MD, Quadria Capital
The onslaught of COVID-19 has precipitated a more intensified focus on the relevance of preventive health in our everyday lives. The scarred memories of the virus even after it is long gone would necessarily play on people’s minds effecting a life-changing shift to preventive health as a part of larger lifestyle adaptation strategy. With Covid-dictated postponement of routine medical visits and a vastly-improved healthcare-related knowledge among lay people, nutraceuticals would come to constitute a critical ‘peacetime weapon’ as opposed to ‘wartime weapons’ of regular drugs and medicines. Attesting to this, an interview with 50 leading doctors reveals that there has been about 20% increase in prescription for nutraceuticals. That there are already nearly 4,000 nutraceutical startups including 375 focused on active nutraceutical ingredients (ANI) in the country is a hugely promising sign.
How nutraceuticals are a weapon for preventive health
Nutraceuticals are widely known to boost immune systems and serve as supplements to the regular diet in order to tide over the nutritional deficiencies of the body. They are also a precautionary answer to several lifestyle diseases such as obesity, hypertension, diabetes and cardio-vascular diseases (CVDs), each of which is preventable in nature. For instance, to ward off diseases of cholesterol and heart, edible oils have been increasingly used as a high PUFA food. What is noteworthy is that several nutraceuticals provide protection against degenerative processes and even cancer of various kinds.
India’s ‘first-mover-advantage’ for nutraceuticals: the numbers & the ranks say it all
Lying at the intersection of food, medicine and technology, nutraceuticals have expanded the frontiers of drugs and medicines going beyond into dietary supplements and functional food and beverages space. As such, it envisages a multi-disciplinary approach involving agritech, chemical engineering, biotechnology and drug manufacturing technologies, among others.
The extraordinarily vast agricultural base: Agri-tech & food processing new stars on the horizon
With 127 agro-climate zones in India providing a fertile ground for plant-based edibles, our food/agriculture base is phenomenal. While ranking among the 4 largest food producers in the world, it is the largest producer of milk, cashew nuts, coconuts, tea, ginger, turmeric black pepper and coffee. Then apart from being the second largest producer of fruits and vegetables, it is also the biggest producer, consumer, and exporter of spices in the world. Furthermore, India is the second largest producer of staple food. In recent years, drawing on this enormous base, the sector has witnessed the rise of over 450 agri-tech startups attracting investments from some of the top global venture capital funds.For domestic investment, the IIM Ahmadabad-based Centre for Innovation Incubation and Entrepreneurship has notably invested in a startup aimed at facilitating precision agriculture for nutraceuticals with an eye on supplying high quality raw material with bioactive ingredients intact to the nutraceutical manufacturers. An EY report says that India’s agri-tech industry has the potential to touch $24 billion in the next five years. At the same time, the food processing industry is the fifth largest sector of the country’s economy contributing to 13% of GDP and 10% of exports and is estimated to attract an investment of $33 billion in the next 5 years.
‘Renaissance’ of Ayurvedic and herbal products setting the stage for nutraceuticals
Building on a rich heritage of Ayurvedic and herbal product consumption, a part of our food and culture since time immemorial, the recent decade has seen an upsurge of new-age branded Ayurvedic and herbal nutraceuticals and supplements offered by both healthcare and FMCG companies. Being among the most biodiverse countries in the world, India hosts over 8,000 medicinal plants used for preparing herbal medicines and is one of the largest suppliers of herbal extracts and raw material for the dietary supplement market worldwide. Incidentally, a major portion of medicinal herbs exports goes to other rich biodiverse countries such as the US and China underlining the exclusivity and the uniqueness of our plants. Additionally, with a large army of over 8,35,000 organic farmers, India is also the second largest exporter of organic products, signalling our potential for nutraceuticals.
The colossal pharma manufacturing & research base: ready-for-nutraceuticals
India is not only the largest provider of generic drugs globally, but also supplies over 50% of global demand for various vaccines. With 1400 WHO-GMP (Good Manufacturing Practices) approved pharma plants, 253 European Directorate of Quality Medicines (EDQM) approved plants, and the largest number of US-FDA compliant pharma plants outside of USA, it boasts of a formidable pharma manufacturing base. In terms of facilities, the country has more than 3,000 pharma companies with a network of over 10,500 manufacturing facilities. These same facilities could be tapped to produce nutraceuticals given that the foundational infrastructure for production of both drugs and nutraceuticals would not differ much with the latter using several of the same technologies as the pharma industry. With Contract Research and Manufacturing Services (CRAMs) gaining traction, India has emerged as a global hub for low-cost high-end research services aided by an impressive pool of skilled manpower. The country has 108 large contract manufacturers in nutraceuticals. That India also has a thriving biotechnology ecosystem worked by over 2700 start-ups and 2500 companies is another huge advantage. The recent drive to scale up domestic manufacturing of APIs and medical devices has been noteworthy and could well be replicated for nutraceuticals too.
Given the increasingly narrow profit margins on pharma products, some companies have even begun to downsize their pharma portfolio in favour of a more expanded nutraceutical portfolio. Although the profit margins on nutraceuticals are lower than pharma products, the R&D component on pharma involves far more investment than nutraceuticals.
The growing role of food and FMCG companies
Not only has there been an increased collaboration between the FMCG and the pharma sector, several FMCG players have even set up research centers to scientifically validate their nutraceuticals products. A few have even steered their product development programmes based on first-hand research and identification of micronutrients deficiency among target populations.
The way forward
First, although the government has periodically streamlined regulations defining nutraceuticals and other related substances, prescribing standards for fortification in terms of quantity of nutrients and mandating carrying of detailed information about their composition and claims, these regulations need to be further tightened as well as elevated to international standards.
Second, government could support through subsidies for land and utilities for building of huge incubation parks for nutraceuticals. Telangana government taking a step in this connection must be emulated elsewhere.
Third, companies taking initiatives on nutraceuticals must be incentivized through policy, tax support and subsidies. For instance, the GST rates on nutraceuticals products could be brought down to 12 from 28 and 18 percent.
Fourth, export/import duties must be rationalised in a way that allows room for local ingredient manufacturers to develop.
Fifth, nutraceuticals could even be compulsorily included as part of diet for midday meal programmes for public and municipal schools.
There are a few large companies supply nutra ingredient to some of the best nutraceuticals companies in the world and government should draw upon that success to encourage newer players. In sum, if India can be the ‘pharmacy of the world’, nothing can stop it from becoming a nutraceuticals manufacturing powerhouse supplying to the rest of the world.