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Nutraceuticals: An Emerging Opportunity in The Gray Area Between Pharma And Nutrition

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Close association between nutrition and health has assumed a historical relevance. Growing pieces of evidence, even today, suggests that nutritional intervention with natural substances could play an important role, especially in the preventive healthcare. The World Health Organization (WHO) too has highlighted that mortality rate due to nutrition related factors in the developing countries, like India, is nearly 40 percent.

The ‘Gray Area’:

In the space between pharmaceutical and nutrition, there is an emerging ‘gray area with 50 shades’ having significant business relevance.

In a related publication, A.T. Kearney – a leading global management consulting firm has elaborated it as under:

“At one end of this natural nutrition spectrum, are functional foods and beverages as well as dietary supplements, aimed primarily at maintaining health. At the other, more medical end of the spectrum, are products aimed at people with special nutritional needs. In the middle, is an emerging gray area of products that have a physiological effect to reduce known risk factors, such as high cholesterol, or appear to slow or prevent the progression of common diseases such as diabetes, dementia or age related muscle loss.”

Evolution of the terminology ‘Nutraceuticals’:

Dr. Stephen DeFelice of the ‘Foundation for Innovation in Medicine’ coined the term ‘Nutraceutical’ from “Nutrition” and “Pharmaceutical” in 1989. The term nutraceutical though is now being commonly used in marketing such products has no regulatory definition, other than dietary or nutritional supplements.

It is interesting to note that the dietary supplement industry defines nutraceuticals as, “any nontoxic food component that has scientifically proven health benefits, including disease treatment and prevention.”

Probably because of this reason, it is often claimed by the manufacturers of nutraceutical products that these are not just dietary supplements, but also help in the prevention and/or treatment of many disease conditions.

In India, nutraceuticals are mostly promoted to the doctors just as any other ethical pharma products. These are also prescribed by the medical profession, not just as nutritional supplements but also for the treatment of disease conditions, ranging from obesity to arthritis, osteoporosis, cardiological conditions, diabetes, anti-lipid, gastroenterological conditions, dementia, age-related muscle loss, pain management and even fertility. All these are generally based on off-label therapeutic claims of the respective manufacturers.

Currently, this particular category of nutraceutical products, despite being out of price control and operating within much relaxed regulatory environment, is showing just a moderate growth trend in India.

The market:

According to a report of Frost & Sullivan, the global nutraceutical market has clocked maximum growth in the last decade.

Nutraceuticals as an industry emerged in the early 1990s. However, from 2002 to 2010 has been the key growth phase for the industry. From 1999 to 2002, the nutraceutical industry grew at an Annual Average Growth Rate (AAGR) of 7.3 percent, while from 2002 to 2010, the AAGR doubled to 14.7 percent, in line with the Indian Pharma Market (IPM).

The penetration of nutraceuticals in India was around 15 percent in 2013. In the same year, the turnover of the global nutraceuticals market was around US $168 billion in which India had a demand share of around 2 percent, i.e. around US $2 billion.

Growing at a Compound Annual Growth Rate (CAGR) of 17.1 percent, the Indian market is expected to reach US$ 4 billion by 2018. China, Southeast Asia, and India are the fast-growing markets, with each experiencing growth in double digits.

In the last couple of years functional beverages have emerged as a fastest growing category for the Indian market, with many companies expanding their portfolio in the segment. This category is expected to grow at a CAGR of 21.7 percent by 2018.

However, in terms of ingredients, especially plant extracts and phytochemical, Indian manufacturers have entrenched their place as suppliers, both locally as well as globally.

Some other key findings of this report are as under:

  • India is currently a nascent market for nutraceuticals, without a robust business model in place. Both MNCs as well as domestic companies in the pharmaceutical and food and beverage space have tested the market with a variety of launches, with some degree of success.
  • The existence of alternative medicines in India, and the Indian consumer’s belief in them, could provide a platform for the nutraceutical industry to cash on.
  • The Indian consumers’ awareness about conventional nutraceutical ingredients such as omega-3 fatty acids or lutein is very limited. The nutraceutical manufacturers would require spreading awareness about their products to the Indian masses, much more effectively.
  • As compared with the developed countries such as the USA, Europe, and Japan, the percentage of population consuming nutraceuticals in India is much low. The middle to high income groups are the dominant consumers of functional foods and beverages along with dietary supplements, while the lower income groups consume mainly prescription-based dietary supplements.
  • Health awareness and an increase in the penetration of organized retail stores are expected to play a major role in driving the nutraceuticals’ consumption in India.

Current regulations in India:

The Food Safety and Standards Act (FSSA) of India, 2006 predominantly regulate manufacturing, storage, distribution, sale and import of nutraceuticals in India. Unlike pharma products, no other regulations are still in place, though the government reportedly is in the process of inviting suggestions from the stakeholders on the subject.

Experts feel that FSSAI needs to play a more important role in defining standards to streamline the operations for nutraceuticals business in India, which should include, besides others, the following:

  • Quality of raw materials
  • Safe manufacture of product with cGMP standards
  • Health claims
  • Labeling
  • Distribution & storage

In the absence of comprehensive regulations many companies are unable to decide on necessary investments that will be required for this business in the longer term.

Currently, nutraceuticals are much less expensive to develop, manufacture, market and distribute, offering a rainbow of business opportunities in the healthcare space.

A brand ‘New Ministry’ in place:

In all likelihood, renewed measures would now be taken to bring nutraceuticals under the mainstream healthcare.

It appears more feasible today than ever before, as the Prime Minister Modi, with an eye on reviving indigenous and traditional medicine has recently created a brand new ministry with a Minister of State (Independent Charge) at the helm to look after Department of Ayurveda, Yoga and Naturopathy, Unani, Siddha and Homeopathy (AYUSH).

Need to generate robust clinical data:

In this context, a relatively new development is worth noting. It has been reported that all new traditional medicines will need to undergo clinical trials before their regulatory marketing approval in India. However, it has also been amply clarified that “such products will include only the new patented drugs and not the classical formulations that find mention in India’s ancient texts, some of which are 5,000 years old.”

I reckon, for all nutraceutical formulations with specific therapeutic efficacy and safety claims, there is a need to generate supportive robust clinical data for the patients’ long term health interest.

Therapeutic efficacy of a drug in the treatment of a disease condition is established with pharmacokinetic, pharmacodynamics, other pre-clinical and clinical studies. Some experts believe that these studies are very important for nutraceutical products too, particularly when therapeutic claims are made on them, as these substances undergo a series of reactions within the body.

Similarly, to rule out any long-term toxicity problem with such products, generation of credible clinical data is again critical. At present, these are not usually followed for nutraceutical products in India, even when therapeutic claims are made.

The experts, therefore, quite often say, “A lack of reported toxicity problems with any nutraceutical should not be interpreted as evidence of safety.”

Regulatory requirements for nutraceuticals in the USA:

In America, the Congress had passed the ‘Dietary Supplement Health and Education Act’ in 1994. This act allows ‘functional claims’ to dietary supplements, like “Vitamin A promotes good vision” or “St. Johns Wort maintains emotional well-being”, as long as the product label contains a specific disclaimer that the FDA has not evaluated the said claim and that the product concerned is not intended to diagnose, treat, cure or prevent disease.

The above Act bestows some important responsibility on to the doctors, who are required to provide specific and accurate scientific information for nutraceutical products to their patients. This process assumes critical importance, as the patients would expect the doctors to describe to them about the usefulness of nutraceutical products as alternatives to approved drugs. In such cases, if any doctor recommends a dietary supplement instead of pharmaceutical products, the doctor concerned must be aware of the risk that the patient’s health may suffer, for which the affected patient could sue the doctor for malpractice.

Indian Health Ministry should take note of these points for ethical promotion of nutraceuticals in India.

Sanofi considered nutraceuticals as a business opportunity in India:

So far in India, Sanofi is the only Pharma MNC that has entered into nutraceuticals business in a big way. Sniffing the market opportunity in this segment, the French major acquired the nutraceuticals business of Universal Medicare Private Ltd of worth Rs.110 Crore, in August 2011. The nutraceuticals product portfolio of Universal Medicare included more than 40 brands from cod liver oil capsules, vitamins/mineral supplements and antioxidants to liver tonics.

Ambivalence of Pharma MNCs:

According to A.T. Kearney report, unlike food industry, the global pharma industry has approached nutraceuticals with a ‘great deal of ambivalence’.

Pfizer and Novartis have sold their nutrition businesses.While the same Pfizer that sold Wyeth Nutrition to Nestle, invested an undisclosed sum to acquire Danish vitamins company Ferrosan and the dietary supplements manufacturer of the United States, Alacer, reinforcing what was already a billion-dollar business enterprise.

On the other hand GlaxoSmithKline (GSK) and Novartis have recently announced a joint venture for consumer products business, which could probably be a stepping-stone to get into nutraceuticals. Who knows?

Food companies leading nutraceuticals business:

The A.T. Kearney report also states that at present the food companies, and not the pharma players, are in the lead, accounting for about 90 percent of nutraceuticals sales with expertise in branding, consumer market expertise and access to mass distribution channels.

A few consumer companies have also inked partnership with pharma companies. For example, Coca-Cola and Sanofi have partnered to sell health drinks in French pharmacies.

Conclusion:

Nutraceuticals business, as many believe, is an emerging opportunity in the ‘Gray Area’ between pharmaceuticals and nutritional product classes. So far, the food companies have been charting this frontier that remained uncharted by a large majority of the pharma players. This is mainly because the success requirements for nutraceutical products, including dietary supplements, are quite different.

That said, a transparent and well-charted regulatory pathway for nutraceuticals, especially for formulations with therapeutic claims, would have a significant impact on its future growth potential in India.

Many nutraceutical products in the country with specific therapeutic claims do not seem to have supporting robust clinical data, leave aside being peer reviewed and published in the reputed international journals on the claims for safety or efficacy.

The entry of one of the global majors, Sanofi, having a clear focus on Evidence Based Medicines (EBM), ushers in a new hope and promise to get the loose knots tightened in this important area, while driving the business growth of the category.

Just as EBM, scientific ‘Evidence Based Nutraceuticals (EBN)’ with therapeutic claims, should be the centerpiece of consumer confidence and interest in this emerging niche of healthcare business in India.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.

A Force Multiplier: An “Armageddon”: A Contender for Supremacy in the Generic Pharma World

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It is very important for any country to ensure access to most appropriate medicines for the patients as and when they require. In many disease areas such access can be remarkably improved through affordable generic drugs, which offer significant savings in cost for absence of monopolistic situation and intense competitive pressures.

In many countries like, India and China to further augment this process, the Government price control on essential medicines is already in force.

A paper titled, “Generic Medicines: Essential contributors to the long-term health of society” highlights the following facts on such drugs:

• Provide an affordable, gold standard medication for many major illnesses

• Allow access to medicines for a greater proportion of the population

• Stimulate healthy competition with the branded sector

• Deliver savings to national health bills

• Are high quality products

Generic companies also innovate:

The same paper also highlights, though innovation has been traditionally perceived as the domain of the research-based originator companies, generic medicine companies often spend significant sums on innovating and improving formulations, enhancing delivery systems and finding solutions to patient compliance issues.

It also says, the generics medicine industry spent 7 percent of revenues on R&D alone, in 2007 and created 150, 000 jobs only in the EU.

Continuous growth of generic drug industry is critical:

Taking all these factors into consideration, continuous growth of the generic drug industry is critical in ensuring broad access to medicines to the population of any country at an affordable price. Nothing else can achieve this objective.

In the developed countries like, Canada, Denmark, Germany, Netherlands, UK and even USA, large volume of generic medicines are prescribed. Most of these countries have put in place appropriate regulations that facilitate market entry of generic drugs soon after patent expiry. All of them, by and large, encourage even more prescriptions of generic medicines.

Of course, there are many instances of deliberate attempts to slow down generic entry, which I shall deal with separately at some other time.

Quality perception for generic drugs:

In many countries the general perception of efficacy and safety standards of generic drugs is still not satisfactory. In many occasions, these are reportedly prompted by well orchestrated campaigns by interested private stakeholders in this area.

However, in markets, like the EU, Canada and the USA Governments do take public awareness measures to dispel such doubt. Unfortunately not enough similar initiatives have been taken in India with tangible results. The reason could probably lie in the existence of a powerful branded generic lobby in the country, unlike many other markets of the world.

The market:

A report of Frost & Sullivan titled, “Generic Pharmaceuticals Market – A Global Analysis” stated, the global generic pharmaceuticals market registered a revenue of US$ 135.85 billion in 2010 with a growth rate of 11 percent. The top eight global markets, namely the United States, Germany, France, the United Kingdom, Canada, Italy, Spain and Japan account for 80 percent of the total generics market. The United States will continue to remain the largest market in the world for generic pharmaceuticals in value terms.

It is estimated, the global generic drug market will grow to US$ 231.02 billion by 2017 with a CAGR 9.3 percent from 2010. The key growth drivers being:

  • Patent expiration of some blockbuster drugs
  • Entry of more biosimilars
  • High growth of emerging markets
  • Cost containment measures of governments and healthcare service providers in various countries

BRIC Countries strongly defend generic drugs:

Allegation of attacks on the generic industry by the patent holders of various drugs is also heard quite frequently.

It was reported that in a TRIPS Council meeting in mid 2012 held at the World Trade Organization (WTO), India, Brazil and China defended the right of access to cheap generic medicines by poor countries, strongly resisting attempts by the US, Japan and some other developed countries to club counterfeits or copies of patented drugs with fake or spurious ones.

They also argued that infringing intellectual property rights should not be confused with sub-standard products.

Many believe that because of the reported ‘clout of India, China and Brazil’ in the WTO, this attempt may not fructify despite such attempts.

India is surging ahead:      

It is interesting to note that out of top 10 fastest growing generic companies of the world, 4 are of Indian origin namely Glenmark, DRL, Sun Pharma and Taro (owned by Sun Pharma) and 3 definitely are home grown Indian companies, as follows:        

Top 10 Fastest Growing Generic Companies of the World:

No. Company Country Sales US$ Million Growth 2011 (%) Growth 2010 (%)
1. Sagent Pharmaceuticals USA 152 106 153
2. Perrigo USA 620 80 45
3. Nichi-Iko Pharmaceutical Japan 1300 79 25
4. Watson Pharmaceuticals USA 3320 46 38
5. Glenmark India 778 37 17
6. Dr. Reddy’s Laboratories (DRL) India 1480 34 15
7. Taro Pharmaceutical Israel 436 33 11
8. Sun Pharmaceuticals India 1650 29 52
9. Veropharm Russia 156 24 28
10. Polpharma Poland 580 22 20

(Source: FiercePharma)

India the pharmacy of the developing world:

According to a recent report India is now emerging as the ‘Pharmacy of the Developing World’, as it produces a large volume of high-quality, affordable generic medicines.

The study also highlights, “as a result of tough competition from the generic players of India, the price of first-line ARVs dropped from more than US$ 10,000 per person per year in 2000 to around $150 per person per year today. This significant price decrease has helped to facilitate the massive expansion of HIV treatment worldwide: more than 80 percent of the HIV medicines used to treat 6.6 million people in developing countries come from Indian producers, and 90 percent of pediatric HIV medicines are Indian-produced.”

Another study indicates, as a result of phenomenal success of the homegrown pharmaceutical companies:

  • 67 percent of medicines exports from India go to developing countries.
  • Main procurement agencies for developing countries’ health programs purchase their 
medicines in India, where there are quality products at low prices.
  • Approx. 50 percent of the essential medicines that UNICEF distributes in developing countries 
come from India.
  • 75-80 percent of all medicines distributed by the International Dispensary Association (IDA) to 
developing countries are manufactured in India. (IDA is a medical supplier operating on a 
not-for-profit basis for distribution of essential medicines to developing countries.)
  • In Zimbabwe, 75 percent of tenders for medicines for all public sector health facilities come from 
Indian manufacturers,
  • The state procurement agency in Lesotho, NDSO, states it buys nearly 95 percent of all ARVs 
from India.

This situation is going to further improve at a galloping pace in the years ahead with proper encouragement from the Government of India.

India tops the chart for ANDAs:

India, with its rapidly growing homegrown generic players, continues to top the Chart for Abbreviated New Drugs Applications (ANDAs) with USFDA by increasing its share year after year, as follows:

Year

Global

India

India’s Share %

2007

492

133

24.1

2008

483

143

27.9

2009

419

132

31.3

2010

419

142

34.0

2011

431

144

33.4

2012

476

178

37.4

Source: Pharmabiz, January 7, 2013 / US FDA

India tops the Chart in DMFs also:

Similarly, India continues to top the Chart with its Drug Master Files (DMF) for Active Pharmaceutical Ingredients (APIs), as follows:

No. Countries Filing Type II DMF
 1. India 2759
 2. USA 1323
 3. China 870
 4. Italy 644
 5. Japan 270
 6. Spain 268
 7. Germany 266
 8. France 170
 9. Israel 170
 10. Switzerland 136

Source: Pharma Times, August 2012

Moreover, domestic pharmaceutical companies have now between themselves, around 175 USFDA and approximately 90 UK-MHRA approved manufacturing units, to cater to the needs of high quality and affordable pharma products across the world. 

India not loosing its R&D Focus:

Discovery of new drugs being the bedrock for the pharmaceutical industry, domestic Indian companies are also not loosing focus on R&D activities. The New Chemical Entity (NCE) pipeline of the homegrown companies as on 2012 is as follows:

Piramal Healthcare 23
Suven Life Sciences 14
Zydus Cadila 11
Glenmark 8
Biocon 7
Torrent Pharma 6
Sun Pharma 5
Wockhardt 5
Ranbaxy 2
Dr Reddy’s Lab 2
Others 5

Source: Citeline Intelligence Services: Pharma R&D Annual Review 2013

Is the “west pressurizing India to change tack?”

In an interesting article published in ‘The Guardian’, the author observed that the western Pharmaceutical companies are putting health of world’s poor at risk. It commented that India makes cheap medicines for poor people around the world, but the EU, pharmaceutical firms and now the US are pressuring the ‘pharmacy of the developing world’ to change track. The same sentiment was echoed in another article published in Pharma Times.

However, the experts do feel that the Government of India, mostly due to intense public pressure, is well prepared to address any such situation, come what may. Thus, despite any retarding forces coming into play, the incessant march of the home grown pharmaceutical companies in search of excellence, especially in this space, is expected to continue even at a brisker pace.

The triggering factor:

Experts opine that the reason for excellence of the domestic Indian pharmaceutical industry, especially in the generic pharma landscape, is due to the amendment of the Indian Patents Act in 1970 allowing only process patents for drugs and pharmaceuticals.

The Government of India reportedly had taken such a path-breaking decision in the 70’s to lay the foundation of a vibrant domestic pharmaceutical industry capable of manufacturing low cost and high quality modern medicines for the health security of the country leveraging latest technology, including IT.

This decision was also directed towards creation of ‘drug security’ for the country as in the 70’s India was very heavily dependent on drug imports and the domestic pharmaceutical industry was virtually non-existent. 

Conclusion:

Paying kudos to the pharmaceutical ‘Crown Jewels’ of India, many industry watchers feel that the global pharma players are now keener than ever before to work with the domestic pharma industry, in various areas of business. This augurs well for all, as it will help creating a win-win situation to add further momentum to the growth of the pharmaceutical industry of India.

Be that as it may, taken in entirety and strengthened by its well-balanced patent laws, India  will continue to have a significant force multiplier effect to emerge as a global force to reckon with, particularly in this important space.

In tandem, with other significant cutting edges, as mentioned above, India is now well poised to be an “armageddon” – a contender of supremacy as a “pharmacy of the developing economies” despite selective allegations and  detrimental efforts by some vested interests.

By: Tapan J. Ray

Disclaimer: The views/opinions expressed in this article are entirely my own, written in my individual and personal capacity. I do not represent any other person or organization for this opinion.