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This article has been written by Yasar Arafath, pursuing the Diploma Programme in Business Laws for In-House Counsels from LawSikho.

Introduction

In the era where the world was busy in battling with various economic, religious and geopolitical issues, a virus rapidly crept in and made us realise what really matters. Pandemic has caused people all over the globe to place emphasis on preventive healthcare and highlighted the use of nutraceutical as a preventive cure. Pandemic demonstrated that people who took precautions were able to prevent the disease and manage the pandemic more effectively. 

Rising awareness among people regarding nutritional enrichment is a favourable factor for the growth of the nutraceuticals industry. For the proper functioning of the human body and the prevention of various diseases, vitamins are considered to be vital. Growing awareness among working professionals about nutritional enrichment is expected to promote the nutraceuticals industry over the next few years.

The treatment cost of novel coronavirus showed how financially distress and crippling an illness can be. Looking at the Cost of hospitalization everyone realised it is best to adopt preventive measures. Nutraceuticals are best options for preventive measures and it comes in the form of gummies, lozenges, chewable etc., which contains amino acids, fibres, minerals, vitamins, probiotics, proteins, etc., and which play a vital role in boosting immunity.

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Overview – Nutraceutical Industry

Millions of people were infected with the novel coronavirus (with the number increasing for every second passing), in fighting viruses we need to build immunity which is crucial. And, it is no secret that the role of nutrients in supporting the immune system is extremely important.

With the rising demand for natural immunity-boosting products during the pandemic made the nutraceuticals industry more in demand. There is a rise in demand for functional foods as people believe that it will add exceptional health and wellness benefits. Functional foods created a Positive attitude among the consumers mainly on account of the health benefits offered by nutraceutical products fueled the growth of the market

Changing Lifestyles, increase in ageing population and increasing healthcare costs have supported the overall growth of the nutraceuticals industry. As per the statistics 9 out of 10 adults are consuming 55% minerals & over 50% vitamins in their daily diets.

In the coming ten years the nutraceuticals industry has potential to grow upto the size of $25-30 billion dollars but it requires a lot of regulatory changes to create an organized ecosystem for the industry players across the value chain.

In 2019 global nutraceutical market size valued at $ 382.51 billion dollars and it is forecasted to have 8.3% Compound Annual Growth Rate in coming periods 

A study conducted by RNCOS and ASSOCHAM estimated the growth of Indian nutraceuticals market could reach $8.5 billion dollars by 2022 from $2.8 billion dollars in 2015.

Nutraceutical Market Report Scope

Insights- Nutraceutical Products

Nutraceuticals are nutritional functional foods or the medicines extracted from a variety of food sources to administer supplementary benefits simultaneously with basic health benefits. Nutraceutical product markets are categorized into functional foods, functional beverages and dietary supplements. The segment of functional beverages led the overall market followed by functional foods and dietary supplements in 2019. Over the years the functional beverage industry will be driven by product development coupled with technological upgradation.

Nutraceutical manufacturers extended the product offerings due to ingredient formulation microencapsulation techniques and particle size reduction. 

Sports drinks gained popularity among individuals and athletes involved in physical activities. Sports drink market is driven by the millennial generation due to their willingness to pay for health products, high buying capacity and growing inclination towards fitness activities.

Risk of heart diseases are reduced by consumption Omega -3 which reduces heart healthy fats. Expected growth of Omega-3 fatty acids based functional foods industry is USD 38.76 million by 2025 with Compound Annual Growth Rate of 9.3% from 2020 to 2025.  

Global Nutraceuticals Market Revenue, by Type, 2025 (USD Million)

Indian Nutraceutical market

Nutraceutical industry in India is expected to hold at least 3.5 percent of global market share by 2023. Indian nutraceutical market amounts to 2 percent of the global market pegged at USD 388 Billion dollars. In India, the pandemic has pushed the people to polarize thoughts on the importance of preventive health.  There is clear visibility on the impact created by pandemic on the nutraceuticals industry in India.

The Indian nutraceuticals industry has great prospects. A wide range of products was made available in the Indian nutraceutical market over the last decade, giving an insight into the remarkable growth. 

India’s economy is booming as a result of an increase in the overall disposable income of the population on one hand and on the other hand, growing awareness on the importance of diet and nutrition for long- term good health. These conditions have contributed to a favourable market for the nutraceuticals industry in India. With qualified human resources, availability of raw material and world-class R&D facilities will lead India an edge over other countries.

By 2030 the market will touch USD 10 Trillion dollars which is quadrupling growth of the Indian economy. India has over 108 large contract manufacturers in nutraceuticals and most of them operate on the “cookie-cutter” model. In the nutraceuticals market, India’s export is below USD 1.6 Billion dollars and imports in nutraceuticals are of USD 2.8 Billion dollars.

While the global market is growing with 7% Compound Annual Growth rate (CAGR) and with 18% Compound Annual Growth rate (CAGR) The Indian market has been growing much faster for the last three years, driven by functional beverages and food categories.

The Indian nutraceuticals market is dominated by pharmaceuticals and FMCG companies primarily with very few pure-play nutraceuticals companies. Some major companies marketing nutraceuticals in India are Dabur India, GlaxoSmithKline Consumer Healthcare, Cadila Healthcare, Zandu Pharmaceuticals, EID Parrys, Amway, Himalaya Herbal Healthcare, Sami Labs Ranbaxy and Elder Pharmaceuticals.

Challenges faced by Nutraceuticals Sector in India

Nutraceuticals sector is currently regulated by the Food Safety and Standards Authority of India (FSSAI), an authority under the Ministry of Food Processing Industries (MOFPI). Nutraceuticals sector could not achieve full export potential due to the limited attention by FSSAI.

The government needs to seriously think of defining the scope of the nutraceutical sector and product portfolio. There is a need of the hour for creation of a separate regulatory body that can provide prompt resolutions for the grievances, HSN [Harmonized System of Nomenclature] repository and export promotion initiatives by a centralized regulatory body to promote the sector.

Specific financial packages, independent HSN code structure and tax breaks for research, manufacturing and clinical studies will significantly boost the nutraceutical industry and which contributes significantly for public healthcare.

Centralized regulation under the Joint Secretary of the Ministry of Commerce and Industry with the institutionalization of roles and responsibilities can coordinate better decisions.

Public-private partnership (PPP) model can drive the nutraceutical products to penetrate the domestic market and to enhance the nutrition levels among the under-nourished segments of the population.

Global Market of Nutraceuticals

In 2020 Nutraceutical market size was worth USD 382.51 billion. The global nutraceutical market size is estimated to reach a value of USD 722.49 billion by 2027, expanding at a Compound Annual Growth Rate of 8.3% between 2020-27.

The U.S. holds over 27.1% of global nutraceutical market share in 2020 and with USD 63.3 billion nutraceuticals market in the year 2020. The United States will maintain a 6.1% growth momentum in nutraceuticals over a period of 2020-25. China, the world second-largest economy, exhibits the potential to grow with 9.6 % CAGR over a period of 2020-27 and with estimated market size of US$77.2 Billion by the year 2027

Other noteworthy geographic markets like Japan and Canada forecast each to grow at 3.4% and 5.7% respectively over the period 2020-2027. Within Europe, which continues to remain an important element in the world economy, Germany market will grow by 4% CAGR. 

Growth and demand for nutraceutical products in emerging countries like Asia-Pacific, Latin America and the Middle East depends on internal market forces and several macroeconomic factors.

Industry Overview: Global v/s Indian Nutraceutical Market

In today’s world, Europe, Japan and the USA together hold for more than 90% of the total global nutraceutical market. With compound annual growth rate (CAGR) of 8% the global market should reach USD 336 billion by 2023 from USD 247 billion in 2019. The nutraceutical market has attained maturity in developed countries and now the focus is shifting towards developing economies, especially those across the Asia Pacific including India. Indian nutraceutical market accounted for 2% of the global market share and is expected to be valued at USD 5 billion as of 2019. By 2023 Indian Nutraceutical market is expected to reach USD 11 billion with 2% Compound Annual Growth Rate (CAGR) and expecting to hold at least 3.5% of the global market share.

Conclusion

Expensive treatments have paved the way for nutraceuticals as an alternative to expensive drugs that are assumed to increase in the near future.

Following the pandemic and the consequent lockdown across the globe, health consciousness among people has mounted significantly, leading to a higher demand for products that bolster immunity. Vitamin supplements such as zinc are in huge demand, as these can help patients with reduced respiratory tract infections like SARS-CoV-2. It plays a big role in the body’s immune function and can potentially bring down COVID-19 replication. Research and clinical trials are being conducted with full force to analyze the potential of various other vitamin supplements including Vitamin C, Vitamin D, and more in reducing the COVID-19 impact.

Over the years, there has been a sharp rise in vitamin deficiencies because of the growing prevalence of hectic lifestyles, shorter mealtimes, and nutrition loss during cooking as well as food processing. Therefore, consumers are becoming more aware of different deficiencies and the type of vitamin supplement to take, leading to a faster growth rate of the global market. 

Given the current market scenario, a key shift in the markets would be that India could be the next big source of raw materials as well as finished goods, as the Chinese trade experiences a slump.

References


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