China has the world’s second largest drug market and it’s growing fast. Estimates are that by 2020 prescription pharmaceutical sales will top $300 billion a year, second only to the US. Drug sales are regulated by the Chinese FDA, which on the surface, has been modeled after the US FDA.

In fact, though, China’s drug industry and regulation is like nowhere else in the world. The reason: one third of all drug sales in China are of approved traditional Chinese medicines (“TCM”) made from dried leaves, roots, stems, fungi, flowers, and seeds, along with a variety of animal, insect and lizard skins and secretions.

The same Chinese FDA regulatory system that tests and approves Western medicines also approves TCM ingredients and potions. China’s healthcare industry thus stands with one foot planted in 21st century science and one foot in its opposite, a world of age-old popular folklore and folk cures.

Chinese medicine has been around in China for at least 2,000 years. Western drugs and teaching hospitals arrived about a century ago. The two regard one another with almost mutual incomprehension. Pharmaceutical executives will tell you that TCM has utterly failed to prove its efficacy in clinical tests, while many of China’s 400,000 traditional Chinese doctors and practitioners consider most “Xi Yao” (??), or Western medicine, to be disruptive or toxic to the natural yin-yang balance. At most larger general hospitals in China, one can find doctors separately practicing each type of medicine. On the ground floor, two separate pharmacies dispense prescriptions.

Chinese navigate between the two worlds. When feeling unwell, they will self-diagnose and decide to seek either Western drugs or TCM. Visiting the doctor is one China’s more popular indoor activities. Each year, Chinese make over four billion visits to a clinic, with about one-fifth of those being to see a TCM practitioner.  No surprise, TCM is more popular among older folks in China.