The dramatic increase in consumer demand for products to improve nutrition and support a strong immune function has opened a huge opportunity for the nutraceuticals industry. In our last article, we covered the reasons spurring the demand and why India’s nutraceutical industry is uniquely positioned to benefit from them.
But, it is of absolute essence to take timely and pertinent measures which will help optimise the growth potential and eliminate the bottlenecks that hinder the industry’s progress. Because, as an old, famous poem goes, ‘a kingdom was lost for the want of a nail.’ It reminds us to take the right actions at the right time.
So, in this article, let’s take a look at the prerequisites for India Nutra Inc in its next leg of growth.
A robust and clear regulatory framework
A recent report from GlobalData informs, “India is overhauling its pharma regulatory norms to expedite the approval process and promote innovation. Given that the country is now focused more than ever on developing novel therapies and vaccines on account of the COVID-19 situation, the move will not only remove unnecessary procedural roadblocks but also foster innovation.”
Sasmitha Sahu, Pharma Analyst at GlobalData, opines, “The recent regulatory reforms are a clear indication that India really wants to focus on innovation in the pharma industry. The centralisation process will help bring in more transparency in the existing systems with a clear mapping of responsibilities and accountabilities in a time-bound manner. This could mean accelerated access to multiple novel therapies and vaccines for Indian patients. It is likely to encourage even the international innovative companies to view India as a priority market from the research and development investment perspective.”
While this is great news for the pharma sector, experts point out that what’s needed is a similar focus on regulatory reforms to propel the nutraceuticals sector towards accelerated progress.
For instance, Sanjaya Mariwala, Executive Chairman and Managing Director, OmniActive Health Technologies opines, “Nutraceutical industry presents opportunities for exponential growth, it is important to proactively leverage them. We need policy and regulations led interventions to facilitate the growth of this industry, along with a cohesive approach by relevant players to make this industry mainstream”.
Some of the major points the industry players raise are as follows:
Creating a centralised regulatory authority: Many stakeholders and observers of this industry feel that this billion-dollar industry doesn’t get the required regulatory push due to the absence of a centralised authority. Currently, nutraceuticals and herbal medicines come under the purview of various regulatory bodies including FSSAI, AYUSH or CDSCO, based on the claims made and ingredients used.
“A clear status to nutraceuticals as a stand-alone the industry is missing. The industry is in a grey zone dabbling between DCGI, FSSAI, MoFPI, BDA. For the industry to grow there has to be a provision for single point ownership. One approach can be to create a body like Pharmexcil for nutraceuticals that helps integrate government bodies to serve nutraceuticals,” pronounces Amit Srivastava, Chief Catalyst, Nutrify India.
Need for growth-oriented policies: Mariwala states, “As far as Government or regulators are concerned, I think three important and immediate steps are required. First, they must provide due recognition to the nutraceutical and natural product industry. This includes providing necessary incentives for raw material production to improve the agricultural base and encourage medicinal seed research to drive innovation. Secondly, creating policies around product standardisation and minimising product adulteration is a must. Lastly, we must have a dedicated desk for nutraceuticals at the Ministry of Commerce and FSSAI for promoting and streamlining exports.”
“Regulators should allow for a combination of FSSAI and AYUSH ingredients as this will skyrocket India’s potential and worth in the global nutraceutical space,” Dr Apurve Mehra, Founder, Biogetica.
A more industry-friendly tax regime: Sandeep Gupta, Chief Founder & Director of ENAC asks for a revision in the tax regime to propel the industry’s progress, “The major challenge to this industry is Tax (GST) regime which is the burden on the sector as currently being implied at 18 per cent and should be brought down to six per cent which will be beneficial to the industry as well as consumers to attract less cost on the basis of such tax burden. Amidst COVID-19 pandemic there is going to be a big challenge for the consumers to adopt a healthy lifestyle and hence bringing the tax slabs to minimum lowest up to six per cent can be a win-win situation for business as well as the health status quo of the population.”
Srivastava also reiterates, “They (government) could help in moderating the import duties to allow space for local ingredient manufacturers to develop. They should also help in incentivisation to medical food/nutraceutical exports. A taxation structure of 18 per cent tax (with few categories even taxed at 28 per cent) should be revised,” says Srivastava.
Raising RDA and adopting TUL for vitamins and minerals: Stakeholders also ask for a raise in the recommended daily allowance (RDA) and state that this step is needed to spur growth in the sector.
For instance, Akshay Pai, Founder and CEO, Nutrova, states, “A pain point in the nutraceutical space has been the level of vitamins that can be used in products. As per the current regulation, vitamins and minerals can be used in levels up to their RDA (recommended daily allowance). This can prove to be restrictive in the cases of certain vitamins with an RDA far lower than known safe levels of consumption (such as vitamin C, where the RDA is 40 mg but can be (and is) safely consumed in doses of 1000 mg). Finding a middle ground to ensure consumer safety and allow companies to innovate could significantly drive growth.”
Gupta further explains, “India is still to adopt the levels of vitamins as per Tolerable Upper Limit (TUL) which has been designed by the Indian Council of Medical Research (ICMR) Committee. Adopting this TUL levels by FSSAI may create a very good opportunity for improving the status of consumer health amidst COVID-19 pandemic. Currently, all the products in India are being regulated as per RDA which is not adequate to meet the nutrient status to protect the immunity of the population.”
Thus, the players and observers in this segment point out that industry’s operations need to be streamlined with the help of relevant regulatory interventions.
A strong manufacturing and supply chain
Three big industries (foods, ingredients, and pharma) are looking at strategies to augment their capabilities in the nutraceuticals market. But, this essentially requires a strong and fool-proof supply chain and distribution channels. This will be a crucial aspect of market expansion as well as to ensure the safety and integrity of products.
“Develop a model of integrated supply chain capability; from farms to formulations. GOI should encourage by providing incentives and tax breaks to companies creating such capability. This will help establish world-class manufacturing plants for nutraceuticals,” explains Mariwala.
“Nutraceutical manufacturers must gear up to minimise the risk of counterfeiting. Deploying an anti-counterfeit solution will go a long way towards solving the problem. At the same time the manufacturers and the government bodies should work hand in hand to enlighten consumers about the risks of consuming counterfeit dietary supplements,” says Gupta.
Thus, the companies involved in this space must also invest in solutions and strategies which will provide them real-time visibility throughout the entire supply chain, help collaborate easily with all suppliers, ensure that ingredients are being procured from ethical sources in a correct and timely manner as well as enable good manufacturing and distribution practices.
An ecosystem which encourages evidence-based practices
One major challenge that the nutraceuticals sector currently battles with is safety and health claim substantiation and the best way to tackle this challenge is through validated data. Therefore, regulators and industry players must encourage and invest in nutraceuticals research to make it more evidence-based. This is vital to forming policies and strategies for health improvement with nutritional interventions.
“Companies in this space need to invest in innovation and education to drive category growth. Companies also need to focus on data-driven products and claims to improve consumer outcomes as well as increase trust in the category. With the potential to make misleading claims in this category, the risk of disillusioning consumers with overstated claims is very real. It is the responsibility of players in this space to ensure transparency and ethical approaches to marketing to ensure the long term growth,” says Pai.
Gupta advises, “They (nutraceutical manufacturers) should focus on products with potent ingredients with right dosage backed by clinical studies and in unique dosage forms.”
Likewise, strict guidelines would be essential to garner and disseminate validated data on the safety, efficacy and claims made on the labels of nutraceuticals products.
“Accept clinical trials and validation as new norms. With the onset of a pandemic, there is a major push from the government for clinical validation of ingredient or formulation. It is best showcased by the large scale study on 80,000 subjects being rolled out by the government to establish the efficacy of AYUSH ingredients,” updates Srivastava.
Gupta points out, “FSMS plans and hygiene certifications are going to be critically essential for every manufacturer of nutraceutical supplements, as quality and safety is going to be the primary decision factor for consumer and having being said that now consumers have access to much better products”
“Companies also need to focus on data-driven products and claims to improve consumer outcomes as well as increase trust in the category. With the potential to make misleading claims in this category, the risk of disillusioning consumers with overstated claims is very real. It is the responsibility of players in this space to ensure transparency and ethical approaches to marketing to ensure the long term growth,” articulates Pai.
He informs that the competent authorities are also working at improving the ecosystem. He says, “In the past five years, the FSSAI has worked on increasing clarity on regulation to a fair degree, giving the industry an impetus for innovation. Regulators are also working on driving awareness of nutritional concepts (healthy fats, protein) at a large scale. This awareness potentially trickles down to drive understanding of supplementation as a category.”
To aid the industry to be more data-driven and evidence-based, Mariwala recommends the government to “provide grants and solutions to encourage more research in the nutraceuticals industry within India.”
Import plants and grow them in India to improve ingredients availability
A report on nutraceuticals released by Assocham and Sathguru Consultants last year points out, “Equipped with local sourcing and supply of raw materials, Indian herbal extract manufacturers have emerged to be highly price competitive in the global markets and have established a strong presence as a preferred supplier in many export markets.” But, it is also important that the farmers and manufacturers are helped to build their strengths and negate their weaknesses to keep India’s position as a leading destination for nutraceutical ingredients
Suggesting some measures in this direction, Mariwala states, “Some of the focused strategies I would like to recommend are – start from the base i.e. build capacity and capabilities to work on agricultural crops, create sustainable models for farming and processing, work on different quality systems, and benchmark standards to make sure the products are globally accepted, and ultimately have analytical systems that support you with data.”
He also suggests, “Import species from all over the world and grow them in India; this will enable better research, more employment, and more suitable products.”
Interestingly, some steps are being taken in this direction, both by the industry and the regulators.
For instance, Srivastava updates, “Nutrify India has started a serious drive in the field of HI-BHARAT, which it believes will revolutionise India to be a high tech active nutraceutical ingredients organisation. HI-BHARAT is health ingredients bioharmonised adjuncts to rejuvenation and therapeutics. Under this programme, Nutrify India has also tied up with CCMB Hyderabad in jointly tapping innovators, start-ups from India and abroad to build a good portfolio of high tech active nutraceutical ingredients”
To cite another example, recently, the National Medicinal Plants Board (NMPB), Ministry of AYUSH signed an MoU with major AYUSH and herbal industry bodies covering a set of measures to promote medicinal plant cultivation. The industry assured the NMPB that they will provide the buy-back guarantee to the farmers /gatherers on the NMPB supported medicinal plant cultivation and collection programme. Industry representatives say that this gesture would provide a sustainable supply of quality raw material to AYUSH, nutraceutical and herbal industry.
A success story in the making…but not without a proper strategy
Implementing and expanding these measures as soon as possible could go a long way to leverage India’s comparative advantages in the nutraceutical space. Opportune and concerted strategies taken now by all stakeholders will help in drafting a tale of success that could rival India Pharma Inc’s growth story.