Nutraceuticals – Industry Overview

The term nutraceutical was coined in the 1980’s to describe the food products which have a medicinal benefit. Nutraceuticals are expected to play a central role in preventive healthcare. The logic of nutraceutical is built on the belief of leading a healthy life and staying preventative to lifestyle related diseases. In the modern world, people have changing routines of diet which are leading to improper intake of nutritions. Lack of nutrition makes the body weaker and prone to diseases like diabetes, cholesterol, heart diseases etc. People have been experiencing intolerance in metabolism due to inefficient diet, because of which specific modified foods are required for meeting the demand, for eg- Lactose free milk products are introduced in market to meet the lactose intolerant consumers.

The Indian nutraceutical market is valued at $10 billion in 2020 and is expected to grow at a rate of 7% during the period of 2019-2024. Indian has 2% share in the global nutraceutical market. The covid pandemic has acted as a catalyst for the surge in demand. The value chain of nutraceuticals begins with KSM like herbs, oil, plants etc which are sent to processing companies. The intermediate manufacturers send the product to formulators like pharmaceutical companies and the health and wellness industry. These formulation products are then sent to customers.

In terms of application, 51% nutraceuticals are used for nutritional deficiency followed by 30% for muscle building and 15% for weight management. With increasing trends on health awareness the age group of application is also expanding from children to senior citizens.

The nutraceuticals can be broadly classified into Dietary supplements and Functional foods/beverages.

Dietary supplements include ingredients such as vitamins, minerals, herbs, amino acids, and enzymes. Dietary supplements are marketed in forms of  tablets, capsules, softgels, gelcaps, powders, and liquids.Unlike drugs, supplements are not intended to treat, or diagnose any disease. Claims like these can only legitimately be made for drugs, not dietary supplements. They just act as a preventive measure by boosting immunity.

Foods/ beverages enriched with nutrition having a functional purpose are known as functional foods. Vitamins, minerals, probiotics, canola oil, proteins, prebiotics etc are added to the foods to increase the nutritional value and offering customers a healthy and alternative way to consume nutraceuticals. 

Vitamins, minerals, herbal supplements, proteins and other nutrients like amino acids, BCAA, kreatin etc comes under the dietary supplements umbrella.Dietary supplements in India are valued at $3924 million and are expected to reach $10,198 by 2026 with growth rate of 22%.Nearly 40% of the dietary supplement market is contributed by vitamins and minerals.

Different vitamins have different therapeutic areas and thus the market is largely diversified. Vitamins are responsible for metabolism and immunity of living beings. The vitamins are manufactured from various intermediates like beta carotene for vitamin A, Ascorbic acid for Vitamin C and Tocopherols for vitamin E. Minerals like calcium, zinc, iron, copper etc are needed for healthy functioning of the body. The therapeutic area for different vitamins are:

The key players in the nutraceutical segment are Amway, Dabur, Heinz, Herbalife, Himalaya, Ranbaxy and others. India is one of the top 10 markets for Amway and it has leading market share in the domestic market. Amway India aims to double their size of nutrition category by 2025 and is willing to invest ₹100 Cr for boosting the R&D initiatives.

Key products of nutraceutical manufacturers in indian market are as follows:

Functional food and beverages are part food products having health benefits and high nutritional value like baby food, protein bars, breakfast cereal, lactose free dairy products, probiotics and prebiotics. The market is fragmented with products like vegetable/seed oil -25%, Sweets & snacks- 19%, Dairy- 16%, Bread & Confectionery- 15%, Breakfast cereal and baby food with 24% market share.  The key players of functional food in Indian markets are Britannia, Cargill, Nestle, Kellogs etc.

Functional beverages also serve the purpose of nutrition enrichment. Products like energy drinks, milk premixes, soft beverages and probiotic drinks are some of the products in the functional beverages segment. The industry is classified as hot and cold beverages with cold beverages contributing 71% of the total functional  beverages market. The Indian market is dominated with products like horlicks and boost manufactured by GSK and  bournvita manufactured by Mondelez. 

In 2019, along with vitamins, minerals and herbs, the launches of new products in the probiotic segment saw an uptake with new launches contributing to 24% of total product launch. 

Trends in the nutraceutical industry looks positive because of high growth potential driven by changing lifestyle patterns. According to statistics, nearly 15% of the Indian population is undernourished. A study from Apollo hospitals in 2021 revealed that death due to non communicable diseases like diabetes, cardiovascular disease and hypertension stood at 64%. NCD kills more than 40 million people globally each year, equivalent to 71% of total deaths which stood at 60.8% in the year 2000. Prevention of such disease through naturally derived nutrients will drive the demand.

ADM is one of the largest manufacturers of nutraceuticals and wellness products for animal and human nutrition. The revenues in 2017 stood at $3532 million and in the year 2020 the company generated revenues of $5799 million. This shows the exponential surge in demand for nutritional products.

Indian players like Fairchem Organics, Matrix life sciences and Fermenta biotech are some companies who manufacture API for nutraceutical products vitamin E and vitamin D respectively. Vitamin E is manufactured from Tocopherols and vitamin D is manufactured from cholesterols of wool grease. Both the products are derived from natural sources like seed oil and animal wool. Fairchem organics nutraceutical revenue contribution contracted from 36% in 2014 to 3% in 2021 on account of high input prices and contraction in demand. The company’s outlook on demand is robust and positive and expects the revival soon.

Fairchem organics competes with matrix life science in the Indian market. Matrix lifescience manufactures high concentrated tocopherols and sterols which are used in manufacturing of vitamin E. Matrix life science is ahead in the value chain compared to fairchem as fairchem organics manufactures low concentrated tocopherols and are moving to high concentration ones. With diversification and upgrade to higher concentration products, fairchem organic is able to expand their margins in comparison to matrix life sciences. 

According to study, 80% of the Indian population is suffering from vitamin D deficiency and the only alternative to meet this insufficiency is through the means of nutraceuticals. Fermenta biotech might benefit as more than 70% of revenue contribution is from vitamin D. The penetration of nutraceuticals is low in India compared to other regions. The penetration is much higher in urban areas compared to rural regions, thus with rise in urbanisation and awareness on health and diet will result in exponential demand.