By Venkatesh Ganapathy
Nutraceuticals is any substance that is part of food, provides medical or health benefits, including the prevention and treatment of disease. Nutraceuticals are by definition, ingredients with human health benefits beyond basic nutrition. Nutraceutical is defined as a product isolated or purified from foods and generally sold in medicinal forms not usually associated with food and demonstrated to have a physiological benefit or provide protection against chronic disease. Nutraceuticals are dietary supplements used to fill nutritional deficiencies in food and to prevent diseases. Nutraceuticals are divided into 3 segments functional foods, functional beverages and mineral supplements.
Nutraceuticals is a combination of the word – ‘nutrition’ and ‘pharmaceuticals’. The term “Nutraceuticals” was originally coined by Dr. Stephen L DeFelice, founder and chairman of the Foundation of Innovation Medicine (FIM), New Jersey. The nomenclature for Nutraceuticals varies in countries like Canada, US, EU and Japan. For instance, herbal medicines and botanicals are considered part of Nutraceuticals in US and Canada but not in Japan.
Regulation in India
Nutraceuticals remain an untapped opportunity in India thanks to the lack of standards and regulation. The draft Food Safety & Security Act is expected to be amended.
The passage of the dietary supplement health and education act of 1994 has led the definition of Nutraceuticals to be expanded to include vitamins, minerals, herbs, amino acids and dietary substance for human use as a supplement diet
The regulatory framework of Nutraceuticals in India needs attention from the relevant authorities. In India, the archaic laws are still governing the use of Nutraceuticals. There is lack of clarity in classifying functional foods and Nutraceuticals. Classifying them as drugs can pose a problem for genuine manufacturers. Food Safety and Standards Act amendment is the way out. The manufacture of Nutraceuticals has to be as per Cgmp (current good manufacturing practices) guidelines.
Like in the US, the Indian regulator has to ensure that approval of therapeutic products that can benefit patients and other citizens is faster but they should also provide assurance that those products are safe and effective. Japan is regularly making amendments in regulation so that the health claims on nutraceutical products are validated.
Two areas of health are very important in India – ‘immunity build up in children and growing adults’ and ‘boosting physical and mental strength of children’. Rising health care costs, a greying population, huge levels of disposable incomes all these are driving the market for Nutraceuticals.
As per Cygnus Business Consulting & Research, in 2008, the Nutraceuticals market in India was Rs.18.75 billion and this is growing at the CAGR of 21.23%. The Indian Nutrition market is estimated to be USD 1 billion; while the global market is growing at a CAGR of 7%, the Indian market is growing much faster at a CAGR of 18%. The latent market in India is two to four times the current market size with 148 million potential customers.
The domestic market for Nutraceuticals is around Rs.4400 crores. India’s nutritional supplement market is expected to more than double to Rs.9500 crores by 2013. Growth in Nutraceuticals products business will be fuelled mainly because of the changing lifestyle and increasing awareness about nutritional supplements.
Indian consumers have a penchant for anything that is “natural” or carries the “herbal” tag. Gullible consumers even get cheated in the process. But the manufacturers of Nutraceuticals products are trying hard to produce products that suit the Indian palate. The rural population in India is 72% and until this market is penetrated, real success may elude the Nutraceuticals industry.
The market will reap benefits for those products that can clearly provide health benefits to the consumers. Growth in herbal extracts segments is likely with green tea, herbal bread, garlic capsules, soya milk gaining popularity in the market. Probiotics, protein supplements, Omega 3 fatty acids, anti oxidants are products that can play a major role in the future growth of Nutraceuticals industry.
As far as the Indian market is concerned, Nutraceuticals need to be targeted at the bottom of the pyramid population to achieve volume growth. Direct marketing efforts may take longer to reach the consumer but are a viable means of reaching out to the consumer.
The Indian Nutraceuticals market is dominated by pharmaceuticals and FMCG companies. But the truth is that the market is largely unorganised. Jeegar Shah, proprietor of the Mumbai-based “Nutraceutical Ingredients” says that contrary to popular perception, there are many small players who are doing good business. He cites the example of one Dhanvantrai Pharmacy which did a business of Rs 20 crores in 2011 by selling colostrums capsules aimed to boost the immunity. The smaller players lag behind the large FMCG firms in advertising and publicity, but this does not take away their business success. Jeegar adds that the Indian market seems to be going the American way. Multi level marketing companies are promoting Nutraceuticals products in a big way. However, there is an increased need to penetrate the market- especially the rural one.
India – an ideal destination
India is an ideal location for manufacturing Nutraceuticals products because of availability of natural products, good quality fruits and vegetables. India has advantages like qualified human resources, world class R&D facilities and varied raw-material aspects that give our country a leading edge.
The factors that contribute to the growth are Consumer awareness, greater health consciousness, changing lifestyle diseases, ageing population, Increase in disposable income, Booming Retail growth.
The total market size in India is still very small compared to the global market. Lack of awareness and absence of regulations are some of the ills plaguing the sector. The Indian market is largely a prescription oriented market. Many pharmaceutical and Nutraceuticals companies that were trying to promote their products through the doctor are now adopting a different route, the direct route to the identified end user.
Reduction in cost of manufacturing and packaging by marketing the products as dietary supplements in powder form to keep the intrinsic value alive.
A recent study reported that 70% of patients typically consulted a medical practitioner before going in for natural therapy. The problems faced by Nutraceutical companies are:
1. Consistent quality
2. Increase in market competition
3. Increase in product cost
This has led companies to outsource products.
Unlike USA, the Indian Nutraceuticals sector is regulated by multiple laws. In the absence of a regularized system for setting up of manufacturing units for Nutraceuticals products, companies are unable to avail of subsidies in the products. Due to absence of regulatory guidelines, the Nutraceuticals are either categorized as foods or drugs. Quality and price control then becomes a major issue.
As a concept, Nutraceuticals is still in its infancy in India due to low levels of awareness and market penetration. How many people are aware about protein biscuits and how many can afford to buy them today? The manufacturers of such specialised products have increased the prices to capitalise on the high-margin-low-volume opportunity.
“The truth is that there is no data available on small companies in India” says Jeegar. He should know better as he is privy to contract manufacturing practices in the sector. He signs off by saying that, “We are doing better by reaching out to consumers directly and organising camps for people. Our internet selling via ecommerce has yielded good results”.
In pharmaceutical development process, clinical test results from animal tests and studies are required for verification of results. In case of Nutraceuticals, there is no such verification method.
Unhealthy eating habits and sedentary lifestyle have led to increase in diseases like diabetes and hyper tension. Growing awareness on the importance of nutrition and diet for long term good health have contributed to a favourable market condition for Nutraceutical industry in India.
The Indian Nutraceuticals market is a mere 0.9% of the total global market size of $ 117 billion. US, China and India are providing a strong impetus for growth. Vitamins, Minerals and Nutrients constitute 85% of the global market while anti-oxidants and herbal extracts accounting for 10% and 5% respectively.
The market is largely fragmented. In a prescription driven market, most consumers rely on their doctors to recommend a product. Attractive pricing, wide spread availability, cogent communication on health benefits of such Nutraceuticals products are some of the steps that will catalyse the growth of Nutraceuticals industry.
The mood of the industry is upbeat and many companies are pumping in money into the Nutraceuticals market in India. Some of the strategic actions needed are Extensive market research, Need based product development, Careful pricing, Meaningful presentation and Widespread availability. One has to excel in all areas of marketing to get the attention of the evasive customer.
Standardisation of good manufacturing practices, a clear regulatory framework to support the industry, increased focus on R&D and sustained efforts in educating customers on the benefits of Nutraceuticals – these are crucial steps for the future development of Nutraceuticals market in India.
With the right regulatory policies and initiatives taken by government for this budding industry, India has several strengths in this sector like its tremendous bio-diversity, a long history of traditional knowledge and scientific know-how.
India will be a strong market for Nutraceuticals products as the players in the industry will be a combination of large multi nationals, Indian companies using proprietary formulations and the small players who constitute the unorganised market. Multinational companies have set up production facilities in India and this trend can only be expected to grow further. Convergence of food manufacturing companies with pharmaceutical companies to manufacture and market Nutraceuticals is another emerging trend that will catch on in the future.
On the supply side, India will maintain a modest trade surplus in Nutraceuticals ingredients as most of the country’s large pharmaceutical companies operate divisions that produce bulk medicinal and nutritional compounds. The distribution channels available for Nutraceuticals shall play a vital role in the future growth of the business.
Indian consumers are known for their money consciousness – the mindset is that – if something can be easily made at home, then why buy that stuff from the market? Added to this is the fact that a large number of medical practitioners are advocating the use of natural foods instead of fortified products. Way back in 1998, when this writer had taken his newborn to a paediatrician and had casually asked about the use of baby foods, the doctor had shot back – “Are you making these baby foods at home? Go for natural foods as this is what your grandparents ate”.
A large number of Indians are becoming more health conscious and they are using their buying power to purchase wellness products. Lifestyle diseases are on the rise thanks to workplace stress, poor eating patterns and long working hours. Research has reported that many Nutraceuticals contain active ingredients, have profound effect on cell metabolism and have little side effects. People’s mindset is changing to a positive one to guard themselves from ill effects of modern antibiotics. They are increasingly feeling the need to protect themselves in a pro active fashion.
Imbalances and deficiencies in India’s medical delivery system will keep a large percentage of India’s population dependent on natural and alternative medicines. The global popularity of Ayurveda will add to the export of herbal and non herbal extracts. Further research in this field needs to be promoted by the govt so that the industry can develop cheaper products that can reach every nook and corner of the country and contribute to the nutrition requirements of future generations.