Supplementing growth

The Indian nutraceutical market has immense potential, but the industry seems to be held back by obstacles like half-baked regulations, export hurdles, and inadequate quality and standardisation of nutra products. Aashruti Kak analyses the domestic and global growth of the sector and finds out what can be done to 'supplement' it

Even though the Indian nutraceutical market is in a nascent stage, it is growing at a fast pace.

Gauging the escalation of the world nutraceutical market and the potential for India, many MNCs and Indian pharmaceutical companies, followed by FMCG firms, are entering this field. What is more interesting is the fact that these companies are also introducing nutraceuticals as supplements to their main products in therapeutic segments. "Nutraceuticals owe their beginnings to the 'alternative' medicine movement and to people who recognise that healthcare needed to be supported by safe, cost effective and more acceptable health care products," says Dr R K Bammi, Chairman, Sami Labs. "And now, the market size of the nutraceutical market in India has touched Rs 1,200 to Rs 1,500 crore," he adds.

Ranjit Puranik, CEO, Shri Dhootpapeshwar says, "The domestic market for nutraceuticals is still in its definitive stage and it would take the better part of the next three to five years for a clear definition to appear." He adds, "One can tell that there is a growing potential for these products and in the coming years we will see a whole new market niche that comes forth in this segment. This would definitely be identified as an FMCG profiled product basket. But one still has to see success for these products and brands." Major players in this sector are companies like Sami Labs, Dabur, Parrys, Natural Remedies and almost all major pharma companies. "Most of the major pharma players in India are in the process of entering this market and this has become particularly important post the WTO Patent regime (in 2005)," says Bammi. He continues, "For natural products, there will obviously be no patents. The wide scale of operations will give an advantage to existing pharma players because their marketing and distribution channels are already in place. Hence, the growth for these companies will be in the region of 12 to 15 percent."

"Fragmented markets along with consumer dynamics will play a very important factor in determining the success of stand-alone nutra companies where brand building will be the key differentiating factor" - Lakhnesh Khosla VP-Sales and Marketing Anglo French

While entry barriers in the sector are low, marketing of nutraceuticals is a challenging proposition today. "Fragmented markets along with consumer dynamics will play a very important factor in determining the success of stand-alone nutra companies where brand building will be the key differentiating factor," says Lakhnesh Khosla, VP-Sales and Marketing, Anglo French Drugs and Industries. "But on the brighter side, nutraceuticals are gaining popularity thanks to extensive R&D and clinical trials, which has gained momentum recently. Further, with the Food and Safety Standard bill 2006, which was cleared by the Lok Sabha on 26 July 2006, the sector will get a boost which will create a new category of food supplements, functional foods and food for special dietary purposes. This bill once implemented will integrate the food safety laws in the country in order to systematically and scientifically develop the food industry and will stimulate both domestic and foreign investment in this sector," he says. And this will fuel the increase in export opportunities and open the Indian market to the international community.

What consumers want

Prashant Tewari, Managing Director, USV, opines, "In India, the younger generation is becoming progressively more health-conscious. Nutritional supplements are focusing on preventive healthcare rather than therapeutic. Increasing awareness on the role of products like antioxidants and adaptogens (anti-stress) is making herbal products increasingly acceptable. This atmosphere is indeed going to help the growth of nutraceutical industry." Nutraceuticals have been generally recognised as safe preventives, useful in chronic disorders. It is this trend, which has led consumers to ask for authentication of claims made by companies as per the safety profile of these products. In addition to the 'back to nature' movement, the trend is also towards standardisation of ayurvedic, Chinese and Tibetan medicinal products as nutraceuticals. "A number of nutraceuticals are also now being included in the official Pharmacopoeial Compendium for their curative values. For example, we have Guggul used for lowering cholesterol in the Indian Pharmacopoeia; L-Selenomethionine as a source of ‘essential’ selenium; Glucosamine for arthritic care and Curcumin from turmeric as an anti-oxidant in the US Pharmacopoeia," says Bammi. He also says that sportaceuticals and cosmeceuticals are the fastest growing segments because of better safety profile of these products and the 'back to nature' movement. Sportaceuticals, oleoceuticals and cosmeceticals are branches of nutraceuticals that comprise of beauty, vitality, and personal care segments that are based on natural products. "But, these are just new words for defining segments in the nutraceutical and dietary supplement domain. Almost all the segments would need to define the value proposition and health quotient of the products to succeed," argues Puranik.

"Internationally, it is presumed that little scientific research is done on the scientific base of nutraceutical products. However, significant efforts have been successfully made for validating effectiveness of functional foods and nutraceuticals" - T C Venkat Subramanian Chairman and Managing Director Export-Import Bank of India

"If you make a clinically tested claim over any product, it becomes a drug. Then it has to go through a drug route. And nobody wants to go that way because then the pricing will be less" - Dr R B Smarta Managing Director Interlink Consultancy

Up, up and away

Nutraceuticals enhance the body's abilities to withstand the stresses and strains that challenge our health through a changed and impulsive lifestyle. "Basic lifestyle discipline and nutrition are few basic requirements for good health which have been denied by a conduct that is fraught with failures and break downs of the immune system," says Puranik. And this, he says, opens an opportunity for nutraceuticals—functional foods, supplements and traditional tonics.

T C Venkat Subramanian, Chairman and Managing Director, Export-Import Bank of India, elaborates on what drives the industry in terms of growth, "It is estimated that the nutraceutical market would witness tremendous growth in the coming years." He further says, "The pattern of demand in global healthcare industry is changing significantly. Consumers are seeking preventive and supportive healthcare solutions, in view of increasing cost of healthcare service delivery. The cost of healthcare facilities in developed countries is increasing, making the healthcare seekers to look for more economic and alternative solutions."

Bammi says that in addition to the movement towards standardised alternative medicine and natural products, and cost-effectiveness, the growth can be also attributed to the fact that nutra products have "less side effects and consumers are willing to try different systems of healthcare for chronic problems owing to more disposable incomes, better access to knowledge and a bigger desire to stay healthy." Also, as Khosla says, other demographic factors like "growing geriatric population, increasing health awareness in not only urban areas but in villages as well, high incidence of self medication, acceptance across doctor specialties and media, and retail boom are contributing to the growth of this sector." Moreover, he says, expanding scientific and clinical research which validates the effectiveness of nutraceuticals has also contributed to making this sector the third largest prescribed category in the Indian pharma market. Today, it is a segment that enjoys support from across all doctor specialties and the market is set to grow further as the general mind set is gradually changing to preventive therapy. Besides that, nutra products have already entered the prescription medicines field with probiotics, complex preparations, vitamins, radical scavengers etc.

Global state-of-affairs

Subramanian evaluates the global scenario, "The global nutraceutical market is valued at over $80 billion. It is also projected that the market size is growing to reach $150 billion by 2010. There are various reasons to attribute to this growth pattern. Move towards natural products is one of them, as consumers are seeking more and more preventive and supportive healthcare solutions." He says that amongst developing countries, India—which is currently number five in the world nutraceutical market with a market share of 4.2 percent and a turnover of about Rs 1,840 crores a growth rate of 13 percent—and China are the two major countries known for their production of traditional functional food products and nutraceuticals. Other large, emerging international markets in south and South-East Asia are Taiwan, Sri Lanka, Thailand, the Philippines, Vietnam, Laos, Kampuchea, Indonesia, Malaysia and South Korea. Potential markets for nutraceuticals would be the Gulf region, especially UAE, Qatar, Oman and Kuwait. The US holds a significant share (35 percent) in the world nutraceutical market followed by Japan (25 percent). The nutraceutical market size in European Union is estimated to be $8 billion, a share of 10 percent of the world market. Major global players in the sector are companies like Twin Labs, General Nutritional Centers, Solgar, Degussa, Indena and Sami Labs/Sabinsa. Pharma companies such as Johnson & Johnson, American Home Products, Procter & Gamble and a number of cosmetic companies such as Avon, Estee Lauder, Aveda and Revlon that have also entered the market for these products.

Research trends

Most nutra products have their origin in age-old remedies in ayurvedic and Chinese system of medicine. This knowledge is in the public domain, and hence, they cannot be patented. Therefore, the research trends are towards finding newer applications of these products and obtaining patents. Companies which obtain these patents will benefit definitely. Standardisation of age-old remedies is also another area of active research.

"Internationally, there has been a tendency to presume that there is little research done on the scientific base of nutraceutical products. However, in reality, there have been significant efforts for validating the effectiveness of functional foods and nutraceuticals, which have proven to be successful," says Subramanian. "There are also several ongoing research projects to validate the effectiveness of nutraceuticals in preventing diseases like cholesterol, cardiovascular, osteoporosis, paediatrics, hypertension, diabetes, menopause, lactose intolerance etc," he adds. Nevertheless, he goes on to say, there are many concern areas in the nutraceutical industry. In order to overcome such problems, high quality research in nutraceuticals, both for product development and applications, is required. There is also a need for undertaking social research to understand usage pattern and motivation aspects of patients. This social research can also establish customer satisfaction as well as efficacy and safety from the user point of view.

"Research trends in product development are many. But in terms of customers etc, research is mostly being done by individual organisations. But, research in India is not lagging behind; it's just that we do not know what exactly we mean when we talk of nutraceuticals," laments Dr R B Smarta, Managing Director, Interlink Marketing Consultancy. The problem in nutra research seems to be the absence of standard norms that can govern testing of quality safety and efficacy. Smarta says, "There is a need for definition, standardisation and regulations with regards to nutraceuticals. And we need to also see who is going to follow those rules and who will monitor." He further says that norms exist where drugs are concerned, but if it is a dietary supplement, then the company only needs to go to the Bombay Municipal Corporation (BMC) to get the quality certificate. "If you make a clinically tested claim over any product, it becomes a drug. Then it has to go through a drug route. And nobody wants to go that way because then the pricing will be less. Suppose there is a protein X powder (which is a drug), the corresponding Amway product will be Rs 2,000, whereas the cost of that protein will originally be Rs 50 or Rs 100. That is the kind of difference that will arise product wise and price wise," states Smarta. To top it all, there is also no mandatory requirement of clinical trials for nutraceuticals to ensure the quality of the product; it is purely optional.

Standards of safety

Subramanian expresses that evidence in terms of safety, efficacy and mechanism of actions are important for the success of nutraceutical products in export markets. In this context, it becomes important to understand the general state of scientific base of Indian nutraceutical products, in order to consider what type of evidence needs to be collected and to look at the reason why safety profile of Indian nutraceutical products cause controversy. Safety of these products seems less of an issue because a number of them share their origin in existing alternative system of medicine or have been used as food for many years. However, for newer applications and long term usage, profiling the products in terms of safety becomes important.

"Many consumer groups in developed countries opine that consumption of nutraceuticals that lack clinical evidence should not be prevented," says Subramanian. He continues, "It is felt that as long as the consumers are aware that there is no clinical proof for efficacy/safety and still if they are satisfied with the product, they may be allowed to consume. Many therapists and manufacturers of nutraceuticals also argue that high level of consumers' satisfaction could be used as a measure of safety and efficacy." But, while determining the level of safety, one should also consider the risk-benefit ratio of the product. If the potential benefits are likely to be significant, the weightage on the scientific safety profile of the product should be the least. "As the name 'nutraceuticals' suggests, these products have to be treated as pharma products while manufacturing, packaging and storing, but because they are classified as food, they have to be free of microbial contamination, and hence, sanitation and hygienic conditions need extra care," says Bammi. Availability of quality raw materials is also an important factor for the success of nutraceuticals, especially those that are made of plant materials.

Framing the rules right?

Major snags faced by the nutraceuticals sector include the regulatory framework, availability of quality raw materials, storage and transportation infrastructure, issues associated with quality, and standardisation. The Indian Government and industry should address some of the challenges, especially the regulatory framework, through joint efforts. Addressing other challenges, associated with quality or standardisation, is purely at the hands of industry. However, the government may extend a helping hand to the industry.

"The purpose of regulatory framework in any health-associated products is to protect the users from ineffective and unsafe products. In USA, any nutraceutical product that claims to treat, cure, mitigate or prevent a disease is regulated by the Food, Drug and Cosmetic Act of USA. However, nutraceutical products, without claiming to cure or prevent any diseases may be marketed as dietary supplement (OTC product under OTC monograph)," enlightens Subramanian. At the moment, companies in the US cannot make therapeutic claims on the label according to Dietary Supplements Health Education Act (DSHEA), passed by the US Congress in 1994, which ensures that there is a mandatory disclosure stating that any claim by the dietary supplement has not been evaluated by FDA and the product is not intended to diagnose, treat, cure or prevent any disease. "This act, while promoting the use of nutraceuticals, has tried to prevent tall claims by unscrupulous elements. Indian drug authorities seemingly had taken a similar stand," explains Bammi.

The European Commission is also proposing new regulations to treat certain classes of nutraceuticals as drugs rather than as dietary supplements. Under this proposal, no herbal product can be put on the market for sale unless a market authorisation is issued. In order to receive market authorisation in EU, manufacturers have to provide extensive data on safety, efficacy and quality of products, Subramanian says.

Tewari says that currently, in India, the sector is governed by three separate laws, namely Prevention of Food Adulteration Act, Food Products Order, and Drugs and Cosmetics Act. Unlike the US, where the DSHEA is in place to regulate these products, in India the Government is in the process of drafting a law to regulate manufacturing, importing and marketing of health foods, dietary supplements and other nutraceuticals. The Central Drug Control Department has put some structures in place for dietary supplements, but not all states have fallen in line. "The responsibility of framing and regulating standards for nutraceuticals is to rest with the Food Safety and Standards Authority of India (FSAI) as outlined in the Food Safety Act, 2006. The authority will be in charge of categories like functional foods, nutraceuticals, dietetic products and other similar products," he adds.

Recently, Tewari reveals, the United States Pharmacopeial Convention (USP) decided to have a separate advisory panel on nutraceuticals and will be joining hands with Indian scientific community for developing safety standards for the entire range of dietary supplements and nutraceuticals that are currently not under the strict regulatory classification of either drugs or foods. Central Food Technological Research Institute (CFTRI), Mysore, is to be the major agency to associate with USP in this regard.

Double jeopardy

"The major threat for Indian nutra industry in the international arena is the deficiency in quality consciousness among the Indian manufacturers," says Tewari. "We need to take the nutritional supplement industry from the 'belief-based' to the 'evidence-based' status. The industry should initiate active partnership with academic institutions to support the product claims with appropriate data," he adds.

Also, innovative positioning and communication strategy adopted by leading companies will further help in increasing the equity of the nutra industry. Another problem is the lack of adequate awareness among the masses. "The awareness itself is a risk, because we hardly have seven to eight percent people who are aware, whereas about 82 percent does not know what the term nutraceutical means. They call them functional foods, dietary supplements; they say that nutraceuticals are for

sick people. I don't think that nutraceuticals mean only B-Complex. There is no specific definition, no legal issues, and there is no solid perception of it. This is the basic challenge nutra industry will have to face," says Smarta. Most nutraceuticals are highly priced, which is one of the deterrent factors as the target consumer still remains the urban elite. Khosla says, "Although urban markets have very high potential, the rural market is fast expanding and will drive future expansion strategies of nutra brands. Increased awareness, disposable income and improved access to healthcare will narrow the divide between the rural and urban consumer." But Smarta says that maybe the rural market does not need nutraceuticals. "They have ayurvedic and other natural products available. Nutraceuticals are required where there are lifestyle related diseases, which occur only in urban areas."

India in the future global scene

India has rich bio-diversity and many natural ingredients, based on plant species that are locally available, which are used in production of nutraceuticals. "In addition to probiotic products, Indian food traditions could also be marketed through food supplements. India is housed with large number of medicinal plants and spices. Most of the spices grown in India have medicinal characteristics, and are valued in international markets. India could leverage such strengths and manufacture food supplements targeting international markets, with appropriate standards," says Subramanian.

India can corner the market for niche segments like products from certain plants which do not occur anywhere else. This includes traditional plants like Pysllium and Coleus forskohlii, which Sami Labs is already working on. "Indian companies have an opportunity to create niche areas because of an established pharma industry which has resources to develop 'claim substantiation'. The scale of operations will also give advantage to Indian pharma companies to create niche markets globally," says Bammi. According to Khosla, the future of Indian nutraceutical market looks very bright and India can easily leverage its existing position and move up to be amongst the top three global nutraceutical markets in the near future. Once this happens, India can take on giants like US and Japan.

aashruti.kak@expressindia.com