HISTORICAL DEVELOPMENTS

The absolute origins of the trade in crude drugs are lost in the mists of time. One supposes the first contract for the collection and supply of a drug with a third party, whether in exchange for specie or not, came about when physicians or pharmacists found themselves too busy to do this relatively menial task themselves. The trust that physicians had in the collectors must have been remarkable, as unadulterated drug was essential, if only to avoid poisoning the patient! It is probable that the first commercial dealers in botanical drugs were apprentices or freed slaves, who preferred to take on that role rather than becoming pharmacists themselves: we shall never know for certain. References from antiquity to the drug trade are rare, although some mural inscriptions from Ancient Egypt, dating back to 3000 BC, evidence knowledge of the effect of medicinal plants and, in the British Museum, clay tablets from the library of King Ashurbanipal (668–626 BC) of Assyria suggest that, around 2500 BC, the Sumerians had a form of Herbal. By 660 BC, around 250 drugs were recognized by the Assyrians themselves, some of which were actively cultivated. Hippocrates (467 BC) was well acquainted with a variety of drugs (although it is improbable that any of the works attributed to him are actually ‘of his hand’). Theophrastus, like Alexander the Great, was a pupil of Aristotle, and later became chief of the Aristotelian school. He listed some 500 plants known to him, and distinguished cinnamon from cassia (an art that, apparently, is being lost in this day and age, at least by some manufacturers of foodstuffs!). It is instructive to note that the use of the Mercury’s or Hermes’ winged staff with entwined snakes or caduceus, nowadays a widely understood symbol for medicine, was originally a symbol for commerce.¹ The whole economy of the ancient city state of Kyrene (Cyrene, near Shahhat in present-day Libya) was predicated on the supply of silphium, a now (probably) extinct species of giant fennel.² The importance of this plant was so great that it was habitually depicted on the coins of this city, both in the form of the plant itself and also as its heart-shaped seeds. It is said by some that the last specimen of a stalk of this plant was presented to the Emperor Nero, who promptly ate it. Mohammed was said to be a spice trader, and at that time spice traders were invariably concerned with crude drugs, particularly as many products were used for both culinary and medicinal purposes, as they are today. The adventures of all of the major explorers, such as Marco Polo,Columbus, Henry the Navigator and the like were undertaken partly with a view to the sourcing of botanical crude drugs. The establishment of the great National Trading Companies, for instance The Honourable East India Company, The Netherlands United East India Company and the Danish Asiatic Company, were undertaken with a similar view.

Prior to modern times, there was no real distinction between the drug and spice trades, and thus during London’s development as an entrepôt, the Guild of Pepperers of London (later the Grocers’ Company) was charged with the overseeing of both trades. The importance of the trade is evidenced on the Grocers’ Company coat of arms, which features nine cloves (Flores Eugenia Caryophilia). The foundation of the East India Company in 1600 placed a near monopoly in the import of ‘East India produce’ into England, and it was from this that the modern general produce trade emerged. Initially in ad hoc form, and later by way of the famous ‘coffee houses’, trade in drugs, even until the Second World War, was conducted in the main by auction. The problem was that the shippers at origin had no direct representation in the consuming countries, and thus had to engage the services of a broker. The usual format was for the goods, whether sent ‘on consignment’ (i.e. sent speculatively to London in the reasonable hope of a sale) or ‘ex stock’ (being the property of an importing merchant), to be put up for show in the warehouse prior to auction, or for samples to be drawn and placed on view in the brokers’ offices. The various broking firms then attempted to sell the merchandise entrusted to them by public auction (the order in which the various brokers did so being decided by lot). Towards the end of the popularity of auctions in London, it was common for no, or almost no, goods actually to be sold at the auction; instead the auctioneer would invite a customer to see him after the auction and would subsequently negotiate a mutually acceptable price between the shipper and the potential customer.

During the Second World War, when lines of communication with the various origins were disrupted, a certain amount of regulation was imposed by the government. This saw an end both to the auctions and, due to licensing controls, to the supply of goods to London on consignment. The trade then took a new form: samples were displayed in brokers’ offices for all to see. The traders, brokers and buyers met in the Corn Exchange and deals were done by word of mouth (and sometimes in covert whispers) in the best traditions of the trade. By the 1960s, with improving communications and increased volumes, this method became impractical and the trade finally took to conducting most of its business by telecommunications.

Obviously, early on, when the trade between the dealers and brokers was small and almost self-regulating, little regulatory interference was required. However, the increasing numbers of firms involved in the trade required a system of settling disputes in an inexpensive and swift manner. Thus, in 1876 the General Produce Brokers’ Association (GPBA) of London was formed. This body performed a number of functions: it presented a united voice to those outside the trade, it regulated the trade by means of a system of arbitration and appeal and it provided a forum in which to voice concerns of interest to members in general. The GPBA thrived initially, but suffered as time went on and various trade groups formed their own Associations, leaving the GPBA with only the smaller parts of London Commodity Trading as its remit. More recently, broking as part of the London trade became less relevant and the name was accordingly changed in 1981 to the ‘General Produce Association of London’. Finally, in 1985, the name was again changed, this time to the ‘International General Produce Association’, to reflect the current true nature of the trade. Forms of contract are issued by the Association for the use of members and others (it is probably true to say that the IGPA contracts, terms and conditions are those most generally used world-wide), and there is a thriving, and relatively swift and inexpensive, system of arbitration and appeal.

CURRENT ASPECTS

London’s pre-eminence as the drug-trading centre has diminished substantially over the years. Although still undeniably the largest market for the trade in essential oils and aromatic chemicals (a trade misnomer frequently used to denote flavour and perfumery chemicals and isolates such as menthol, camphor, piperonal, vanillin and the like, be they natural or synthetic), its role concerning crude herbs and botanicals (such as rhubarb, ipecacuanha and boldo, for instance) has decreased to Hamburg’s benefit, and the trading of spices has moved substantially to Rotterdam. Nonetheless, when disputes need to be settled, most eyes still invariably turn to London to obtain a ‘fair deal’.

The North American trade is, as it always has been, substantially different. Unlike most of Western Europe, Canada and the United States of America, as well as being large consumers of crude drugs, are also large producers. Many products regularly traded in the European drug markets emanate almost exclusively from North America. A number of American firms hold stocks of drugs (many of native origin, but not exclusively so) speculatively, being confident that there will be demand for the product held on their books in the near term. Granted, there is a trend towards the European market usages of trade, but nonetheless, consumers in North America should be thankful that, because of this pattern of business, it is still usually possible to obtain materials for immediate delivery from a trader’s stock, rather than waiting for shipment from origin. There has been a certain amount of consolidation in the trade in the USA and, consequently, the North American market is edging, however reluctantly, towards the European model.

Consuming patterns in Europe have also changed. There has been substantial consolidation of companies concerned with crude and processed botanical drugs, particularly but not exclusively within Germany, to the extent that nowadays one large conglomerate, while not controlling the business, has great influence. A number of recent closures and rationalization have caused concern, particularly on the part of consuming companies. What effect all of this will eventually have on the world markets for crude drugs has yet to be seen, but the current mood of the market could well be described as ‘melancholic’.

Trade nowadays has changed substantially. In relatively recent times, many drugs were imported speculatively with a view to selling them either ‘afloat’ (i.e. once confirmed the goods were aboard ship) or from ‘the spot’ (i.e. with the goods in store in a European warehouse, available for immediate delivery). With the changing requirements of buyers, be it either for the quality of the goods required or with changing trends in the particular drugs used, this has become less common, and nowadays it is more likely that a customer will request of a trader an offer for a specific quantity of crude drug for shipment from origin and delivery after safe arrival of shipment, be that in one delivery or in parts, either against a sample or (more rarely) a mutually agreed level of quality. Whereas the customer is, of course, at liberty to approach the origin direct for supplies, the advantages of purchasing from a trader are those of transference of risk. If the quality or condition of goods is such that on arrival the goods are either of lower quality than that contracted or damaged in some way, or if delivery is delayed beyond the agreed period, recourse is to the local trader, from whom one is far more likely to obtain settlement than the origin, where satisfaction of a claim might be far more difficult or, in some cases, impossible to perform, due for instance to local currency regulations. Also, if the trader concerned supplies the same material to various buyers it can frequently be possible to rearrange the allocations on his book to provide the buyer with an ‘emergency’ delivery should production demands require this. In return for this service, the trader asks a small premium over the price paid to origin and requires absolute adherence to the contract terms, such as delivery dates and terms of payment, for it is on this basis that the price has been calculated and thus, by inference, the margin. Margins in the crude drug trade are currently probably as small as they have ever been. For the customer to delay or cancel an order placed, or to delay payment once goods are delivered, is unacceptable, as would be the trader defaulting, delivering goods late or of poor quality. A fallacy still holds in the consumer industries that ‘rapacious’ traders make vast sums from their livelihood. This might once have been the case, centuries ago, but almost invariably nowadays margins are confined to low, single-figure percentage levels, representing a small fraction of those that the customer usually makes. This point cannot be overemphasized: contracts (which, after all are based on the concept of ‘equity’ or fairness) work both ways and, in London at least, the old adage Verba mea pacta still holds with the traders; it must also do so with the customer. Is it reasonable that a trader who has purchased a specific product for a customer, for which that trader has no other potential outlet, should without recourse be required not to deliver goods because of an error on the part of the customer, or a whim of the customer’s customer?

The question of quality from the trader’s point of view is improving. Strong competition at origin has seen a general increase in quality across the board. Many goods are still traded on the old descriptions such as the ‘Common Round’ or ‘Flat’ grades of Chinese rhubarb or ‘Mossel Bay’ or ‘Port Elizabeth’ aloes from South Africa. One can always be sure that ‘Mossel Bay’ aloes will pass the requirements of the British Pharmacopoeia, whereas ‘Port Elizabeth’ will rarely, if ever, do so. Nonetheless, more and more trading is being undertaken on the basis of pre-shipment samples, and shippers at origin feel happier to do so now that the world-wide networks of courier services are in place, as a sample of the specific lot in question can be on the desk of the trader two or three days after it was dispatched from origin, rather than the two or three weeks it used to take, or the two or three months before the advent of airmail. Some products are still traded on the basis of out-turn analysis, there being defined a nominal content of isolate on which the price of the contract is calculated, a minimum level below which the parcel is rejectable, and an agreed pro-rata formula for adjusting the invoice value once the quality has been independently established.

From a commercial point of view, the world has changed dramatically over the past few years. The change in Eastern Europe from state capitalism (less accurately, communism) to free-market economies has also changed supply patterns from these countries. Fifteen years ago, traders had one or two source companies to contact in a country, whereas now there is a plethora of suppliers. Reliability has changed as well: formerly, contracts were sacrosanct but nowadays attitudes are a little more relaxed. Further, to increase income, commercially valuable crude drugs are being produced in countries that previously had not done so; India is an excellent case in point. This country had for many years been a large nett importer of ipecacuanha root (Cephaelis acuminata), for both internal consumption and re-export of finished alkaloids. Granted, there has been a small local cultivation of this material, but the quality, until recently, had been relatively poor. Over the past few years, however, India has been able to offer ipecacuanha of high quality and at very competitive levels. These developments all tend to reduce the price of the drugs in question. But at what point does this become deleterious to the market? The answer must be directly related to economics. Subsequent to the changes in Eastern Europe, the prices of some drugs have fallen consistently. Thus, in a place where aspirations for personal income are rising fast (not unreasonably, considering past history and current circumstances), the income from their produce is consistently falling. Perhaps due to increased competition, or conversely from factors at the point of consumption, the price falls. Frequently, the initial effect of lower prices is, in the short term, to raise the quality of the product delivered, with a view to securing the next order. However, if low prices are sustained then eventually the quality of the crop slowly falls as the producer is unable to fertilize or tend the crop to the optimum levels. Adulteration, either with admixed drug or, more subtly, with water (i.e. increasing the moisture content) sometimes takes place. Finally, the farmer or collector is presented with the decision of either continuing the cultivation of the product in the absence of profit or changing crop in favour of one that gives a return. In the worst case, supplies of a drug could well cease for lack of profit to the producer, which, when taken in the context of the price at which the finished product is retailed to the public, is almost insignificant.

It might be that the reader is taken aback by what appears to be a hard-nosed trader making a plea for a fair deal to the producer; this, however, is not the case. The writer would far rather have a steady, sustained business over an extended period than a phenomenal short trading ‘boom’ and thereafter be out of business.

Be it desirable or otherwise, there has been a move over recent years for the goods to be extracted at origin and the isolate, rather than the bulk drug, being shipped. At first glance this has many advantages for all concerned; the less technically demanding work is performed at origin, where labour and facilities are less expensive and where local regulations as regards, say, effluent are less stringent. This adds value to the goods and increased foreign exchange earnings for the country of origin. It is of advantage to the trader, as there are fewer freight, warehousing and handling costs involved and, finally, it gives the customer an (at least semi-) prepared product with which to work, thus eliminating the expensive and laborious initial extraction processes. However, this concept is a double-edged sword. One may be tempted to be a little more cursory as regards quality control of the inward product, particularly after a long run of good experience. If a parcel of material is found to be of inferior quality for whatever reason, the resulting loss tends to be the greater as concentration of the product frequently leads to the acquisition of fewer, larger parcels and (most important) deprives the consuming country, over time, of the knowledge and equipment with which to perform the complete process. In relatively peaceful times this last consideration might be irrelevant; but if lines of communication with the traditional suppliers are disrupted by war, terrorism or natural disaster, then even though it would be possible to obtain the raw material from elsewhere, this would be of little use if the know-how and/or equipment required for the complete extraction process is lost. Commercially, this is of little moment, but for the greater good it is vital not to lose the expertise that has been built up over many centuries in the consuming countries for a small cost saving. A middle road to this position has evolved in recent years. Goods are procured by the user of the finished product and shipped to an extractor in a third country that usually has low wages and lenient pollution and employment regulations, to be extracted on a ‘toll’ basis. The drawbacks are two-fold: the ‘carbon footprint’ of the goods is increased substantially and, again, the expertise of extraction is still maintained out of the country. There is of course a cost saving, but in the long term is this adequate compensation?

Another problem has arisen recently, which also gives cause for concern. It was brought to the author’s attention by a friend who is a practitioner in speech and language therapy, that atropine delivered by way of a patch (used for control of the secretion of saliva) was proving difficult to source. A few phone calls led to the conclusion that the reason why this medicine was unavailable was that it was perceived that there was insufficient profit in the manufacture of the said patches, and thus production had ceased. Half a century or more ago this would not have been regarded as serious, for the pharmacist would simply have obtained a supply of the raw material in question, performed his own extraction and concocted it into the required carrier. Now, with the majority of pharmacists at best unwilling (and at worst unable) to perform this act, the patient will have to go without.