source: Kerala Economic Review, 2008 Note: IP Inpatient care; OP Outpatient care In terms of facilities and infrastructure of Ayurveda, Kerala is in a relatively better position compared to other states (see appendix Tables). 4.4 Changing Production Relations and Multiple markets Ayurveda has played a key role in the growth of vibrant health tourism sector in Kerala. It is also relevant here to note that in the current development strategy being upheld by the state, the Ayurveda is assigned an important role. Important development is that many corporate entities are interested in the brand name of Kerala Ayurveda and has started agglomeration or merger with many ayurvedic companies of the state, interestingly with many traditional Ayurveda houses. The impulsion for the drive comes from the entry of firms such as Reliance Retail, through its Reliance Wellness unit, Hindustan Unilever Ltds (HULs) Ayush and Pantaloon Retail (India) Ltds Tulsi brand of Ayurveda drugs and health centres. Birla (3,000-crore group) is looking for more acquisitions within the state. Recently, Kerala Ayurveda Ltd (KAL) (formerly it was a public limited company), a listed company owned by serial entrepreneur and former head of PepsiCo India, Ramesh Vangal, announced a merger with Coimbatore Arya Vaidya Pharmacy (AVP), the second-largest ayurvedic traditional company in South India after Kottakkal Arya Vaidya Sala. The group bought KAL in 2005. Now Birla group (one of the largest industrial group in India) is in advanced negotiations with two major ayurvedic companies in Kerala having chains of treatment centres and drug outlets, which acquired a majority stake in Kochi-based Kerala Vaidyasala (a part of KAL) early last year to form Birla Kerala Vaidyasala (BKV). BKV is in discussions to acquire the Nagarjuna Group of Thodupuzha, near Kottayam. These three major companies (Kerala Ayurveda, Nagarjuna, AVP), which has shown its interest in merging with the international corporate are the leading traditional pharmacies, offering authentic Kerala brand Ayurveda. Yash Birla bought 51 per cent of Kerala Ayurveda in last year as an extension into the ayurvedic wellness segment. BKV is planning to invest Rs. Million 500 to open more than 200 new resorts in various cities across India. The company has its spa centres across Kerala and Goa, and in cities like Mumbai, Bangalore, Kolkata and Chennai. The company is also mulling on launching its centres in every district in Kerala with an aim to provide authentic Ayurveda treatment. AVP has tied up with Hindustan Lever for establishing 48 'Ayush' (spa) clinics at Chennai, Bangalore, Maharashtra, Delhi and Hyderabad and Kochi. According to one recent report on Medical Tourism in India 21, Kerala has marked an astounding growth of 31 per cent in 2005 tourist arrivals. Many companies are aiming to tap this increasing potential and possibilities. This shows that the recent developments in the ownership
21

RNCOS (2006) Opportunities of Health Tourism in India, an Industry Analysis Report, New Delhi

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pattern of Ayurveda while promoting health tourism, in collaboration with traditional pharmaceutical companies, tends to create spaces of exclusion as far as affordable healthcare in concerned. The withdrawal of the state government from ayurvedic healthcare infrastructure adds to the dismal state of therapeutic category. The vision document 2010 (RNCOS 2006) suggested some important steps based on Ayurveda for the overall development and poverty alleviation in Kerala. It was aimed to develop the Kerala ayurvedic manufacturing sector to Rs. 90 billion industry by the end of the first decade of the twenty first century. The major initiatives by the government in this regard included; 1) llaunching of the Kerala State Herbal-Drug Development programme by the Kerala State Council for Science, Technology and Environment through TBGRI, KFRI, Rajiv Gandhi Centre for Bio Technology and in cooperation with National Botanical Research Institute and Central Drug Research Institute, 2) Kerala has set up a joint venture called CARE Keralam for the manufacturing, testing, validation and marketing of Ayurvedic products. 3) A Patent Cell is functioning in the department of Indigenous Systems of Medicine. It has already translated 2000 traditional ayurvedic texts.4) A Biotech Farm is coming up in Ernakulam and 5) Tie up with Traditional Knowledge Digital Library of CSIR is being initiated. The second set of initiatives is mainly on Ayurvedic tourism promotion. Financing development: Role of state The Data from Kerala State Industrial Development Corporation (KSIDC) 22shows that in the Industrial categories, tourism sector is the most profitable investment in 2008, and in which, Ayurvedic resorts are considered one of the major potential sector (table 11). KSIDC estimates shows that around 54 percent of the total loans (around Rs. 69 million) in 2009 is diverted to the tourism industry and of which, around 82 percent is given to the tourists resorts, where ayurvedic tourism remains a leading package (KSIDC primary information). Table 11: Data on Loan Disbursements of KSIDC
Sector Tourism/ Ayurveda Resorts Food Steel Wood Chemicals Minerals Paper Pharmaceutical Hospitals Total Principal (percent) 28 15 10 8 5 5 5 5 3 84 Arrear %on total loans 15 18 14 3 3 2 4 10 10 80 Arrears as % of sector loan 27 53 31 18 33 28 34 68 65 Number of units 32 25 9 5 12 3 5 6 3

Source: Compiled from KSIDC Accounts The promotion of Ayurveda in state health tourism started in 1994, when Kerala Tourism Development Corporation (KTDC) started Ayurvedic health centres in its premium properties like Hotel Samudra, Kovalam. From then onwards there is a conscious effort to promote Ayurveda as a tourist destination through marketing and financial subsidies to private resorts. Now most of the hotels (including the government guest houses) in the premier tourist destinations in Kerala as well as the major allopathic hospitals do have a separate wing of Ayurvedic wellness centre. The state looks for tapping the increased potential of the sector. It is worth noting that even the government led manufacturing houses now seem to enter the spa division with the realised profits and enhanced public funding.
22

KSIDC is the most prominent government institution in Kerala, which lends for various industrial entities in the state and work as a facilitator of industrial development in the state.

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This shows Ayurveda has become a Unique Selling Proposition in the state tourism and hence prioritised in terms of state financing. This also shows the shifting focus of the government in terms of expenditure on Ayurveda as a therapeutic entity to a commercial entity (where Ayurveda is commodified) as a tool of development. But an exclusive health tourism policy is yet to be formed in Kerala state. The priorities of the state has been very much directed towards the production and exports and hence the industrial and tourism promotion of Ayurveda (where the improvement of standards and infrastructure has been given priority). It appears that in the process of promoting health tourism, state support to the ayurvedic medical sector generally has been showing a decelerating trend indicative of passive exclusion. The government institutions (like KSIDC and KINFRA) are increasingly supporting investment in ayurvedic tourism as it is considered as a sector with greater prospects (sun shine industry) with high returns. Apart from various Government owned ayurvedic hospitals, which promote the wellness element, 76 Ayurveda centres are approved by Department of Tourism exclusively for wellness and herbal tourism. The elevation of Ayurveda as unique selling proposition of Kerala Tourism has brought substantial increase in the number of Ayurvedic massage centres in all the major tourist destinations of the State. It is observed in that in around 58 hotels other than ayurvedic resorts (including five-star and four-star classifications) where in financial support from state owned KSIDC has been offered in 2012, Ayurveda is a leading luxury package. (based on discussion with KSIDC officials). The Government of Kerala has classified Ayurveda centres 23 into Green Leaf and Olive Leaf categories based on the facilities at the ayurvedic resorts. The State is also in the process of adopting a policy of introducing Responsible Tourism in Kerala. R esponsible Tourism (RT) is becoming inevitable especially because of the urgent need for evolving a relationship between social development, economic development and ecological balance and rejuvenation. The sector also enjoys interim service tax exemptions and tax holidays. The observed trend tends to indicate that, from a mainstream promoter of Ayurveda as a health system (as in the grants-in-aid in the early 20th century), the state has shifted its role as a facilitator of reinvented forms of Ayurveda. It is interesting to note that a large number of institutions have registered manufacturing units as cosmetic units to sell their products as herbal medicines. In Kerala, the government documents shows that their number is fast growing and now it constitutes around more than a thousand. Many of them sell their medicines and products as not cosmetics but ayurvedic food supplements and herbal cosmetics. The GMP manufacturing units are relatively less in Kerala. According to the 2008 statistics, it forms only 40 percent of the total units (AYUSH 2008). While, the celebrated Kerala health experience seems to have sustained through effective private interventions, government has failed or not complimented effectively in the recent times to reinforce the growth element. This is true in the case of indigenous medicine like Ayurveda also. Even though fiscal crisis is one of the reasons for decelerated healthcare expenditure, in terms of relative expenditure of available resources, spending on Ayurveda has been far below the satisfactory levels as evidenced from various indicators like public expenditure, number of hospitals and beds allocation etc. Mostly industrial units finance the research and produce human capital for the sector. Higher R&D from private units and higher private seats for training shows this. Bourgeoning loan disbursement to ayurvedic resorts and licenses for cosmetic firms, cluster formations and tax incentives etc. reinforce this agenda but this should not be at the cost of mainstreaming ayurveda in the public health stream. This may pose challenge to the affordable healthcare. A reorientation of state support seems to be idealised possibly through local self-government institutions, as the state is well advanced in the decentralised planning process. 5. The Innovation and Production Linkages: Empirical evidence
23

To forestall any misuse and maintain a uniformity of practice, Government of Kerala has initiated a scheme for the approval of Ayurveda Centres (140/98/GAD) dated 23 rd March, 1998. According to this order a uniform approval is given to all the centres fulfilling the conditions prescribed, irrespective of its class in quality.

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An innovation system is comprised of the agents involved in the innovation process, their actions and interactions, and the formal and informal rules that regulate this system (Ekboir and Parellada 2002, p. 138). Explicit in the innovation system concept is the notion that innovations are the product of networks of social and economic agents who interact with each other, and as a consequence of this interaction, create new ways to deal with social or economic processes. As Hall et al. (2001) argue, this concept highlights the critical importance for innovation of idiosyncratic, inter-personal and interorganizational relationships, and partnerships. In the following section; we anlyse the LIPS framework in Ayurveda by closely looking at the five important pillars, which are a) how value additions and labour relations works out at the nodes in the backward linkages of the sector in such a way that, there are multiple efficient ways of raw material supply b) the modes and types of innovations within the Ayurvedic firms and their relations with the other structures of government and NGOs in research and development to understand the existence of interactive learning within the system; c) Looking at the social innovation process of collaborating while competing as manifested in the case of CARe Keralam cluster in creating the potential for equity within the system. Certain aspects of inclusion are highlighted by a) exploring the role of traditional physicians and informal vaidyas in the formation of this framework, in which the Kerala health system revolves around and b) examining the livelihood inclusion in the commercialization process by revisiting the case of Jeevani an anti-fatigue drug. 5.1 Institutions, Labour and Raw Material Nodes A recent study showed that the annual consumption of 230 raw drugs by the Ayurvedic medicine manufacturing industry in Kerala is about 20,517 tonnes. Consumption of raw drugs is highest in Thrissur, Malappuram and Palakkad districts as some of the large units are located in these districts (Sasidharan and Muraleedharan 2009). The institutions responsible for managing the medicinal plants in Kerala are the Forest Departments, Kerala State Federation of SC/ST, Development co-operative Societies, and the minor Forest Products societies. The activities of the Forest Departments are timber oriented and they do nothing to control the over-exploitation of non-timber resources and to check the illegal collection of medicinal plants by non-tribes. The Federation is run by salaried officials who have no motivation to improve efficiency. The societies were formed to eliminate middlemen, but the middlemen remain to be dominant forces. The institutions like Tropical Botanical Garden and Research Institute, Kerala Forest Research Institute and Kerala Agricu1cure University conduct studies on various aspects of medicinal plants, but these institutions direct linkages to any of the economic actors in the sector is minimal. Hence, usually collected materials are not subject to proper quality control. No clear price mechanism: there is no clear-cut pricing mechanism for the medicinal plants in Kerala. The minimum prices fixed by the minor forest production committee are not related to the market. The rates at which actual transactions take place are influenced by many factors. At the first level of transaction, the buyer fixes the rate, no matter if the collector sells to the society or to the private dealers. The people who spend days and nights in forests for collecting the materials are merely price-takers, because of their poor social and economic status. The bargaining power is very less here. Still the competition between the societies and the private traders results in the latter paying better rates to induce the tribes to go out of the official channel. The dealers on the other hand, sell these materials at the rates declared by them. Some sort of sellers' market exists at this level of transaction. Since there exists large number of buyers competing with each other, the seller has a say in the market. However, the societies often do not get attractive prices because of their poor delivery system and after purchase services. As mentioned earlier, the societies sell materials through auction and the manufacturers do not bother to go through the formalities. The various linkages essential for medicinal plant trade is not yet well developed. In the current system the risks of economic coordination opportunism (i.e. risk related to the level of trustworthiness of the actors involved and the chance that arrangements are not respected) are high. For example, in the current system traders exert their power to transfer price risks to producers, people often fail to Page | 33

implement agreed actions, and individuals may act opportunistically, withdrawing from collective agreements. Efforts are needed to strengthen the networks of the actors involved in the medicinalplant chain. Strong social networks can create trust and facilitate cooperation, reducing risks and transaction costs (DFID1999)24. Also, for rational and regulated collection, strong local communities or strict governmental control measures are necessary. High risks, transaction costs and lack of trust among chain actors prevent smallholder producers from taking up cultivation of medicinal plants. In Kerala there are two types of medicinal plant supply linkages. One includes a large number of agents like medicinal plant collectors from wild generally from tribal communities, regional traders, district level traders who does not generally make any value addition but cost in the supply channels till manufacturing firms. It has shown that the share of income in the chain would be very less to the wild collectors as the middlemen accrues a lion share. Gatherers share is, in most cases, less than even 10 percentage of the final market price without any value addition by the succeeding agents (Table 12). Table 12: Gatherers Share in the Final Price of Medicinal Plants (Prices Rs/Kg)
Gatherers share to firms price in % (6) Gatherers share to private outlet price (7) 17.41 22.50 12.86 23.33 25.33 34.55 14.17 23.08 30.33 Avg. Price of the plant in firms25 (3) Traders Margin (8)27 21.67 38.64 78.57 41.67 20.83 50.43 43.33 58.33 62.08 Price in Private outlets26 (4) 135 60 35 15 75 165 60 325 150 Gatherers (collectors) Price (5) 23.5 13.5 4.5 3.5 19 57 8.5 75 45.5 Botanical Name (1) Malayalam name (2)

Withania Somnifera Adatoda Vassica Siddha spp Tinospora Cordifolio Phyllanthesus Emblica Piper Longum Tragia Involucrata Comnifora Mukul Tricosanthes Cucumerina

Amukkuram Adalotakam Kurunthotti Amruthu Nelli Thippali Kodithuva Guggulu Kattu Padavalam

30 22 21 6 24 115 15 180 120

78.33 61.36 21.43 58.33 79.17 49.57 56.67 41.67 37.92

Source: Primary Survey The second one is the chain mostly led by the tribal co-operatives. Studies have pointed out that the tribal co-operatives of Kerala provide only a very small percentage of the total requirement of Kerala manufacturing units (Meerabai 2001). In Kerala, the marketing is taken in a relatively organised manner, though a large number (34) of tribal co-operatives operates in different districts through Medicinal Plant Societys four branches in Thiruvananthapuram, Adimali, Thrissur and Kalpetta. But the private traders still do most of the trade. Some of the tribal societies have established collection
24

DFID, 1999, Sustainable livelihoods guidance sheets, http://www.livelihoods.org/info/info_guidancesheets.html (excerpted in 20092004). 25 This is the price at which the plant is bought by the firms. 26 The private medicinal plant selling shops are included in the category of private outlets. This information is the average price of the sample units. We have taken three private outlets from Trivandrum for the analysis. 27 Traders margin when the plant is sold to the manufacturing firms (100 minus column six). The traders margin in the private outlets is much higher and could be calculated from the table itself (100 minus column seven).

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depots but inadequate storage facilities form a major hurdle. In spite of the efforts made by this federation, the private traders control 60 to 70% of the medicinal plant trade. These private traders will offer the collectors a higher return for their product to compete with the federation, but still less than their subsistence needs. Although the chain working through the federation is more beneficial to the collectors and the pharmacies, either the lack of tribal co-operatives or the under functioning of the co-operatives remains a major hurdle for this medicinal plant market chain. The survey of three manufacturing units shows that most of them have very little connection with the tribal co-operatives. While, Arya Vaidya Sala depends on the conventional suppliers and buy-back arrangements, Pankajakasthuri gets its medicinal plants mainly from traders. Now many firms in Thrissur directly purchase from the Cluster, CARe Keralam as well, which ensure the quality of drugs. Table 12: Major Suppliers of Raw Materials to the Ayurvedic Firms in Kerala
State (1) Kerala Tamil Nadu Punjab Location (2) Thrissur, Kozhikkode, Thiruvananthapuram Coimabatore, Salem, Madras, Kunnathoor Ludhiana, Jalandhar, Chandigarh Thiruvananthapuram Number of Major Suppliers (3) 20 7 6 Firms in Kerala having linkage (4) 45 40 23 Major items Supplied (5) All materials Root items, gur, oils, ghee, and fruits. Gulgulu, Amukkuram, Kottam, Karpooram, Saffron, Kunthirikkam Root items, tuber items.

Kerala SC/ST Federation

Source: Meerabai (2001) Many officials in the sample of manufacturing firms have pointed out that they prefer private traders than co-operatives mainly due to the factors like easy and timely availability, complete information about the stocks, age-old relations with the suppliers etc. There is a lack of linkage between the tribal collectors and the pharmacies and especially the co-operatives and the pharmacies. This asymmetry of information puts the tribal collectors in the lowest rung of the ladder. Both in the supply and demand side, the market imperfections are apparent. There is an asset specificity character attached to the supply side, because full information about the supply function is not possible. Here asset specificity is in the form of the difference in the quality and the form in which they prefer raw materials (whether in semi-finished form or fresh form) etc. Another problem is information asymmetry. The information about the right quality material, right maturity and availability of the plants and about the final demand and price will not be available with all the suppliers or gatherers, but only with some (Chandrakanth and Suneetha 2001). This works as an entry barrier for new agents in the tiers of the market and firms will prefer their conventional suppliers. In a way, this helps the traders as well, because they are forced to be very careful in the selection of the agents. In the second chain, this problem will be sorted out with effective monitoring mechanism through co-operatives. Organisation and control of production may also be encouraged if consumers or retail buyers express preference for supplies that come from socially and environmentally sustainable production. For sustainable production and better returns, a number of issues need to be addressed. In this context, a) better information about the current status and potential of production of medicinal plants, which will provide a baseline for a strategy for sustainable production; b) More transparent supply chain information, in order to improve the bargaining power of those down the chain and to ensure good quality raw materials; and c) Organisation of plant collectors at the local level to put in place mutually enforced codes of collection and sharing of market benefits; are all important. These three points are very well enforced through the Tribal co-operatives. Nevertheless, the fact is that, unfortunately such efforts are lacking on the part of both firms and government. Training for Page | 35

collection, information on existing market price and better-demanded varieties can be easily provided through these co-operatives. An immediate need of restructuring the chain towards the second chain seems to be necessary. Considering the profitability of the firm, the restructuring of the value chain needs attention and should be a matter of primary concern, because the data obtained from the firms shows that a major expenditure item is the raw material and in most of the firms it constitutes more than half of the total expenditure (Madhavan 2004). It is evident that it can be reduced largely if the chain is restructured. However, there is not much effort on the part of the firms towards this, mainly because of the disadvantage in terms of procedures and transaction costs. In short, if the local gatherers are to secure a fair price for their work and participate willingly in sustainable harvesting and local cultivation, new models of trade are called for which will shorten the supply chains and incentivize the sustainable collection. In the perception of firms, the raw material depletion is the single most threat industry faces. It is been revealed by the manufacturers that many herbs, which is used in the sector is imported from other states. Since the daily employees clean up the wild and roadside vegetation due to the new employment provision scheme namely Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) of the government, a major threat in terms of making available those medicinal plants which was abundantly available for eg. Kurunthotti (Sida Rhombifolia), the herb, most needed for preparation of medicated oils and other products. This has resulted in shooting up its price to around 40% in the last couple of years. Kurunthotti is a panacea for ailments like rheumatism, arthritis, cough, asthma and bronchitis. Local medicinal plant collectors belonging to the backward communities for whom the collection of medicinal plants is a major source of livelihood, are excluded in the initial nodes of the supply chain market from getting a legitimate share of the final product. A rearrangement of the supply chain is suggestive option to considering a nodal link with co-operatives, for which the pre-requisite would be to strengthen the tribal co-operatives as such. Medicinal plant boards in the state can contribute actively to this suggestion.

5.2 Employment structure in the Industry and Traditional Physicians There is a systematic preference for institutionalized trained physicians as the size of the firm increases. Most of the small firms in Thrissur are traditional families, which are largely run by the traditional physicians. Most of the traditional (non-institutionally trained) physicians are producing medicines manually or minimal or semi mechanized structure as evidenced from the 32 small firms. Most of them have only tableting and pulvarising machines and depend upon the large institutions for the quality control of raw materials and finished products. Table: 13 Employment Structure of the sample firms
Size (number) Large firms (3) Medium firms (5) Small firms (32) Total BAMS 10 7 36 53 MD 4 2 1 7 Traditional Physicians 4 2 14 20 Payment range 14000-21000 12000-19000 9000-14000

Source: primary survey It was found that (knowledge survey on tribal physicians and knowledge, TBGRI at various points of time) the non-institutionally trained physicians are holding a mine of information regarding the improved classical formulations and effective cure for many diseases. But given the present preference pattern by the firms (see table 13) this generation of physicians would be vanished from the world in the next 20 years. So a planned utilization of the knowledge base of these physicians needs to be developed, and their abilities and potential to be utilized in diagnostic methods, unknown formulations, drug making processes etc. Even though in Thrissur, this has been largely done by the Page | 36

firms, other parts of the state and the country have largely ignored this knowledge base considering them merely as quacks. This exclusion behavior of the growing modern industry need to be addressed and an effective intellectual property right mechanism has to be devised to utilize their knowledge optimally. The Indian systems of medicine policies of India and Kerala do not identify codification of this knowledge as a priority case. 5.3 Dynamics of interactive innovation Generally, the research and development activities in ayurveda could be broadly classified into three types related to two typical positions. One is product research, very relevantly, the position that traditional medicine may offer better routes to the discovery, development and delivery of new drugs with enhanced performance in terms of cost, safety and efficacy. Second type is research which produce proof, with the argument that what is more important is to be evidence based medical system (EBM). Third is medicinal plant research. The demarcation between the plant research and the product research is ambiguous as in the beginning of product research, botanical research is necessary. The research investment is skewed towards the second type of resrch (see table 14). Table 14: Distribution of research expenditure (%) into different activities by the reporting firms (27 only)
Number of firms in sample according to size Large firms Medium firms Small firms Product research 43 31 19 Standardisation and quality check 50 63 75 Plant research 7 6 6

Source: Primary survey There is a constant demand for scientific validation of the principles on which Ayurveda, Siddha and Unani (ASU) systems are founded, particularly in respect of the efficacy and safety of the therapeutics used. Such a demand had motivated a large number of investigators to launch clinical research and drug standardization studies. Although such projects have been pursued over decades, the outcomes have been limited (Chandra 2011)28. Various national institutions like Indian Council of Medical Research (ICMR), Council of Scientific and Industrial Research (CSIR), Department of Biotechnology (DBT), Department of Science & Technology (DST), Central Council for Research in Ayurveda and Siddha (CCRAS), Central Council for Research in Unani Medicine (CCRUM) involved in research in Ayurveda and other indigenous medical systems. There are a number of collaborative projects at national level, but the New Millennium Indian Technology Leadership Initiative (NMITLI) and the Golden Triangle Initiative (GTI)29 projects needs specific mention in the context of product research in association with Industrial field. NMITLI is the largest R&D scheme to boost public-private-partnership efforts in the country. It looks beyond todays technology and thus seeks to build, capture and retain a leadership position by synergizing the best competencies of publicly funded R&D institutions, academia and private industry. Admittedly, despite the vast potential and possibilities, as of now, very few success stories have emerged from this research. This may be because most of the work in this field has remained within the clinics of traditional practitioners or confined to academic research laboratories and not
28

Chandra S. (2011) Status report on Indian medicine and folk healing, Report submitted to the department of AYUSH, Govt. of India. 29 The Golden Triangle Partnership (GTP) Programme was launched in the year 2005 as an innovative scheme with Department of AYUSH, ICMR and CSIR as equal partners to study Ayurvedic formulations/ medicines using modern tools and technologies for: (1) Validating these as safe and efficacious therapies for Indian and global use. (2) Identifying a few formulations as complementary agents to modern drugs. (3) Helping Indian traditional drug industry to scientifically standardize the raw materials and finished products for global acceptability of these drugs.

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taken seriously by industries that are strong in research and development. Therefore, path-breaking initiatives like NMITLI in India are crucially important. The Government of Indias GTI project integrating biomedicine, modern sciences and traditional medicine is indicative of a trend where traditional sciences like Ayurveda are increasingly embracing the scientific evidence-base and the spirit of robust research30. When we look specifically at the R&D efforts by the firms in the study area, the Research Collaborations are relatively better in the large firms like Oushadhi, vaidyaratnam and SNA Oushadhasala. It is difficult to demarcate the research funding among the firms on afore mentioned types. But undoubtedly, a large chunk of R&D expenditure is being spent on standardization activities. Table 15: General economic Indicators of Three firms
Sales (Rs Mill) Export% of sales Proprietary medicines (%) Fixed Capital R&D expenditure% of sales 2009-10 Oushadhi VROPL 322.6 413.6 Nil 86 NA 18 110.4 0.19 7.0 0.9 SNAO 51.5 23 68 1.0 NA Oushadhi 379.3 Nil NA 124.5 0.34 2010-11 VROPL 475.3 73 19 17.0 1.1 SNAO 61.1 25 72 1.0 NA Oushadhi 453.1 Nil NA 138.8 0.66 2011-12 VROPL 535.1 67 20 17.0 2.0 SNAO 73.1 38 76 1.0 NA

Source: primary survey Research collaborations are not very persistent in small firms. In most of the firms, the research funding is less than one percent of their sales turn over (table 15). From the survey it is revealed that most of the ayurvedic labs for quality checks of the raw material have been considered as research labs. And hence, the lion share of research money is actually spent on standardization process, but not for product development or research leads. Most vibrant firm in research collaboration is the public firm Thrissur namely Oushadhi. But the research spending of OUSHADHI is still less. Looking at the innovative activities of the firms, most of the firms invariably whether it is large, medium or small have innovative activities. Most of them have at least one product which has the proprietary license. But when the new process innovations and improved process innovations are considered, they are not very frequent in these small firms (table 16). But many claimed that they have made changes in the appearances of the product, to suit the market demand and user friendliness. Table 16: Number of firms reported varied innovative activities
Number of firms in sample according to size Large firms (3) Medium firms (5) Small firms (32) Size is not known (but prima facia small) (10) Firms reported New Products 3 5 18 3 New process 3 5 9 0 Improved process 3 5 0 1 appearances New Markets 2 2 3 0 Traditional products 3 5 32 10

3 4 16 0

Source: primary survey

30

The Osteoarthristis project under NMITLI scheme involved a network of 16 national research institutions, modern medicine hospitals and pharmaceutical industries from India. The project used a traditional knowledgeguided platform where the base formulation was optimized with additional ingredients to obtain desired therapeutic activities. All the formulations were manufactured under Good Manufacturing Practices. They came out with patentable poly-herbal drugs, which is patentable (Patwardhan 2009)

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The innovations of OUSHADHI are commendable. It has brought out around 90 drugs into the market through various forms of innovations. The various networking done by Oushadhi are mainly; a) the programme for bio-manure from bio-waste with Kerala agricultural University, b) medicinal plant nursery development with state medicinal plant boards; c) collaborative research with central government institutions like Central Food Technologies Research Institute (CFTRI); d) collaboration in preclinical and clinical research and product development with Jawaharlal Nehru Tropical Botanical Garden and Research Institute (JNTBGRI) and Amala Cancer research centre; e) National medicinal plant project related linkage with various biotechnology departments of many colleges f) analytical research collaboration with bio-sciences department with Kannur University; g) production and research collaboration with Central council for Research in Ayurveda and Siddha (CCRAS); h) network with CARe Keralam, the cluster for making available the best quality raw materials and also i) interdisciplinary projects and validation pharmaceutical products with many ayurvedic firms. AYUSH has recently provided funding for Oushadhi as a Centre of excellence for Ayurvedic pharmaceuticals (Rs. 50 million). State government grants in aid and share capital helps OUSHADI to step into many research collaborations. The share capital of State government has increased from Rs. 2.5 million in 2007-08 to Rs. 40 million in 2011-12. Table 17: Types of innovative activities in the major firms
Dimensio ns Oushadhi VR SNA New Product 22 20 12 Improved products 10 7 30 New process 4 8 0 Improved process 10 8 13 Quality change through technology 30 5 0 New rawmaterial 5 2 0 Appearance change 4 4 09 New forms of organization 4 5 0 New market 1 0 0 Total

90 59 64

Source: primary survey Shelf life and palatability were the basic innovations, the firms pursued in the case of basic ayurvedic formulations. The most innovative companies are able to come up with a large number of new products and new processes in making the products. Companies like Oushadhi are able to bring innovations by even by creating new markets by bringing products like health drink into market. Many classical ayurvedic medicines have taken new appearance in pills and choornams (powders), which is very customer friendly. Most of the firms cited that the major incentive for engaging in R&D and innovation is said to be the technology change and self-motivation. Oushadhi and Vaidyaratnam have links with many research labs both government and private (for example VR have links with NABL Mumbai for HPTLC and HPLC testing and in toxicology studies they have collaboration with Mannuthi veterinary college and pharmacology studies link with Kottakkal Arya vaidya Sala). According to the information from firms, the disease conditions most of the research is concentrated at the firm level are Rasayana (Rejuvenators/Immunomodulators), Joint disorders, memory disorders, menopausal syndrome, Cardiac disorders (Cardio-protective & anti-atherosclerotic), obesity, Irritable Bowel Syndrome (IBS), diabetes mellitus, rheumatoid arthritis etc. Standardization and Safety & toxicity studies of metallic bhasmas and mineral based formulations are also getting high priority in the research. One of the suggestions from the firms is that there need to be a grading system based on the size of the firm31. Government follows same policy for all types of firms. The small firms need to be informed about the quality criteria, patenting qualifications and changing policy environment in terms of export policies. They also need to be supplied with a common laboratory support and subsidized in electricity costs and leniency in legal constraints like wild life laws and stringent forest rules. A few of the firms suggested for balanced regulation and dosage standardization as the fake practices are very high and adulteration is easy. The use of research capabilities of the traditional experienced physicians is suggested as one of the important solutions for dealing with quality standards and the
31

Mahaoushadhi Herbal remedies, avanoor and Kodakkatil Ayur Links, Kandanissery

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treatment should be based on referral system, so each firm or dispensary can specialized in the competent field32. This would even help in the growth of overall system. Many small firms have fewer interactions in the field. This actually limits the learning capacity in terms of technology transfer and adoption. In terms of interactive learning, 19 firms have shown that they have interaction with traditional physicians and all sampled firms are member of Ayurvedic Manufacturing association of India. Table18: Sources of Innovations
Firms Oushadhi VR SNA High Nil Commercial labs and R&D enterprises Within enterprises Medium R&D enterprises, govt. research organisations, universities, customers, competitors, within enterprise experiences Competitors Competitions, consultants and Research labs and R&D enterprises Low consultants Within enterprises Govt. research organisations and clusters

Source: primary survey The responses from the firms showed that the most important source of innovations are interaction with the R&D enterprises, competitive initiatives and in-house research facilities (table 18). The larger the in-house facilities the lesser the cost of the research would be. Many small firms mentioned that a common research and facilitation centre like CARe Keralam would be a boon for further quality network, but this service needs to be subsidized. They even blame the government for not incentivizing these facilities, even though Ayurveda is considered to be a parallel system of promotion in the recent policies. Lagging in infrastructural promotion would pull back all types of other development efforts in the sector. So an immediate attention in terms of high investment in common facility centres, need to be given or government research centre capacity should be made accessible to the medium and small manufacturing units. According to the law, if formulations follow the classical dosage form and ingredients, no further trials are needed. In that case, continuing clinical research in an open ended manner simply by trying new permutations and combinations of the same drugs is wasteful; this is because these pursuits have shown negligible outcomes in terms of acceptance for patent or for adoption by industry. Instead the government research councils should be made responsible for acting as a conduit for getting standardised drugs manufactured centrally through a public sector company under the Department of AYUSH or outsourced to good manufacturers in the private sector. The logistics of raw material quality, production of standardized drugs and their timely dispatch to treatment centres can be done by the Council staff many of whom are engaged in routine, repetitious clinical research which amounts to little more than offering rudimentary treatment in a peripheral kind of way (Chandra 2011). The perceptions from the firms have some consensus on the following points. They have reiterated that the ayurvedic firms shall promote some common ideas regarding formulation or yogams and techniques and also some provision for transferring the unique methodologies to other firms. Further awareness regarding importance of R&D and manufacturing should also be imparted to the ayurvedic academicians so that a concern for developing a manufacturing-friendly paradigm is possible. Moreover, differences between quality standards, regulatory affairs, R&D and clinical standards should be made familiar to the ayurvedic community. The Minor Forest Product Laws, procurement regulations and even advertisement rules seem to be hitting the innovative environment of the industry. It is also suggested that Ayurvedic Pharmacopeia of India (API) is not able to provide proof for all the products or not able to cover the categories of production system, which the industry at
32

Conversation with the main physician at KMA Oushadhasala, Guruvayoor

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present has and hence production regulations should not be based on the same. Many firms have suggested the new research protocols for clinical trials are a necessity and AYUSH need to take immediate initiative in this direction. Firms-level pharmaceutical research need to be enhanced for further innovative products. OUSHADHI R&D lab is of the opinion that research methodologies should concentrate not on new standardization procedures but on new disease categories.

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Table 19: Factors inhibiting innovations: Perceptions from three firms


Low Excessive risks and availability of finance All managerial factors are of low significance High Cost of innovation VAIDYARATNAM Medium Low Excessive risks and availability of finance Others are of low importance SNA OUSHADHASALA High Medium Low Excessive Cost of Availability of risks innovation finance All managerial factors are of low significance Impact of regulation and Standards Lack of customer response

OUSHADHI Medium Cost of innovation

Lack of customer response

remains one of the major or innovation according to OUSHADHI

Organizational rigidities within the enterprises would be a concern Impact of regulation and standards and lack of customer response Cost of Innovation is the major risks for VAIDYARATNAM while regulation and organizational rigidities also pose challenges

Impact of regulation and standards and excessive risks are the reasons for lack of technological innovation

Source: primary survey

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In the recently released draft guidelines, the Department of Ayush makes it mandatory for all Ayurvedic manufacturers to undertake clinical trials. It mandates that the approval for clinical trial on an Ayurvedic drug should be initiated only after the permission has been granted by the licensing authority, along with the approval from the respective ethics committees. According to the draft notification, the licensing authority should be informed of the approval of the respective institutional ethics committees as prescribed and the trial initiated at each respective site only after obtaining such an approval for that site. Most of the firms have pointed out that the stringent requirements for granting permission to manufacture ASU drugs is going to hamper the innovative efforts of the industry which is already suffering from a number of bottlenecks. It is completely not in tone with the ayurvedic research methods. Moreover, it is not feasible and affordable for the small scale manufacturers who make up the most of the industry to carry out ayurvedic medicine research in India at all stages of drug development, whether prior or subsequent to product registration in India. In the contemporary ayurvedic sector, due to absence of efficient protective/incentive mechanisms and other institutional bottlenecks, the innovations within the system largely tend to remain as secrets. Many indigenous knowledge groups protect the knowledge through various mechanisms like term locking, means using a tribal/colloquial term for the known medicinal plants in herbal healing system. Various examples could be found from the mudugar tribe of Attappady, Kerala (Unnikrishnan 2009). Hence, many of these indigenously known ayurvedic and folk knowledge do not reach professionally trained ayurvedic physician/firm who might be involved in the clinical development of ayurvedic drugs. In consequence, the knowledge and innovations remain private due to the absence of incentives to put it in the public domain. Hence, the knowledge would be continuous but non-additive and the production remains at same level and the sector, static. The issues of standardization, sustainability of raw materials and incompatibility with allopathic notions/paradigms work as entry barriers for many of the modern pharmaceutical firms. In the case of local and underdeveloped economies, we can simply find the bottlenecks like high transaction costs and risks, weak information flows, weak institutional environment and a number of other constraints are at work in accessing the market. The resultant low level of technological and economic activity puts these economies in a low level equilibrium trap. This is simply true in the case of traditional medicine market. This is shown in the below figure; Figure: 4 Institutional failures in Indigenous sector
Inhibited economic and Technological development

Inhibited market access and development

High transaction costs, risks, high unit costs, and thin markets

Weak institutional and infrastructural environment

High cost information access and Property rights

A more nuanced analytical understanding of institutions and markets should both demand and promote greater understanding (a) of the processes and types of institutional change needed for local systems and communities to climb out of low level equilibrium traps, and (b) of the need for pragmatic, path-dependent and location-specific mixes of investment, in non-standard institutional arrangements as well as in the institutional environment. This in turn demands that we learn from Page | 43

existing and past institutional arrangements and examine in detail the institutional functions that they may have attempted to fulfil. The key questions addressed in this paper revolve around understanding how local actors build on their social and cultural traditions and practices to create and adapt their knowledge in order to favour innovation; how their capacity to learn and innovate can be recognized and facilitated to contribute to health development or universal access to healthcare; and how local capacity is built to facilitate continuous learning that sustains innovation. In the section next, we give a historical prologue, which details the milestones in the development of the sector and various institutional interventions in the Indian trajectory. 5.4 Networking, up-gradation and Social innovation: CARe Keralam Case As we mentioned earlier, the largest concentration of Ayurvedic firms are in the districts of Thrissur and Palakkad. If we take into account the northern part of Ernakulam and the southern parts of Malappuram and Kozhikode the number of units engaged in the manufacture of traditional medicines is around 400 in that region. This forms the largest clustered units in the state. The industries in this sector is a predominant factor in recognizing the need for certain common facilities being provided to such small and medium enterprises to ensure proper quality control, technological up-gradation and bench marking of their products. The manufacturers were competing among themselves (mostly with a flagship product) and such intense competition had resulted in slowing down their growth. It was felt that non-conventional approach was required to promote and develop the sector. Efforts were initiated by the industries to bring Ayurvedic product manufacturers to a common platform for evolving a concerted effort for the overall development of Ayurvedic sector. Series of meeting were held with the Ayurvedic product manufacturers and their association during the past few months under the auspices of Kerala Infrastructure Development Corporation (KINFRA) and Kerala State Industrial Development Corporation (KSIDC), the two government agencies. They have decided to form a consortium with the objective of jointly promoting Kerala as a global destination for sourcing Ayurvedic products and services of internationally acceptable standards. This was decided to be done through forming a Special Purpose Vehicle (SPV) by product manufacturers with the participation of KINFRA and KSIDC. It is estimated that the annual combined turnover of these industrial units in the Kerala is over Rs.500-600 crores per year. . An SPV has been formed among major Ayurvedic firms in the State together with KINFRA and KSIDC and a company under the name CARe- KERALAM (Confederation for Ayurvedic Renaissance Keralam Pvt. Ltd) has been registered. The major Ayurvedic firms in the State like Pankajakasthuri, The Arya Vaidya Pharmacy, The Vaidyarathnam Oushadhasala, Nagarjuna, Sitaram, Sreedhareeyam, S.D Pharmacy, Kandamkulathy, Dhanwanthari, Bipha, Sree Sankara, Nupal, Kerala Ayurveda Ltd., Relax Herbals & Exports etc, have already joined as members of the consortium. Besides these leading firms, there are around 240 companies all over Kerala has joined the campaign with a considerable share equity, which contributed to a good sum to the total cost Kottakkal AVS, the largest manufacturer in Kerala could not participate yet, as the cluster rules prohibit only trust to enter into the cluster scheme, but only companies registered under companies act. The common facilities set up under the consortium are common raw material supply facility, QC lab, R& D facility, branding of Kerala Ayurveda, etc. Also, the company works on documentation of various Ayurvedic products, which is a pre-requisite for the marketing of Ayurveda products as drugs in the foreign market. In the first phase, the consortium is taking only generic Ayurvedic formulations for branding. The consortium is planning to standardize Kerala Ayurvedic treatment sector also. A brand logo will be given for these branded products to the members of the consortium.

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The cluster identified various problems and hurdles of the industry at various stages (nodes) of the production process, starting from cultivation to policy level. And it intends to tackle each issue with common efforts from the existing firms. The major problems identified are shown in the below table. Table: 20 Constraints of the Industry at Various Nodes
Node Cultivation Constraints Sourcing of raw drugs from wild/ traders Farmers dont get adequate value for their produce hence hesitation to cultivate medicinal plants Lack of awareness on pre harvest and post-harvest activities (GAP) on the part of cultivators Testing requirement at raw material, online/WIP, final product stage Technology constraints Lack of documentation on processes, products and benefits IPR related issues Integration with mainstream markets New market access New Product development Visibility and branding Regulations/ tax implications on value added processes outside manufacturer premises Use of animal sources for some generic drugs Extension of insurance benefits for treatment under Ayurveda

Manufacturing

Marketing

Policy Level

The characteristic of ayurvedic industry is there are firms who aim largely domestic market and a few companies serious look at the external market. The products are also not synonymous. It dealt with various sub markets like medicines, health supplements, beauty care products etc. The R&D is mostly confined to public laboratories and private manufacturing labs. The investment on R&D is seemingly less. The value chain is mostly supplier driven in the case of medicine and buyer driven in the case food supplements and beauty products. Entry barrier is low and if there, it is only the knowledge. Upgrading in the value chain depends on the collective efficiency of the firms and the technology is more or less tacit. Firms are in competition at product level. The competitiveness is increased many times by aesthetic innovation, marketing and advertisement so far with the traditional industries like Ayurveda It was held that the collectivity not only provide economies of agglomeration, but also, as argued by Coase (1937), considerably reduce the cost of organizing production, or the transaction cost so vital for firm growth. In the case of ayurveda clusters, more than the infant industry/small firms survival argument, clustering is a necessity as far as the nature of the industry is concerned, especially in terms of its present state of affairs in standardisation, quality control, drug policies of various export destinations and the economies of scale issues. As much of the interventions in the industrial cluster formation in the late 90s mainly backed by the point of encapsulating the benefits of clustering, i.e., the competitive advantage derived from local external economies and joint action, as Schmitz (1995: 530) emphasized that collective efficiency is important. There would be a positive relationship between product upgrading and the degree of collective efficiency in the group of industries. It could be analysed by i) the use of mechanisations, which will be installed in the proposed common facility centre, include, Soft Gelatine capsule filling machine, totally automated capsule filling machine, totally automated Coating machine and carbon Dioxide extracting machine ii) by vertical joint actions with local suppliers and buyers and iii) multilateral horizontal cooperation plays an important role in product upgradation through various actions such as participation in international trade fairs, collection of information about global demand and easier connections with international buyers.

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The functional upgradation can also work if the firms are cautious in marketing and branding their products and the cluster envisages this opportunity to market it with an AYUSH stamp as well as in the name of a Kerala branding. The collective efficiency hence very much relate with the functional upgrading process. Complementing this information with the available qualitative evidence, we can say that due to a) circulation of information and skilled man power (external economies), here traditionally skilled Vaidyas and ayurvedic doctors, b) various initiatives like national as well as international fairs and awareness programmes c) higher link with travel agencies to achieve more transnational patients and customers and widely spread euphemism about the natural products can work very well in achieving the functional upgradation of many firms. Hence the large investment which is needed in the branding and marketing would be made collectively here and which will improve the access to information, know how, and knowledge about markets. In other words the degree of collective efficiency positively affects the small and medium firms chances of functional upgradation. Inter-sectoral upgradation is possible when many ayurvedic firms are acquiring the benefits from the experience of being in close contact with the ayurvedic manufacturing demand and being supplied to the various national dispensaries and hospitals, shifts to a very close concern in the sector, i.e. herbal spas or tourist resorts. This move could be in a way a move from national buyers to transnational buyers and mostly a move from an activity which was mostly impacted by the cluster rules to a global value chain frame. And even, it could be a mostly a move towards mostly buyer driven chain. We have examples of this phenomenon in the past, of course outside the cluster scheme, in the case of Kerala Ayurveda joining hand with a leading national business giant to establish health spas all over the nation. The engagement and integration with the global value chains may support the rapid enhancement of product and process capabilities. It is important that, the cluster promotion like CARe KERALAM, try to overcome some of the low road characteristics33 like substandard products, low income to the employees etc. of a developing country clusters with certain regulations, strict monitoring and enhanced incentives to shift to a highroad cluster. As standardisation and quality validation of ayurvedic products remain as a major hindrance for its global market entry, the cluster rules are mostly concentrating on a strict development of at least one testing laboratory and most of the core interventions 34 in the rules include setting up of common facilities for testing, certification, standardisation, quality control and other capacity building measures. This indirectly shows that the higher nodes of the value chain of ayurvedic products are a strong determinant of how the clustering rules have been formed. On the other hand, this may help the firms to upgrade the process of manufacturing. Moreover, small and medium firms can obtain GMP certification or training for procedures, which is a basic necessity to reach out to the external market. At present, only 50 percent of the firms have GMP accreditation. The invariable concern of the cluster schemes in Ayurveda seems to be how far it can capture the global market is bit farfetched. But on the other hand, the interventions should ideally aim at how far it can better serve the local market with affordable medicines, so that the up-gradation in the value chain need not completely depend upon the logics of developed world demand. Ayurvedic medicine has a large domestic market if the industry can serve with better quality at affordable prices. The argument promoted by CARe KERALAM is what Chinese medicine followed, i.e. Ayurveda needed to capture the world market initially with its health supplements and proprietary products, which it can if it serves with an evidential substance, later, this, will attract the demand for traditional
33

The high-road refers to cases where business dynamism is promoted through investment in efficiency enhancement and innovation and the low -road reflects negative firm strategies such as cost cutting via reducing labour income, poor input use, inadequate or no networking, what result in technological stagnation and sub-standard products. The high -road syndrome is found common in developed nations (Pyke and Sengenberger 1992), where certain formal regulation, often devised at the cluster level, ensures collective vigilance against any unfair business practices. As of the developing nations, surveys of available evidence in Nadvi and Schmitz (1994) and Schmitz and Nadvi (1999) conclude that most clusters carry low-road characteristics and some a combination of the two. None, however, has symptoms of an entirely high -road variety. 34 MoHFW (2007) Scheme for Development of AYUSH Clusters, page 2

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medicines. So the promotion of Ayurvedic commodities of this type would be a first step in initialising a market for the system of Ayurveda overseas. In keeping with the reality, not every firm produces or aims to produce for a high-end, global market. The market for many of these products could be limited by the locality or culture specific need or absence of cost-competitiveness due to high material or transport cost. For that matter, the success of a cluster need not be measured by whether and to what extent its links exist with the international market; instead, supportive interventions need to be made towards product diversification and upgrading local technological capabilities of these clusters. This is in no way to undermine the importance of export-orientation, the value of global value chains and the entrepreneur -exporters strive for enhancing product quality. Rather, the emphasis here is to acknowledge the strong presence of a large segmented domestic market for products differentiated by quality and price. This is one dimension ruefully glossed over in the thriving literature on value chain analyses, which, in fact, does recognize that integration into global trading systems could have both positive and negative effects for people in developing countries (Gereffi 1983). Humphrey and Schmitz suggest that local producers learn a great deal from global buyers, about how to improve their production processes, attain consist ency in higher quality and increase their speed of response to the customers orders. This could work true for Ayurvedic pharmaceuticals as well. Research and Development is one of the prime concerns in the forthcoming cluster and the aim of developing an industry academia link would be of prominent in the future as now the link between biology and Ayurveda and botany and Ayurveda becoming clearer and research is encouraged on the lines. An institutionalised system of receiving ideas from academia to the development of the sector is an important joint action for the Cluster, even though, the public firms like Oushadhi have encouraged it even in the past35. As a feedback to the AYUSH Cluster policy the major opinion form the industry associations were to convert the facilities available at IMPCL, TAMPCOL, OUSHADHI be mandated to install and run manufacturing units with world class accreditations like approvals from- WHO cGMP, HACCP, US FDA, EU GMP and Australian TGA, rather than manufacturing and marketing products to compete with licensed units in the private sector in the domestic sector. And they requested this to use as the manufacturing premises from which they can source their export products. Another important joint action could be the link between the public and private firms and even the link with vaidyas and ayurvedic houses to have substantial product development and to understand the traditional drug development process regarding particular ailments. This joint action is very well possible, as many new firms in the sector have strong lineage with the traditional vaidyas and ashtavaidyas, for example, vaidyaratnam oushadhasala, dhanwantari etc. Clusters are now required to develop networking with service provisions, for instance, consultancy, financial services, market research, advertising, packaging and product design, to be able to perform a more active role than before. Also, a greater thrust on upgrading labour skills, provision of flexible norms of work, improved methods of supervision and quality control has been considered essential for achieving a competitive edge. Support for digitization/ IT based database management for documenting traditional medicines is one of the prime aims of the CARe Keralam. This would support the on-going similar efforts at various institutions like TBGRI (Tropical Botanical garden and Research Institute), HONEY BEE, FRLHT (Foundation of Revitalisation of Local Health Traditions) etc. and later convert it to TKDL (Traditional Knowledge Digital Library). Next important outcome could be the increasing vertical linkages, which is both backward and forward linkages. The CARe Keralam Cluster would work as a facilitator for finding the right quality raw materials as well as initiating an organised collection process in connection with the cooperatives. A study found that even though the co-operatives are providing the medicinal plants at a very low rate in Kerala than most of the traditional middlemen contractors, the lack of linkage between the co-operatives and the manufacturing units actually increase the transaction cost of the
35

A Number of botany postgraduation theses are written based on the internship at Oushadhi laboratories.

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firms and hence result in high price of the medicines (Madhavan 2004). This could be rectified to an extent if the cluster can establish an effective link with the co-operatives, and which in turn can give employment and livelihood opportunities to many traditional tribal collectors. The plan for buy back arrangement for in-situ cultivation as well would be a welcome move. In the case of another vertical linkage, the cluster has an initiative to link with the machine tool industry which supplies exclusive ayurvedic medical as well as massage equipments. This is a newly developed industry, which has a derived demand from the ayurvedic industry as well as health tourism industry. These two options can actually create a large number of employments in directly or indirectly connected sectors. The administrative structure of CARe Keralam needs to be restructured such that, it should not defeat the purpose of its establishment. Now a firm can be a member in the consortium if Rs. 0.1 million is paid and would be a member of executive governance if the firm pays Rs. 1 million - indicative of the prevalence of active exclusion. The decision of the consortium regarding its tie ups and involvement in the industry is being taken by this core group of governance and hence the interests of the large number of small groups are not getting addressed. As it is a public-private concern, the steps should be taken to represent the interest of all the firms. Otherwise, this has the potential of increasing the market concentration, weakening interactive learning process and the elimination of numerous small firms resulting from active exclusion built into the system. 6. Cases of inclusion within Sector 6.1 Innovations and disease categories Around 70 % of the firms have claimed that their innovative efforts for new products are determined by the self-interest and technology change, while the decision on the areas of innovations are made based on the demand and requirements, signaled by the patients of the disease categories approaching their physicians in hospitals. It is well known that there are certain diseases like arthritis for which no effective long term cure is offered by the modern medicine. However, for disease like arthritis, Ayurveda is shown to be providing reliable long term cure. Based on the patient survey of one of the leading ayurvedic firm, it is observed that there are some diseases where the Ayurveda offers amazing results to continue further research. Most of these diseases are below the radar of many of the allopathic drug producing companies, but prevalent in many developing countries. This data is actually an indication that ayurvedic sector in Kerala can develop some areas of expertise in certain disease categories. But this calls for collaborative research, more standardized and homogenous approaches and innovative abilities, right institutions with sizeable amount of research investment. The table shows that in many cases like rheumatoid arthritis, cervical spondylitis, psoriasis, menstrual disorders, sciatica etc, ayurvedic medicine seems to be giving excellent results. This table could be comparable with the information from the other firms as the major disease categories are common as mentioned in the surveyed firms, and there are some considerations of excellence in some diseases. Table: 21 Treatment and Outcome: Patient survey of an ayurvedic firm
Disease types number of patients 500 255 248 200 256 230 Treatment duration in house 21*2 21 14 14 21*3 14 oral medication 90 60 30 30 90 60 Excellent 180 80 77 42 65 34 Result Good 280 97 93 128 143 86 Percentage of positive result 92 69 68 85 81 52

Rheumatoid arthritis Osteo arthritis back pain cervical spondylitis Psoriasis Sinusitis

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Sciatica Hemiplegia Parkinsonism menstrual disorders

300 150 32 100

14 21 21*2 14

30 60 90 90

153 52 5 79

84 49 17 10

79 67 68 89

Primary survey (Information from dhathri) (2009) It is visible that in some cases like, rheumatoid arthritis, osteo-arthritis, cervical spondylitis, psoriasis, sciatica etc. the treatments are seems to be very effective. Some firms have opined that, the demand for medicines at their own hospitals led to innovation and marketing of many products in the future. The R&D has specifically concentrated on remedies for many of these diseases. The product categories of the firms shows that many of them offers effective cure for the local as well as the global diseases through the traditional as well as the proprietary product categories. The diseases like arthritis, bronchitis, diabetics etc. At the same time they address many life style diseases as well. Most of the products are available OTC and demanded by the patients and mostly accessible at a low cost. Hence this industry offers a large number of product categories at an affordable cost, which are mostly pro-poor medicines and not been considered in the radar of the large industrial pharmaceutical companies. Table: 22 The major diseases addressed by the product categories according to the firm size
Number of firms in sample according to size Large firms (3) Traditional medicines Proprietary medicines Indigestion, diabetics, sprain, obesity Rheumatic fever, fistula and skin diseases, indigestion, obesity Hair oils, chronic ulcers Other products

Asthma, bronchitis, anti-fatigue, anemia, diabetic, scrofula, menstrual disorders, sinuses, blood impurity, jaundice Sinuses, diabetic, immunity power, arthritis, chronic skin diseases, arthritis, allergy Pediatric medicine, snake poison, stomach ache, eye diseases, laxative, bleeding piles

Medium firms (5)

Small firms (7)

Tooth powder, hair oil, sexual dysfunction, complexion Obesity tapes, ayurvedic cots, ayurvedic footwear Tooth powder,

Source: primary survey 6.2 Family Linkages, Niche Market and Capacity Creation Ashtavaidya Physicians and the challenge of system upgrading
Recognizing this very contribution of Ashtavaidyas to the system of Kerala Ayurveda, Menon and Spudich (2010) note that between the 13thand the 17thcenturies, with generous royal and individual patronage, a fertile intellectual milieu developed around temples in Kerala state, especially in the Nila valley region in Malabar, where scholarship and scientific research on medicine, mathematics and astronomy made significant progress. The Ashtavaidya culture evolved in this environment, blending the Ayurveda of Ashtangahrdayam with the knowledge and practices of local healers. Menon and Spudich (2011) also bring out the nature of human agency as well as the institutional mechanisms which the system of Kerala ayurveda used to evolve and reproduce in the past. According to tradition, initially eighteen upper caste families of Kerala were designated as Ashtavaidyas. Each Ashtavaidya family developed its own therapeutic specialties and its specific methods of transmission. Although many of the specialties were guarded as family secrets, students outside the family were accepted as disciples. This helped disseminate their knowledge beyond the family circle and create new lineages of transmission. The Ashtavaidyas enriched Ayurvedic literature through their Sanskrit commentaries on the Ashtangahrdayamsuch as Hrdayabodhika and Vakyapradipika, and compendiums in Malayalam such as Alattur Manipravalam, Cikitsamanjari, Sahasrayogam

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and Sindhuramanjari. Ashtavaidyan Vayaskara N.S.Moos made one of the most significant contributions to 20thcentury Ayurvedic literature by publishing ancient texts and his own original works. More recently, Vaidyamadham Namboodiri has written books and over a hundred newspaper articles to inform the public about Ayurveda. Menon and Spudich (2011) point out that until recently the methods and the progression of the training of senior Ashtavaidyas were those followed for centuries for mastering any Shastra or body of knowledge in India. All the senior Ashtavaidya physicians who remain active till this day were trained in the Gurukulam system and had practiced for more than 40 years. They are masters of healing with deep knowledge of classical texts and all aspects of traditional therapy. All belonged to families where, in the words of Vaidyamadham Namboodiri, we lived and breathed Ayurveda from birth. The education of a traditional Ashtavaidyain the Gurukulam system involved a long period of intense study and apprenticeship under accomplished masters. Knowledge of Sanskrit in all its complexity through the study of grammar, poetry and drama was considered essential to decipher and analyse the intricate and implied meanings in the ancient medical texts. In addition, the students mastered Sanskrit works on Tarka (the rules of reasoning and argument), and the traditional philosophies of Nyaya, Vaisheshika and Samkhya. In the words of Ashtavaidyan Olassa Narayanan Moos, such erudition was necessary to become agaadha panditas, profound scholars, of Ayurveda. According to the Ashtavaidyas the current education system is too narrowly focused. Of the extensive pharmacopeia of Ayurveda only a fraction is being taught, largely because importance is now given to a relatively limited number of commercially available prepared formulations. This is also largely true of the therapeutic techniques of Ayurveda. Popular and lucrative techniques are being taught and many of the classical practices are now known only to a small number of skilled older practitioners. Menon and Supdich (2011) note that the Ashtavaidya physicians were strongly in favour of reestablishing the opportunity for at least a small number of students to study classical Ayurveda in depth in order to perpetuate the tradition of scholar physicians. Adequate guaranteed financial support for students with the aptitude and motivation to undergo intense training to become scholar physicians, as is now available for advanced study in the basic sciences, would go a long way to keep this scholarly Ayurveda tradition alive. As for centuries royal patronage played important roles in maintaining the Ashtavaidya tradition today the government has to play this role. Today, only a handful of Ashtavaidya physicians trained in their ancestral system of study by apprenticeship remain in practice and the tradition itself is at a crucial turning point. In spite of the trend in modern India to prescribe standardized Ayurvedic medicines manufactured by pharmaceutical companies, the Ashtavaidyas continue to make the effort to practice their ancestral tradition of person-centered therapy using medicines they themselves prepare that are adapted to the needs of each individual patient. Among the healers of Kerala, the Ashtavaidyas represent the Brahmin scholar physicians who were masters of the eight branches (Ashtanga) of Ayurveda mentioned in classical texts. Although ideally the number of years of education was said to be five years of textual study, five years of learning about medicinal plants in the forest, and five years of apprenticeship at home (in Malayalam ezhittil anju, kattil anju, veettil anju), in practice the number of years of learning medical texts started in the mid-teens and continued until the mid-twenties. Through his years spent in the study of Sanskrit language and literature, followed by classical texts of Ayurveda, a qualified Ashtavaidya learned to provide truly individualized therapy, the hallmark of their tradition. The students were also taught to identify plants for making personalised medicinal preparations by varying the ingredients appropriate to each patients ailment. Individualized treatments taking into account all aspects of a patients life are a specialty of traditional Ayurveda. The practice of Ayurveda in the modern context is developing at two levels. On the one hand, a small number of Ayurvedic practitioners and Ayurveda centers treat illnesses using classical therapeutic techniques and medicinal preparations, complying with modern standards required by government. On the other hand, increasing numbers of Ayurveda-based practitioners and centers propose so-called Ayurvedic rejuvenation therapies along with a smattering of yoga, meditation and Indian philosophy. While there is room for both types of practices in the contemporary context, the distinction between the two is becoming blurred, and the economically lucrative leisure aspect is coming to represent Ayurveda as a whole. Understandably more students are embarking on the study of Ayurveda with leisure medicine as their goal, and the in-depth study and practice of classical Ayurveda is not finding as many devotees. This trend could have serious impact on the future of the transmission of classical Ayurvedic knowledge and therapeutic techniques. Menon and Supdich (2011) note that in order to secure the future of Kerala Ayurveda the master physicians talked of the need for better patients education. The patients compliance with Ayurveda regimens requires a

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basic understanding of the contexts in which traditional medicine and modern biomedicine can be effective. A patient who is well informed can participate actively and accelerates the healing process. In general, traditional Ayurvedic therapies, because of the types of procedures and formulations used, require more time to manifest their beneficial effects. Purified single molecule drugs used in biomedicine are effective within a shorter period of time, and for certain illnesses biomedicine is the only effective therapy. Patients need to be educated about the risks and advantages of each system, like speed and efficacy versus issues of long-term side effects. Menon and Supdich (2011) note that Ashtavaidyas are not opposed to the integration of systems of medicine as long as the principles are understood and not ignored. The senior ashtavaidyas were clear that since for certain ailments, such as those related to the locomotor, immunity and digestive systems, their methods can be more efficacious. In their view, physicians who understand the potential of both modern biomedicine and traditional therapies should assist patients to choose the most appropriate therapy. At present the majority of patients choose traditional medicine when biomedical therapies have failed and the ailments are almost incurable, and this negatively influences the way the efficacy of traditional therapies is perceived by the public. Clearly there are some important lessons in the criticisms of the senior Ashtavaidyas of the developments taking place in the emerging system of Kerala ayurveda. Policymakers need to take a note of the advice being offered by the Ashtavaidya physicians; they have very appropriately argued for an Integrative Medicine paradigm where traditional Indian medical systems and modern biomedicine work together on an equal footing in a cooperative medical culture to form a dynamic healthcare system. It is important to recognize that since the traditional system of Kerala Ayurveda originated in the practice of Ashtavaidya physicians they are going to play an important role in the development and maintenance of the system of Kerala Ayurveda. Consequently the challenge of steering and coordination of the upgrading of system of Kerala ayurveda is required to be understood as also a challenge of modernization and transformation of institutions responsible for the development of ayurvedic practice and associated pharmaceutical industry.

In Kerala, other than the folk healers, it is evident that only the physician families, who were known for their traditional service and experience like Vaidyamatom, Narayanan Moossu Vaidyasala, Chitatinkara, Dhanwanthari Ayurveda, other Ashtavaidya families etc, remain dominant in the traditional sector and in which many of them attempted modernisation in various ways. Other small entrepreneurs of ayurvedic medicine more or less perished in the commercial transformation process. In the case of traditional physician families, when the capitalist mode of production became dominant, the pre-capitalist manual form of production regained some importance as a subordinate mode of production in the name of its traditional acclaims. In that sense, the capitalist expansion of the sector has not led to the immediate demolition of these old units of production; on the contrary these old relations of production were consolidated to a certain extent and attempted to complement the capitalist sector, at least some parts of Kerala. But this has not happened in other segments (folk segments), which does not have a strong lineage to claim. Apparently, many Ashtavaidya traditional physicians stick to their age old practice and person centred therapy using the medicines they themselves prepare that are adapted to the needs of the patients (Menon and Spudich 2011) To an extent, this informal categories of ayurvedic sector claimed dominance at various parts of the state, offers a complementary rather than a competitive approach with the formal organised sector of the industry. Rather, silent innovative efforts of the existing knowledge communities and huge accumulation of traditional knowledge vested with the traditional ayurvedic physician families make them a serious sector to be considered in the health system framework of Kerala. But the Kerala state so far does not have any policy imperatives to include these physician families into the ongoing mainstreaming of ayurvedic systems in state healthcare frameworks. But the national consideration over unregulated informal physicians decides the fate of many of these traditional knowledge groups. This might be based on to what could be considered legitimate and illegitimate medical knowledge and practice and how far it is mapped into the local social landscapes. The blurring boundaries of practice of various systems like Ayurveda, Siddha and Homeopathy also becomes a cause of concern. Hence on the one hand, the informal economy is presented as essentially unregulated; the informal providers are portrayed as unaccountable economic actors prone to self -interested behaviour. On the other hand, they are frequently recognised as locally situated social actors and frequently shown to be located in fiercely competitive market places where their everyday dispensing practices are driven by consumer demand. The nature of small scale, localised medical or healthcare business in a highly Page | 51

competitive market place means that individual providers constantly seek to build and maintain good relationships with their clientele by offering goods and services that meet local expectations of care or value for money. From the point of view of market, it is difficult to talk about the prices charged in the informal sector and the profits being made. Sales policy is capricious and can vary from one physician to another. Some prices are lower than those in the organised sector, while some are higher. It should be noted, however, in the informal sector much smaller amounts are sold usually, and thus the consumer only spends a smaller amount of money in each transaction. The availability and attainability, mostly made according to the demand, personal relationships with the physicians are major reasons of increasing popularity of informal ayurvedic sector in the rural areas. One important reason of higher demand for traditional physicians is the outcome contingent contracts consultancy they offer. In many of the events of consultation of the patient to a doctor, the doctor is paid according to whether the ailment can be cured or not and which actually keeps the physician to have a close contact with the patient to follow the patients effort on the dietary regimes, exercises, treatment regimes etc. A treatment event will be finished when the patient is fully or partially back to health with the treatment and many times the payment is made after that. This could be an outcome of the physician-patient relation in the informal sector, which is mostly not applicable in the formal sector. The availability of medicines and its application does not have a fixed criterion according to the disease, but most of the time depends on the body constitution and the intensity of the ailments. These factors help the traditional physicians to complement in many parts of the state to have a complementary position with the formal sector. Yet very few contemporary public health interventions targeting the problems posed by informal providers of medicine take into account the specific effects of capitalist marketing and strategies of supply as drug producers direct their products into the market place. The existence of traditional physicians informs that the demands for their customers determine their sales practices and they struggle to retain the patronage of their clients in the face of stiff competition and do so by meeting the demands and expectations of customers for a particular kind of product, services and treatments. Many a times they compete against the profitability and consultative practices of the formal organised sector with a sound moral economy and higher applicability of custodianship and social ethics. This is very important to win the demand of rural households and subsequently a regional demand supply interactions emerge largely succumbs to a one-to-one relation between the patient and the physician and hence a continued demand, assuring the existence and a niche market. So this informal traditional sector works as new institutional arrangement such as the spread of reputation based trust mechanism, which has overtime gained the status of socially legitimised regulatory systems. The demand is sustained through the reputation built through concrete personal relations and networks are the key to trust. The repetition of contracts and the quality of care emerges as a bonding factor within the social network. The sector works as an inherent corrective mechanism to the government failure about which we mentioned earlier. In addition, in many countries like India, the weaknesses in the public sector management and governance contributed to the growth of informal markets and growth of market relations in the unorganised sectors. This forced many states to have strong regulative mechanisms over the traditional medicines. 6.3 Social Inclusion through Livelihood: A Revisit to the Jeevani Case The celebrated Kani benefit sharing model is one of the examples in Kerala shows how an indigenious medical system can promote inclusive development, when it is commercialized in an efficient way, where prior informed consent is respected and effective information is circulated. This model also shows us that institutional co-ordination is very necessary to sustain the inclusiveness (Madhavan 2011). The case of the Kani access and benefit sharing (ABS) model begins in April 1987, Page | 52

when a group of scientists from the All India Coordinated Research Project on Ethnobiology (AICRPE) in the forests of the Agasthyar hills in southern India. A team led by the Chief Coordinator of All India Coordinated Research Project on Ethnobiology (AICRPE), Dr P. Pushpangadan, arrived in the forests in December, 1987. Within the first few days, the scientists realised that the Kanis who accompanied the team as guides, did not feel fatigued as the scientists. On further inquiry the scientists found that the fruits the tribal group members were chewing had imparted this vitality and rejuvenation. After much persuasion the members of the Kani tribe agreed to share details about the plant with the scientists. Botanical identification of this plant was not clear initially. So it was tentatively identified as Trichopus zeylanicus with the help of local botanists. According to one of the TBGRI scientists, later it was send to Kew gardens (London) and was identified as Trichopus zeylanicus subsp. travancoricus. The anti-fatigue knowledge of this plant was first reported by Kani tribal people. A formulation was developed based on this plant. Apart from the pharmacological and phyto-chemical studies, the plant was also studied through the concepts of Ayurvedic pharmacology (Dravyaguna sastra). Three more plants widely known to Ayurveda having immuno modulating and bioavailability enhancing activities were included in the final formulation. Toxicological screening and open clinical trials were conducted with this formulation. According to TBGRI, all the experiments were done adhering to WHO guidelines for traditional medicines. This formulation was named Jeevani - The life giver. Apart from this formulation, an anti-diabetic drug and a sports medicine, Vaji (powerful like horse) were also developed from Arogyapacha. It took almost 7 years for developing a drug. A key patent covering the process of making Jeevani was filed in India. Since this was applied for in 1996, a time when India did not have pharma product patents. The process patent was valid only for 7 years from the date of application (under the Old Act) and has already expired. There were a few more patents filed which covered the properties of Arogyapacha (sports medicine, diabetes and even as an anti-cancer agent, in combination with another herb). There are five patents which emanated from the research work at RRL, Jammu and the TBGRI. The first patent was awarded to the RRL based research team in 1994 (File No: 88/Del/1994) on the process for isolation of glycolipid in the Arogyappacha plant. After the research moved to TBGRI, four patents were applied for. Among them one was on the process for jeevani which we mentioned earlier. This was received in 1996 (File No: 959/MAS/1996). The team also received a patent on an anti-diabetic herbal drug developed at the TBGRI in 1996 (File No: 957/MAS/1996). Similarly, a herbal sports medicine was developed called Vaji for which a patent was received (File No: 958/ MAS/1996). The TBGRI also received a patent for herbal medicinal compositions for cancer treatment from Janakia arayalpathra root and Trichopus zeylanicus leaf (Patent No. 193609). Table :23 The Monetary compensation: First and Second ABS Agreements between Stakeholders
First Agreement Parties were TBGRI and the AVP Entered into force on November 10, 1996 Valid for a period of 7 Years License fee of Rs. 10,000,00 ($ 25000) Royalty to be paid at 2 % for 10 years Second Agreement Proposed Parties included Kanis, the TBGRI and Oushadhi Yet to be implemented Would be valid for a period of 7 Years License Fee 20,000,00 ($ 50000) Royalty to be paid at 4 % for 10 years

The scientists were ready to forgo their share of benefits for the Kani tribal groups. But how to transfer the money was the question. To transfer the monetary benefits, they have formed a Trust with the available members initially, and later inclusion of most of the members account to 1000. The benefit-sharing scheme began prior to the establishment of Kerala Kani Samudaya Kshema Trust (KKSKS) and on September 1997, the due amount of Rs 519,000 ($ 13000) was transferred to the account of KKSKS, in which Rs 500,000 ($12500) was the 50 % of the licence fee and rest was the first instalment of royalty. The KKSKS had power to decide the ways of utilising only the interest amount accrued over the licence fee and royalty. Up to 2003, a sum of $ 2500 was obtained as royalty Page | 53

from the sale of the drug. The inadequate supply of T. zeylanicus leaves was the reason for the low amount of royalty accrued during this period. But the benefit in terms of cash and kind (vehicle for raw material transportation, trust room etc.) transferred to the kani knowledge holders were commendable. The industry-academia- community (Aryavaidya Pharmacy Coimbatore-Tropical Botanical Garden and Research Institute (TBGRI)-Kani Tribe) link has produced this world known benefit sharing mechanism. The major institutional stakeholders are well co-ordinated here to produce a win-win situation in the sector. At the same time, this model also cautions the need for a complete contract taking into consideration of government agencies. The model faced a serious threat of availability of plants for scaling up production, which even led to a standstill in the production. The ex-situ cultivation is failed due to the endemic and intrinsic character of the plant. The cultivation was banned by the state forest department due to the over exploitation. It has shown that a well- defined the property right and an institutional co-ordination at every level is important in any development contract. The Kani case provided an important policy lesson for the TBGRI regarding the involvement of other concerned agencies in the Agreement. The first ABS Agreement was only concluded between the TBGRI and the AVP. At the time of the second agreement (renewal) the TBGRI established a business management committee on which the Kani Trust was represented. This is an example to understand how the different stakeholders have worked together to produce an ideal situation, how the innovation capacities have utilized to bring livelihood benefit to the communities, who are the owner of this knowledge system. Here, we see how market was used an efficient institutional facilitator in production relations of indigenous medicine. The possibility of indigenous medicine to act as a constant push for not only better health outcome within community settings, but these innovations are efficient in providing with livelihood opportunities. Here the indigenous medical model is inclusive in the sense that the knowledge community became the major beneficiary of this entrepreneurial outcome. 7. Conclusion and Policy Directions

In a context of growing concern on inequality associated with economic growth driven by greater access to science technology and innovation, the RISSI project aimed at locating the factors and forces that give rise to varied space of exclusion by analyzing local innovation and production system. Against this broad approach, the present study has undertaken an analysis of the local system of innovation and production in Keralas Ayurvedic medicine. Kerala, while known for its unique development experience marked by higher levels of human development, of late along with better than national average performance in terms of traditional indicators like GDP growth, has been showing signs of growing inequality as a manifestation of the existence of varied spaces of exclusion. The selection of Ayurveda for detailed analysis of the local system of innovation and production is justified by the fact that Kerala has profound claims of tradition, practice and institutional built up in the sphere of Ayurveda. Historically Ayurveda has been a source of inclusive health care system contributing significantly to the better health outcomes observed in Kerala. For field level investigation, we have selected fifty ayurvedic firms in the Thrissur district, which has the maximum presence of traditional physicians, largest concentration of ayurvedic medicine manufacturing companies and high concentration of medicinal plant market. To the extent that the local system of innovation and production is governed to a great extent by the institutional arrangements at national and international level, we have also explored the changing institutional architecture at the global and national level. Such an enquiry has enabled us to highlight the way in which sector has been subjected to varied exclusionary practices. In a sense, while the sector in the early phase of development has been subjected to active exclusion, today it appears to be in a phase of illusive inclusion.

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The Local innovation and production system in Keralas Ayurveda is under transition. While Keralas Ayurveda is known for its therapeutic contributions especially for certain widely prevalent diseases like rheumatism, arthritis, diabetic and others, the current focus is moving towards the rejuvenative and cosmetic concerns. In a sense, the transition is towards tourism oriented development of Ayurveda, where in state policies have played no less significant role. It is necessary that Ayurveda may give more attention to the preventive side of non-communicable diseases. Kerala being one of the societies, soon going to have around 20% constitute aged population, Ayurveda can also look at the possibilities of geriatric care. Driven by state policies and profit making opportunities increasing number of large firms, both foreign and local, is present in Kerala. The financing pattern of development and the new policy orientation are indicative of the exclusion therapeutic practices with overriding importance to heath tourism. Such a transformation seems to have had its effects on the nature of demand for the ayurvedic health personnel as well as the very existence of time tested therapeutic practices and traditional physicians. While there is a growing demand for therapists from the health tourism sector, the ayurvedic doctors are the one among the lowest paid professionals. Documentation of knowledge could be the first step towards research. In the case of rheumatoid arthritis, chikungunya Ayurveda have effective solutions. The success stories in these cases should be documented. Documentation is necessary also in the case of traditional knowledges in nethra chikitsa (ophthalmology), visha chikitsa (poison therapy), practice in birth attendance (delivery systems) etc. The sustenance of ayurvedic medical system depends to a great extent on the access to the quality raw materials. Despite Kerala being one of largest biodiversity hotspots, the availability of medicinal plants has been severely threatened by the large scale deforestation and irrational exploitation of resources. Though steps have been taken in promoting medicinal plant cultivation, raw material bottle necks still persists. As of now, there are two major types of raw material supply chains those based on co-operative systems and the one driven by private traders. Among them, the latter being the dominant, wherein, the collection is primarily undertaken by the tribal communities. In the absence of appropriate institutional architecture, while the less privileged tribal communities get exploited in the hands of middlemen, the ayurvedic firms very often failed to get quality raw materials, which in turn affect their operations. The study tends to suggest that viewed from the perspective of innovation system, LIPS in Ayurveda is at a rudimentary stage of its evolution. This is evident from the absence of an appropriate institutional architecture along with very limited linkage between different actors and more importantly absence of interactive learning that characterizes a vibrant innovation system. We found that in case of small manufacturing firms, sustained mostly by their inherited knowledge, are hardly involved in any form of interactive learning either with the competing firms or with other institutions. However, in case of larger companies, a trend towards interactive learning seems to have set in, but the existing institutional arrangements are hardly sufficient to take such interactions to higher level of interactive learning and competence building process. A restructuring of the curriculum and initiation of co-ordinated research in Ayurveda should be immediately called for. The first and foremost move should be the standardization of curriculum and it should be updated into a common syllabus in north and south and also many of the texts in practice need to be reviewed to look at the possibility to be incorporated as part of the curriculum. A committee needs to be appointed immediately to look into the matter. To quick start research on selected basic formulations (not only validation research), an Ayurvedic research promotion council need to be established to coordinate the efforts at the state level and also to link with the stranded private industrial research. This should be based on a continuous monitoring/evaluation and support system. Even in the state of Kerala, the political economy of choice of systems for different healthcare programmes need to be noted. A strong lobbying from the modern medicine, ridicules the role of Ayurveda in many health policy aspects. The recent draft of Kerala health policy (2013) hardly suggests any road map for development and use of Ayurveda in the mainstream healthcare. The role Page | 55

of Ayurveda to be defined and institutional financial infrastructure should be immediately made accessible. In the year 2012-13, the plan allocation for Ayurveda in Kerala was only Rs. 176 million, in which half was given to Oushadhi and in the rest; more than half of the amount was disbursed as salaries and pensions. With largely handicapped financial assistance, the sector would be in a vicious circle of underdevelopment. None of the insurance schemes other than the government employees, incorporated or covered Ayurvedic medical system. Schemes like Karunya benevolent fund36 does not include Ayurveda. A recent intervention at the instance of large ayurvedic companies and the state is the formation of the CARe Keralam, which intends to bring together the different stakeholders in traditional medicine and address their varied problems like raw material access, standardization, marketing and R&D in Ayurveda. Nonetheless, the extent of support given by the state and the scale at which it operates is hardly sufficient given the multiplicity of problems confronted by the LIPS. It is discerned from the discussion from the small firms that the current organizational structure of CARe Keralam creates space of exclusion for the small ones, as the decision making, as of now, is controlled by the companies having sales turnover beyond a threshold level. The study also noted certain spaces of inclusion as it is manifested in the case of traditional physicians and the Jeevani case. 8. References Aylin, Paul, Shivani Tanna, Alex Bottle and Brian Jarman (2004), Dr Fosters case notes: How often are adverse events reported in English hospital statistics? British Medical Journal, 329: 369 AYUSH (2008) Annual Report, Ministry of Health and Family Welfare, New Delhi Banerjee, M (2004) Local knowledge for World market: Globalising Ayurveda Economic and Political Weekly, Vol.39 No.1 Banerjee, M (2004) Local knowledge for World market: Globalising Ayurveda Economic and Political Weekly, Vol.39 No.1 Banerjee, M (2009) Power, Knowledge, Medicine: Ayurvedic Pharmaceuticals at Home and in the World, Orient Blackswan, Hyderabad Bode, M (2008) Taking Traditional Knowledge to the Market the Modern Image of the Ayurvedic and Unani Industry 1980-2000, Orient Longman Private Limited, Hyderabad Carlsson, B. and R. Stankiewiez (1995) On the Nature, Function and Composition of Technological Systems in B. Carlsson (ed.), Technological Systems and Economic Performance, The case of Factory Automation (Boston: Dordrecht: London; Kluwer academic Publishers). Chandrakanth, M.G, Suneetha.M.S (2001) Demand and valuation of Medicinal plants in the Western Ghats of Kerala: a Resource Economics study, Department of Agricultural Economics, University of Agricultural sciences, Bangalore Coase, Ronald H. (1937) The Nature of the Firm, Economica (N.S.) 4: 386-405 (November) Cozzens, S and Kaplinski, R (2010), Innovation Povery and Inequlaity: Cause, Coincidence or Coevolution in B A Lundvall K J Joseph, Cristina Chaminade and Jan Van (eds) Handbook of Innovation Systems and Developing Countries, Edward Elgar Cheltenham Ekboir, J. & Parellada, G. (2002). Public-Private interactions and technology policy in innovation processes for zero tillage in Argentina; In D. Byerlee & R. Echeverra, eds. Agricultural Research Policy in an Era of Privatization. London: CABI. Freeman, C. (1987) Technology Policy and Economic Performance: Lessons from Japan (London; Pinter).

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Karunya Benevolent Fund provides financial assistance to under-privileged people suffering from acute ailments like Cancer, Haemophilia, Kidney and Heart diseases and for Palliative Care. The amount for the health scheme is raised through lottery. This welfare measure will be helpful to those who suffer from ailments, the cost of treatment of which are proved to be unbearable to lower and even middle strata of society.

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Appendix
Table: A1 State wise Infrastructure in Ayurveda: 2007
States/UTs Andhra Pradesh Arunachal Pradesh Assam Bihar Chhattisgarh Delhi Goa Gujarat Haryana Himachal.Pradesh Jammu & Kashmir Jharkhand Karnataka Kerala Madhya Pradesh Maharashtra Orissa Punjab Rajasthan Sikkim Tamil Nadu Tripura Uttar Pradesh Uttaranchal West Bengal Total Hospitals 9 1 1 11 8 10 1 48 8 24 2 1 122 124 34 51 8 15 100 1 7 1 1771 7 4 2398 Beds 584 10 100 1356 365 643 40 1855 835 420 155 160 8147 3987 1626 7673 488 1214 914 10 580 10 10288 319 409 42963 Dispensaries 620 2 380 311 634 148 11 501 472 1105 273 122 589 740 1427 490 624 507 3496 1 32 55 340 467 295 13914 Reg Practitioners 15231 0 442 132981 794 3088 290 20985 18726 7236 1952 0 20352 15068 47602 63030 4448 18424 23861 0 3612 0 51240 1065 3234 453661 UG Colleges No 5 0 1 11 3 1 1 11 6 1 1 1 53 14 17 62 6 12 6 0 6 0 15 4 2 240 Capacity 200 0 50 330 170 40 40 485 310 50 60 40 2470 680 715 3305 190 560 300 0 210 0 650 210 110 11225 PG Colleges No 2 0 1 1 1 1 0 2 0 1 0 0 16 4 3 22 1 1 2 0 0 0 2 1 1 62 Capacity 31 0 12 8 17 6 0 45 0 24 0 0 218 88 18 362 15 8 70 0 0 0 39 24 6 991 318 52 195 65 47 9 514 370 81 13 148 1121 625 660 195 149 265 1 269 2062 77 324 7621 Pharmacies

Source: Ministry of Health and Family welfare, GoI Table: 2A Traditional medicine infrastructure in India: A Glance in 2007
Systems Ayurveda Homeopathy Unani Siddha Naturopathy Yoga Sowa-Rigpa Total Registered Practitioner 453661 217860 46558 6601 888 Na NA 725568 Firms 7900 685 322 290 Na Na NA 9197 UG Colleges (admission) 240 (11225) 183(13425) 39(1750) 7(350) 10(385) Na Na 479(27135) PG colleges (admission) 62(991) 33(1084) 7(67) 3(110) NIL Na Nil 105(2252) Hospitals 2402 234 262 277 171 12 2 3360 Beds 43751 10933 4671 2596 5677 495 32 68155 Dispensaries 13913 5910 1019 488 238 70 131 21769

Source: AYUSH department, GoI (2007)


Table: 3A AYUSH Related Trade in India (in Crores)37

37

This includes 1) all Plant and plant parts for trade include seeds and fruits used for perfumery or pharmacy or similar purposes fresh or dried, cut or crushed or powdered, 2) Ayurvedic, Unani, Siddha, Homoeopathic or Bio-chemical systems medicaments not put up for retail and 3) Ayurvedic, Unani, Siddha, Homoeopathic or

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Year 1995-96 1999-2000 2004-05 2007-08

Export 627.48 1324.73 1657.69 2275.64

Import 46.50 165.69 189.26 268.10

NVA 580.98 1159.54 1468.42 2007.54

Net Variation 93% 87% 89% 88%

Source: Directorate General of Commercial Intelligence and Statistics (DGCI&S)

Bio-chemic systems medicaments put up for retail sale and 4) vegetable extracts and other related modified products.

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