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“From US$4 bn nutra market, US$1 bn was online, which will double”
Monday, 19 October, 2020, 08 : 00 AM [IST]
Nutrify India is a platform to empower responsible nutrition businesses and shape the growth of the Indian nutraceuticals industry. It encourages convergence of technologies to bring in robustness to industry and bring convenience to end-user. It is an idea-to-commercialisation platform that engages with the industry by connecting businesses and knowledge sharing. The platform helps innovators connect with companies with larger market access or investors wanting to invest directly for commercialisation from innovator. Amit Shrivastava, founder, Nutrify India, in an email interaction with Manjushree Naik explains what his platform is doing for the nutraceuticals business in the country and the nutraceuticals market scenario amid the pandemic. Excerpts:

What is the idea behind the launch of your company?
The idea behind launching our company is to enable responsible nutrition businesses by connecting innovators with curated access to knowledge, markets and finance. It assists innovators/startups through a process to develop a quality product that has a price serving an ecosystem including the market. It promotes evidence-based science of nutraceuticals to catalyse better and efficacious health outcomes.
The company dreams of a healthier India by helping nutraceutical innovations reach their maximum potential.

How do you see the nutraceuticals industry growing in India by 2025, especially, looking at the pandemic impact?
Lets understand the nutritional map of India first:

•    Category A–350 million people in India are in complete malnourishment category. This segment includes those who are in the low income group category or in medical condition that impacts the nutrition absorption profile.
•    Category B - 650 million are calorific sufficient but malnourished. This population is typically the culture broth of lifestyle diseases like diabetes, cardiovascular problems, cancer, etc.
•    Category C - 150 million people are those who migrated from category B in pursuit of being healthy and are experimenting with food choices, and supplements.
•    Category D -10 million people are the most health-conscious and they know what nutritional supplements or functional foods to consume.
The current growth of nutraceuticals is mostly being fuelled by Category D and E. Category B is mostly ignorant and depends on non-standardised traditional ingredients in times of health emergencies.

Currently US$1.2 billion vitamin and minerals health supplements market is driven by medical professionals' prescriptions and OTC sales. Category B commands US$1.8 billion contribution but has a compliance rate of slightly over 14%. This category is plagued by short patience time, low brand loyalty and low priority towards nutraceuticals in health management.

Category C contributes to about US$2.3 billion with an average compliance rate of 40-60% while Category D contributes to US$700 million with high compliance rate of over 74%.

Foreseeing the future, the current pandemic moved from being a government responsibility to a lesson of self-education. Unfortunately for nutraceuticals, Covid-19 turned out to be the crucial catalyst for the industry's growth. This growth could be seen across all categories probably due to the nature of the disease that did not discriminate based on categories. Category B which had the lowest growth rate of 6% has shot to 10%, while Category C showed the maximum growth of 25% from 12% average growth and category D remains stable at 18%.

Projections reflect that with chronic exposure to fear and nudging to self-healthcare; it is estimated that the growth trend will remain upwards permanently with a fall of 10% in next one year and about 20% in the next three years. The new normal growth trend would however remain 50% higher than the old normal before pandemic. Behaviorally, in their pursuit of improving their compliance consumers will seek formulations that fit into their habits increasing demand for functional foods. It's evident that the Western trends of functional foods have caught up with the startups fuelling the growth. Some of the fastest growing functional food companies are The health factory, And me, The Auric and Zago.

Internationally, how do you see the growth prospects for this sector?
The global market in the nutraceutical space was estimated to grow at a CAGR of 8% in 5 years from now till 2025 and reach US$611 billion (Rs 46,000 lakh crore). The market mainly consists of vitamins, minerals, health supplements, paediatrics and proteins. Off these three categories, the vitamin and minerals supplement space constitutes a good 13% of the total nutraceutical market. The nutra formulations growth internationally is mostly augmented by the startup and mid-sized nutraceutical/ pharmaceutical companies. Covid has disrupted the growth pattern. While the global growth rate of nutraceuticals has moved to 14% from 8% normally, the good news is that herbals and its extracts will take the centre stage in nutraceuticals. India is all set to gain as India has advantage of pre-established ancient science of Ayurveda. Ayurveda has already made its importance felt globally with success of curcumin, bacopa, Ashwagandha, etc, India would also emerge as global ingredient powerhouse as India has about 65 agroclimatic zones making it eligible to churn out largest portfolio of medicinal/nutraceutical raw material.

What is the current growth and size of the sector in India and abroad?
  • The global nutraceutical market is estimated to grow at a CAGR of 8% from 2020 to 2025, to reach US$611 bn (Rs 46,000 lakh crore), up from US$416 bn in 2020 (Rs 31,200 lakh crore).
  • The Indian nutraceutical market, is the fourth-largest nutraceutical market in Asia and accounts to about 2% of the global nutraceuticals market. This market is growing rapidly at a CAGR of 15.8%, and It is estimated that the India nutraceuticals market will reach US$18.16 billion (Rs 1.3 lakh crore) by 2025 (as per pre-Covid trends).
  • The global nutraceuticals market is primarily categorised into three segments, with vitamins, minerals, health supplements  being the largest segment constituting 13% of the total nutraceuticals market. This is closely followed by segments of paediatrics and proteins.  
  • The growth of the nutraceutical industry is propelled by population growth, increasing ageing population, rising burden of chronic diseases, information access and voluntary self-healthcare initiatives by consumers.
  • As per current estimates, Indian market imports more than it exports. With US$1.5 billion exports while India imports US$2.7 billion worth of nutraceuticals. It presents a clear case of trade deficit.   
  • Investments in nutraceuticals industry in the form of Foreign Direct Investments (FDI) have grown by 25.4 per cent from US$131.4 mn (FY12) to US$584.7 mn (FY19). Recent rise in investment has been because of the Government of India in 2015 modified the FDI regulations allowing 100 per cent FDI under automatic route for the nutraceuticals sector. This is expected to further propel the growth of this market (all this is pre-Covid). The FDI enquiries in nutraceuticals have gone up 60% during the pandemic.
  • In the last five years, around 29 angel/ seed funding deals were witnessed in nutraceuticals companies, in India. Recent initiatives like ‘Start-up India’ and ‘Make in India’ will not only increase traction of investors but also bolster opportunities for innovation and growth within the Indian nutraceuticals market. National Research Development Corporation of India has already tied up with our company with the purpose of supporting and growing Indian nutraceuticals industry and enable it to be “Atmanirbhar.”

How can the nutraceuticals sector evolve? What are the challenges and solutions that you foresee for 2021?
Government Front: Gestating the Nutraceutical Industry
1.  In order to allow and authorise the nutraceutical industry, it needs to be protected first which would mean it needs to have centralised ownership. The most suited ownership would be with the Ministry of Food Processing Industries (MoFPI). This would mean including the ecosystem (active nutraceutical ingredients, contract manufacturing, formulations and raw materials processing) of nutraceuticals under it. MoFPI can create a sub-category as medical/health foods. Regardless of its science or outcomes, it is still a food. Hence, it would naturally fit into MoFPI. By creating a sub-category and incubating the industry it would enable the government to dole out industry focussed incentivisation packages.

2. The inclusion of medical foods ecology into MoFPI, the constituents connected to biodiversity laws in MoEF (Ministry of Environment, forest and climate change) and NBA (National Biodiversity Authority) could be accomplished under MoFPI. This will stop Indian trendsetters using USA as the podium to unveil their plant ingredient discoveries and assist small- to medium-sized companies upgrade businesses in India (which is presently truncated by the difficulties posed by biodiversity laws).

3.  Including medical foods/nutraceutical parks under PMKSY scheme of MoFPI could lead to parks concentrating on strategic locations of India to allow business persons as well as larger players in nutraceuticals to tap into prototyping, research/ development lab complex, testing, validation, common facilities (like blender farms, SCO2 facilities, spray drying, freeze drying, fermenters and so on) and market access. An initiative of MoFPI, creating NIFTEM (National Institute of Food Technology Entrepreneurship Management) is a significant leading stride towards completely changed environment that seems to be close to an upcoming opportunity currently.

1.    While FSSAI / Ayush stays to progress in the correct direction, resource restraints and food regulations, unlike in pharmaceuticals have kept watchdogs aloof from operative enforcements. This has resulted in some nutraceutical/Ayurveda companies coddling in diverged assertions and practices carrying loss of trust and contempt to the business.
2.    A technical staffing in licensing and product approval committee should be instated to grow the systematic reasoning and be able to support high science original nutraceutical products.

Ministry of Finance
1.    Kerbing the import duties to permit interplay for local ingredient manufacturers to mature more.
2.    Correct incentivisation to nutraceutical exports.
3.    Taxation structure of 18% tax (with few categories even taxed at 28%) to be revised to style nutraceuticals as a more reachable category.

State Ownership as Host
For nutraceutical parks to grow, it is imperative that state governments have the visualisation of development and own up to even host the ecosystem park. The Telangana government in India is taking huge steps in crafting networks for numerous modules of healthcare including generating an incubation park for nutraceutical industry. The project is being driven by Shakthi Nagappa, director (life sciences and pharma), under the direction of present-day government in the state of Telangana.
1.    The Indian nutraceutical industry needs to self-regulate to make sure that there is compliance, nutrition and accountability in the nutrition field and it is not deemed as only a shortcut revenue generation conduit.
2.    Embracing the Nutrify India Initiative as it empowers the responsible nutrition revolution through start-up. This enterprise commercialises innovation through the government market access programmes and through large companies with robust supply chain systems.  
3.    Work strictly with Responsible Nutrition Association in generating criterions that can be used worldwide too.
4.    Work with incubation hubs for selecting high end innovation. There are 4,000 nutraceutical start-ups in India working with several incubation hubs sustained by the government’s innovation preferment bodies like BIRAC and AIC.
5.    To accept clinical trials and validation of new trends. With the onset of the pandemic, there is a major rush from the government for clinical validation of formulations. It is best showcased with an enormous study on 80,000 subjects being rolled out by the government on Ayush ingredients to discover the worth.

The pandemic has altered the dynamics of procurement for nutra. Consumers have moved their choice from want to need due to the impact of Covid. The awareness about nutraceuticals has increased to 80% resulting in overall category growth with chyawanprash. Digital nutra brands are here to stay and shape the nutra industry. From US$4 billion market, US$1 billion was online which is expected to double up by March 2021. This is a phenomenal growth. eTailers will have to arrange responsible nutrition philosophies and severe compliance to FSSAI to ensure the right products make way into the stores with a strong monitoring of reviews posted for products.

With the new normal of nutra growing at 22% after one year from now the infrastructure of India will need to be more conducive and regulators will have to be more careful or there is a potential downside, a risk of losing consumers. This could happen due to the lack of trust generated due to hyped claims vs. outcomes, something similar to what happened to Ayurveda.

Combined efforts would not only lead to better health outcomes enabling healthier population to deliver higher economic objectives of country, but also build strong equity into global nutraceuticals space.

What are the incentive schemes as government today has come out with PLI incentive scheme for bulk drugs?
Currently, there are no nutraceutical focussed incentive schemes. There are borrowed incentives that can be availed from Ayush, MoFPI, pharmaceuticals. This can be real strainful and time-consuming shuttling from different government bodies.

How is the nutraceuticals market scenario in view of the Covid-19 related challenges?
The pandemic has triggered the importance of clinical validation of nutraceuticals. The biggest challenge in nutraceuticals pre-Covid has been declining quality of clinical trials and claims. This has also led to consumers losing faith in nutraceuticals. The pandemic has triggered regulators to enforce the quality of clinical trials and claims. Although there is a beginning, the bigger challenge is enforcement. ICMR and Ayush has set a good standard with Ayush ministry rolling out immunity ingredient of Ayurveda origin and the trial is on over 10,000 personnel in police. The sample size itself is a good example of qualitative trials and claim validation.

How conducive and clear the regulations are when there are two bodies FSSAI and DCGI governing nutraceuticals?
The nutraceuticals industry desperately needs a host ministry- a parent. Currently formulation industry struggles between two bodies and ingredients industry in nutraceuticals has added burden - Biodiversity law. Unless there is a host ministry that overlaps into other bodies’ function with reference to nutraceuticals, till then Indian nutra industry will struggle and in turn enable and empower international competition to take over.

When do you think the market will start showing remarkable difference?
The market has already demonstrated remarkable difference with growth maintaining at 25% as against 15% pre-Covid. There is a consumer behaviour shift. Indian consumer looked at nutraceuticals as something serious enough that needed doctors endorsement. New generation has been driving the dependency on doctors and has been spending time with Dr Google to self educate and take preventive health decision making in their own hands. The decline on doctor’s endorsement had been at about 10% per annum. With onset of pandemic, the decline in doctors’ engagement with pre-pandemic nutra consumers has gone down to 6%, but the new adapters of nutraceuticals have added a new dimension of depending mostly on net content consumption in decision making. The new adopters delta over precovid nutra consumers is impressively 30% 
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