The Chinese are renowned for their knowledge of botanical medicine and many swear by its healing properties. But this vast bank of information has never been translated into treatments in the West, until recently.

Now, Phynova, based in Long Hanborough, is developing a commercial, 21st century approach to this alternative medicine.

In Western medicine, about 120 prescription drugs contain active ingredients derived from plants, but only about 190 plant species are used medically out of the 250,000 existing on earth. Chinese botanical medicine uses several thousand plants in its remedies as part of traditional Chinese medicine.

The drug regulatory authorities in the United States and Europe are taking a far more enlightened approach and allowing marketed botanical products with no known safety issues to be developed at a rapid pace.

Dr Tony Mills, director of business development for Phynova, said: "The Chinese have a long history of plant-based medicine dating back thousands of years. We know the treatments are safe, or they wouldn't be using them, but much of the knowledge they have of efficacy and safety is handed down, or may appear anecdotal.

"To meet Western standards, we have to conduct all the tests and trials that are demanded for any drug before approval is given."

The use of natural medicine, although growing in popularity in the West, is still a relatively new concept and is seen as exclusive from conventional synthetic therapies. In China, conventional and natural treatments are run side by side and are complementary.

One key element to Phynova's strategy has been to take a 45 per cent stake in Botanic Century of Beijing. This gives a vital foothold in China and demonstrates to the investors the company's commitment to its goals.

Botanic Century has state-of-the-art laboratories and conducts drug formulation and testing to Western standards. Its scientists are young, entrepreneurial and highly-educated.

Phynova's approach is to create drugs by design to fulfil an identified, unmet need and and Chinese staff in the UK and in Beijing assist with that design, tapping their wide knowledge of traditional Chinese medicine and its pharmacopoeia.

Then they will take raw plant material in its direct form, normally a dried material, and extract the active fractions. The distilled extract may be further purified and that purity monitored carefully.

Drug manufacture is then carried out to exacting good manufacturing practice protocols in high-tech plants.

Dr Mills said: "The medicine you'll take will look and taste no different to any other drug. Our key drug is PYN17. It's a treatment for chronic Hepatitis C, which is a serious problem worldwide, including China. It's a virus that affects the liver and is usually caught from some kind of blood problem, such as a contaminated transfusion, or an infected needle.

"Conventional drugs are monovalent and attack only the virus. PYN 17 is multivalent and addresses other problems such as inflammation and fibrosis.

"What we're doing is to take a remedy that the Chinese knew only as something to combat a liver disease, rather than as a drug specifically for Hepatitis C.

Now they design the drug actually for Hepatitis C, a complete change of approach.

"The idea is for PYN 17 to be used on its own or alongside conventional drugs, so we're taking the Chinese-style complementary approach as well.

"Our goal is to have a high-value drug that we can license to a big pharma company to take on to Phase III trials and then to market. That would give us significant milestone payments and ongoing royalties."

Phynova is developing other drugs, including an anti-viral, a cancer drug and one to combat bowel blockage following abdominal surgery. Some of these drugs are Phynova's own, some are in collaboration with Chinese institutes.

China's tiger economy has wrought changes to its pharmaceutical industry.

Acknowledging that its reputation for ignoring patents, counterfeiting and a poor regulatory system would prevent it competing in a global market, China is cleaning up its act.

The reward is the presence and substantial investment of big pharmaceutical firms such as Novartis and Astra Zeneca, which are there to capitalise on the skills base and the projected leapfrog growth of China from the 15th to the ninth largest pharmaceutical market in the world by 2010. Once, big pharma paid only lip service to Chinese plant-based medicine; now they are keenly interested, anxious to bolster thinning drug pipelines. Phynova was founded in 2002 by chief executive Dr Robert Miller, who has more than 20 years' experience with Chinese botanical medicine.

Starting in the Oxford Science Park, the Phynova story is a familiar tale of little money, research being conducted in exchange for shares, and struggle for investment.

Angel investors put up the necessary funding and are still shareholders. In 2006, Phynova floated on the Alternative Investment Market. Additional funding has been raised and the firm is aiming to become profitable by 2009. Its already substantial achievements have cost only £6m, a mere fraction of what a large company would have spent.

Dr Mills describes Phynova as semi-virtual'. The company employs a growing number of staff in the UK, including two resident Chinese scientists, but outsources any laboratory work to a network of academic laboratories.

He added: "Our aim is to have a mix of deals, some high-value ones like PYN 17, and some where we show just proof of principle, then sell or license out.

"The large deals will bring us into profitability and finance new research and perhaps one of the big boys will invest in us to have first call on our discoveries."

This year, Phynova was nominated for the UK Trade and Investment's prestigious UK Innovation in Drug Discovery and Development Award, at the UK Bioentrepreneur of the Year Awards, finishing in the top seven.

The alternative just became mainstream.

n Contact: Phynova, 01993 880700, email tmills@phynova.com