The burgeoning interest in nutraceuticals (products extracted from natural sources or manufactured synthetically to supplement the regular diet and help prevent nutrition-related disorders) should come as no surprise.
More than 40 per cent deaths in developing countries are due to nutrition-related disorders, according to the World Health Organization.
Eight of the top 15 risk factors are related to nutrition and contribute nearly 40 per cent of the total deaths and 30 per cent of total disease burden in developing countries, including India.
It’s not just a developing world trend either.
Globally, pharmaceutical companies have begun competing head-to-head for market share and the acquisition of emerging health and wellness products with growth potential, such as Nestlé Health Science’s recent investment in Axona.
And why not? A recent survey of 1,000 vitamin consumers in the US had 93 per cent respondents saying they felt more confident about their health when taking a vitamin or supplement–a jump from 71 per cent customers last year.
Back at home, “the market is being driven by the changing lifestyles of consumers and increased knowledge about nutritional supplements.
It is also due to a shift towards preventive therapies, increase in disposable incomes, increase in healthcare spending and ageing population,” says Dr Shubnum Singh, dean, nursing, Allied Health & Wellness Programs, Max Hospitals Group.
The size of the global nutraceuticals market is pegged at $117 billion.
According to a joint study by FICCI and Ernst & Young, India’s share of this is minuscule at $1 billion, but the growth pattern is impressive.
While the global market is growing at 7 per cent, the Indian market has been growing by over 18 per cent for more than four years.
Of the three broad categories within nutraceuticals–functional foods, functional beverages and dietary supplements– the last is growing the fastest globally, with a CAGR of 11 per cent.
In India, functional foods are the fastestgrowing with a 54 per cent market share, while dietary supplements have a 32 per cent share followed by functional beverages at 14 per cent.
Sensing the market opportunity, Aventis Pharma, part of the French drug-maker Sanofi, acquired the branded nutraceutical formulations business of Mumbai-based Universal Medicare Pvt Ltd last year for an undisclosed sum.
This March, Biocon forged a pact with Abbott India to develop nutrition products for maternal and child nutrition and for diabetes care.
According to Kiran Mazumdar- Shaw, CMD, Biocon, “The combined market insights and nutrition science expertise of our two organizations will enable us to address these needs by developing critically important, innovative yet affordable nutrition products for the Indian population.”
Aventis and Biocon may be considered late entrants into the business; the market already has 132 players in place. While pharmaceutical companies like Pfizer, Ranbaxy Laboratories (now Daiichi Sankyo), Wockhardt, Nicholas Piramal India, GSK Consumer Healthcare and Lupin still offer only a few products in this category, pure-play nutraceutical companies like Amway India, Raptakos, Dabur India, Himalaya Herbal Healthcare, Ajanta Pharma, EID-Parry, Omni- Active, HLL, Elder Pharmaceuticals and Zydus Cadila Healthcare lead the pack with products such as Pediasure, Chyawanprash, Horlicks, Maltova, Viva, Complan, Kids–pro, Revital, Sugar Free Natura and Nutrilite.
“Dietary supplements make up the biggest and better penetrated overthe- counter (OTC) segment in India, with a substantial presence in the one lakh-plus towns. We have only recently entered this segment and are looking forward to launching more extensions. Already, our brand has grown faster than the category growth of 12- 14 per cent,” says Swati Piramal, director, Strategic Alliances & Communications, Piramal Healthcare, which entered the nutraceuticals market in 2009 with Supractiv Complete.
Adds Kamlesh Udani, executive director (Technical & Production), JB Chemicals & Pharmaceuticals Ltd: “Gone are the days when the nutraceutical products were limited to Omega-3 and fish oil.
Now, there are products covering areas ranging from muscular growth to hair care to cancer.
” While the contribution from nutraceuticals to the overall revenues is still insignificant, “there’s tremendous room for growth,” he reasons.
Divi’s Laboratories, which recognizes nutraceuticals as one of its two core businesses, has hived off the segment into a separate arm–Divi’s Nutraceuticals– and deals with vitamin products like Astaxanthin, Betacarotene, Canthaxanthin and Lycopene.
Similarly, the Rs 1,000-crore Alkem Laboratories, which invested Rs 100 crore last year in its nutraceutical arm Alkem Health Foods, is targeting a `300-500 crore annual revenue from next year, according to chairman Samprada Singh.
Dabur, Divis and Alkem are all eyeing the overseas markets.
“We have two wholly owned subsidiaries, one each in the US and Europe, which are engaged in marketing nutraceutical products. In 2011-12, these subsidiaries have enhanced their reach to customers in North America and Europe and contributed net sales of `81 crore to the company,” explains Murali K Divi, chairman of Divi’s Laboratories.
Dabur, which forayed into food supplements in December 2010 with Nutrigo, is gung-ho about move abroad.
“We are setting up a greenfield manufacturing unit in Sri Lanka, which will become operational by the second half of the current fiscal,” says Dr Anand C Burman, chairman, Dabur India Ltd, adding that the proposed plant will initially produce only fruit juices under the Real brandname.
“In addition, we are contemplating local manufacturing in Africa for Namaste’s hair care products. This will enhance our presence in Africa,” he says.
While the local companies look overseas, foreign direct selling companies like Amway are focusing on the domestic market.
William Pinckney, MD & CEO, Amway India says, “Lifestyle diseases are not specific to tier-I cities; they are also common in tier-II and III towns. We look forward to building this category over the next three years with our Nutrilite brand.”
Of course, everyone agrees that there are still many impediments to growth—such as lack of standardized products, high pricing, lack of consumer awareness and distribution challenges.
But if those concerns can be addressed, given the current low per capita spend on these products and the rising instances of lifestyle diseases in India, the companies are hopeful of nutraceuticals showing a healthy growth line.
■ The Rs 1,000-crore Alkem Laboratories, which invested Rs 100 crore last year in Alkem Health Foods, aims to generate over Rs 300-500 crore revenue from its nutraceutical arm from next year
■ Biotech major Biocon has signed up with Abbott India to develop “innovative yet affordable” nutritional products for diabetics and mothers and babies
■ Dabur India, which gained a leadership position in India with Chyawanprash and almond oil, is planning a greenfield plant in Sri Lanka
■ Divi’s Laboratories, which has set up a subsidiary for its nutraceuticals business, is ramping up its operations in Europe and the US.