Nutraceutical manufacturing, the complex process simplified through vertical integration.
According to the October 2021 report by the US-based Grand View Research, the global nutraceutical market is projected to reach $8,26,426.3 million by 2028, expanding at a CAGR of 8.9% over the forecast period. While this is good news, the underlying manufacturing process is fraught with challenges given the divers nature of these products which are a mixture of vitamins, minerals, proteins, peptides, polyphenols, lipids, flavonoids, and isoflavonoids.
Plants harvested in different places at different times can bring about variations in the biochemical profile and affect reproducibility. Other variables like source and quality of raw material, storage and transportation, mode of extraction, the polarity of the extracting solvents, stability of the constituents, particle shape, and size also affect processing. Consequently, analysis has to be diverse and different techniques for extraction and purification have to be employed when working with these fragile and friable, sensitive to air, light, and humidity constituents.
Each step in the manufacturing process needs to be carefully monitored and documented to ensure that the end product is safe and does not carry pesticides, allergens, toxins, or heavy metals beyond industry-regulated amounts. This makes the process time-consuming and expensive in a market that is becoming increasingly competitive.
In this scenario, vertical integration between manufacturers and suppliers helps reduce many risks while offering a consistent and reliable supply of products. For manufacturers, increased coordination and sharing of trade secrets within the supply chain improves quality, traceability, and safety, thereby building trust amongst consumers.
Vertical integration benefits suppliers equally. In 2010, under the ‘Seed to Sell’ program, Indian farmers were contracted to grow marigold flowers on 1,000 acres and extract lutein from them. Today, more than 10-11,000 farmers are growing 60,000 tonnes of marigold on 11,000 acres, multiplying their income from Rs 25,000-30,000 per acre to Rs 2-3 lakh per acre.
With 52 different agro-climatic zones, India is one of the largest producers of medicinal herbs and botanical extracts, many used traditionally in time-tested Ayurveda products. Given our proximity to an inexhaustible supply of raw materials, we could become a strong market leader, bringing new and affordable plant-based products and dietary supplements to the shelves.
So far, we have been importing raw materials and formulated nutraceuticals to the tune of around $2.3 billion but that could reduce with the setting up of nutraceutical parks where raw materials can be grown domestically and in close collaboration with manufacturers, in sync with Prime Minister’s Narendra Modi’s or ‘Atmanirbhar Bharat’ vision.
The Food Safety and Standards Authority of India’s (FSSAI) has directed states to ensure that nutraceuticals comply with the Recommended Dietary Allowance (RDA) norms. It also emphasises validation according to guidelines set by ICMR (Indian Council of Medical Research). This should bring in new investors and boost exports by offering clarity on regulation and legislation in accordance with international standards.
Moderating import duties and lowering tax rates which in 2017 were pushed up from 12% to 18% (with a few categories at the highest end of 28%) will also ensure competitive pricing and growth of the market.
The GOI should be encouraged to seriously consider introducing a PLI scheme for the nutraceuticals industry specifically. It will drive better investments into manufacturing competency and capacity on a global scale and help the industry grow at a much faster pace.
According to a study conducted by the Associated Chambers of Commerce and Industry of India (ASSOCHAM) and RNCOS, our nutraceuticals market is expected to grow from $2.8 billion in 2015 to $8.5 billion in 2022 and our global market from 2% in 2019 to 3.5% and reach $11 billion by 2023.
So, the next time you reach for a bottle of Vitamin C capsules, it could well be made in India.
Sanjaya Mariwala, Founder President of the Association of Herbal and Nutraceuticals Manufacturers of India (AHNMI) and Executive Chairman and Managing Director at OmniActive Health Technologies.