Historically, all medicinal preparations were derived from plants, whether in the simple form of plant parts or in the more complex form of crude extracts, mixtures, etc. Today, a substantial number of drugs are developed from plants. The majority of these involve the isolation of the active ingredient (chemical compound) found in a particular medicinal plant and its subsequent modification. A semi-synthetic analogue of such a compound could typically be a useful pharmaceutical product. .
Large proportions of such drugs have been discovered with the aid of ethno- botanical knowledge of the traditional uses of the plant. The pharmaceutical company that makes such a drug applies for some form of intellectual property protection, the most favored being the patent. If granted, the patent gives the company the right to prevent anyone else from manufacturing or selling the product. The company gets, in effect, a commercial monopoly. In addition, the source of the ethno-botanical knowledge is generally not mentioned. Thus both the credit for the product and the financial reward generally go to the company. The country from which the knowledge is obtained is simply treated as a source of raw material, whether of knowledge or of a biological resource. This has led some activists to coin the term "bio-piracy" to refer to a commercially useful product that is derived from traditional knowledge without any return to the knowledge holder. Bio-piracy is a major issue in developing countries today.
The rich knowledge base of countries like India in medicinal plants and health care has led to a keen interest by pharmaceutical companies to use this knowledge as a resource for research and development programs in the hope of discovering and producing new drugs. In such a situation, the country is faced with a dilemma. On the one hand, there is often a wish to share biological resources and knowledge, especially in relation to medicinal plants, although different communities may have different conditions for imparting such knowledge.