The Indian nutraceuticals market estimated at Rs.440 crore which is less than one per cent of the world market estimated at Rs.51,480 crore is in its infancy . The world nutraceuticals consumption is predominantly high in the US, Europe and Japan. The silver lining is that Indian nutraceuticals market is estimated to have grown 18 per cent ( CAGR ) in last three years compared to the world market of seven per cent (CAGR).
The latent demand in the Indian market is estimated to be four times the existing demand. There are some impediments that need to be addressed to tap the potential as pointed out by Ficci and Ernst & Young study on Indian nutraceuticals market. The impediments are high prices of nutraceuticals when compared to food or even pharmaceutical products ( In many important international markets price of pharmaceuticals are higher), lack of credibility of the benefits of nutraceuticals (unsubstantiated claims), regulatory framework not implemented ( to enhance the credibility among the customers and consumers).
Nutritional needs
Broadly there are three categories of nutritional needs . These are nutrition deficiency need, disease or condition specific need and achievement need.
Nutrition deficiency need arises out of not getting proper nutrition ( micro- and macro-nutrients) in the balanced proportion required for proper development of the body and its organs. Worst affected are children. Malnutrition in pre-pregnancy is a quite common phenomenon in India, particularly in rural India.
Disease or condition specific need is because of the disease or certain conditions. Either the body is not been able to make nutrition available to the system to meet the normal requirement or the requirement itself has gone up. Example 1.Requirement is normal but body is unable to provide- nutrition during liver disorder, metabolism is affected and required nutrition is not available. Example 2. Requirement is more during pregnancy.
Achievement need is that excess nutrition is required for better physical performance like sports nutrition, body building etc.
Players in Indian market space
Both Indian and multinational firms are operating and many new firms are poised to join the foray. But as on date the mood of the industry is not upbeat on the investment on nutraceuticals market in India. The players are British Biologicals ( started pioneering work in 80’s on protein supplement to make it palatable), Elder Pharmaceuticals, Abbott Nutrition, Nestle Nutrition, Alembic , Fresenius Kabi, Venky’s ,Mead Johnson, GSK and many other pharmaceutical houses with nutrition supplements.
Many new players have announced fresh investment plans like Alkem Laboratories, Plethico, Divi’s Laboratories, Mission Vivacare, GNC, Vitabiotics, Robert Schwartz etc
Types of nutraceuticals in demand
Nutraceuticals can be broadly be classified into three categories.
These are functional foods, functional beverages and dietary supplements. Functional food is a generic term that has been linked to health benefits. In India functional food and functional beverages have started gaining momentum because of aggressive marketing by the FMCG players. The dietary supplement market is yet to claim a substantial share in nutraceuticals.
There are many forms in which nutraceuticals are marketed in India. Food products enriched with micro-nutrients and functional ingredients having therapeutic or medicinal value, dietary supplements in the powder and liquid forms, functional ingredients in the capsule form, ready to drink liquid form etc.
The data from IMS shows that oral solid has more market share compared to liquid in the prescription formulation of protein preparations.
The demand of the nutraceuticals is greatly influenced by the palatability of the product in question. The health or nutritional value of the product is the entry cost to the category but the differentiator is the palatability. British Biologicals is the leader in nutrition in India (source-IMS) based on the same reason. It is estimated that around 30 per cent of the sales are coming from repeat purchase by word-of-mouth and without prescription.
There are three parameters based on which demand of the food products varies. The three parameters are taste, health or nutrition and convenience. Although taste and nutrition are opposite poles companies are trying to find a compromise between the two. Hence in many advertisements we hear the slogan “Taste bhi health bhi”.
Export , demand and new market opportunities
In general the regulatory frameworks for food and nutrition in many countries are not as strict as that of pharmaceuticals. The entry to a foreign country needs compliance to their regulatory requirement. India receives lots of queries from the world markets regarding the existing products and the possibilities of manufacturing products matching their market requirements.
To encash the potential of the export markets and to compete with other exporting nations, our regulatory environment should be more industry-friendly to reach the highest standard of maintaining product quality, stability and label claims.
Regulatory environment & government responsibility
In 2006, the Indian government passed Food Safety and Standard Act to integrate and streamline the many regulations covering nutraceuticals, foods and dietary supplements. The Act calls for the creation of the Food Safety and Standards Authority (FSSA). Once established, the FSSA will be charged with drafting rules and regulations for companies in the food sector to be licensed by local authorities, and a system of checks and balances, including product-recall procedures enforcements and penalties. (Source-Deepak Kaushik, Functional food nutraceuticals regulations in India). Unfortunately this regulatory framework has not been implemented for various reasons, one being the lack of resources.
The regulatory authority should hold the hands of the entrepreneurs and help them achieve their dreams of coming out with world class nutraceuticals products in India. The apex academic institutions in the country dedicated to the research excellence in the field on nutrition and use of functional ingredients in the prevention and management of diseases do not feel the need to embrace the industry for extending the benefits to the population. The RDA ( recommended dietary allowances) may be to some extent population specific. There is an urgent need to update the RDA for Indian population. Heaps of research articles are being piled up in the field of nutrition internationally. Indian industry is still not yet ready to take the advantage of these new findings especially in the field of functional foods.
Recession & its impact on sector
Fortunately healthcare and pharmaceuticals are not as affected as other industries are by the recession as we have seen that India is registering a healthy growth of 18 per cent (CAGR in three years). But India being virtually a market that is in its nascent stage, the opportunities are huge in terms of geographical coverage, malnourished population, disposable income going up and the inclination towards keeping fit.
Challenges before India for becoming a major player
As we have noted earlier, there are few major hurdles to tap the latent potential in the Indian market.
High prices of nutraceuticals:
India by its scientific manpower could dominate the world market by manufacturing pharmaceuticals at the rock bottom prices. The same feat needs to be repeated in the nutraceuticals as well. India is a very price sensitive market. Here pick up price needs to be kept low. Here total revenue should get priority over the marginal revenue. Hence economies of scale is important and for that reason strategic pricing is extremely important to capture the mass market.
Lack of credibility among physicians & consumers:
We need strict regulation and an enabler government ( not a disabler) to enhance the credibility of the nutraceuticals among the consumers and health care professionals. Authentic and evidenced-based scientific health claims will increase the belief in the positive effects or efficacy of the nutraceuticals among the health care professionals like doctors, dieticians, nurses and chemists. Dieticians can play an important role in this movement of correcting malnutrition and in the making of a healthy India.
Lack of fresh investments in healthcare:
Due to the improper regulatory framework of the country,large multinational players are hesitant to make big investments. As fresh investment is not forthcoming, the market development activities are not taking place and as a result the market is not growing as expected.
Potential to be a nutraceutical powerhouse
India has the potential to become a major power as a nutraceuticals manufacturer and exporter country in the world. But in order to tap this potential, it is essential to take a few important steps. These include finding ways to keep the cost low so that nutraceuticals can be sold at a economical price to capture the mass-market. There is need to make the apex scientific institutions more industry-friendly in order to make their scientific inventions available to the general population. The enacted regulatory framework should be made operative so that credibility of nutraceuticals among general population and healthcare professional increases. Entrepreneurs need to come out with new products matching the nutritional needs for different health / disease conditions. Entrepreneurs should be able to emerge as leaders in the industry by setting a healthy competitive environment. There is also an urgent need to educate general public and health care professionals on the benefits of balanced nutrition.
- The author is marketing manager, British Biologicals.