Internship Project

On

Flavor Potential and Mapping of Pharmaceutical and

Nutraceutical Market in North India

AAKANSHA NEGI
(College Of Agribusiness Management, G.B Pant University Of Agriculture and
Technology, Pantnagar)
 EXECUTIVE SUMMARY

The results of the study from manufacturers of pharmaceutical and nutraceutical sector should be
useful in development of flavors with respect to the flavor requirement of the industry.
The primary research includes survey of nutraceutical and Pharmaceutical for information in
relation to their flavor requirement. This helped in understanding the flavor potential.

The prime objective of the study is to understand the flavor potential of nutraceutical and
pharmaceutical market.

A total of 48 manufacturers (inclusive of both the sectors) were surveyed in North India (covering
Delhi, Delhi NCR, Himanchal Pradesh, Punjab and Uttarakhand). Among these 23 manufactured
pharmaceuticals while 22 manufactured nutraceuticals, remaining 3 manufactured both
nutraceutical as well pharmaceuticals.

Nutraceuticals is relatively a new product category in food industry. It was recently covered under
the FSSAI guidelines as well. The industry is still in its growing stage with a number of product
categories which hold a large potential for flavor incorporation. The incorporation of flavor solely
relies on product type and composition; hence, different product categories have different flavor
requirement.

Pharmaceutical sector on the other hand is one of the major contributing sectors and is broadly
segmented into Generics Drugs, Patented Medicines and OTC Medicines. The flavor requirement
of this sector is comparatively specific in nature. Flavor requirement analysis of OTC medicines
(over the counter medicines) is one of the -potential areas for flavor incorporation.

Flavors are frequently used in nutraceutical and pharmaceutical products, they serve the purpose
of flavor masking as well as improving the product taste. A number of factors influence flavor
quantity and type which directly reflects on the flavor potential of these markets.

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 TABLE OF CONTENTS

S.No. Title Page No.

EXECUTIVE SUMMARY I
LIST OF CONTENTS II
LIST OF TABLES AND FIGURES III
1. INTRODUCTION
1.1 Nutraceuticals 5
1.2 Pharmaceuticals 9
1.3 Flavors in pharmaceutical and nutraceutical industry 11
1.4 Flavor Regulations 13
1.5 Problem statement 14
1.6 Objectives of the study 15
1.7 Market Size 15
2. METHODOLOGY
2.1 Research Design 17
2.2 Data Sources 17
2.2.1 Secondary Sources 17
2.2.2 Primary Sources
2.3 Area Of Study 17
2.4 Sampling Design/Sampling Plan 18
2.4.1 Universe 18
2.4.2 Sampling Unit
2.4.3 Sample Size
2.4.4 Sampling Technique
2.5 Research Instrument 18
2.6 Analytical Tools 18
2.7 Duration Of Study 18
3 RESULTS 19
4 RECOMMENDATIONS 26
5 REFRENCES 27
ANNEXURE 1 Questionnaire

3
 LIST OF TABLES
TABLE 1: MAJOR INDIAN PHARMACEUTICAL PLAYERS (SOURCE: INDIAN BRAND EQUITY FOUNDATION-IBEF) ................. 11
TABLE 2: FLAVORS USED IN PHARMACEUTICAL PRODUCTS ...................................................................................... 13
TABLE 3:FLAVOR QUANTITY REQUIREMENT OF SYRUP MANUFACTURER..................................................................... 22
TABLE 4:FLAVOR QUANTITY REQUIREMENT OF PROTEIN POWDER MANUFACTURERS ................................................... 24
TABLE 5: OVERALL FLAVOR QUANTITY REQUIREMENT ............................................................................................ 25

LIST OF FIGURES
FIGURE 1:CATEGORIES OF FOOD UNDER HEALTH SUPPLEMENTS, NUTRACEUTICALS, FOOD FOR SPECIAL DIETARY USE, FOOD
FOR SPECIAL MEDICAL PURPOSE, FUNCTIONAL FOOD AND NOVEL FOOD),FSSAI .................................................. 5
FIGURE 2:CLASSIFICATION OF NUTRACEUTICALS IN INDIA, FSSAI................................................................................ 6
FIGURE 3 VALUE CHAIN OF F&F AND NUTRACEUTICAL INGREDIENTS .......................................................................... 7
FIGURE 4:INTERLINKAGES BETWEEN F&F AND NUTRACEUTICAL VALUE CHAIN.............................................................. 8
FIGURE 5:MAJOR PLAYERS OF INDIAN NUTRACEUTICAL MARKET ................................................................................ 8
FIGURE 6: REVENUE SHARE OF SUB SEGMENTS OF PHARMACEUTICAL SECTOR ............................................................... 9
FIGURE 7: CLASSIFICATION OF INDIAN PHARMACEUTICAL INDUSTRY.......................................................................... 10
FIGURE 8: OVERVIEW OF PHARMACEUTICAL SECTOR .............................................................................................. 10
FIGURE 9: MAJOR FLAVOR AND FRAGRANCE PLAYERS IN INDIA ................................................................................. 12
FIGURE 10: MAJOR FLAVOR AND FRAGRANCE PLAYERS GLOBALLY ............................................................................ 12
FIGURE 11:GLOBAL MARKET SIZE OF NUTRACEUTICALS ......................................................................................... 15
FIGURE 12: MARKET SIZE OF INDIAN NUTRACEUTICAL SECTOR ................................................................................ 16
FIGURE 13:INDIAN PHARMACEUTICAL SECTOR-(REVENUE) ...................................................................................... 16
FIGURE 14:MAP OF AREAS COVERED .................................................................................................................. 18
FIGURE 15:PRODUCT MARKET COVERED ............................................................................................................. 20
FIGURE 16: CATEGORIES OF PRODUCTS COVERED .................................................................................................. 21
FIGURE 17: FLAVOR ANALYSIS OF SYRUP MANUFACTURERS .................................................................................... 22
FIGURE 18:FLAVOR ANALYSIS OF PROTEIN POWDER MANUFACTURERS ..................................................................... 23
FIGURE 19: FLAVOR REQUIREMENT OF OTHER PRODUCTS....................................................................................... 24

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1.INTRODUCTION
Worldwide nutraceuticals are defined as ingredients that have health benefits beyond basic
nutrition. They are also defined as parts of a food or a whole food that have a medical or health
benefit, including the prevention and treatment of disease. ("FSSAI Key Requirements for
Manufacturing Nutraceuticals in India", 2017)

On the other hand, the Indian pharmaceuticals market is the third largest in terms of volume and
thirteenth largest in terms of value, as per a report by Equity Master. India enjoys an important
position in the global pharmaceuticals sector.

Figure 1:Categories of food under Health Supplements, Nutraceuticals, Food for Special Dietary
Use, Food for Special Medical Purpose, Functional Food and Novel Food),FSSAI

Health foods are divided into nutraceuticals and Pharmaceuticals. The “nutraceuticals” are claimed
to have health benefits over and above their traditional role in human nutrition, including the ability
to inhibit inflammation, cancer, diabetes, hypertension, obesity, heart disease, and brain disorders,
while Pharmaceuticals are drug preparations designed to prevent or treat specific diseases

1.1 NUTRACEUTICALS
According to the definition in the Food Safety and Standards (Health Supplements, Nutraceuticals,
Food for Special Dietary Use, Food for Special Medical Purpose, Functional Food and Novel
Food) Regulations, 2016, it has been stated that nutraceuticals shall provide a physiological
benefit and help maintain good health. The Regulation also states that “a food business operator
may extract, isolate and purify nutraceuticals from food or non-food sources, that is preparing
amino acids and their derivatives by bacterial fermentation under controlled conditions.

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1.1.1 SEGMENTATION OF NUTRACEUTICAL INDUSTRY
Broadly, the nutraceutical industry is divided into two segments in India, Functional food and
beverages and Dietary Supplements. The former category is futhur demarcated as functional foods
and Functional Beverages.

Figure 2:Classification of Nutraceuticals in India, FSSAI

Source: Report by FICCI ‘Global Nutraceutical Industry: Investing in healthy living’

In terms of flavor and nutraceuticals, the areas highlighted as green in Figure 2 are the identified
potential areas of flavor incorporation and the research is focused on these segments.
While different countries legislations including India have different definitions of health
supplements and nutraceuticals, globally, the term can be divided into 3 segments: Functional
Packed food, Dietary Supplements, Functional Beverage.

Functional foods contribute to 3/4th of the market and major contributors are fortified products.
Functional beverages too have shown demand recently due to increasing demand for fortified
juices and energy drinks (ASSOCHAM).
A dietary supplement is intended to provide nutrients that may otherwise not be consumed in
sufficient quantities. Supplements as generally understood include vitamins, minerals, fiber, fatty
acids, or amino acids, among other substances. Dietary supplements hold the largest share in the
market. The Indian dietary supplement market is composed of over 500 participants. Vitamins and
minerals supplement market is the most competitive with over 100 participants. Further, India is
opening up its market to foreign players.

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1.1.2 NUTRACEUTICAL AND FLAVOR & FRAGRANCE (F&F) VALUE CHAIN

Very broadly, the F&F and nutraceutical value chain has four key stakeholders – (a) raw material
suppliers (b) base ingredient manufacturers (c) functional ingredient manufacturers and (d) end-
consumer industries. Figure 3 below depicts the value chain for these segments:

Base ingredient Functional Ingredient

Raw Material Supplier
•Agri output providers
•Natural raw material or
petrochemicals for furthur
processing
•Synthetic:Petrochemicals
and Pine Dericatives
•Natural:Herbs and
Spices,Mint,Other products
manufacturer
•Standardized extract with
minimaldifferentiation
•application across variety of
end users
•limited pricing power
•Includes:
•Synthetic: Aroma Chemicals
and synthetic ingredients fo
nutraceuticals
•Natural : Spice
extract,oleoresins
End consumer company
Manufacturer
• Offer premium value added • B2C players offering final
products focused on specific products to end
end-use applications consumers
• Products drive the key •Specialize in final
functionality to the end formulations combining
consumers
fine ingredients and
• Specialize in delivery
technologies for superior
excipients; may
performance of end manufacture products
products themselves
• Products are usually •Strong marketing and
branded and clearly brand building
differentiated from capabilities;
competitors’ offerings
•Includes:Perfumes
• Includes:Fragrance blends •FMCG products
and Cosmetic actives •Processed
• Flavours & colours foods/beverages
• IP driven nutraceutical •Dairy products
ingredients •Nutraceuticals

Figure 3 Value Chain of F&F and Nutraceutical Ingredients

Source: Report on ‘Flavours, Fragrances & Nutraceutical Ingredients In India’ by Avendus

Three sub-segments of the F&F and nutraceutical value chain –(a) base ingredient manufacturers
(b) F&F blenders and (c) nutraceutical ingredient manufacturers. There is a significant overlap
between the supply chain of the F&F and the nutraceutical segments. Nutraceutical ingredients
and F&F are often manufactured from the same starting blocks which are referred to as base
ingredients. A natural extracts player could be supplying extracts and essential oils into the F&F
industry as well as extracts and oleoresins to nutraceutical ingredients companies. Similarly, a
synthetic ingredient manufacturer could be supplying aroma chemicals to F&F blenders as well as
synthetic vitamins/synthetically derived compounds to the nutraceutical value chain. Figure 4
depicts the interlinkages between these two sectors.

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 Figure 4:Interlinkages between F&F and Nutraceutical Value Chain

Source: Report on ‘Flavours, Fragrances & Nutraceutical Ingredients In India’ by Avendus

1.1.3 MAJOR PLAYERS OF NUTRACEUTICAL MARKET

The global market is dominated by players like Amway, Pepsico, GSK, Danone, Unilever
,DSM, and ADM. These players have managed to scale up by building strong multi-product
portfolios through innovation, marketing, and strong science, enabling them to be included
in the mainstream nutraceutical market.
Company market share (%) Dietary Company market share (%)- Fortified/
supplements India Retail Value(2016) Functional packaged foods India Retail
Value(2016)
Amway India Enterprise Cargill India Private Limited
Limited
Dabur India Limited Britannia industries Limited
12%
Heinz India Private Limited Gujrat Co-operative Milk 20%
11% Marketing Federation Limited 31%
Herbalife International India Nestle India Limited
Private Limited 6%
Himalaya Drug Company 56% Kellogg India Limited 15%
5%
Ranbaxy Laboratories Agro Tech Foods Limited
4% 15%
Elder Pharmaceuticals 4% Ruchi Soya Industries Limited 8%
2% 3%
Others Others
3% 5%

Figure 5:Major players of Indian Nutraceutical Market

Source: Report by FSSAI “Health Supplements and Nutraceuticals Emerging High Growth Sector in
India”

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1.1.4 Future Projections of Nutraceutical Market
India’s nutraceuticals market is expected to double in size by 2020 on account of the strong demand
for dietary supplements from the upper and middle class. It is expected to grow at a significant 21
per cent CAGR to $10 billion by 2022. This will likely be fueled by a significant 25 per cent per
annum growth in functional food & beverages market accompanied by similar potential growth
from the other segments. Market for functional foods and beverages is expected at CAGR 22% by
2022.

1.2 PHARMACEUTICALS

The Indian Pharmaceutical market (IPM) accounts for approx.1.5% of the global pharmaceutical
industry in value terms and 20% in the volume terms. The IPM is highly fragmented with about
24,000 players (330 in the organized sector). The top ten companies including domestic and MNC
companies make up for more than a third of the market. The market is dominated majorly by
branded generics, which constitutes nearly 70% of the overall market. (equity master: Indian
Pharmaceutical Industry report).

India supplies 20 per cent of global generic medicines market exports, in terms of volume, making
the country the largest provider of generic medicines globally and expected
to expand even further in coming years

Over the Counter (OTC) medicines and patented drugs

Revenue share of Indian Pharmaceutical
constitute 21 per cent and 9 per cent, respectively, of total sub segment in 2015(%)
market revenues of USD20 billion.
The Indian pharmaceuticals market has characteristics that 9% Generic Drugs

make it unique. First, branded generics dominate, making OTC Medicines

21%

up for 70 to 80 per cent of the retail market. Patented

70%
Second, local players have enjoyed a dominant position
driven by formulation development capabilities and early
investments.
Figure 6: Revenue share of sub segments of Pharmaceutical sector

Third, price levels are low, driven by intense competition.

Source: Business Monitor International, FCCI
Indian Pharma Summit 2014-15, TechSci Research

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The industry is broadly categorized into: Tablets, capsules, Oral Liquids, Lotion,
Lozenges, Dusting powder, Chewables and Eye drop.

Pharmaceuticals

Capsules Oral Dusting Eye

Tablets Lotion Lozenges Chewables
Liquid Powder Drop
Figure 7: Classification of Indian Pharmaceutical Industry
Source: Campaign for Awareness on Responsible Use of Medicines (CARUM)

The marked segments in Figure 7 hold the potential of flavor incorporation in the pharmaceutical
sector and therefore, these have been focused upon in the research as well.

MAJOR PLAYERS OF PHARMACEUTICAL MARKET

Dr Reddy’s accounted for the largest share in
the Indian pharma market, with sales of
USD2.36 billion during March 2016
Lupin had the second largest share in the
Indian pharma market with sales of USD2.09
billion in FY16
Cipla, with a revenue base of USD2.089
billion for March

The market is driven by factors such as

increasing consumer demand for a variety of
flavors in food products, personalized flavor
options and product variety, and increasing
consumer preference towards convenience
foods & ready-to-eat products, worldwide.
The high growth potential in emerging
markets and untapped regions provides new
growth opportunities for market players.
Figure 8: Overview of Pharmaceutical sector
Source: brandindiapharma.in (Pharmaceutical Industry Analysis: Market
Research, Survey, Growth & Reports)

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Table 1: Major Indian Pharmaceutical Players (Source: Indian Brand Equity foundation-IBEF)

Glenmark Pharmaceuticals Ltd GSK-GlaxoSmithKline Pharmaceuticals Limited

Abbott India Limited Cipla

Cadila Pharmaceuticals Ltd Ranbaxy Laboratories

Jubiliant Lifesciences Sunpharma

Dr Reddy’s Lupin

1.2 FLAVORS

Flavors and fragrances are very critical components of food & beverage, home and personal care
products as they create a strong sensorial impact on the customer, contributing to a positive or
negative brand recall. F&F blends use a large number of ingredients which can either be natural
or synthetic, or a combination. Blending involves mixing of different flavors or fragrances to
obtain the desired flavor or fragrance. Base ingredients are chemicals used in the F&F or
nutraceutical value chain, obtained either from a feedstock using a synthetic process or from
naturally occurring spices, herbs, fruits and flowers using an extraction process. These ingredients
are then further processed by F&F blenders or nutraceutical ingredient manufacturers to be
supplied to the FMCG or F&B, and nutraceutical sectors respectively.
Flavors are segmented on the basis of the industry they serve. These include savory flavors, fruity
flavors, cheese and other dairy flavors and meat flavors.

• Savory flavors: These are used in snacks, cooking sauces and ready-to-eat meals. Demand for
savory flavors is driven by increased consumer demand for convenience food and drinks

• Fruity flavors: These are used in fruit-flavored drinks such as alcohol and fruit juices. The
demand is driven by increasing innovation in the F&B industry

• Cheese and other dairy flavors: These are used by flavored milk, yoghurt, cheese and other
dairy product manufacturers. The demand is driven by increasing health consciousness of
customers

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1.3 FLAVORS IN PHARMACEUTICAL AND NUTRACEUTICAL INDUSTRY

Nutraceutical Sector
The global F&F market is a reasonably consolidated market, with the top 5 players constituting
~60% and the top 10 players constituting ~80% of the market

The organized Indian F&F production market is USD 1.1bn in size, close to 30% of which is
exported. The Indian market, just like the global F&F market is dominated by the MNCs, with the
top 4 global players (Givaudan, IFF, Firmenich and Symrise) constituting over 50% of the market.
S H Kelkar is the only Indian player of scale, with the Ultra group having created a sizeable
business as well.

Major Market share of F&F players Market Share of Major F&F Players in
(2016) India (2016)
Others Givaudan ,19%
Huabao 22%
2% Givaudan, 15%

T.
Hasegawa
2% Others, 35% Firmenich, 21%
Firmenich,14%
Robertet
2%
IFF,13%
Sensient
3% S H Kelkar, 13% IFF, 10%

Frutarom, 4% Mane, 5% Takasago ,5% Symrise,9% Symrise, 6%

Figure 10: Major Flavor and Fragrance players globally Figure 9: Major flavor and fragrance players in India

Source: Report on ‘Flavours, Fragrances & Nutraceutical Ingredients In India’ by Avendus

Pharmaceutical Sector
Flavors generally play a minor role in taste masking, particularly when the challenge is bitterness
or trigeminal irritation owing to differences in the physiology of taste, smell and
chemesthesis. However, they are useful in masking a malodor from the API (e.g. the sulfurous
aromatic of some antibiotics) or excipient (e.g., oxidized oil aromatics of most emulsifiers).

There are specific therapeutic agents and associated flavors with certain formulations.

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 Table 2: Flavors used in pharmaceutical products
Source: Research paper titled ‘Flavouring Agents In Pharmaceutical Formulations”

The use of a spice vanilla flavor for phenylephrine and chlorpheniramine maleate preparation has
been proposed. Strawberry is well suited to tranquillizer formulations. Maple combined with
butterscotch is well suited to improve the taste of adsorbents such as kaolin and pectin. Also, this
same flavor is recommended for aminophylline and theophylline. Mint is preferred in antacid
preparation.

1.4 FLAVOR REGULATION FOR PHARMACEUTICAL AND NUTRACEUTICAL

MARKET

According to Codex Alimentarius “flavorings or flavoring substances are added to food to impart
aroma or taste. Like other food additives their use should not present an unacceptable risk to
human health and should not mislead consumers. The quantity added to foods should be at the
lowest level necessary to achieve the intended flavoring effect. Flavors and flavoring substances
should also be of appropriate food grade quality; and be prepared and handled in the same way
as a food ingredient.”

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REGULATIONS FOR NUTRACEUTICALS
As per FSSAI Functional Foods,2017
General requirements.- (1) The articles of food sold in capsule format, hard or soft or vegetarian,
shall comply with the general monograph and quality requirements specified for them in Indian
Pharmacopoeia:
Provided that the food business operator may use the approved colours and additives permitted in
Schedule VF;
Provided further that the food business operator may use the natural flavors or nature identical
flavors or synthetic flavors in accoradance with the provisions of regulation 3.3.1 of Food Safety
and Standards (Food Product Standards and Food Additives) Regulations, 2011

REGULATIONS FOR PHARMACEUTICALS

Food Safety and Standards (Food Products Standards and Food Additives) Regulations, 2011 have
described flavoring agents under the head ‘Flavoring Agents and Related Substances’ in the
Regulations

▪ Natural Flavors and Natural Flavoring substances means flavor preparations and single
substance respectively, acceptable for human consumption, obtained exclusively by
physical processes from vegetables, for human consumption
▪ Nature-Identical Flavoring Substances means substances chemically isolated from aromatic
raw materials or obtained synthetically; they are chemically identical to substances present
in natural products intended for human consumption, either processed or not.
▪ Artificial Flavoring Substances means those substances which have not been identified in
natural products intended for human consumption either processed or not.
1.5 PROBLEM STATEMENT
Nutraceutical sector is relatively in its budding stage and can easily be explored for flavor
opportunities. On the other hand, the pharmaceutical market is very specific in terms of its flavor
needs and requirement. The flavor requirement of both the sectors is relatively unexplored and
restricted with a few key position holders. VKL Seasonings Pvt. Ltd is a well-established name
for its flavors and seasonings across most of the sectors, however, it is yet venture the
Pharmaceutical and Nutraceutical market. The study is therefore to related to the flavor potential
of the respective sectors and thereby provide a fair idea of flavor requirement of the market.

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1.6 OBJECTIVES

1. To identify segmentations and requirements of the Pharmaceutical/ Nutraceutical market

2. To understand different formats of available products in the market

3. To identify type of flavors used by the pharmaceutical and nutraceutical industry

4. To identify the flavor market potential in the pharmaceutical and Nutraceutical sector.

1.7 MARKET SIZE

1.7.1 Nutraceutical Market

The nutraceuticals segment which has seen tremendous growth over the past decade. Key growth
drivers of the nutraceutical segment.

International Market:
The US is the largest market for nutraceuticals in the world, followed by Japan and the European
Union. The global market for nutraceuticals is estimated at USD 198.7bn in 2016 and is expected
to reach USD 285.0bn by 2021.

2014 (% Global nutraceutical market

share by geography)
APAC
North
30%
America
39%

ROW
4% Europe
27%

2019 (Global nutraceutical market

categories- Estimated % share)
Functional Dietary
Food Suppleme
30% nts
22%
Functional
Beverage
48%

Figure 11:Global Market size of Nutraceuticals Source: Global Nutraceuticals Market 2015-2019-technavio

15
 Indian Market:
India, by virtue of having an abundance of useful
herbs and spices, as well as owning a rich history in
Ayurveda and related sciences, is becoming an
increasingly meaningful player in the natural
nutraceutical ingredients segment. The Indian
nutraceutical ingredients market is a relatively
nascent space, with most large companies having
emerged over the last two decades. The organized
Figure 12: Market Size of Indian Nutraceutical Sector
market stood at ~USD 550mn in 2016 and is expected to
grow at 20% to USD Indian Nutraceutical market is estimated to be valued at $ 8.5 billion by 2022
from $ 2.8 billion in 2015. As per Drug Marketing and Manufacturing Association (DMMA), in
the next five years, the industry is projected to grow with a CAGR of 16% and Contributes 2%
globally. Given the fledgling state of the nutraceutical formulations market in India, most of the
Indian ingredients manufacturers focus on exports. In many cases, over 90% of the revenues of
the nutraceutical ingredients companies come from exports
1.7.2 Pharmaceutical Market
INTERNATIONAL PHARMACEUTICAL MARKET
• QuintilesIMS Institute predicts that the pharmaceutical market will reach nearly USD
1,485 billion by 2021, an increase of USD 350-380 billion from the USD 1,105 billion
recorded in 2016
• This growth is coming mainly from market expansion in pharmerging countries and
demographic trends in developed countries due to an ageing population. Global brand
spending is forecast to increase to USD 815-832 billion in 2021. Global generic spending
is expected to increase to USD 495-505 billion by 2021
INDIAN PHARMACEUTICAL SECTOR
• The Indian pharmaceuticals market witnessed growth
at a CAGR of 5.64 per cent, during FY11-16, with the
market increasing from US$ 20.95 billion in FY11 to
US$ 27.57 billion in FY16. The industry’s revenues
are estimated to have grown by 7.4 per cent .in FY17.
(Source: Indian Brand Equity Foundation -IBEF)
Figure 13:Indian pharmaceutical sector-(Revenue)

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• India accounts for 20 per cent of global exports in generics. In FY16, India exported
pharmaceutical products worth USD16.89 billion, with the number expected to reach USD40
billion by 2020
• The Indian pharmaceutical market size is expected to grow to US$ 100 billion by 2025, driven by
increasing consumer spending, rapid urbanization, and raising healthcare insurance among others.
• By 2020, India is likely to be among the top three pharmaceutical markets by incremental growth
and sixth largest market globally in absolute size.

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 2.METHODOLOGY
2.1 Research Design
Exploratory research design was used for the study. The nutraceutical and pharmaceutical sector
uses different types of flavors for its products. The study was done to find the flavor needs and
requirement of the industry.

2.2 Data Sources

Both primary and secondary sources of data were used for the research

2.2.1 Secondary Sources

Secondary Data was collected from Journals, reports, magazines and books.

• IBEF-Indian Brand Equity Foundation

• FSSAI “Health Supplements and Nutraceuticals Emerging High Growth Sector in India”

• Flavors, Fragrances & Nutraceutical Ingredients in India - Avendus

• FSSAI- FBO List

• Nuffood spectrum

2.2.2 Primary Sources

A structured questionnaire was used to collect the primary data

2.3 Area of Study

The area under the study was North India covering: Delhi, Delhi NCR, Punjab, Himanchal
Pradesh, Uttarakhand

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Figure 14:Map Of areas covered
2.4 Sampling Design/Sampling Plan

The sampling plan included the following:

2.4.1 Universe

The universe included manufacturers of Pharmaceutical and nutraceutical products.

2.4.2 Sampling Unit

It comprised of Manufacturers of Nutraceutical and pharmaceutical products from North India,

namely: Delhi, Delhi NCR, Punjab, Himanchal Pradesh, Uttarakhand.

2.4.3 Sample size

A total of 48 pharmaceutical and nutraceutical manufacturers were surveyed for understanding the
flavor potential.

2.4.4Sampling Technique

The study involved snowball sampling for data collection, wherein the initial informants were
approached who through their social network nominated or referred the participants that meet the
eligibility criteria of the research under study

2.5 Research Instrument

A structured questionnaire was used for collection of information personally and telephonically.

2.6 Duration Of study

2 Months

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3. RESULTS
The flavor potential of pharmaceutical and nutraceutical Market in North India covering Delhi,
NCR, Punjab, Himachal Pradesh and Uttarakhand identified 3 categories of manufacturers based
on annual turnover as follows

MANUFACTURER TYPE ANNUAL TURNOVER

A 25 Crore and above

B 1 Crore – 25 Crore

C Less than 1 Crore

The total market included 250 of pharmaceutical (nearly 200) and nutraceutical manufacturers
(approximately 50) out of which a total of 48 nutraceutical and pharmaceutical manufacturers were
surveyed for flavor potential mapping.

SEGMENTS STUDIED

The Segmentation of the product business market was as follows

Product Business Market

Both, 3

Nutraceutical,22
Pharmaceutical,
23

Nutraceutical Pharmaceutical Both

Figure 15:Product Market Covered

Out of the total manufacturers surveyed 23 manufactured pharmaceuticals, 22 manufactured

nutraceuticals while 3 manufactured both pharmaceuticals and nutraceuticals.

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PRODUCT FORMATS COVERED

Nutraceutical and Pharmaceutical sector is broadly demarcated into various segments as discussed
earlier. The survey was conducted keeping in view the major segments which hold the potential of
flavor incorporation (excluding generic drugs and injectables).

The figure below shows the product categories covered in the analysis

Syrups Sports drinks

Nutraceuticals
Pharmaceuticals

Lozenges Energy drinks

Reconstitutes Health Food drinks
Chewables Nutri Bars
Energy Bars
Protein Supplements
Vitamins and Mineral
Supplements
Figure 16: Categories of products covered Herbal Supplements

FLAVORS USED BY PHARMACEUTICAL AND NUTRACEUTICAL

INDUSTRY

The Flavor application of each of the product category varied based on the product type i.e.
products like syrups and nutribars used liquid water-soluble flavors, however, dry syrups, protein
powders, vitamins and mineral supplements, reconstituted energy drinks used spray dried or
powdered form of flavors.

With respect to each product category different flavor requirement was observed.

SYRUPS

Syrups whether dry or liquid use flavors as per the target population of consumption i.e. syrups for
children mainly include fruit flavor while for adults includes mint, ginger and tulsi flavor are used.

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 Syrups for children
• The flavors majorly used included:
• Pineapple
• Strawberry
• Orange
• Mango
Syrups for adults
• The flavors majorly used included:
• Mint
• Tulsi
• Ginger
Figure 17: Flavor analysis of Syrup manufacturers

Syrups along with its application in pharmaceutical industry is also included in the nutraceuticals
sector as vitamin and mineral supplements.

Table 3:Flavor quantity requirement of syrup manufacturer

Manufacturer Number of Quantity Average Total flavor Annual

Type Manufacturers /Month flavor quantity Flavor
requirement required/Month requirement
B 13 30000Ltr 2 Ltr/1000Ltr 60Ltr 720Ltr
or (0.002%)
2 Lakh
bottes of
150ml
each
C 10 12000Ltr- 2 Ltr/1000Ltr 24-30Ltr 324Ltr
15000Ltr (0.002%) (Average :27Ltr)
Or
80000-1
Lakh
Bottles of
150ml
each
TOTAL 23 84-90Ltr Average
Value
(522Ltr)

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Flavor Potential of Syrup Industry

Average Annual flavor requirement 522 litres (For liquid syrups)

. Out Of the 13 type B Manufacturers. 5 manufactured dry syrups also, the average flavor
requirement /dosage is 0.5Ltr/1000Ltr, the monthly flavor requirement stated for dry syrups ranged
between 40-50kgs (average annual requirement 540kgs), hence a monthly production of 20-25 kg.

The flavor potential of the surveyed population is calculated by multiplying the minimal annual
flavor requirement (324Ltr) With 200 manufacturers (approximate number of manufacturers
identified) and hence an annual value of 64800Ltr (65 MT).

PROTEIN POWDERS

Major flavor used in protein powders included chocolate flavor thereafter the flavor depends on
the brand, while the less used and demanded flavors included banana and strawberry (fruit flavors).

Chocolate Flavor : All the

manufacturers responded chocolate as the
highest selling flavor.

Fruit Flavors: Flavors like Banana,

strawberry are less in demand and sell
less.

Figure 18:Flavor analysis of Protein powder manufacturers

Flavor Potential of Protein powder Industry

Average Annual flavor requirement 600 Kgs
The average flavor requirement /dosage is 1-4Kgs/100Kg.

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Table 4:Flavor quantity requirement of protein powder manufacturers

Manufacturer Number of Quantity Average Total flavor Annual

Type Manufacturers /Month flavor quantity flavor
requirement required/Mont requirement
h
B 11 1200- 1-4Kg/100Kg 50-100kg 900Kg
2500Kg (Average
:75kg)
C 10 500- 1-4Kg/100Kg 20-30kg 300Kg
750Kg (Average:
25Kg)
TOTAL 21 100Kg Average
Requirement
= 600 Kgs

The flavor potential of the surveyed population is calculated by multiplying the minimum annual
flavor requirement (300 Kgs) With 50 manufacturers (approximate number of manufacturers
identified) and hence an annual value of 15000Ltr (15 MT).

OTHER PRODUCT CATEGORIES

Other product categories include Nutri Bars, Oral liquids, Energy Drinks, Herbal Supplements.

NUTRIBARS (Nutraceutical)
•Nutribars incorporate chocolate,butterscotch along with fruit flavors
•he quantity requirement may vary depending on the type of nutribar.
•On the basis of the manufacturers surveyed the average monthly quantity is around 20-30kgs (flavor
doasge was not revealed)
ENERGY DRINKS (Nutraceutical)

•Reconstituted energy drinks are generally fruit flavored( orange or pineapple)

•The flavor dosage varies but was not disclosed by the manufacturers.
HERBAL PRODUCTS (Nutraceutical)
•Generally no flavors are added .
•In case of products like aloe vera juices , aloe vera flavor may be used as per product need.
ORAL LIQUIDS (Pharmaceuticals)
•Generally mint flavored.
•Quantity and dosage was not responded with.

Figure 19: Flavor requirement of other products

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The Flavor quantity used also varied depending on the product category, herbal products were
however excluded since they do not involve any flavor incorporation.
The figures (in terms of overall flavor quantity requirement) have been tabulated below depending
on the monthly average volume of production and average dosage of flavor required with respect
to each product category covered.
Table 5: Overall Flavor quantity requirement

Product Market Product Form of Formulation Annual flavor

Category Flavor requirement requirement
of
manufacturer
Pharmaceutical Syrups Liquid Liquid:2L/1000L batch 522Ltr
(water Dry: 0.5L/ 1000L Batch
soluble) (Range depends on
flavor type)

Nutraceuticals Protein Spray 1-4 kgs/ 100 Kg Batch 600 kgs

Powders dried (Range depends on
(Powder flavor type)
Form)
Nutraceuticals Nutri Bars Liquid/ - 300 kgs
Spray
dried

The monthly requirement of flavor fluctuates depending upon Salt composition in case of syrups
and flavor type along with demand third party manufacturing.

The quantity of flavor requirement also varied depending upon the formats of products
manufactured by the manufacturers. The survey questioned their overall monthly consumption of
flavors. Hence, for manufacturers with more than one type of product being manufactured, the
quantity of flavor required will differ accordingly.

OTHER FACTORS AFFECTING FLAVOR REQUIREMENT

Apart from the above-mentioned results, other factors which act as key success factors for flavors
includes:

Ability to innovate – Blenders create products by mixing together various base ingredients in
unique combinations. Blenders need to keep innovating to create new flavors and fragrances to
satisfy the demands of the market. They collaborate with end-users as well as ingredient

25
manufacturers to come up with unique flavors. The major global F&F houses spend an average of
9% on R&D, highlighting its importance to stay ahead of the curve.

• Relationship with customers – In some cases, customers could be large players which have
significant requirements for F&F across their product basket. In such cases, most of the major F&F
houses and some scaled up Indian players directly align with them to supply specific flavors and
fragrances for their specific products. Customer acquisition is a long drawn out process with
several customers having stringent vendor selection processes and quality norms. This makes
building and maintaining relationships with these customers extremely important.

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4. RECOMMENDATIONS FOR ACTION
Based on the conducted research in the pharmaceutical and nutraceutical market, the following
can be considered based on the 4P concept covering: Product, Place, Price and Promotion

PRODUCT
The nutraceutical and pharmaceutical sector corresponds to varied kind of flavor requirement
based on product type, this can be observed as follows.

Based on the identified areas of flavor incorporation namely: Syrups, protein supplements,
lozenges, vitamin and minerals supplements, herbal supplements and functional beverages in both
the sectors the following can be inferred:

A strong flavor library needs to be developed based on the below mentioned flavor trends and
application.

FLAVOR REQUIREMENT
SYRUPS: For syrup manufacturing the major flavors required includes fruit flavors like: mango,
orange, pineapple, strawberry. Majorly the flavor format depends on the syrup type i.e. liquid
syrups require liquid water-soluble.

RECONSTITUTES: Reconstitutes (Dry syrups) uses dry powdered flavors, mainly fruit based for their
formulation.

PROTEIN POWDER: Protein powders market demands and sells Chocolate, Coffee Mocha, Vanilla
as major flavors. Fruit flavors do not respond in this sector and hence, can be avoided. The flavor
format is solely spray dried powder in nature.

FUNCTIONAL BEVERAGES: Energy Drinks in the category of functional beverages are generally fruit
flavored (Orange, Apple, Mango, Lemon), therefore fruit flavors need to be focused upon. This
category uses more of liquid flavor.

NUTRI& ENERGY BARS: Energy and Nutri Bars show same almost the same requirement as protein
powders (chocolate, Choco almond, butterscotch) along with a good application of fruit flavors
(strawberry, mango) as well, which may either be in dry or liquid format.

PLACE
Certain areas have been identified in North India which cater to a good percentage of
pharmaceutical and nutraceutical manufacturing units.

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Concentrated Market of Nutraceutical and Pharmaceutical products
• Baddi in Solan, Himanchal Pradesh is a concentrated market consisting of more than 150
nutraceutical and Pharmaceutical manufacturers.
• SIDCUL, Pantnagar, Uttarakhand also consists of a considerable number of
pharmaceutical manufacturers.

PRICE
On the basis of existing flavor price in the market, the below mentioned price can be considered
as average market price per Kg of the respective flavor.

FLAVOR PRODUCT CATEGORY PRICE/Kg (Rs.)

Chocolate Dairy (Spray Dried) 1015
Butterscotch Dairy 908
Coffee Mocha Dairy 1233
Vanilla Dairy 693
Cherry Pharmaceuticals 719
Orange Pharmaceuticals 472
Pineapple Pharmaceuticals 505
Mango Pharmaceuticals 943
Raspberry Pharmaceuticals 345
Strawberry Pharmaceuticals 384
Lemon Pharmaceuticals 671
Peppermint Pharmaceuticals 1189

PROMOTION (CHANNEL)
POINT OF DISTRIBUTION
For constructive marketing of company’s flavors, a central distributor needs to be focused upon
which caters and cover a good percentage of the nutraceutical and pharmaceutical market for easy
market share and penetration.

Name of few such manufacturers engaged in third party manufacturing of nutraceuticals and
pharmaceuticals include Zeon Lifesciences Limited (Himanchal Pradesh) and Tirupati Life
Sciences (Himanchal Pradesh).

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REFRENCES
• FSSAI Key Requirements for Manufacturing Nutraceuticals in India. (2017, September
11). Retrieved July 03, 2018, from https://foodsafetyhelpline.com/2017/09/fssai-key-
requirements-manufacturing-nutraceuticals-india/
• Indian Pharmaceutical Industry. (2017, March). Retrieved July 03, 2018, from
https://www.ibef.org/archives/detail/b3ZlcnZpZXcmMzcxMDYmOTA=
• Bhadoria, Vikas, et al. "India pharma 2020: Propelling access and acceptance, realizing
true potential." McKinsey & Co(2012).
• Flavors, Fragrances & Nutraceutical Ingredients in India - Avendus
• Spectrum;, N. (2017, January 20). Nutraceutical industry in India: Current scenario and
future trends. Retrieved from
http://www.nuffoodsspectrum.in/inner_view_single_details.php?page=1&content_type=
&vrtcl_panel_nm=&ele_id=NOR_588b37ba948df4.78777381
• Spectrum;, NuFFooDs. “ASSOCHAM to Hold National Symposium on
Nutraceuticals.” Nutritional & Nutraceutical – Business News, Trends, Analysis,
Technology Breakthroughs, Innovations, 7 June 2018,
www.nuffoodsspectrum.in/inner_view_single_details.php?page=2&content_type=panel
&vrtcl_panel_nm=TOP STORIES&ele_id=NOR_5b19242f91e2e2.82678906.
• Flavored Syrups Market by Flavor (Fruit, Chocolate, Vanilla, Coffee, Herbs & Seasoning),
Flavor Type (Sweet, Salty, Savory, Sour, Mint), Application (Beverage, Dairy & Frozen
Dessert, Confectionery, Bakery), & by Region - Global Forecast to 2021. (2016, May).
Retrieved from https://www.marketsandmarkets.com/Market-Reports/flavored-syrup-
market-992.html

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 ANNEXURE

QUESTIONNAIRE
Name of Company:
Address:
Brand:
Contact Person: Contact number:
Type of Operations: Self Brand/ 3P/ extension plant.
Product
1. What type of product does your business market?
i. Nutraceutical ii. Pharmaceutical

2. Product category:
 Syrup  Health food Drink
 Chewable  Energy Bar
 Lozenges  Nutri Bar
 Reconstitutes  Protein Supplement
 Sports Drink  Vitamins and Mineral supplements
 Energy Drink  Herbal Supplements

3. Sizes in which the product is available?

4. Approximate volume and value / annum of production?

Flavors
5. What type of flavors are used in the product?
 Spray Dried  Liquid
 DM  Water soluble /
 Other(specify)  oil soluble

6. Which is the highest and least selling flavor?

7. Quantity requirement of the above-mentioned flavors:

8. Any specific flavor requirement with regard to the product?

Product reach
9. How is the product available in the market?
 Distributor, retailer etc.
 Online
 Both

10. Market/ Area

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