When Mumbai-based entrepreneur Sanjaya Mariwala wanted to set up his new venture for developing active ingredients from natural sources for health and wellness products in 2004, even his business-enthusiastic family didn’t consider it a sensible choice and was hesitant to help invest. But Mariwala’s venture, OmniActive Health Technologies, is currently one of the fastest growing natural care companies in India with large global investors queuing up to invest in it.
“And they ask no questions,” says Mariwala while talking about the routine calls that he receives from potential investors, who are convinced about the sector’s growth.
Pragun Jindal, MD of Bangalore-based Jindal Aluminium, too, did not have second thoughts about his plan to enter the natural care business when the group recently decided to diversify their business. According to him, the research-backed natural care market is going to be the next big opportunity in India as well as abroad.
Mariwala and Jindal represent hundreds of India’s new-age entrepreneurs and business entities, who have taken a serious call on the exponentially growing natural care segment in the newly emerging healthcare and wellness market. This is because those seeking good health and personal care around the world are increasingly moving towards alternative therapies and natural products.
Large corporate players including pioneers such as Himalaya Drug Company, Dabur India, Hindustan Unilever (HUL), EID Parry, OmniActive, Patanjali, and many new entrants such as Jindal along with at least a dozen top pharma companies such as Zydus Cadila, Wockhardt, Sun Pharma and Alkem Labs are betting big to seize this huge global opportunity.
A World Of Opportunity
The world market for neutraceuticals including adjuvant therapies, functional food, dietary, health and food supplements is estimated at $278 billion, while the personal care market, comprising cosmetics, oral, skin and hair care and others stand at $12 billion. A Nielsen report released in June pegged the natural segment in India’s personal care market at Rs 18,500 crore in 2016 — 41 per cent of the total Rs 44,790 crore personal care market. India’s natural care (nutraceuticals and dietary supplements) industry will touch $9.2 billion by 2020, predict other reliable reports. “Roughly, every given year, naturals is eating up a per cent point from the non-naturals in the personal segment,” says Nielsen South Asia Executive Director Sameer Shukla.
The segment is growing at almost 1.7 times that of overall personal care and the value growth of the natural segment is racing ahead at almost 2.2 times that of non-naturals, adds the Nielsen report.
At a time when the definition of healthcare is rapidly progressing from illness care to wellness care, the priorities in the market witnesses a paradigm shift. According to noted consultant in pharma and healthcare marketing and the MD of Interlink Marketing Consultancy, Raja B. Smarta, science-based natural care, both in healthcare and wellness is one of the most promising areas in healthcare, although the marketing models are yet be structured and fully emerged in India.
The Research Landscape
Despite the growing numbers, this highly research oriented industry is not an easy play, cautions industry experts. And India carries the notorious tag of having a market for fake products in this sector.
“Unless the products are backed by high level scientific research and differentiated by innovation, they can’t make a successful entry in the market” says D.B. Anantha Narayana, Chairman, Herbal Products Committee, Indian Pharmacopoeia Commission and former research head at HUL (Lever Ayush) and Dabur.
Therefore, serious players are substantially raising their benchmarks in R&D, innovation, global approvals and reach. While big brothers like Himalaya, Dabur, HUL, EID Parry, Patanjali among others have already made substantial investments in R&D, the new players are looking at differentiated products.
Mariwala-promoted OmniActive Health Technologies raised a round of private equity funding from Everstone Capital and debt funding from multiple sources including Avendus Finance (AFPL) early this year. OmniActive also made a strategic acquisition soon after this to expand its product offerings as well as manufacturing capacity.
“The kind of research that we do in this area (natural care) and the innovation that we bring into our products can not only impact our lives today but can also address the emerging challenges of tomorrow,” says Mariwala.
In terms of improved R&D, Chennai-based EID Parry is currently the only company in the world with the capability to produce all the three algae-based dietary supplements, including Spirulina, Chlorella and Astaxanthin. The company has also introduced multi-level marketing, a model that was introduced by nutraceutical firm Amway, to boost Spirulina sales in Asian markets. The company says that the coming years will see rapid expansion in the Asia Pacific and Indian sub-continent regions.
Jindal Aluminium, too, is positive about its entry into the herbal health and wellness space. “We have our R&D team already working on the innovative healthcare products business and should be ready with the marketing set up in another 5-6 months,” said Jindal.
Following the trend, most of India’s top pharma companies are now planning to expand their consumer health (non-prescription) portfolio, focusing mainly on naturals. While the growing consumer demand for natural care is the key reason, a shrinking generic drug business further prompts them to build an alternative growth channel.
Zydus Wellness, the consumer products arm of Ahmedabad-based drug maker Cadila Healthcare, has now added several new natural care targets in its R&D portfolio after the success of a natural variant of its popular low calorie sweetener ‘Sugar Free’, which has been developed from the herb Stevia.
Also, the country’s largest generic drug maker Sun Pharma has initiated a renewed marketing push for its consumer health business that was acquired through the purchase of Ranbaxy Laboratories. This unit had developed a number of products using natural ingredients.
Pioneering Task
In India, the concept of scientifically developed natural pharmaceuticals was pioneered by The Himalaya Drug Company in 1930. Founded by the late entrepreneur M. Manal, Himalaya’s history began with his exposure to an interesting herb in the forests of Burma, where he saw a man pacifying a restless elephant with the root of a herb called Rauwolfia serpentina. Excited by the fascinating effects of this herb, Manal went on to scientifically study it and discovered that it had antihypertensive properties. His idea to bring the traditional science of Ayurveda to society in a contemporary form culminated into the establishment of the company and its first product — Serpina. Developed in 1934, Serpina was claimed to be the world’s first natural antihypertensive drug.
A strong and continued focus on intensive research in the natural substances helped Himalaya to expand its product offerings. Its highly successful brands currently include Liv52, a liver formulation that ensures optimum liver function, Septilin, a respiratory care product, and a series of brands such as Cystone, Bonnisan and Rumalaya Forte. The company had established its main factory in Makali near Bangalore in 1975 and moved its research facility also to Bangalore in 1991. “Currently, we have a healthy pipeline (under research) of over 100 products across various business segments,” says Himalaya’s R&D Head Rangesh Paramesh.
Himalaya is the only Indian company that regularly contributes plant DNA sequences to global registries such as the Barcode of Life Data System, a DNA barcode library maintained by the University of Guelph, Canada, and GenBank nucleic acid sequence database, one of the major genomics repositories, maintained by National Center for Biotechnology Information (NCBI) at the National Institutes of Health. Himalaya, which has a current turnover of close to Rs 2,500 crore, says each rupee that it earns get reinvested into R&D, manpower and infrastructure, depending on the business requirements.
Companies that are now venturing into this space could take a leaf out of Himalaya’s experience. The company’s model of scientifically developing products and promoting them strictly through prescription route makes its position unique in the market. Himalaya, which currently offers adjuvant therapies in the areas of respiratory, allergy and liver ailments, also plans to make its presence stronger in metabolic disorders and cancer.
“We have been steadily expanding our field force and the marketing channels in the last 3-4 years as we want to serve the growing market in pharma as well as other segments,” says Himalaya Drug Company’s President & CEO Philipe Haydon. The expansion of the field force is part of the company’s strategy of achieving its overall revenue target of $1 billion by 2020. “Looking at the growing market demand for natural care, I am even confident of setting a target of $1 billion in sales for India alone,” adds Haydon.
The New Hotspot
Narayana, also an Ayurveda science veteran, talks about India’s two recent policy initiatives — the Herbal (Botanical) Drugs law and Nutraceuticals and Dietary Supplements Bill (introduced in 2015 and 2016, respectively). “These have provided regulatory clarity, paved the way for the industry to undertake extensive research in this area,” he says. With these pioneering laws, it is not only Indian companies but several foreign firms too have set up R&D and manufacturing facilities in India for herbal and natural care products, Narayana points out.
India has 15 agro-climatic zones and 17,000-18,000 species of flowering plants of which 6,000-7,000 are estimated to have medicinal usage in folk and documented systems of medicine such as Ayurveda, Siddha, Unani and Homoeopathy. In fact, going by the estimates of the National Medicinal Plants board (Ministry of Ayush), about 960 species of medicinal plants are estimated to be in trade of which 178 species have annual consumption levels in excess of 100 metric tonnes. There is global resurgence in traditional and alternative healthcare systems resulting in a boom in world herbal trade, which is expected to touch $7 trillion by 2050, the Board claims.
Despite availability of scriptures that offer off-the-cuff remedies using chemical-free ingredients, a contemporary research-based documented answer is key to the sector’s growth.
‘BUILD CREDIBILITY’
Q: How prepared is the Indian natural care industry to seize the global pie?
If India wants to be a serious contender in the global natural care industry, we will need to build credibility and acceptability, focus on quality and invest in the education of both the medical fraternity and consumers. Today, the Indian government is actively supporting it and also focusing on increased awareness.
Q: What is the reason behind the big shift in the health and personal care market towards naturals?
Globally, there is a growing incidence of chronic lifestyle ailments such as diabetes, hypertension, arthritis and cholesterol. As awareness around these conditions increases, consumers are embracing preventive care and wellness, resulting in the rising popularity of natural and herbal supplements that safely augment the body’s healing and rebuilding process. Additionally, herbal medicines are also being used as adjuvants or in supportive care to address several lifestyle disorders. With personal care as well, consumers are choosing natural products as they are gentle on the skin, hair and body.