Pharma Firms Betting Big on Nutraceuticals

Awareness about health care is growing and pharmaceutical companies are betting big on nutraceuticals. Several pharma companies are introducing products in this category and predict a significant increase in their profits from this segment.

Elder Pharma leads the pack while other major players in the nutraceuticals segment include Wockhardt, Plethico, Glenmark and Troikaa Pharmaceuticals. Elder Pharmaceuticals director Alok Saxena said, "We are currently the largest player in this segment and getting strong. The growth in this segment is going to be phenomenal in the coming years." In 2007, Elder pharma acquired 20% stake in UK-based Neutra Health for £5.63 million.

Industry sources value the nutraceutical segment in India at roughly $400 million (Rs 1,750 crore) and expect it to grow at approximately 20% per year. "The Indian healthcare sector is valued at $7 billion (Rs 30,500 crore) and $400 million is a somewhat accurate estimate of the nutraceutical segment. The question, however, arises that since nutraceuticals is a wellness product, whether ayurvedic and herbal products fall under this category as well," Ernst & Young health science practice partner Murali Nair said.

Though nutraceuticals in India are considered drugs, unlike the over-the-counter status they have in western countries, the industry estimates global sales to reach $190 billion (Rs 8,28,000 crore) by 2010. "The dietary supplement market in India alone is estimated to reach Rs 5,267 crore by 2010 and is expected to witness a tremendous growth rate of 16%," Maheshwari Basavaiah, analyst with Frost & Sullivan said.

The challenge facing Indian pharmaceutical companies, however, is the fact that the definition of nutraceuticals is not clearly defined in the country. "Nutraceuticals cover dietary supplements and vitamins among others. In India there is no act which promotes the manufacture and sale of these, under a label other than 'drugs'. It can be sold only through pharmacies and to acquire a license in this case becomes a hassle. There needs to be more clarity on this," Ahmedabad-based Troikaa Pharmaceuticals managing director Ketan Patel said. Nutraceuticals contribute over 13% to the company's turnover.

What the industry needs, Mr Nair said, is an empowered body that will enforce strict regulations on companies but allow them to bypass the medical channels. Currently, pharma companies have to approach doctors to promote their products. Industry sources also feel that OTC status might be better to boost the segment rather than a drug status, as people associate drugs with curative measures rather than preventive ones.

Source: The Economic Times
Date: August 22, 2008