gt ficci nutraconsensus whitepaper

8/13/2019 GT FICCI Nutraconsensus Whitepaper

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NutraconsensusEmerging insights on Nutraceuticals - players and policy makers

A whitepaper prepared by Grant Thornton and FICCI

FICCI-HADSA Nutraceuticals 2012 “Regulation, Categorisation and Commercialisation”

6 November 2012, Mumbai


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Nutraconsensus 1

© Grant Thornton India LLP. All rights reserved.Member firm of Grant Thornton International LtdOffices in Bengaluru, Chandigarh, Chennai, Gurgaon, Hyderabad, Kolkata, Mumbai, New Delhi and Pune

Disclaimer: The information and opinions contained in this document have beencompiled or arrived at from published sources believed to be reliable, but norepresentation or warranty is made to their accuracy, completeness or correctness. This document is for information purposes only. The information contained in thisdocument is published for the assistance of the recipient but is not to be relied uponas authoritative or taken in substitution for the exercise of judgment by any recipi-

ent. This document is not intended to be a substitute for professional, technical orlegal advice. All opinions expressed in this document are subject to change withoutnotice. Whilst due care has been taken in the preparation of this document and in-formation contained herein, neither Grant Thornton nor FICCI nor other legal enti-ties in the group to which they belong, accept any liability whatsoever, for any director consequential loss howsoever arising from any use of this document or its con-tents or otherwise arising in connection herewith.


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Nutraconsensus 2

© Grant Thornton India LLP. All rights reserved.Member firm of Grant Thornton International LtdOffices in Bengaluru, Chandigarh, Chennai, Gurgaon, Hyderabad, Kolkata, Mumbai, New Delhi and Pune

Contents

Page

Foreword – FICCI 3

Foreword – Grant Thornton 4

A framework of definition 5

A framework of operation 10

A framework of regulation 31

Recommendations 42


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Nutraconsensus 3

© Grant Thornton India LLP. All rights reserved.

Foreword: FICCI

Mr Ajit Singh

Chairman-FICCI Task Force on NutraceuticalsChairman-ACG WorldwidePresident-Health Foods & Dietary Supplements Association (HADSA)

As we enter our fourth successive year, FICCI and HADSA are delighted to bring together another

edition of the developments in the Nutraceuticals sector.

This whitepaper attempts to bring out the key trends in the developments of the nutraceuticals seg-ment in the BRIC regions over the last few years. It further benchmarks the regulatory aspects andchallenges in operation, quality, control and market dynamics. While strategies adopted by key marketplayers are often specific to countries, they often serve as an effective medium of learning for other

regions with similar demographic profiles and population characteristics.

Increased consumer awareness, changing lifestyles and a marginal degree of under-satisfaction from

traditional drugs has given adequate impetus to this industry to expand its presence and visibility

through innovative marketing channels and riding the retail boom in countries like India.

The year 2012 is being envisioned as the year of nutraceuticals in India with a positive beginning in

the form of crystallisation of licensing, registration and quality control standards by the Food and

Safety Standards of India. Although much needs to be done to strengthen the mechanism of imple-

mentation and application of these guidelines, this has been a move which has been welcomed by the

industry and other users alike.


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Nutraconsensus 4


Foreword: Grant Thornton

Mahadevan Narayanamoni

Practice Leader, Healthcare and Life Sciences AdvisoryPartner, Corporate FinanceGrant Thornton India LLP

It gives us immense pleasure to participate as Knowledge Partners with FICCI and HADSA for the

4th International Nutraceutical Conference on Regulation, categorisation and commercialisation of

Nutraceuticals.

As the world celebrates a 100 years of Vitamins, India continues to remain a leader as one of the most

undernourished populations in the world. Past efforts for removal of malnutrition have been ad-

dressed through some national efforts by the government and global aid agencies in the form of forti-

fication and specific eradication measures. India can now be viewed both as a developer and manufac-turer of nutraceutical ingredients and products, and also as one of the strongest emerging market for

nutraceuticals. Players, domestic and international, have expressed a high degree of satisfaction with

the country moving towards a more regulated environment and see this as an enabler for weeding out

unproven and unapproved products which find a place on the retail shelf and are often administered/

used without appropriate medical advice/ knowledge.

This whitepaper attempts to bring out issues and concerns in the emerging markets and undertakes a

benchmarking of the cultural issues, operating and regulatory dynamics across these regions and in-

cludes recommendations for a multi-pronged strategy to address the nutritional needs of a vastly grow-

ing, ageing and unhealthy population.


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Nutraconsensus 5


Nutraceuticals and functionalfoods combine traditional nutri-

tive with drug-like functions ofprevention


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Nutraconsensus 6


Clarity in Definition

NUTRITION plus PHARMACEUTICAL equals NUTRACEUTICAL

DRUGS HEALTH AND WELLNESS COSMECEUTICAL

PHARMACEUTICAL NATURAL/ ARTIFICAL SUPPLEMENT

PRESCRIPTION THERAPEUTIC CLAIMS REGULATION BABY BOOMERS

SAFETY PROBIOTICS AND PREBIOTICS MEDICINE FUNCTIONAL FOODS

Although not clearly defined as such in regulatory parlance, the term “Nutraceuticals” has been apart of our medical history, knowingly or unknowingly, for the last several decades. Formallychristened as “Nutraceuticals” in 1989 by Dr. Stephen De Felice (Foundation of Innovation inMedicine), they can be defined as “a food or part of a food that provides medical or health bene-fits, including the prevention and treatment of a disease”. While this definition has seen a contin-uous evolution over the years, nutraceuticals are now broadly defined “as natural, bioactive chem-ical compounds which have a health promoting, disease preventing or medicinal properties”.

The food versus drug debate……

Often regarded as synonymous to a drug, the key differentiator between a drug and a nutraceuticalis the ability of the drug to act as a “treatment” for a disease whereas nutraceuticals simply have asupportive function and are often just used as “supplements”. Drugs (which are patent protectedfor the first few years) also need to confirm to stringent compliances (including clinical and animaltrials) prescribed by regulators in respective countries. Nutraceuticals on the other hand are notsubject to independent guidelines (more stringent in the US and Europe) and have a comparative-ly shorter approval process without the need for conducting clinical/ animal trials. Accordingly,nutraceuticals lie somewhere between a food and a drug.


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Nutraconsensus 7


Celebrating a hundred years of Vitamins - 2012

Vitamins are organic nutrients which are essential

for life. The human body requires very small

amounts of these nutrients to ensure normal me-

tabolism, growth and physical well-being. Most

vitamins are not made in the body or only in insuf-

ficient amounts to meet our needs. They therefore

have to be obtained primarily through the food we

eat in which they are present in minute quantities.

Minerals, as with vitamins, are indispensable (essen-tial) in small amounts to ensure that the body

grows, develops, and stays healthy. Minerals are

found in wide range of foods. The body uses min-

erals to perform many different functions — from

building blood and strong bones to transmitting

nerve pulses and maintaining a normal heartbeat.

Unlike micronutrients such as vitamins and miner-

als, macronutrients are required by the body in larger

amounts and include proteins, carbohydrates, and

fats. They, too, are indispensable for our health and

well-being.

Each of the 13 vitamins known today has specific

functions in the body, which makes each of them

unique and irreplaceable. No single food contains

the full range of vitamins, and inadequate vitaminintake results in vitamin deficiency disorders. A bal-

anced and varied diet is therefore vital to meet the

body’s vitamin requirements. Of the 13 known vit-

amins, four are fat-soluble, namely vitamins A, D, E

and K. The others are water-soluble: vitamin C and

the B-complex, consisting of vitamins B1, B2, B6,

B12, niacin, folic acid, biotin and pantothenic acid.

1910UmetaroSuzuki dis-covers prod-uct, lateridentified as Vit B1

1912“Vitamin” coined byCasimir Funk

1912-191313 Vitamins identifiedand characterised

1934-1987Industrialproduction of vitamins

1924-2000Mandatory fortification of salt, flour, cereals, sugar, wheat, maize,dairy in many countries.

Control over deficiencies such as iodine, iron, vitamin A,D, B

2000 onwards Deficienciesidentified inseveral indus-trialised coun-tries

1900 1950 2000

1980’s – 1990’s Emerging physician acceptance Awareness through numerous journalsand articles on benefits


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Nutraconsensus 9


Emerging trends

Multiple micronutrient intervention

studies

On-going research in various corners of the world

aims to establish a link between single and multiple

micronutrient intervention studies and diseases of

the human body to arrive at a holistic nutritional

approach for combat. The evidence supporting

the role of interventions in the prevention of vari-

ous diseases however is still evolving. As an ex-

ample, food fortification with folic acid is being

researched for NTD reduction whereas food forti-

fication with Iodine for goitre reduction is already

an established and implemented area of scientific

research. The effectiveness of multiple interven-tions depends on their appropriate combination

and sequencing. In addition to the sectors men-

tioned, water and sanitation which are also closely

interlinked are also being examined in parallel.

Partnering in Nutrition

Nutrition now plays a prominent role in the global

public health agenda and has also been identified

as the top investment priority at the recent Copen-

hagen Consensus 2012. There are several players

in the nutrition space, each with its own agenda,structure and approach strategy. There is a need to

move away from multiple pilot scale programs and

launch large scale interventions and engage players,

policy makers and global agencies with govern-

ment support.

In home fortification

A promising approach (which finds mention in a

WHO report 2011), in- home fortification of food

was suggested to improve iron status and reduce

anaemia in infants, children and women. If com-

bined with commercial distribution schemes, this

approach could act as an effective means for large

scale intervention.

Food, Water and Sanitation – underpinning

the success of Nutrition

Food and Nutrition is being defined as “a situation

when all people at all times have physical, social

and economical access to food, which is consumed

in sufficient quantity and quality to meet their die-

tary needs and food preferences and is supported

by an environment of adequate sanitation, health

services and care, allowing for a healthy and active

life.”

New Dimensions

The usage of nutrients has increased from tradi-

tional forms (foods, supplements and beverages) to

new markets such as cosmetics, pet care, marine

life, sports, etc.

• Antioxidants for longevity, immunity and vitali-ty

• Increased demand from the highest risk cate-gories of baby boomers

•

non-prescription based cosmetics with medici-nal (including anti-ageing) properties• Functional and medicated confectionary foods

and snack bars• Fatty Acids (CLA and omega 3, 6 and 9) and

Proteins and clinical evidence of their healthbenefits

• Pet Nutraceuticals• Sports Nutraceuticals• Functional Additives - Vitamins, proteins, fi-

bres

Naturally derived substances, consisting of herbal

and botanical extracts and animal- and marine-based derivatives.


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Nutraconsensus 10


The largest market for nutraceu-ticals is US, followed by Europeand Japan. The global marketfor Nutraceuticals is projectedto reach US$250 billion by 2018

largely driven by the need for adisease free lifestyle. Growth isalso seen in emerging countrieslike BRIC nations (Brazil, Rus-sia, India, and China), Mexico,

Poland, and South East Asiancountries including Taiwan, Thailand, Philippines, Vietnam,Malaysia, Singapore, North andSouth Korea. This white paperemphasises on growth trends in

the BRIC countries and com-pares them to our most nour-ished counterpart – the US


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Nutraconsensus 12


Learning from a nourished counterpart

USA

One of the earliest adopters of the fortified foods

regime, functional foods already represent around

5% of the overall US food market. While early forti-

fication was mostly done under public support (flour

fortified with Vit B, salt fortified with iodine, milk

enriched with Vit D), developments in the last few

decades have been driven largely through private

initiatives. The market today is dominated by many

large multinationals in collaboration with specialised

ingredient makers. Soft drinks and dairy are the key

functional foods currently being sold in the US mar-

kets.

Completely impervious to the financial crisis, this

segment continued to display healthy growth pat-

terns, factors fuelling which include:

A proactive adult population who understands

the need for nutrition

An ageing baby boomer population

Increased awareness about quality and safety

Solving the equation of diet and disease

An evolving labelling and marketing regulation

Brand evolution through some direct channels An early maturity for most products and availa-

bility of newer products and newer brands

Key players

Competition is intensifying with growing sales, re-

sulting in excessive advertising, new (often hurried)

product introductions, the emphasis on quality and

efficacy have assumed significant importance in the

consumers mind.

Food and beverage conglomerates such as Danone,

Unilever, Nestle, Kellogg, Kraft and Coca Cola

have introduced tailored healthy foods and adopted

health, nutrition and wellness as much as possible

in their product baskets. Every major food corpo-

ration from Nestle to Kraft is involved in nutraceu-

ticals including Johnson & Johnson which haslaunched a new supplement brand. Some of the

recent acquisitions in this arena by these players in

the US include - Kraft acquisition of $140 million

(Balance Bar and Boca Burger), Nestle acquisition

of the competing PowerBar ($130 million sales),

Quaker JV with Novartis.

The YakultStory

A single nichebrand displacing

generalist brandsand market leaders!


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Nutraconsensus 13


Illustrative list of players in the US region

US Company

NameKey brands

Nutrition Deal History

(2011/2012)

Operating dynamics and differen-

tiators

NutraceuticalCompanies

Pfizer Nutrition

Pfizer ConsumerHealthcare

S-26 Gold, SMA and Promil

Pfizer Nutrition sold toNestle for $11.85bn (2012)

Acquires Emergen C (Sup-plement)

Acquires Ferrosan’s Con-sumer Healthcare Business

More than 80% of Pfizer Nutritionsales were in emerging markets.Focus – “Infant Nutrition “

Dietary Supplements is the keyfocus area within Nutraceuticals.

Nestle

Infant Nutrition - Nan, Gerber, Lac-

togen, Nestogen and Cerelac infantcereal

Nestlé Health Science to

acquire a stake in AcceraNestle acquisition of Pow-erBar ($130 million sales)

Pfizer Nutrition acquisition to com-plement existing Infant NutritionPortfolio.

Abbott GlucernaPediasureEnsure Muscle HealthImmune BalanceNutriPals

Long term supply agree-ment with Martek for infantnutrition (Martek acquiredby DSM)

Child Health and NutritionWorking towards probiotics andprebiotics - Nutrition shakes.

Subsidiaries ofIndian Companies

Valensa Interna-tional (EID Parry)

Saw Palmetto, Zanthin, Cranberolt, AstaCran, Valerex, Z-Omega,

Amaranthol

EID Parry Ltd acquiredstake US Nutraceuticals

(Valensa)(2008)

Targets Baby Boomer Population

Botanical Solutions Provider.

Natrol (Plethico)Natrol, Laci Le Beau, Trinovin,Prolab, Vedic Mantra, NuHair,Shen Min, Promensil

No history of recent acqui-sitions

Key focus areas - nutritional sup-plements, herbal teas and sportsnutrition (through acquisition of Pro-lab Nutrition and Medical ResearchInstitute).


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Nutraconsensus 14


US CompanyName

Key brandsNutrition Deal History(2011/2012)

Operating dynamics and differentia-tors

IngredientSupplier

DSM NutritionalProducts

Quali blends, Carotenoids(Carocare, Actilease), Life’sDHA,Resvida, GeniVida, fabuless, Pep-topro,

Acquires Cargill’s Culturesand Enzymes Business forEuro 85bn (2012) Acquires Martek, Microbiaand Vitatene (2010-11) Alliances with Kemrock andSinochem in India (2011)

Global supplier of nutritional and spe-cialty ingredients to food, beverageand dietary supplement manufacturers.

Focus is on production of vitamins,minerals and micronutrients.

Direct Marketing

AmwayNutrilite, XS Energy Drinks, per-sonal care, home care, air andwater purifiers, Artistry cosmetics

Plans to spend $185 millionon U.S. manufacturing ex-pansion to meet growingglobal demand Nutrilitebrands.

Direct selling companies with a multi-level marketing system

Grows, harvests and processes at itsown organic farms.

Early China entry in 1995Despite regulatory (direct selling relat-ed) changes, China remains its largestcontributor of sales.

HerbalifeFormula 1, Active Fiber l, Herbal-ife24, Prolessa™ Duo, Herbal-ifeKids

No history of recent acquisi-tions

Weight Management, Digestive Health,Energy & Fitness, Targeted Nutrition,Personal Care.

*Neither Grant Thornton nor FICCI express any personal views on the performance or market standing of any of theabove companies and the same have only been presented as a segment illustrative.


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Nutraconsensus 15


Quick Brick fact-files

Brazil Russia India China

2011$trillionUS GDP

2.48 1.85 1.86 7.31

GDPgrowth(Annual)

3% 4% 7% 9%

Area (MnSq. Kms)

8.52 17.08 3.29 9.60

Population(Mn)

197 142 1241 1344

Ages 0-14(% of total)

25% 15% 30% 19%

Ages 15-64(% of total

68% 72% 65% 73%

Ages 65 and

above (% oftotal)

7% 13% 5% 8%

Populationgrowth

1% 0% 1% 0.5%

Lifeexpectancy

73 years 69 years 65 years 73 years


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Nutraconsensus 16


Emerging trends

Number of people who are under-nourished

11.7 million 2008

Prevalence ofoverweight (above

15 years)

57%2010

Prevalence of un-dernourishment

(%of population) 6%2008

Health expenditureper capita (current

US$)

$990 2010

GNI per capita(current US$)

$10720 2011

Maternal mortalityratio (per 100,000

live births)

56 2010

Prevalence of un-

der nourishment(% of population)

19% 2008

Under-five mortali-ty rate:

69 per 1000 livebirths 2009

Lifetime risk of

maternal death

1 in 702009


US$)

$542010


$1410 2011

Infant MortalityRate (per 1000 live

births)

522008

Number of people

who are under-nourished

129 million 2008

Under-five mortali-

ty rate:21 per 1,000 live

births 2008

Malnutrition – Height for age (be-

low five years)

9.4%2010

Health expenditureper capita (currentUS$)

$2212010


$4940 2011

Maternal MortalityRatio (per 100,000

live births)

372010

Prevalence ofoverweight (%above 15 years)

49% 2010

Underweight (un-der-five, 000)

2222008

Infant MortalityRate (per 1000 live

births)

12 2008


US$)

$525 2010


$10400 2011

Maternal mortalityratio (per 100,000

live births)

342010

BRAZIL RUSSIA

CHINA INDIA


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Nutraconsensus 17


Building Nutra – BRIC by BRIC

Nutraceuticals have entered the world food market and have gained tremendous importance in the lastfew years in most developed companies. Such functional food and beverages are priced higher (result-ant higher profits) and provide additional economic benefits to players when compared to traditional

foods.

Globally, the US and Japan are the most developed markets for nutraceuticals, due to the consumeracceptability achieved in these regions. India, China and Brazil are developing nations which showhuge potential for the nutraceuticals market. Also, India and China have emerged as a key sourcingdestination for natural ingredients. Each of the countries in the BRIC region is in different evolution-ary stages of development and nutraceuticals are subject to differences in regulation, nutrition aware-ness, consumer demand, biological support and affordability. China and Brazil have an advanced regu-latory framework for the approval of nutraceuticals and their advertising, although these differ some- what in the specifics.

Copenhagen Consensus 2012

The Copenhagen Consensus 2012 Expert Panel finds that fighting malnourishment should be the toppriority for policy-makers and philanthropists. For just $100 per child, interventions including mi-cronutrient provision, complementary foods, treatments for worms and diarrheal diseases, and behav-iour change programs, could reduce chronic under-nutrition by 36 per cent in developing countries. While a $100 per child may mean a significant sum for a developing country, this only constitutes a15% increase in the current aid spending indicating a need for re-channelising some of our existingresources. The key investment priorities for advancing global welfare (especially in the developingcountries) are:

BUNDLED MICRONUTRIENT IN- TERVENTIONS to fight hunger andimprove education (Health/ Disease re-lated)

Malaria Combination Treatment(Health/ Disease related)

Childhood Immunisation Coverage(Health/ Disease related)

Deworming (Health/ Disease related)

TB treatment (Health/ Disease related)

R&D to Increase Yield Enhancement tofight hunger

Effective Early Warning Systems

Strengthening Surgical Capacity (Health/

Disease related)

Hepatitis B Immunisation (Health/ Dis-ease related)

Low ‐Cost Drugs for Acute Heart Attacks(Health/ Disease related)

Salt Reduction Campaign (Health/ Dis-ease related)

Solar radiation management

Conditional Cash Transfers

HIV Vaccine R&D (Health/ Disease re-lated)

Information Campaigns on SchoolingBenefits

Borehole and Public Hand Pump Inter- vention


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Nutraconsensus 18


Nutraceutical trends in Brazil

Country specific developments and challenges

With a rich natural resources profile, a large domestic market and an exploding middle class (thoughsmall in number but high in value) segment, the demand for nutraceuticals in this region has indicated

healthy growth rates over the last few years. Guidelines in Brazil are often comparable to several developed countries although it has significant dependencies in the form of imported ingredients.

An aging population, improved economy, improved personal wealth, more educated and savvy youth,as well as consciousness for health(with awareness of linking diet to chronic diseases), are all encourag-ing factors for growth in Brazil. The nutraceuticals industry in Brazil is roughly divided into two majorindustry sectors: the over-the-counter (OTC) market, and the health and wellness foods market. Nei-ther market is believed to have reached maturity, which indicates there is good potential for futuregrowth. Current supply chain vulnerabilities in nutraceuticals are evident through its reliance on im-ported ingredients for processing foods (despites its own rich botanical heritage) and limited pro-cessing capabilities.

Regulations are stringent (ANVISA), although need to be strengthened to provide impetus to research-ing its natural botanical heritage. The trend across the globe, including across Latin America, is towardmore rather than less regulation - a more demanding legislation, and a greater need for high quality, sci-entific, technical, regulatory guidance for decision-makers. A few other notable nutraceutical trends inthis country include:

A nutrition transformation from an under nourished to an over nourished (read obese) popula-tion

Pharmacies being the primary mode of distribution for OTC products

Vitamins and dietary supplements and herbal and traditional products also being the key driversof the OTC segment sales.

An aging population that is concerned about the increased risk of diseases like diabetes, heartdisease and cancer.

‘Organic is healthy’ mantra - Healthy lifestyles, including diet, are becoming part of mainstreamawareness leading to a growth in ‘less sugar’, ‘slimming food’, ‘light food’, fortified foods. ‘freshorganic food’ (sugar, coffee, soya being chief crops)


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Nutraconsensus 19


BRAZIL

Key consolidation activity (involving Brazil as a target) in 2011 and 2012

Month Target name Acquirer Transaction Details

Feb 2012Probiótica Laboratórios(Brazil)

Valeant Pharma-ceuticals

Deal Size: $86.3 MnProbiotica currently markets a full line of over-the-counter sports nutrition products and other food sup-plements.

August 2012Tortuga Companhia Zootéc-nica Agrária

Royal DSMEnterprise Valuation: is € 465 mn. Tortuga deals innutritional supplements with a focus on pasture raisedbeef and dairy cattle.

February 2012Mylner Indústria E ComércioLtda

Frutarom Indus-tries Ltd

Deal Size: $ 15.7 Mn. Mylner develops manufacturesand markets flavour solutions, focusing mainly onsweet flavours for beverages and baked goods, natu-ral plant extracts and natural flavours products.

August 2012 Yoki General MillsDeal size: $ 1160 MnPrivately-held food company headquartered in SãoBernardo do Campo, Brazil.


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Nutraconsensus 20


Nutraceutical trends in Russia

Country specific developments and challenges

Russia’s evolution in the nutraceutical space has been marred by the presence of an equal number of unreg u-

lated products as the number of regulated products. An illegal sales network of low quality (often dangerous

products) has forced policy makers to review regulation around nutraceuticals. In addition, most of the busi-

ness still stems from two or three key cities usually identifiable by population size, superior distribution net-

work and appropriate advertising impetus. Russian Nutraceutical sales largely include Vitamins, combination

dietary supplements and probiotic supplements.

Significant limitations have been imposed on the nutraceutical market with regard to advertising, promotion

and distribution, especially in “official” sales channels. Before such anti-dietary supplement regulations were

put, it was easy to unscrupulously obtain Traditional Chinese Medicine and minor brands from Eastern Eu-

rope without any significant constraints. Post introduction of stringent guidelines and new product registra-

tion procedures, global players can now penetrate the region by securing relationships with existing reputable

local players that understand the space and can navigate through the regulatory and product launch stages.Existing multinational players who are already in the nutraceutical market include Amway, Herbalife, Nu Skin

and Sunrider (Direct Sales); and Nycomed, Ferrosan and Unipharm (Pharmacy channel). Some of the top-

most local Russian brands and the operating Companies are set out in exhibit in the following page:


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Nutraconsensus 21


RUSSIA

Key local Russian Players and their Brands

Name Brand Differentiator

Evalar

CardioActiv, Ginkgo Biloba, Everyday

Calm, Stress free, Slim by nature, Brome-lain

Market leaderCultivation of medicinal herbs and theirprocessing extracts to packaging of fin-

ished productsStrategic direction of the company is thetransfer of dietary supplements with prov-en clinical efficacy in the category of drugsdone in collaboration with an establishedclinical trials outfit.

Diod

Capilar, Viardo, Iod-Active, Phase 2, arthro- Active, optometrist , Orvirem, Hypoxen – Pharmaceuticals,Mir ekologii' - Retail Chain

Development and production of naturalnon-drug and drug treatment of activecosmetics, medical and environmentaltechnology, innovative substances for theprevention and treatment of socially signif-icant diseases. Also manufactures healthcare equipment,healthcare cosmetics, pharmaceuticals,

and has its own retail chain.

Akvion ABC (Vitamins)Vetoron (beta-carotene)Qudesan (co-enzyme)

Develops, produces and promotes vitaminand vitamin-mineral complexes – suppliedto several Russian companies for fortifica-tionKardiosredstva, tools for vision correction,Energotropic drugs.


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Nutraconsensus 22


Nutraceutical trends in India

Country specifications and challenges

Even with the lowest per capita GDP in the BRIC regions, India is poised to overtake China as the most

populous country (also with the largest number of undernourished children in the world), and represents an

extremely favourable market for the growth of nutraceuticals. At population levels like ours combined with

income disparities, the need for nutrition arises in each strata of our society. While approximately 42% of all

Indian children under age 5 suffer from malnutrition, nearly 300 million people are part of an expanding mid-

dle class. The middle class level, with increased disposable incomes has become aware of the importance of

diet and nutrition for long term good health. “Healthy habits need to start young. Only an appropriate blend

of micro/ macro nutrients in our diet can help us break through the health deficit” feels Rajiv Chopra, Presi-

dent, DSM India. An increasing working age population presents a market opportunity for development and

marketing of Nutraceuticals. Some key emerging trends in the Indian Nutraceutical space are set out below:

Focus on wellness and preventive care

Increased awareness and health consciousness Growth currently driven by the functional food and beverages segment.

Health and wellness yet to reach the fat and oils segment

Increased accessibility through new distribution channels and greater visibility (example infant andsports nutrition)

A large diabetic population (similar to Brazil and China)

Vitamins used in several food fortifications

Mass market retailing is just getting off ground in India with FDI approvals and can represent a great way to market the nutraceuticals.

One third of the population being vegetarian, protein supplements in the form of soya/ rice/ otherscan assume great significance.

Flavoured powdered milk fortified with vitamins and minerals is a recent trend. In other parts of thecountry, milk scarcity drives soya and skimmed milk demand

Both India and China have traditional remedies and healing systems such as Ayurveda and TCM which form

the centre stage in terms of a tried and tested from of medicine with identifiable herb compounds. Dietary

supplement regulations in India continue to evolve leaving many wondering how emerging legislation will rec-

oncile modern, corporate research and regulations with ancient traditions.

Because nutraceuticals are not a part of pharmaceuticals and drugs formulation, rules and regulations also tend

to be different for this segment. Indian government has recently implemented the FSSAI regulations (Food

Safety and Standards Authority of India) although implementation parameters are not clearly understood by all

in the industry and are being explored.


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Nutraconsensus 23


But challenges remain, as poor infrastructure, lack of adequate facilities for storage, transportation and cold

storage facilities continue to hinder growth. And while the Indian regulators have worked to improve the regu-

latory framework, there is still plenty of confusion around rules, regulations and licensing for a variety of dif-

ferent commodities.

India can be viewed both as a developer and manufacturer of nutraceutical ingredients and products, and as a

strong emerging market for nutraceuticals. .We now analyse some of the key players in India (without relying

on any specific selection criteria) and the marketing strategies adopted by them:

ZYDUSZydus Wellness and Zydus Nutriva are the key driversof the consumer, wellness and nutraceuticals divisionof this pharma major. Market strategy includes “ThirdGeneration Nutraceuticals”

Segment presenceProtein formulae for all ages, diabetics and pregnancyand lactation, haematinics, tonics, calcium supple-ments, osteoporosis, osteoarthritis, menopause, malesubfertility, obesity, specialized pregnancy care range,animal health productsCosmeceuticals.

Key brandsGRD (protein supplement), Fol-5 (folic acid), Globac Activ (iron), C-yum (calcium), Sugar Free D’lite (healthdrink), Nutralite (cholesterol free spread), Actilife (nu-tritional milk additive), Globac-Z.

Key differentiators- Formed an Indian advisory board for rational use ofnutraceuticals- Dedicated nutraceutical range with emphasis onwomen health, infant and child nutrition.

PLETHICO/ (including subsidiary NATROL)Dominant player in the herbal and nutraceutical seg-ment with a focus on- Sports Nutrition and Women’s Health. The

Company aims to bridge the gap demand sup-ply gap in the country to reduce dependencies

on high cost and duty laden imports.

Alliance History Acquired Natrol in 2007 – a leading manufacturer andmarketer of branded nutritional products in the UnitedStates. Several acquisitions in the CIS regions toobtain retail reach.

Key brandsSports Nutrition - Natrol, MRI, Laci Le Beau, NuHair,ShenMin, Promensil, and ProlabHerbal - Mountain Herbz (herbal medicines and sup-plements), Travisil (herbal cough syrup & lozenges).

Marketing StrategyIndia - Prescription by Doctors, Nutritionists and

availability of products on the retail shelf supplement-ed through brand awareness campaigns.Natrol - distributes products in the US through morethan 54,000 retailers.

PIRAMAL HEALTHCAREEstablished the consumer product division in 2007,Piramal Healthcare’s OTC range includes productcategories like Vitamins & Nutrition, Analgesics, Der-matological, Antacids and Cough & Cold.

Segment presenceIt entered nutraceuticals market in 2009 with Suprac-tiv Complete, a vitamin and mineral supplement fordaily consumption. The product, a Rs 12 crore brandis the second biggest brand in the nutrition segmentafter Revital.

Key brandsLacto Calamine, Saridon, Supractiv Complete, Triac-tiv, Itchmosol, i-Pill, Workz, Jungle Magic.

Key differentiatorsGlobal presence in over 100 countries including man-ufacturing bases in USA, Great Britain, Sri Lanka,China and Canada.


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“The recent FSSAI guidelines are a welcome move for the nutraceutical industry in India. Itrepresents a concrete idea which gives assurance on safety of food, safety of customer andthe promise of a good product. The implementation mechanism and guidelines needstrengthening and we feel that if the approvals were made for a formulation (rather than theproduct itself), this would help improve timelines for approval in a significant manner. We,

as industry players, are willing to provide manpower and other form of implementation sup-port to FSSAI that may be needed.”

- Sanjay Singh,Head F&D (Nutraceuticals and Herbals), Plethico Pharmaceuticals

ELDER PHARMA A Mumbai based pharmaceutical manufacturing &marketing organisation, Elder entered the nutraceu-ticals segment in 2010 with launch of 'CoenzymeQ10' which helps to build immunity against cardio-vascular diseases, neuro-generative diseases.

SEGMENT PRESENCEPresence across 5 therapeutic segments – womenhealthcare, anti-infective, wound & pain manage-ment, nutraceuticals, and life care products.

KEY BRANDSShelcal, Eldervit Range, Elmecob, I-Vit, Phytomega,Carnisure, Somazina (in-licensed brand), Amifrugroup, Nephrocaps and I-Vit group. Launched 3nutraceutical products during 2011-12 - I-Vit, I-VitPlus and D-360.

KEY DIFFERENTIATORSPrescription based marketingWide range of nutraceutical products with focus onwomen healthcare

R&D division develops novel drug delivery system(NDDS) for a nutraceutical formulation called Coen-zyme Q (10) CO Q10, first of its kinds globally.

NANDANEstablished in December 1999, NBL is a sustainableenergy provider and herbal nutraceutical companyheadquartered in Hyderabad and listed overseas.KEY BRANDSNBL offers herbal and by- herbal products with focuson therapeutic value. Key products include SafedMusli Standardised Root Extract, Bio-Rhythm Cap-

sules, Sorgasm Capsules, AloeActiv Beverage.

TABLETS INDIA LIMITED A part of Jhaver group, TIL’s therapeutic range in-cludes nutritional supplements, haematinics, hepa-toprotectives, novel antipyretic, Osteoporotic Formu-la, Respiratory Medicine.KEY BRANDSBifilac, Hapenz, BioRS, Ecoflora, Astymin, Astyvit, Astyfer, Aminocal, Tilvit, Antoxyl Forte, Cefobeta,

Ambrolite, Peglec, Glutazene, Neutrosec, Apetamin.

HEXAGON NUTRITIONHexagon Nutrition entered the nutrition industry in1991. The broad segments are Food Fortification,clinical nutrition and Animal Nutrition.KEY BRANDSClinical nutrition –Penta sure range, Meta Gluta Zs(Immunity), Obesi Go BLCD (Weight management),Geria Gold, Proactiv (Wellness nutrition).

NATURAL REMEDIESIt manufactures and supplies standardized herbalextracts, phytochemicals and herbal veterinaryhealthcare products. Broad segments are HumanHealthcare, Animal Health care and Phytocom-pounds.KEY BRANDSHuman Healthcare-Allerease, Bacomind,Kalmcold, Gutgard, Ocibest.

UNIVERSAL MEDICARE (SANOFI)Sanofi, a global healthcare company operates in 7core areas which are diabetes solutions, humanvaccines, innovative drugs, consumer healthcare,emerging markets, animal health and the new Gen-zyme.

ALLIANCE HISTORY Aventis Pharma (part of the Sanofi Group) acquiredUniversal Medicare business of marketing and dis-tribution of branded nutraceutical formulations inIndia in November 2011.

KEY BRANDSThe portfolio of nutraceuticals and lifestyle man-agement products includes brands like Sea Cod®,Primosa, Multivite and Freeflex

MARKETING STRATEGY Part of Sanofi’s Global marketing network and OTCand prescription based sales.


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Nutraconsensus 25


INTERNATIONAL PRESENCE

“Women and child health continues to remain our primary focus area; we also believe that ad-dressing the wellness needs of the country’s growing geriatric population by ensuring a diseasefree life presents an excellent opportunity of growth. Our SHELCAL brand for example targetsthe nutrition needs (especially of calcium and vitamin D) of a broad based population segment – from the paediatric to the geriatric population.”- Himanshoo Nayak,

Head - Business Development, Elder Pharma

ADVANCED ENZYMESDeals in the production of plant, microbial and ani-mal-based enzymes. Product categories includeHuman Nutrition, Animal Nutrition, Food Processing,

Bio Fuels, Bio Catalyst, Biologicals and IndustrialProcessing.KEY BRANDSHuman Nutrition (Active ingredients) –Nattokinase,fungal Lactase, Peptizyme SP, Fungal Lipase.

DABURDabur is an Ayurvedic and Natural Health CareCompany. It entered the nutrition supplements seg-ment with the launch of Dabur NUTRiGO in 2010.

Products categories include Hair Care, Oral Care,Health Care and Skin Care.KEY BRANDSDabur Chyawanprash, Dabur Honey and DaburGlucose.

DSM Nutritional ProductsDSM is a global supplier of nutritional and specialty ingredients to food, beverage and dietary supplement manufactur-ers. Providing ingredients and ‘Health benefit Solutions’ globally, DSM focuses on the production of vitamins, mineralsand micronutrients that enhance the health profile of products, as well as areas where end consumers are looking foranswers and support.Health Benefit SolutionsEye Health, Bone Health, Essentials for women, Essentials for men, Essentials for kids and teens, Essentials for vege-tarians, Mind health, Hearty health, Beauty from within, Weight nutrition, Sports nutrition, Joint health, Immunity, Essen-tial nutrition and Healthy ageing.

ABBOTT NUTRITION Abbott Nutrition, a division of Abbott is a healthcare company to develop nutritional and related health care products .It

offers a wide range of nutritional supplements in segments of infant and mother care, child, adult, sports and activeliving, therapeutic nutrition.

Key BrandsSimilac, Advance, Similac Expert Care, Alimentum, Soy Isomil in infant formulasPediaSure and Pedialyte for children, Ensure and ZonePerfect for active adults, EAS for elite athletes and fitness en-thusiasts and Glucerna for people with diabetes.

GSK

GSK consumer healthcare business operates in three areas - Over-the-counter (OTC) medicines, Oral healthcare andNutritional healthcare. In 2010, GSK acquired Europe’s leading sports nutrition brand, Maxinutrition. GSK portfolio in-cludes a number of well-known brands such as Panadol, Sensodyne, Lucozade and Horlicks.Revenue from Consumer Healthcare is Euro 5.2 billion in 2011 (19% of the group revenue).

Key BrandsLucozade and Ribena – energy and sports drink, Horlicks, Boost and Maltova - malted, milk-based drinks and foodsand Viva, a vitamin supplement.


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Nutraconsensus 26


Deals, alliances and expansion strategies

The Nutraceutical industry has shown strong growth potential and much of the early stage commer-

cial/regulatory risk has been reduced as international nutraceutical companies establish a record of doing busi-

ness in the market.

Whether one views the country as a developer and manufacturer of nutraceutical ingredients or as a strong

emerging market for nutraceuticals, the country is poised for unprecedented growth from domestic players and

already established international companies. Devising a strategy for deeper penetration into the Indian

Nutraceutical market will be foremost in the minds of large global players.

“Key stakeholders in the Indian Nutraceutical landscape need to focus on the following CriticalSuccess Factors – providing access to food in the first place, ensuring the right quality and mixof food, weeding out adulteration, improving the general environment and ensuring the availabil-

ity of clean drinking water for all.”

RAJIV CHOPRAPresident, DSM Nutritional Products

HERBALIFEHerbalife International is a direct selling companywhich deals in nutrition and weight management. Ithas over 2 million independent distributors.

SEGMENT PRESENCEHerbalife operates in more than 80 countries. Prod-uct segment includes Targeted nutrition, personal-ised weight management, Essential nutrition, Energyand Fitness, Skin care and Fragrances.

KEY BRANDSFormula 1, Active Fiber l and Herbalife24, ShapeWorks.

MARKETING STRATEGY Partnered with the Global Alliance for ImprovedNutrition (GAIN) and DSM, nutrient suppliers, todistribute 20 million micronutrient sachets to those inneeds in Ethiopia and Kenya

The company has also opened five new markets in2011.

AMWAY A global direct selling company, Amway marketsproduct primarily dealing in the health, beauty, andhome care segments.

SEGMENT PRESENCEPresence in more than 80 countries including Americas, Europe, greater China, Japan and Korea,and SE Asia/Australia.

KEY BRANDSNutrilite, Artistry, XS Energy

KEY DIFFERENTIATORS Amway’s business model is based on multi-level/networking marketing and distributes productsglobally through more than 200,000 distributors Also, Nutralitie is the only global vitamin and mineralbrand to grow, harvest, and process plants on itsown certified organic farms.


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Nutraconsensus 27


INDIA

Key consolidation and M&A activities (involving India) in 2011 and 2012

Month Target Name Investor Transaction Details

August 2011Universal Medicare-

Nutraceutical Business

Sanofi India

Aventis Pharma Ltd. acquired nutraceutical business of UniversalMedicare Pvt. Ltd. for a total consideration of $114.22 million (INR 5.67billion). Under the agreement, Universal Medicare will manufacture the

products that Sanofi/ Aventis will be acquiring on mutually agreedterms.

October 2012Innoves Animal HealthPvt.

Hester BiosciencesInnoves Animal Health Pvt. is engaged in the marketing of large animalhealth products.

September 2011Octtantis Nobel LabsPvt.

Vivimed LabsOcttantis Nobel Labs Pvt. is engaged in trading, manufacturing andmarketing of pharmaceuticals and nutraceuticals formulations.

May 201130 plus brand from

Ajanta PharmaDabur India

Ajanta Pharma is a Mumbai based company. 30 plus is an energiserbrand.

April 2011Johnson & Johnson ,Raricap

Bafna PharmaceuticalsRaricap is the trademark for manufacturing tablets for iron deficiencyanaemia used in pregnancy of Johnson & Johnson

September 2010 Full Fit Socrus Bio Sciences LtdFull Fit is an anti-obesity brand. The brand Full Fit is a formulation con-tains the herbal ingredients which have no side effects.

NA Elder Pharmaceuticals Private Placement

The company offers various products in the fields of women’s

healthcare, wound care and pain management, nutraceuticals, cardio-vascular, central nervous system, neuro drugs, and anti-infective.

Relying heavily on imports to meet its nutritional demands, activity in the domestic space has seen

the mushrooming of smaller (but focussed companies), increased visibility of some domestic com-

panies, and select brand oriented. With clarity in regulation, it is however expected that the more and

more international and domestic nutrition players will now be seen on an expanding retail shelf.

While some traditional players may still want to go the prescription route, it is expected that in the

post regulation scenario and retail-boom, nutrition products will find an entry into more and more

households in the next ten years. Already established as one of the leading ingredient suppliers, In-

dia will remain an attractive destination for significant consolidation activities in the near term.


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Nutraconsensus 28


Nutraceutical trends in China

Country specifications and challenges

Although still heavily influenced by Traditional Chinese Medicine, all types of functional foods and supple-

ments are gaining acceptance in China. Traditionally dietary supplements were sold in small grocery stores;

however, a change in retail structure has led to the emergence of large format outlets such as hypermarkets and

convenience stores. Factors such as rising healthcare costs and an ageing population and diseases such as an

unhealthy immune system, fatigue and cholesterol regulation are expected to be key drivers for the develop-

ment of this sector in the future. High costs of insurance and healthcare have prompted the Chinese popula-

tion to resort to preventive medicine. Imported supplements are often associated with better quality and with

a burgeoning middle class population, the demand for nutraceuticals (considering approved TCM as a part of

the group) is expected to multiply four times the present.

China is one of the leading suppliers of nutraceutical ingredients to almost all of the leading players worldwide.

According to a recent study, China will evolve into the largest global producer and consumer of nutraceutical ingre-

dients by 2020, surpassing the U.S. and Western Europe. A survey indicates that consumers in China are readyto switch to healthier alternatives of carbonated soft drinks and that brands are yet to offer the product op-

tions to fulfil this demand signalling a need for large players to respond to this demand and penetrate the mar-

ket. Launches of “Natural”, “Diet”, “Low calorie claims” are penetrating deeper into the natural beverages

market indicating an “On the move” consumption opportunity at convenience stores.


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Nutraconsensus 29


CHINA

Key expansion activities (involving China) in 2011 and 2012

Month Target Name Transaction Details

June 2011 Zhejiang Medicine Private Placement

Deal Size: $201 Mn

The Company offers synthetic vitamin E, natural vitamin Esoft capsules, levofloxacin lactate tablets, vitamin A tab-lets etc.Raising capital on the Securities Exchange.

June 2010 Baby CareUSANA Health Sci-ences Inc.

Deal Size: $ 62.15 MnDevelops, manufactures and sells nutritional products forthe entire family, with an emphasis on infant nutrition.

March 2011Guangdong JiujiBiotech

Xiangxue Pharma-ceutical

Deal Size: $ 5.71 MnSeller of healthcare equipment, chemicals, andcosmetics.

May 2011Guangming Phar-maceutical

Shenzhen KangzhePharmaceutical

Producer of health supplements, biological diagnosticreagent and bioengineering fields.

June 2012Northeast Pharma-ceutical Group Co.

Liaoning FangdaGroup Industrial

Deal Size: $43.79 MnVitamin Series, Antibiotics, Anti-AIDS, Digestives, Narcot-ic medicines, Cardiovascular and Cerebrovascular medi-cines.

June 2011Jiangsu Spring FruitBiological Products

Yihai Kerry Invest-ments

Vitamin E oil manufacturer.

2011-12 Lonza Facility Set Up For Vitamin B3 – Niacin.


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Regulatory standards and

legislative practices arechanging and constantlyevolving across the globe. With globalisation ofnutritional supplementsmarket and increasing chal-

lenges, it becomes impera-tive to have a sound regula-tory framework for safety ofconsumer health and ensurefair practices in

international trade


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Nutraconsensus 31


Regulation and Standardisation

Legal status, the world over

The regulatory environment in developed countries is often governed or controlled by government

agencies which look into regulatory matters on nutrition related scientific health claims and also other

aspects such as manufacturing, packaging, labeling, and marketing of functional foods and dietary sup-

plements. The regulatory regime ensures the safety of consumer health and encourages fair practice in

international trade through the development of guidelines on food standards, codes of practice and

other recommendations. The FAO and WHO have developed together the Codex Alimentarius

Commission which aims to integrate, harmonise global food standards and create coordination

amongst non-governmental and international agencies. In practice, however, most countries follow

their own established regulatory system as it still remains unclear about the approach used in setting

guidelines for the Safe Upper Limit (SUL) of vitamins and minerals and consensus on matters like the

reduction of disease risk claims and scientific substantiation are yet to be reached.

Regulations in the USIn the USA, the FDA through the DSHEA has a separate set of regulations for dietary supplements

and dietary ingredients and does not cover food additives and medicines. All companies, domestic and

foreign engaged in the manufacturing, packaging, labeling etc. of dietary supplements must comply

with good manufacturing practice (GMP) for quality control. Under DSHEA, manufacturers are re-

sponsible for product safety and labeling, however, the FDA bears the burden of proving that a prod-

uct is unsafe or improperly labeled. Also, in general, registration and product approval is not required

for dietary supplements.

Three types of claims are allowed in the U.S. The first two are allowed without FDA premarket ap-

proval, provided they are not false or misleading:

1) Nutrient content claims: Claims relating to the level of nutrient in the food. For example, the prod-

uct is “low fat”, or “contains 60 calories” or “contains no added sugar”

2) Structure/function claims: The role of a nutrient or an ingredient likely to affect the structure or

function of a human body. For example, calcium is good for bones, fibre for digestive health, vitamins

A/C/E for natural defenses, vitamin A for eyes, etc.

3) Health claims describe the relationship between a substance and a health related condition or dis-

ease. They are often written statements but also include symbols, specific labeling and any other form

of communication that establish a relation. Evaluation and review by the FDA is a must prior to use. As per FDA, an example of an authorised health claim is “ Three grams of soluble fiber from oatmeal

daily in a diet low in saturated fat and cholesterol may reduce the risk of heart disease.”


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Nutraconsensus 32


Federal Trade Commission (FTC) is an independent agency responsible for consumer protection as

well as regulating the advertisement related to dietary supplements and the DSHEA is responsible for

product claims, product labeling and promotional activities undertaken at the point of sale. In order to

be compliant with the FTC law, the advertiser must identify claims and interpret ad meaning then veri-fy by having substantiate claims and also validate claims based on traditional sues and consumer expe-

riences. Also, under DSHEA, all statements must have a disclaimer that the statement has not been

evaluated by FDA and that the product is not intended to "diagnose, treat, cure or prevent any dis-

ease."

Cosmetics : FDA's Center for Food Safety and Applied Nutrition (CFSAN) is responsible for regulating

the cosmetic products. Pre-market approval of the FDA is not required for most cosmetic products

(except those containing colour additives). Like DSHEA, here also manufacturer is responsible for the

ingredients and safety of the product before it reaches the market. Other major enactments of law gov-

erning cosmetics are the Federal Food Drug and Cosmetic Act and the Fair Packaging and Labeling

Act which require consumer products to be labeled with proper disclosure and honesty. The FDA also

maintains a Voluntary Cosmetic Registration Program (VCRP) for post market reporting for use by

manufacturers. It applies to only cosmetic products sold in the US and does not include skin care clin-

ics or spa. The FDA does not formally recognise a classification for “cosmeceuticals”, for the agency, a

product is either a cosmetic or a drug depending on its intended use.

Veterinary Products: Federal Food Drug and Cosmetic Act (FFDCA) set the regulatory framework for

animal feed including pet food. The provisions of DSHEA are not applicable for veterinary products.

European Union

The regulatory status of dietary supplements in the EU is diversified and complex due to the presenceof different legislations and practices within member states. The European Food Safety Authority

(EFSA) is the risk assessment regulatory body that also governs matters related to nutraceuticals. Di-

rectives have been issued by EFSA in the nutraceutical segment on matters such as food supplements,

nutrition and health claims, botanicals, novel food and novel food ingredients, the traditional herbal

medicinal products and foods for particular nutritional purposes. Set out below is a brief of some of

the directives issued.

Nutrition and Health claims Regulation 1924/2006 sets out framework to ensure that labeling claims

in the EU are validated by scientific evidence and contains guidelines which protect consumers

from misleading or false claims

Food Supplements Directive 2002/46/EC has guidelines for labeling requirement and also sets themaximum level of intake of vitamins and minerals that can be added to a food supplement.

Apart from this, it contains the list of vitamins and minerals that can be added for specific nutri-

tional purposes in food supplements

Botanicals: Food supplements prepared from plants, algae have become available in the EU mar-

ket. Use of botanicals in food supplements are regulated by EFSA. The main purpose use scien-

tific based approach to assess the safety of botanicals used in food and supplements

Foods for Particular Nutritional Purposes Directive 89/398/EEC, which sets up specific directives

and rules for several areas such as infant or young children, weight management foods and other

specific areas.

Cosmetics: The Cosmetics Directive includes rules and procedures on what constitutes as safecosmetics and also guidance on restrictions on ingredients and monitoring labeling, packaging

and marketing requirements


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Vet Products: Committee for Medicinal Products for Veterinary Use governs the technical as-

sessments and the European Medicines Agency which governs the drugs and pharmaceuticals in

EU region look after the Marketing rules. Marketing authorisation is required for veterinary

products in EU.

United Kingdom

Products categorised as dietary supplements are mostly classified as food and are not regulated as a

therapeutic product under the Medicines Act. Also, stringent guidelines and product approvals appli-

cable for medicines in terms of dosage, ingredients, labelling and purity are not required for dietary

supplements. The Food Standards Agency (FSA) Expert Group on Vitamins and Minerals (EVM) has

published recommendations on what constitutes as a safe levels of intake for vitamins and minerals.

The food law and European level regulate the claims made for supplements. The Advertising Stand-

ards Authority (ASA), a self-regulatory body set up by the advertising industry has established codes

for the broadcast media (TV and radio advertising standards codes) to ensure marketing communica-

tion of dietary supplements is legal and honest.

Japan

In Japan, Foods for Specified Health Use (FOSHU) look into the food regulation, registration process

and labeling guidelines for food products that contain functional ingredients which affect the struc-

ture/function of the body. FOSHU approval is determined on a case-by-case basis while nutrient-

health claims are generic for any product, meeting the stipulated requirements.


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Nutraconsensus 34


Regulatory Framework in developed countries –

USA, European Union, and Japan

Regulatory/Non-Regulatory

Regulatory ActsDefinedNutraceuticalSegments

Role of RegulatoryBody

Labelling & Mar-keting Regula-tions

USA Regulatory body – Food & Drug Ad-ministration

Food & Drug Ad-ministration (FDA),Dietary Supple-ment Health andEducation Act(DSHEA), FederalFood Drug andCosmetic Act(FDCA), CODEX(Codex Alimentari-us Commission).

Functional Foodsand Dietary Sup-plements.

Provide pre-approvalto health claims;Defines dietary sup-plements;Regulates all foodsandfood additives;Regulates goodmanufacturing prac-tices for supple-ments;Develops standards

and guidelines forfoods for specialdietary uses.

The food labellingregulations arecomplex and con-stantly developing.Monitors safetymeasures in caseof any adversereporting related tofoods and productinformation such aslabelling, health orfunctional claims,

and package in-serts.

Europe Regulatory body – European FoodSafety Authority

General Food LawRegulation, EC178/2002, Europe-an Food Safety Authority (EFSA),Directive2002/46/EC (foodsupplements),Directive2004/27/EC (me-

dicinal products),Directive2001/83/EC, NovelFood RegulationEC 258/97, TheTraditional HerbalMedicinal ProductsDirective2004/24/EC.

Dietetic foods,food supplements,novel foods, herb-al medicines, etc.

Approves the healthclaims. Assess the laws ofEU countries relatingto supplements. Allows the registra-tion of products asmedicines by devel-opers providinggood quality herbal

products.Classifies novelfoods.Defines the claimsmade for productsbased on which aproduct can be de-fined as medicinal.Establishes a sci-ence-based ap-proach for theoriesrelating to functionalfoods.

Mutual legislationregarding labellingis missing amongEU countries.EFSA ensures thatproducts sold aresafe and preventsthe miscommunica-tion of informationto consumers.


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Nutraconsensus 35



Regulatory ActsDefinedNutraceuticalSegments


Labelling & Market-ing Regulations

Japan Regulatory

(FOSHU) as wellas non-regulatory(non-FOSHU)

Foods for Specific

Health Use(FOSHU), JapanHealth Food As-sociation (JHFA) -purposeful gov-ernment involve-ment that regu-lates the field, butdoes not overlyrestrict it.

Functional foods Focuses on health

claims for specificproducts. Approves healthclaims.FOSHU approvalprocess of 1 year tobe followed by man-ufacturing compa-nies for their prod-ucts and a furthershort period requiredfor review by thelocal authorities andthe Ministry ofHealth and Welfare(MHW).

Japan has a well-

defined product cate-gory and labellingsystem which helps incontrolling the market-ing of non-approvedproducts.Functional foods inJapan are a highlyprofitable business andgenerate further bigprofits as the FOSHUlabel allows for higherpricing of products.

Canada Regulatory body – Health Canada

Natural HealthProduct Regula-tions, Food andDrug Act, Canadi-an Food Inspec-tion Agency

Functional foods,Probiotics, naturalhealth products(NHPs)

Define requirementsfor quality, efficiencyand safety of prod-ucts.Manage health foodclaims for functionalfoods.Defines naturalhealth products.

Approve specificclaims post review-ing the products indetail (processingmethod and nutritioncontent, etc.)

Define the require-ments for labelling,packaging, clinicaltrials, Gmp, site in-spection, and alsoreporting of adverseevents.


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Consumer Awareness

Changing lifestyles

Increase in disposable income

Retail growth

Certain degree of dissatisfaction ofmodern medicine

Ageing population

Factors fuelling the growth of theNutraceutical Industr

Regulations in the BRIC regions

The demographic, economic, and cultural changes that

have driven the development of functional food markets

in developed countries are also fuelling the growth in the

BRIC regions. While the domestic market environment

and demand factors in the opportunities available for

companies in developing countries, export markets may

offer profitable opportunities to overcome their limited

domestic demand of functional foods. Commercial ex-

port opportunities exist in value-added raw materials,

functional ingredients, and even in consumer products

for the functional food sector in the more mature mar-

kets. The following section examines the functional

foods sector in three of the emerging economies in the

BRIC regions – Brazil, Russia, China and followed bydevelopments in India.


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Nutraconsensus 37


Regulatory Framework in developing countries –

Brazil, Russia, and China


RegulatoryActs

Defined

NutraceuticalSegments


Labelling & Market-ing Regulations

Brazil Health claims ‐ referenceto the cure orprevention ofdisease ‐ are notallowed

National HealthSurveillance Agency (ANVI-SA), StateFood and Drug Administration(SFDA)

FunctionalFoods

Coordinates, supervises,and controls activitiesregarding registration,information, inspection,risk control, and rulemak-ing to assure health sur-veillance over food, bev-erages, water, ingredi-ents, packages, technol-ogies, contaminationlimits, and veterinaryresidues, Check naturalor synthetic substanceshaving a demonstrated

and physiologic activity,Regulates foods thathave a functional orhealth claim associatedwith their use

Russia Non regulatory Russian Minis-try of Health

Dietary sup-plements

The process for register-ing dietary supplementstakes around 6 monthsand once all the require-ments are fulfilled, thereis a short period requiredfor issuing and register-ing the certificates.

Significant limitationshave been imposedon the nutraceuticalmarket with regard toadvertising, promotionand distribution, espe-cially in “official” saleschannels

Among the BRIC countries Brazil leads the vitamins and minerals market. China is home to the second largest

vitamins and minerals market, led by multi‐ vitamins, while its single minerals category displays rapid growth.

Among the developed country manufacturing packaging labelling and marketing of nutraceuticals and dietary

supplements are regulated by the well-furnished and managed government regulatory body. But in the develop-

ing country like India, regulations have been evolving over the last decade with a formalisation of the policy in

2011-12.


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Nutraconsensus 38


Evolution of the Nutraceutical Regulation in India

The Food Safety and Standards Regulations, 2011. How is it different from the previous(multiple) law/s?

Prior to the FSSA, there were multiple laws and regulations governing food safety and standards. Nutraceuti-cals were clubbed under Prevention of Food Adulteration Act and Rules (PFA). Food was classified as eitherfortified or propriety. Later in 2006, all the existing laws were consolidated to form one single statute in orderto ensure systematic and scientific development of the food processing industry. Food was classified under thefollowing heads:

Novel foods

Genetically modified food

Propriety Food

Standardised Food

Foods for special dietary use Functional foods/Nutraceuticals/Health Supplements

The Food Safety and Standards Regulations, 2011 notified in the Gazette of India came into force on 5th Aug2011 to regulate manufacture, distribution and sale of nutraceuticals, functional foods and dietary supplementsin India.

Licensing and Registration requirements

Every Food Business Operator(FBO) in the country will have to obtain registration and license in accord-ance with the procedure laid down in FSSAI (Licensing and Registration of Food Business)Regulation2011

A manufacturer cannot commence business unless he is registered or has a valid license.

Petty food manufacturers(annual turnover less than Rs.12 lakh) have to register with the Commissioner-ate and manufacturers whose turnover is greater than 12 lakhs to obtain PA or food licence from FSSAoffice

Existing licenses/registration should be converted into FSSAI license/registration before 5 August 2012(now extended by a few months)

An application for the grant of a license shall be made in Form B of Schedule 2 to the concerned Licens-ing Authority. The license shall be issued within 60 days from the date of issue of an application ID num-ber

After the issue of Application ID number the Licensing Authority may direct the Food Safety Officer toinspect the premises in the manner prescribed by the FSSAI in accordance with these Regulations.

The Licensing Authority shall issue a License in Format C under Schedule 2 of these Regulations

Registration or license granted under these Regulations shall be valid and subsisting, unless otherwisespecified, for a period of 1 to 5 years.

Increased regulation should encourage manufacturers to deviselong-term market strategies…..and weed out unscrupulous playersand products from the market.


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FSSAI regulations 2011 at a glance

Challenges faced by the Supplier/Manufacturer with the introduction of the new law

Product Approval

Prior to FSSAI, a company could manufacture a product if it had the license of Prevention of Food Adultera-

tion (PFA). But now, product approval certificate is mandatory to obtain a FSSAI license. An applicant has to

apply for each ingredient separately for New Product/Ingredient. For obtaining product approval the food

business operator will make an application in the prescribed format with an initial payment of non-refundable

INR 25,000. This tends to create technical hurdles as well as increase the cost incurred by the manufactur-

er/supplier. In a recent case, Tamil Nadu Food Supplement Manufacturers and Traders Association (TFSM-

TA) has decided to move court seeking amendment to FSSA rules.

FBO can nowcommence business

Food BusinessOperator (FBO)

Fill application Form A forregistration

Submit documents

Attach self-declaration

NO

Registration/license ismandatory

YES

Grant registration/license within thestipulated time

YES

YES

Check criteriafor Centrallicense or Statelicense

Fill application Form B forlicense

Submit documents

Licensing authority may seekadditional information

Issue of Unique Application

number

Appoint Food Security

Officer (FSO)

Send notice of inspec-tion to FBO

FBO to comply with therequired alterations

FSO to submitinspection report

Meetseligibility?

Inspectionrequired?


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Separate Food License for packed food items

In order to prevent misrepresentation of claims on labels, the FSSAI has recently sent notices to manufacturers

of food supplements like Pediasure, Bournvita, NutriChoice asking them to provide scientific basis of their

claims. The act has made it mandatory to have separate licenses for these items.

Timelines

While specific timelines have been mentioned in the guidelines actual implementation of some of the above

process steps may take longer than prescribed timelines as the procedures, implementation agencies and their

operations are in the process of formalisation. Considering the fact that an approval process lasts for only a

period of one year, companies with a larger portfolio would be involved in the approval process for significant

time periods every year. While these appear to be teething issues in the implementation of the regulation, inter-

im relief through specific approvals) is being awarded in terms of temporary licenses for products which are

already being sold in the market. Foreign players, however, disagree on selling products until final confirmed

approvals for all products are in place.

Facility Approvals

Operators also feel that a certain level of facility based approvals should also be added to the current regime

(like pharma) so as to save timelines for process based formalities which may be common for a basket of

products that are being manufactured at a facility.

Documentary evidence

There does not appear to be complete clarity on the documents required to be submitted during the approval

process and monitoring agencies seem to be taking time before responding with specific pending requirements.

Also clarity is required in terms of products which are manufactured outside India (to prevent dumping of re-

jected overseas products in the country).

Labelling/ Advertising

Legislation on product quality and standards (included in the FSS (Packaging and Labelling) Regulations, 2001)

need to be adequately supported by a claims monitoring agency for product labels and advertisements directed

at attracting the consumer to the product. Regulations currently prohibit the making of any health claim on

proprietary/ functional/ novel foods without FSSAI approval and no claims should be made which are false,

misleading or deceptive. What is a correct/ misleading health claim is it proven, what the process of approval

is and associated timelines are some of the questions which still remain unanswered.

Marred by issues around ambiguity and multiplicity for the last decade, guidelines forNutraceutical regulations have made a hurried but long awaited debut in the Indianmarket in 2011-12. Welcomed by all, these guidelines appear to face teething issues interms of actual implementation and transition of old, existing products into the newregime. While nodal and monitoring agencies have been framed for the effective im-plementation of these rules, still much needs to be done to supplement the manpowerto handle the volume of applications in a country, which is poised to become one of

the largest consumers of Nutraceuticals in this decade.


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Growing market sizes, heightenedattention to product safety and the

continuing harmonisation of foodsupplement regulations show aglobal trend toward more regula-tion and India, although a late en-trant, has emulated these guidingprinciples of Nutrition Regulation

across the globe


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Recommendations and way forward

Some of our recommendations for growth of this sector in a regulated environment are included in the

paragraphs below:

Transformational Partnerships

The National Health Agenda, though currently

viewed from the lens of ‘public’ health only, needs to

be viewed through experienced industry players and

institutional agencies as well. A key learning from

the Copenhagen Consensus 2012 for our policy

makers is to ensure that Bundled Micro-Nutrient

Intervention should form a core area of fund alloca-

tion in our Budget. Independent pilot plans for

meeting the nutrition needs of the country need to

be supplemented with large scale alliances of publicand private partners to increase access to the missing

nutrients necessary for the growth of health of peo-

ple, communities and economies. These alliances

can then be supported by public and private sector

donors and participation from domestic and interna-

tional players (who may have experience of imple-

menting these in other developing economies).

Some examples for the kind of alliances which can

be layered under one another to address a collective

agenda of malnutrition include:

National multi-stakeholder PPP model

Sectoral partnerships

Private sector led initiatives (by experienced glob-

al players)

Building institutional capacity with industry

representation

The improved and stringent regulatory environment

should be augmented with institutional capacity and

include member representatives such as producers,

processors as well as the government regulatory bod-

ies, as necessary for addressing matters around:

technical assistance on potential technologies

evaluation of scientific benefits and evaluation

of claims

best practices in quality standards including

learning from products which are already ap-

proved in other regulated markets

manpower support with experienced specialists

for speedy transition and redressal of issues and

avoidance of delays

change enablement support for smaller and

newer entrants in the market

Continued research and innovation

There has been a continued scientific evaluation in

the areas of biodiversity and the beneficial health

effects on functional food and nutritional uses in the

markets. Scientific evidence for safety and functional

effectiveness of these compounds is essential in or-

der to realise their potential in the production of high

market valued products.

New value-added components could also come fromlocal food crops, medicinal plants or non-food

sources.

Economics of Nutrition

Providing information and support for strategicdecision-making:

To a supplier of raw material ingredients, the target

markets for food supplements, traditional medicine

and functional food all appear to be interlinked. In

order to strengthen the functional food programs, it

becomes imperative to identify the potential sectorson a case by case basis and assess their profitability. .

Before a product decision is made, it is helpful to


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understand the likelihood of market acceptance by

studying each market segment in depth. Each mem-

ber of the supply chain must be given an opportunity

to make rational and informed choices. This canhappen only if the market and regulatory information

is made available to them.

Strengthening mass communication for

specific health nutrition factors

Child and women’s health and sports nutrition ap-

pear to be the focus areas of almost all industry play-

ers in the developing regions. A national emphasis

on such matters, which is already present in case of

infant and women nutrition to an extent, needs to be

extended to emphasising on the importance of sports

activities in school curriculum as well as in the

younger and middle aged population.

Change enablement

The FSSAI regulations include the set-up of nodal

agencies for the immediate implementation of the

guidelines. Industry representatives feel that several

time limits are currently not being complied with for

existing product applications and there have been

significant delays resulting in financial losses for thecautious players. Interim, temporary approvals need

to be allowed for players and products which have a

long history of having sold these products in the

domestic and international market.

A formulation or a facility based approval

Current approval processes designed for each and

every product (whether new or already being market-

ed) is a lengthy process and also holds validity only

for a defined time period. This may be streamlined

with practices in the pharma industry where bothproduct and facility approvals can co-exist and re-

newals are less stringent and less time-consuming

process.

Labelling and Claim Evaluation

In a vastly illiterate and scientifically ill-informed

population like India, any misleading information

(through advertising/ packaging/ labeling) that has

been printed on to the label of the dietary supple-

ments meant for mass consumption may cause a ma-jor national crisis. Though National institute of Nu-

trition and the FSSAI have issued guidelines and

norms for packaging and labeling urgent attention of

the government or the regulatory body in this direc-

tion which covers all aspects of Advertising, Packag-

ing and Labeling and evaluate all products beforethey enter the market (and not in the form of post

facto approvals/ withdrawals, as is currently the

case).


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References

1. Micronutrients, Macro Impact:- The story of vitamins and a hungry world (www.sightandLife.com)2. Nutrition Business Journal, S&P3. International Journal of Pharmacy and Pharmaceutical Sciences - DIETARY SUPPLEMENTS: A LE-

GAL STATUS IN INDIA & IN FOREIGN COUNTRIES4. Health Enhancing Foods Country Case Studies of China and India – The World Bank5. Expert Panel Findings, Copenhagen Consensus 20126. Next-Generation Nutraceuticals, Business Insights7. Nutraceuticals as therapeutic agents: A Review, Research J. Pharm. and Tech8. An Overview Of Nutraceuticals Current Scenario, Journal of Basic and Clinical Pharmacy9. Advanced analysis of nutraceuticals , Journal of Pharmaceutical and Biomedical Analysis10. Hunger And Malnutrition, Challenge paper, Copenhagen Consensus 201211. Regulatory environment for nutraceuticals and functional foods, National Research Council of Canada12. Nutraceuticals: What Are They And Do They Work? Kentucky Equine Research, Inc.,Versailles, KY13. East Meets West: Bridging the Cultures with Innovative Food Solutions - Dr. Sharon Shoemaker + Dr.

Karen Lapsley, Moderators

14. Nobel Laureates: More Should Be Spent On Hunger, Health15. Classification, Regulatory Acts And Applications Of Nutraceuticals For Health and Dietary Supple-

gt ficci nutraconsensus whitepaper

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