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Executive Summary:

Executive Summary The Indian Nutraceuticals market valued at $1480 Million in 2011 to grow to $2731 Million in 2016 – Frost & Sullivan The Global Nutraceutical market in 2011 was $149.5 Billion C o mp r ises o f th r ee se g ments, d ietary sup p lement s , functional f oo d s and functional beverages Ma r k et Drivers & C h a l lenges Drivers: Increasing shift towards preventive therapies Increasing disposable income Increase in Healthcare Spending Increasing shift towards self-medication Growth in pharmacy and wellness & retail chains Favorable pricing environment Challenges: Lack of standardization High pricing Lack of awareness Marketing and distribution challenges G o v er n m e nt Regulations A m w a y 17% D a bur 12% H ein z 6% R a nb a x y 6 % Pfizer 5% Others 56% Major Pl a y ers Major Players by Market Share- Domestic companies currently enjoy a stronger f o o th o l d , b u t multinationa ls a r e al s o increasing their presence. Players include large FMCG companies, pharma companies. Regulatory framework to govern the nutraceuticals market in India has yet to be implemented rigorously Food Safety & Standards Act 2006 was effective from 5th August 2011


Contents Introduction N u t r ac e u t i ca l - C las sific ation Nutraceutical- Necessity Nutraceutical-Therapeutic Benefit Market Overview Competition - FMCG Vs Pharmaceuticals Drivers & Challenges Government Regulations Past & current state of FSSAI FSSAI - Functionaries Strategic Recommendations Way Forward

Nutraceuticals -Classification:

Nutraceuticals -Classification f r om "N u t ritio n " and Nutr a c e u t i cal th e t erm coin e d "Pharmaceutical” The term "nutraceuticals" is o f ten i n t e r chan g e d w it h "functional foods" even though there are subtle differences between the two. Nutraceuticals are " naturally derived bioactive compounds -dietary supplements and herbal products, and have health promoting, disease preventing, or medicinal products” Functional foods are foods which contain an ingredient that gives that food health-promoting properties over and above its usual nutritional value, for example, Probiotic yoghurts

Necessity of Nutraceuticals:

Necessity of Nutraceuticals In Indian 380 million population are Undernourished. Nearly 70% (280 million) low purchasing power lead to deficient in micronutrients. Remaining 30% (100 million) due to inadequate food consumption for various reason like illness, low appetite ,diet consciousness. Calorie sufficient-nutrient deficient population-570 million People who are consuming adequate or excess calories than norm but not sufficient nutrient, generally higher and middle income group. May have need due to specific conditions like pregnancy, obesity, stress due to changing life style. Over-nourished population-80 million This segment sufficient purchasing power and with enhanced nutrient and calorie intake due special requirements sports, heavy exercising, etc

Nutraceutical-Therapeutic Benefit:

Nutraceutical-Therapeutic Benefit

Nutraceuticals Market:

Nutraceuticals Market The Indian Nutraceutical market valued at $1.5 Billion compare to global Nutraceutical market of $149.5 Billion in 2011 United States, Europe and Japan are the largest markets that together account for a combined market share of over 90% of the global Nutraceutical. The Indian Nutraceutical market currently accounts for only 1% of the global market. The global market is growing at 7% where as Indian market has been growing at a 21% CAGR for last 3 years. Functional Foods is the largest segment, followed by Dietary Supplements. F un c t i o n a l Foods 54% Dietary S u pp l e me nts 32% F un c t i o n a l Beverages 14% Source: E&Y, Net scribes

Competition - FMCG Vs Pharmaceuticals:

Competition - FMCG Vs Pharmaceuticals The Indian Nutraceutical market is dominated primarily by Pharmaceuticals and FMCG companies with very few pure play Nutraceutical companies Largely, the market is fragmented. However, the FMCG dominated segments are relatively less fragmented as compared to the pharmaceuticals.

Drivers & Challenges – Summary:

Drivers & Challenges – Summary Growing disposable income and lifestyle change in dietary habits are likely to fuel the demand for nutraceutical products. Based upon qualitative analysis on dynamics of developed markets

Government Regulations:

Government Regulations Food Safety and Standards Authority of India (FSSAI), which is responsible for framing rules and regulations to govern the nutraceuticals markets. FSSAI (Food Safety and Standards Authority of India )– The Food Safety and Standards Act, 2006 was notified in the gazette of India on 24 th August, 2006 Authority Established-2008 to operationalize the FSS Act,2006 Gazette Notified Licensing/Registration-FSS Regulations 5 th Aug , 2011 All Food Business Operators in India to get Licensed/Registered with Food Safety Authority

Genesis and current state of FSSAI:

Genesis and current state of FSSAI Source: Primary Interviews and Ernst & Young analysis

Major Functionaries in FSSAI:

Major Functionaries in FSSAI

Challenges & Success Strategy:

Challenges & Success Strategy Marketing Challenges Strategy High development cost Clinical complexity Partnership for cost effective development Well designed trials & protocols Development High promotional spend Uptake by stakeholders Market competition Regulatory Barriers Patent Barriers Enter marketing agreements Right product for right indication Low cost manufacturing Gain experience from US/EU regulatory guidelines Gain legal expertise Profitability Marketing Technical Barriers Lack of Manufacturing facilities Early planning & analysis Team up with companies having expertise Access to GMP facilities Manufacturing Big US/EU Pharma Strengths meter Indian Pharma Based upon qualitative analysis on dynamics of developed markets

Way Forward:

Way Forward Agenda for government Lay down rules to govern quality and claims of nutraceutical products Take measures to ensure availability of adequate resources for implementation of laid out rules Encourage R&D in the field of nutrition and deploy PPP models to serve needs of the undernourished segment of population Agenda for private sector Product development : Develop customer focused products addressing specific needs of different consumer segments Product differentiation : Differentiate products by focusing on credibility building and/or lowering prices of products Product promotion : Increase awareness of the benefits of nutraceuticals through advertizing and physician education