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Nutraceuticals – Poised for a great future!
Tuesday, 07 February, 2012, 08 : 00 AM [IST]
Kalakad V Ganapathy
Introduction

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. It 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, the US, the EU and Japan. For instance, herbal medicines and botanicals are considered part of Nutraceuticals in the 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. In this regard, the Food Safety & Standards 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. The FSSA 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.

Market potential

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 Rs18.75 billion and this is growing at the CAGR of 21.23%. The Indian nutrition market is estimated to be US$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 4,400 crore. India’s nutritional supplement market is expected to more than double to Rs 9,500 crore 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, and antioxidants 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 crore in 2011 by selling colostrums capsules aimed to boost immunity. The smaller players lag behind the large FMCG firms in advertising and publicity, but this does not take away their business success. Shah 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.

Growth drivers

The factors that contribute to the growth are consumer awareness, greater health consciousness, changing lifestyle diseases, ageing population, increase in disposable income, and booming retail growth.

Challenges

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 regularised 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 categorised 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
 
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