Exports of botanical extracts and herbal active ingredients for global majors have started declining following a loss of customer confidence in the US and fierce competition from manufacturers from China who are selling the extracts at rock bottom prices.

According to Philip Samuel, chairman and managing director, Indfrag Ltd, a leading herbal extracts company, the weight management formulations which constitute plant based extracts, are the badly hit segment. A lot of hype is created on the efficacy and the instant results achieved by weight loss formulations. But, most of them have not delivered the desired results and are mild in action. Companies are now held responsible for the false claims on labels, which resulted in heavy fines by the US Federal Trade Commission.

The sales of several weight loss products have been hit quite badly. In February 2006, the leader in dietary supplements, Glaxo SmithKline Beecham introduced a weight loss drug 'Alli' which is the only US FDA approved, over-the-counter weight loss product. The company asserted a 50 per cent weight loss for patients.

Another weight loss pill, Xenical, by Hoffman-La Roche also approved by US FDA as an ethically promoted drug, proved to have several side-effects. The drug was withdrawn and is now prescribed at half the dosage of the earlier version. The success of Alli and Xenical can be ascertained only by February 2008. In the meanwhile herbal companies manufacturing and marketing weight management supplements are facing a crisis because lack of public confidence, he said.

New product launches are only 25 per cent creating an uncomfortable situation of herbal bulk drugs manufacturers. India on the contrary continues to show a positive response to herbal and plant based supplements.

In the wake of negative attitude in the West, Indfrag too is now working towards focusing on food and cosmetics sector. With natural fruits juices and use of Probiotics on the rise, companies are gearing up to capitalize the opportunity.

According to Samuel, the interest generated from food and beverage and cosmetic companies is a clear indication that the future holds immense potential for herbal and botanical extract majors. With fizzy drinks replacing natural fruit juices, there is huge demand for herbal extracts to be added in food products and drinks. Indfrag has already started supplying many of its botanical and herbal extracts to food and beverage giants.

Hindustan Lever, Parle, Nestle to name a few have already launched many products and more are in the pipeline. Going by the positive reactions towards such products, Samuel is of the view that food is the future for herbal extract companies.

On the cosmetic front, there is an increased use of herbal extracts in moisturizers, creams and shampoos. While Curcumin and Piperine are being widely used in food products Aloe vera is the most popular herbal preparations used in cosmetics.