E&Y Nutraceuticals-Critical Supplement For Building A Healthy India-1

Nutraceuticals
Critical supplement for

building a healthy India
Contents
Foreword................................................................................................... 04
Introduction............................................................................................. 06
Executive summary................................................................................ 07
An insight into the nutraceuticals market of India
Section I: Nutritional status of the population of india....................................10
Section II: Nutraceuticals market: global and India......................................... 24
Section III: Way forward............................................................................... 48
Annexure.................................................................................................. 66
Acknowledgements................................................................................ 76
Glossary.................................................................................................... 77
About FICCI..............................................................................................80
Foreword
Ajit Singh
Chairman- FICCI Task Force on Nutraceuticals
Chairman- ACG Worldwide (formerly Associated Capsules Group)
President- Health Foods and Dietary Supplements Association (HADSA)
Dear reader,
Nutraceuticals as they are called in industry parlance cover a basket of products from dietary supplements to probiotic and energy drinks
to cholesterol and fat free foods among others. Increased discretionary spending, changing lifestyles and growing awareness among
Indians about healthy living are accelerating the growth of this Industry. Despite the huge potential, India’s share, with reference to the
global Nutraceuticals market is still minimal.
FICCI is one of the apex chambers of commerce of India, which has empowered Indian businesses in the ever changing and challenging
times, to step up their competitiveness and enhance their global reach.
FICCI acts an effective change agent and has been working diligently towards influencing the government to bring about necessary
policy changes to give impetus to this sector. FICCI has played a catalytic role in many sectors where India commands a leadership
position today.
HADSA is a non-profit trade association which not only represents the interests of manufacturers, suppliers and health-care products, but
also supports science-based environment for responsible marketing of nutritional supplements.
FICCI and HADSA have come together to provide a platform to the industry to share their concerns, flag issues, and discuss strategies to
compete globally in the field of Nutraceuticals, Functional Foods and Dietary Supplements.
Our vision is to accelerate India’s share of 0.9% of the world’s US$117 billion nutraceuticals, functional foods and dietary supplements
market to a sizeable number in the next few years. Considering the huge growth potential of the Indian nutraceuticals industry, I envision
India to be ranked among the top players such as USA, Europe and Japan which are the current market leaders.
This FICCI - Ernst & Young knowledge paper has synergized the available body of knowledge with the current business realities and
suggested strategies to increase India’s share of the global Nutraceuticals market.
4 Nutraceuticals— Critical supplement for building a healthy India

Hitesh Sharma M Muralidharan Nair
Partner Partner
Ernst & Young Ernst & Young
Dear reader,
Nutrition related risk factors contribute to more than 40% deaths in developing countries and India is no exception. Nutrition related
disorders force back its GDP by at least one percentage point. India is reeling under the burden of nutrition deficiencies with one-fifth of
the Indian population lacking the purchasing power to even consume a diet sufficient in calories, let alone nutrients; and an astounding
570 million consuming sufficient or excess calories, but lacking adequate intake of nutrients. In fact, 60% of this section consumes higher
than normal calories, with a disproportionately high fat intake and this could make India the future cardiovascular and diabetes capital of
the world.
The key factor responsible for these severe inadequacies in nutrient intake has been a significant change in lifestyle caused by rapid
urbanization and growing modernization in methods of food processing and cooking. As these changes are irreversible in nature, any
agenda to foster "quality healthcare for all" is incomplete without supplementing it through nutritional interventions. Unless such
interventions are introduced, the gap in nutrient intake will continue to widen. Thus, it should be a part of the nation’s critical agenda to
ensure that every citizen has access to Nutraceuticals - products which supplement the diet to provide nutrition over and above regular
food. It is a non-negotiable imperative that nutraceuticals cease being just a luxury and emerge as a necessity for the Indian populace.
However there are some impediments in the path to achieving this aspiration:
• The prices of most nutraceutical products are high, severely limiting growth in demand, especially since India is a price
sensitive market
• There is a lack of credibility of the benefits of nutraceutical products in the consumers’ minds, further aggravated by
unsubstantiated claims
• The lack of regulations to govern nutraceuticals acts as a deterrent for committed nutraceuticals players, both Indian and
international, to enter the Indian market
"Nutraceuticals – Critical supplement for building a healthy India", a FICCI – Ernst & Young initiative is a comprehensive
study assessing the current and latent potential of the nutraceuticals market in India, the critical impediments to convert latent
opportunity into a market and the future imperatives for the government and private sectors. The report suggests concerted
and implementable strategies to the government and private sectors which, if implemented, would assist in achieving the
latent potential of nutraceuticals in India and at the same time addressing the diverse nutritional needs of the population.
We encourage you to explore, invest and partner in the Indian nutraceuticals market which truly stands at an inflexion point, poised
to grow.
Nutraceuticals— Critical supplement for building a healthy India 5

Introduction
Quality healthcare is the foundation of any prosperous nation. Nutrition care, which forms an integral part of preventive healthcare, is
undergoing a transformation in India. Today, food alone is unable to fully service the nutrition needs of the body. Thus, supplementing
it with lifestyle interventions has become a non-negotiable imperative not only to enhance health but also to reduce dependency on
curative measures.
While lifestyle interventions can be manifold, this report is focused on those formulations or foods that can supplement normal
diet (called " Nutraceuticals ") and does not cover services that can be offered in this regard. Also this report covers the domestic
nutraceuticals market and not the export market potential of Indian nutraceuticals.
This document aims to present:
• The nutritional status of Indians, their dietary patterns and underlying drivers
• An assessment of the current and latent potential of the nutraceuticals market in India
• Critical impediments in achieving latent potential, and
• Way forward for the government and private sector
The viewpoints and conclusions presented in this report are an outcome of discussions with various stakeholders, regulators, key opinion
leaders, subject experts, data available in the public/propriety domain and our industry understanding. An attempt has been made to
provide a reference document for existing private Indian and global nutraceutical players, new entrants, potential investors and regulators
to explore and assess the nutraceuticals opportunity that India presents.

Executive summary
• Nutrition is a fundamental need. Various risk factors related • The third population segment (80 million) is one which
to health result from an imbalance in nutrition. Together, consumes nutrients and calories more than the norm due
these factors contribute to more than 40% of deaths and to their enhanced physical requirements because of their
30% of the overall disease burden in developing countries. chosen lifestyles and interest areas such as professional
sports, heavy exercises and extensive outdoor field work.
• In India, nearly 20% of the total population and 44% of young
This would lead to a greater need for nutrition, in addition
children (below 5 years of age) are undernourished, numbers
to some condition specific and foundational needs.
which are significantly higher than even the poorer sub-
Saharan African countries. Iron deficiency anemia during • Many of the factors affecting nutrition related concerns are
pregnancy accounts for one-fifth of maternal deaths in India irreversible that have led to natural sources of nutrients
and the prevalence of this deficiency in women has alarmingly being consumed in insufficient quantities. Hence, the
increased from 52% in 1998 to 56% in 2006. Iodine and requirement of external intervention, that can supplement
Vitamin A deficiencies in India are still above the WHO specified diet to help prevent nutrition-related disorders and promote
desired levels. Annually as many as 0.3 million children wellness over treatment of illness, has become critical.
succumb to Vitamin A deficiency related diseases. The impact Such products are collectively called as “ nutraceuticals”.
of these deficiencies is a productivity loss of around one
• As a concept, “nutraceuticals” is in its stage of infancy with
percentage point of India’s GDP.
several developed countries having defined it only in last 15
• The nature of India’s nutrition concerns are three fold – years. India has already defined it in the Food Safety and
Standards Act of 2006 but is yet to implement it as the rules
• On one hand is the undernourished population (380million)
are not completely framed. Of the global nutraceuticals market
with majority having inadequate purchasing power to
of USD117 billion (INR5148 billion), India has less than 1%
even consume a diet sufficient in calories, let alone take
share and is estimated to be around INR44 billion in size. The
sufficient nutrients. Their challenge is to meet foundation
three broad categories within nutraceuticals are - functional
needs to maintain normalcy of being. These needs
foods, functional beverages and dietary supplements.
would have to be addressed by government programs
with the private sector playing a supportive role. • While the global market is expected to grow at a CAGR of
7%, the Indian industry has been growing much faster at a
• On the other hand is the huge population (570 million)
CAGR of 18% for the last three years, driven by functional
that is nourished in calorie intake but not in terms of
food and beverages categories that are growing faster than
nutrient intake. This segment would typically include lower
the dietary supplements category due to wider distribution
middle to upper class population with sufficient purchasing
across FMCG channels as well as aggressive mass marketing.
power but probably low awareness about their nutrient
requirements, leading to unmet condition specific needs in • There are four key drivers to this growth – an increased
addition to foundation needs. In fact, there are 340 million affluence of the ever-growing working population, a
in our population (30% in urban and 34% in rural areas) who reduced affordability of sick care that in turn drives
consume more than the recommended number of calories consumers towards wellness, an increased physician
with higher than recommended levels of dietary fats and awareness and media penetration and finally, an
could be the largest contributor in making India the future increased accessibility to newer distribution channels.
cardiovascular and diabetes capital of the world. While there
• However, the latent market in India is two to four
are several factors that have contributed to these severe
times the existing market size (between INR89 billion
inadequacies, the key ones are increased urbanization,
and INR172 billion) with nearly 148 million potential
larger working class population and growing affluence.
customers. The market is latent because there some major
These factors have resulted in a shift of dietary habits from
impediments to effectively tap this market. These are –
consuming micronutrient rich foods such as fruits and
vegetables to consuming more of fat-rich calorie foods. • High prices of nutraceuticals when compared to
conventional foods especially since India is a price
sensitive market.

• Lack of credibility of the benefits of nutraceuticals Measures should be taken to ensure availability of adequate
in the minds of consumers, further aggravated by the resources for efficient implementation of laid out rules.
unsubstantiated claims made by certain products. These measures could include gearing-up of staff strength,
specialized training and increasing the number of food
• Regulatory framework not yet implemented despite the
testing laboratories from an estimated 250 laboratories
act being in place for over three years plus inadequate
currently to a required number of 500 laboratories.
resources available for implementation. This lack of
regulations to govern nutraceuticals acts as a deterrent for • Encourage research and development in the field of nutrition
large foreign players planning to enter the Indian market. and deploy Public Private Partnership (PPP) models to
serve needs of the undernourished segment of population
What needs to be done?
The government should establish a dedicated fund for
To overcome the above mentioned impediments and to pave the focused nutraceuticals’ research and support nutraceutical
way for nutraceuticals to supplement India’s quality healthcare players by providing them with research infrastructure
agenda, the following initiatives need to be undertaken:
• Ensure that a larger population gets the benefit of
Agenda for the government nutraceuticals
• Lay down rules to govern quality and claims of For this, the government should explore PPP to deliver
nutraceutical products the benefits of nutrients to the undernourished section of
the population.
While the Food Safety and Standards Authority created as
per the Food Safety and Standards Act 2006 have plans to
Agenda for the private sector
lay down rules for governing standards of articles of food and
to regulate their manufacture, storage and distribution by • Product development: develop customer focused products
end of 2009 based on panel recommendations, it is of critical that address specific needs of different consumer segments
importance that these rules be made exhaustive to govern
quality and claims of nutraceutical products. The rules should: The private sector should invest in research to develop
products that meet specific consumer needs, preferences and
• Clearly specify revised RDA levels (the RDA norms taste. One potential area can be converting the nutritional
of 1989 are outdated and do not reflect lifestyle properties of herbs and botanicals from the rich pool of
changes as well as the considerable nutritional traditional Indian sources into nutraceutical products.
research accumulated in this period)
• Recognize proven nutrients and labeling requirements. • Product differentiation: differentiate products by focusing
on credibility building and/or lowering prices of products
• Define permitted health claims and the product
approval process. In the cluttered market with me-too products and inadequate
intellectual property protection, the private sector can focus
• Identify standards/monographs, and on product differentiation by building credibility of their brands
• Provide guidelines on good manufacturing practices and making products more affordable. Focusing on cost
for nutraceutical products. Leading international reduction initiatives could be one of the levers to lower prices.
practices highlighted in the report can be used
• Product promotion: increase awareness of the benefits of
as reference while framing the rules.
nutraceuticals through advertising and physician education
This is easier said than done. Concrete and sincere effort needs
to be put in by the stakeholders to enable nutraceuticals to
supplement India’s quality health agenda, ushering a shift in the
mindset from illness to wellness, from curing to preventing.

Section I
Nutritional status of the

population of india

Summary
• Various risk factors related to health result from an imbalance in nutrition. Such
imbalances in India are widely prevalent leading to adverse outcomes. The impact
of these outcomes is a productivity loss of around 1% point of India’s GDP
• A
► nalysis of our dietary intake reveals nutritional imbalances across most segments
of population :
• Majority of the undernourished population (380 million) faces a challenge to

meet foundation needs to maintain normalcy of being.
• There is a huge population (570 million) that is nourished in calorie intake but not
in terms of nutrient intake. They face the challenge of meeting condition specific
needs in addition to foundation needs and could be the largest contributor in
making India the future cardiovascular and diabetes capital of
the world.
• There is another population segment (80 million) which consumes nutrients and
calories more than norm due to their enhanced physical requirements.
• S
► ince many of the drivers underlying nutrition related concerns are irreversible
and natural sources of nutrients are being consumed in insufficient quantities, the
requirement of an external intervention has become a non-negotiable imperative
that can supplement food diet to help prevent nutrition related disorders and
promote wellness rather than treat illness. Such products have collectively been
called as “Nutraceuticals”

More than forty percent deaths in developing countries are attributable to risk
factors linked to nutrition
8 of the top 15 risk factors are related to nutrition and contribute to nearly forty percent of total
deaths and thirty percent of total disease burden in developing countries like India
15 leading risk factors in developing countries with high mortality rates*
Risk factors Percentage of deaths attributable to risk factors Percentage of disease burden attributable to risk factors
1 Underweight 13% 15%

Unsafe sex 10% 10%
2 Blood pressure 7% 2%
Unsafe water, sanitation and hygiene 6% 6%
3 Cholesterol 5% 2%
Tobacco 5% 2%
Indoor smoke from solid fuels 4% 4%
4 Low fruit and vegetable intake 4% 1%
5 Zinc deficiency 3% 3%
6 Vitamin A deficiency 3% 3%
7 Iron deficiency 3% 3%
Physical inactivity 2% 1%
Alcohol 2% 2%
8 Overweight 2% 1%
Unsafe healthcare injections 1% 1%
0% 5% 10% 15% 0% 4% 8% 12% 16%
Nutrition related risk factors
Source: World Health Report 2002, WHO

* Notes:
• Includes 66 countries. Key countries include South Africa, sub-Saharan African countries, Iraq, Egypt, Pakistan, Peru, South Korea, India, Myanmar, Nepal
• Other risk factors include physical inactivity, risk factors for injury, overweight, lead exposure, climate change, childhood sexual abuse, illicit drugs, urban air pollution, noise,
airborne particulates, ergonomic stressors, carcinogens which contribute to the remaining 30% deaths and 44% disease burden
Food is composed of a wide distribution of nutrients, which have very specific metabolic effects on the human body. Nutrients are
of two types - macro-nutrients and micro-nutrients
Definition of key nutrients
• Includes carbohydrates, fats & oils, proteins & amino acids

• Supply energy, and these essential nutrients are needed for growth,
Macro-nutrients maintenance, and activity
• Needed in large amounts
Nutrients
• Includes vitamins, trace minerals (iron, zinc)

• Vitamins act as catalysts that help to trigger other reactions in the body while
Micro-nutrients
trace minerals contribute to the synthesis of glycogen, protein, and fats
• Needed in relatively small amounts

Such risk factors have led to significant adverse outcomes in India
Risk factors Key adverse outcomes
44% of Indian children are underweight1, which is much higher than most comparable countries. Further,
the proportion of underweight children has reduced only marginally in last 10 years, showing slow pace of
improvement. Other related adverse health outcomes are stunting2 and wasting3 and the proportion of
these is also alarming at 38% and 19% respectively. Being underweight may reduce a child’s IQ by 5%,
while stunting may reduce it by as much as 11%.
Percentage of underweight children below 5 years of age
Underweight 43.5
3.7 6.8
1.4
Russia Brazil China India
Source: NFHS, World Bank, World Development Indicators 2007
Maternal mortality rate in India is much higher than that of comparable countries. About 20-40% of maternal
dealth in India are due to anemia, the proportion of which has increased in the last decade.
Maternal mortality rate per 10,000 live births, 2005
45
79
74
Iron
deficiency
4.5
11 52 56
2.8
Percentage Percentage women

Russia China Brazil India
anemic children* suffering
from anemia**
1998-99 2005-06
* Children between 6-35 months of age

** Married women in the age group of 15-49 years
Source: WHO, NFHS
Prevalence* of vitamin A deficiency symptoms (1990-2003)
0.7-1.1%
Prevalence of vitamin A deficiency is much
0.5% above WHO cut off levels resulting in
Vitamin A
deficiency approximately 330,000 child deaths every year
India WHO cut-off level
* Pre-school children
Source: NFHS, Report of the Working Group on Integrating Nutrition with Health, 11th Five Year Plan (2007-2012) , India Micronutrient National
Investment Plan 2007-2011
1 Underweight: Children under 5 years whose weight-for-age is less than -2 Standard Deviation (SD)
2 Stunted: Children under 3 years
Totalwhose height-for-age
goiter is lessdeficiency
rate (Iodine than -2SD disorder)
3 Wasted: Children under 3 years whose weight-for-height is less than -2SD
10%
Prevalence of goiter caused due to Iodine deficiency
is twice the WHO cut off levels, adversely impacting
14 Iodine Nutraceuticals— Critical supplement for building a healthy India
5% intellectual capacity by upto 15%
deficiency
deficiency approximately 330,000 child deaths every year
* Pre-school children
Source: NFHS, Report of the Working Group on Integrating Nutrition with Health, 11th Five Year Plan (2007-2012) , India Micronutrient National
Investment Plan 2007-2011
Total goiter rate (Iodine deficiency disorder)
10%
Prevalence of goiter caused due to Iodine deficiency
is twice the WHO cut off levels, adversely impacting
Iodine
5% intellectual capacity by upto 15%
deficiency
Source: Report of the Working Group on Integrating Nutrition with Health, 11th Five Year Plan (2007-2012), India Micronutrient National
Investment Plan (2007-2011 )
India has the largest burden of CVD and largest number of diabetes patients in the world
Cardiovascular diseases – Diabetes — Number of patients (millions)

DALY’s (millions)
Blood 31.7
pressure, 28.9
24.5
overweight, 20.8
cholesterol
11.8
4.1 4.6 4.6
Brazil Russia China India Russia Brazil China India
Source: WHO 2009 Source: WHO 2000
Adverse outcomes are estimated to cost nearly 1% point to India’s GDP and so improvement in
nutrition status is a critical part of the country’s agenda for progress
An estimate of the cost of productivity lost on account of mortality due to nutrition related
disorders was estimated to be 0.85% of the GDP in 2004 and is expected to increase upto 1.2% of
India's GDP by 2015
Source: WHO 2009, Popkins et. al (2001), Ernst & Young analysis

Analysis of India's dietary patterns provides a few key insights into the
nutrition levels and needs of the population
Nearly 20% of the Indian population is undernourished implying a low calorie as well as
1
nutrient intake
Percentage of population undernourished
20
19
• India lags behind not only other developing
12
countries but also some sub-Saharan African
9 countries in terms of undernourishment
7
3
Russia Brazil Nigeria China Uganda India
Source: Global Hunger Index, International Food Policy Research Institute 2008
Even in the population that shows sufficient calorie intake, the micronutrient consumption is
2
not at desired levels
While the intake of calorie rich foods may be high, micronutrient rich foods are being consumed
in low proportions. As a result, significant micronutrient deficiencies exist in urban as well as
rural areas
Actual food intake as a percentage of ICMR recommended levels Average intake of key micronutrients (percentage of RDA)
109% 111%
101% 102% RDA
93%
83% 83% 81% 56%
76% 76% Zinc
70% 71% 65%
68%
60%
Vitamin A
58%
33%
83%
Iron
90%
Cereals Edible oil Milk & milk Sugar Pulses Vegetables Fruits 0% 20% 40% 60% 80% 100% 120%
products
Calorie rich Micronutrient rich
Rural Urban
Source: India Micronutrient National Investment Plan 2007-2011

At the same time, there is a growing population (340 million) which is consuming excess
3
calories, with a disproportionately high level of fats
Nearly 340 million people - 30% of the population in urban areas and 34% of the population in rural
areas - consume calories more than the norm
Percentage of population by level of calorie intake as a Calories derived from fat as percentage of total calories
percentage of norm level* for the excess calories consuming population
11% 13%
19% 21% Recommended range
Calorie intake as a percentage of norm

>150%
32%
70% 66% 23%
120% 23%
150% 17%
Urban Rural
<100% 100%-120% >120% 21%

Average
16%
Rural Urban
Source: NSSO 2004-05 Source: NSSO 2004-05

*2700 kcal per consumer unit per day
Also, there is a growing fitness need which has led to rapid rise in slimming centers and
4 gymnasiums. This is driving enhanced nutrition requirements for this segment of the
population
Growth in slimming centers and gyms market (INR billion)
4.5 4.6
CAGR CAGR
33% 23%
2.5
1.9
Slimming centres Gyms
2005 2008
Source: Ernst & Young — FICCI Wellness report, 2009

These patterns can be mapped into distinct population segments based on their
food and nutrient intake
Sufficient/
Over-nourished 80 million
excess
ICMR norm
for fruits and
vegetables2
Under-nourished 3
Micronutrient intake
380 million
Calorie sufficient nutrient deficient

Deficient
population- 570 million
Deficient Adequate/excess
80% of norm Calorie consumption

level as defined
by NSSO
Undernourished population – Calorie sufficient nutrient deficient population–

380 million 570 million
�• �Nearly 70 percent (280 million) of this segment would include �• �This segment would consist of people who are consuming
those with inadequate purchasing power to consume a diet that adequate or excess calories than norm but not sufficient
would be adequate in calories and therefore deficient in nutrients. This segment would typically include high and middle
income group population with purchasing power enough to at
micronutrients
least consume an adequate calorie diet
Immediate need for this section of the population would be
�• �This segment may have a need due to specific conditions
foundational to meet basic calorie nourishment and will have to
like pregnancy, menstruation, obesity, stress and may need
be addressed by government intervention. Some programs
to increase awareness to maintain and promote a normal,
under-taken by government include mid-day meal, micronutrient
healthy life
national investment plan and food security programs under
Millennium Development Goals
Over-nourished population– 80 million
�• �Remaining 30 percent (100 million)of this segment would include
people with sufficient purchasing power but inadequate food �• �This segment would consist of those with sufficient purchasing
consumption due to various reasons like chronic illness, low power and with enhanced nutrient and calorie intake due to their
appetite, extreme diet consciousness special requirements such as professional sports, heavy
exercising, extensive outdoor field work
Source: NSSO 2004-05, India Micronutrient Initiative Plan 2007-2011, Ernst & Young analysis
Market size of this segment of the population is assumed to be insignificant as they are calorie deficient but micronutrient sufficient implying that
they could be an extremely health conscious segment with dependence on very low calorie foods but still managing to derive sufficient micronutrients
1 Population as per NSSO 2006-07 report
2 As per most recent national initiative called the Micronutrient National Investment Plan 2007-2011, inadequate consumption of fruits and vegetables
is a key reason for deficiency of essential micronutrients. For the purpose of estimating deficient and sufficient nutrition intake population segments,
it has been assumed that persons who consume fruits and vegetables combined less than ICMR norm of 175 gms/ day would be deficient in
micronutrients
3 The entire population below the food poverty line (as defined in the report of the National Commission on Macroeconomics and Health, 2005) has
been considered as undernourished, irrespective of level of calorie consumption

Nutrition related needs of population segments can be viewed as a hierarchy of
– foundation, condition specific and enhancement needs
Hierarchy of nutritional needs
• N
� utrition requirements of over-nourished people
with enhanced nutrient and calorie intake due to
their special requirements such as professional
sports, heavy exercise, extensive outdoor field
work etc
Enhancement These nutrition needs are for “enhanced

functioning”
needs
• N
� utrition requirements prevalent in people largely
across the micronutrient deficient segments during
specific conditions such as nutrient-specific deficiency
due to lower intake, pregnancy, menstruation, post
Condition specific needs menopause, obesity, stressful and sedentary life
These nutrition needs are for “addressing
specific conditions”
• N
� utrition needed by all segments of population to
maintain and promote a normal, healthy life
Foundation needs These nutrition needs are for “maintaining normalcy
of being”

While food has been the major source for servicing these needs in the past,
with growing modernization some traditional ways are being given up, thereby
adversely impacting balanced nutrition
Nutrients concerned Traditional ways being given up Adverse impact on nutrient intake
due to modernization
Water soluble vitamins (Vitamins Fresh vegetables used for cooking In the modern blanching processes adopted there
B and C) and minerals is loss of ascorbic acid, water soluble vitamins and
minerals just before freezing the vegetables
Proteins, minerals and Vitamin B complex Manual processing of cereals Milling and polishing of cereals significantly
reduces protein, mineral and Vitamin B complex
Calcium, Iron, Thiamine and Niacin Fresh grinding of wheat at home Heavy milling and poor storage conditions result in a
considerable loss of Calcium, Iron, Thiamin and Niacin
Iron Cooking in iron “karai” Organic iron from the conventional “karai” is stated
to fortify the food cooked in it – a benefit absent
in modern cookware like non-stick and teflon
coated utensils
Copper Use of copper vessels for Copper, although required in minor amount, is not
cooking and storing water gained from the stainless steel utensils used today.
Deficiency is known to cause chronic diarrhea,
mal-absorption problems and reduced immunity
Source: Srilakshmi B. 2003 Food Science, American Association of Cereals Chemists, Carribean Home Economics, Ernst & Young research
There is an ever widening gap in nutrient intake due to which – "normal life is no longer normal"

Thus, the pressing need to complement food with external nutritional
interventions has become a non-negotiable imperative to avert
curative measures
While such interventions can be manifold, this report is focused only on products that can fulfill
this role. These products have been collectively referred to as "Nutraceuticals"
Nutraceuticals, an emerging concept, can be broadly categorized as products which are extracted
from natural sources (nature-like) or manufactured synthetically (man-made), which supplement the
diet to provide nutrition over and above regular food and help prevent nutrition related disorders.
Curative
Traditional
medicine Pharmaceuticals
Usage
Food Nutraceuticals
Preventive
Natural Nature-like Man made
Source
• Ideally, intake of nutrients through food would have been sufficient to prevent curative
measures such as pharmaceuticals and traditional medicine to a large extent
• However, in the absence of requisite nutrition through food, an external intervention in the
form of nutraceuticals has become imperative

Section II
Nutraceuticals market:
global and India

Summary
• As a concept, “Nutraceuticals” is in its stage of infancy with several developed

countries having defined it only in last 15 years
• Of the global nutraceuticals market of USD117 billion (INR5148 billion), India has
less than one percent share and is estimated to be around INR44 billion in size. But
it has been growing much faster than global rates at a CAGR of 18% for the last 3
years driven by functional food and beverages categories
• There are four key underlying drivers for this growth:
• Affluence of working population with changing lifestyles
• Reducing affordability of sick care, driving consumers towards wellness
• Increasing physician awareness and media penetration
• Increased accessibility due to emergence of newer distribution channels
• However, the latent market in India is two to four times the existing market size
(between INR89 billion and INR172 billion) with nearly 148 million potential
customers.
• The market is latent because there some major impediments to effectively tap into
this market. These are:
• Regulatory framework not yet implemented
• Inadequate resources for implementation of regulations
• High prices of nutraceuticals
• Lack of credibility of nutraceuticals

Nutraceuticals is an evolving concept with varying definitions across countries
While some countries define nutraceuticals based on the • USA and Canada actually list the constituents that a product
segments it constitutes, others define it based on the must have to be called a nutraceutical, whereas Europe
benefits it provides to the consumers. There is also no and Japan just provide general guidelines on the properties
clear consensus on inclusion or exclusion of traditional that a product should have to be called a nutraceutical.
medicines. Further, some of the most developed countries • Traditional and herbal medicines are included in the
have implemented legislation as recently as in 2004, so definition of dietary/nutritional supplements in Canada.
the concept itself is recent in such countries – Japan does not mention traditional herbal medicines under
FOSHU foods. USA includes herbs and botanicals in
• The nomenclature for nutraceuticals varies across countries
its definition.
with Canada naming them as "Natural Health Products",
USA calling them "Dietary Supplements" and Japan • The Indian definition (as per the Food Safety and
naming them "Foods for Special Health Use" (FOSHU) Security Act 2006) lists down the ingredients that
a product should have, and it also specifies general
• The definitions even by regulating authorities in different
properties of nutraceuticals. Traditional medicines
countries range from general to highly elaborate:
though have been excluded from the definition.
• There are distinct definitions and regulations for dietary
supplements and functional foods in USA, Canada and
Europe. Whereas in Japan, both dietary supplements and
functional foods are governed under the same set
of regulations.
Source: US Food & Drug Administration website; Health Claim Evidence Requirements in Japan,(Yamada et al); Health Canada – Natural Health Products Directorate website;
European Union Directive; European Parliament directive on food supplements; Department of Health & Ageing, Therapeutic Goods Administration, Australia website; The
Russian Federation Chamber of commerce and Industry website, Food Safety and Security Act of India, 2006

Definitions of nutraceuticals as per various legislations around the globe
Canada European Union (EU) Russia
Known as: “Natural Health Products” Known as: “Food supplements” Known as: Biologically active food
Governed by: Food and Drugs Authority Governed by: Food Safety Authority supplements
Implemented in: 2004 Implemented in: 2002 Governed by: Ministry of Health & Social
The definition covers: Development
The definition covers the following
Implemented in: 1997
• Vitamins and minerals products:
• Herbal remedies • �Concentrated sources of nutrients The definition covers :
• Homeopathic medicines •� Other substances with a nutritional or
• Nutriceuticals (Vitamins, Minerals, amino
• Traditional medicines such as physiological effect
acids, dietary fibers)
traditional Chinese medicines
• Para-pharmaceuticals ( bio-flavonoids,
• Probiotics
alkaloids, essential oils, polysaccharides)
• Other products like amino
acids and essential fatty acids
USA Australia Japan
Known as: “Dietary supplements” Known as: Complementary medicines Known as: ‘‘Foods for Specific Health Use”
Governed by: Food and Drugs Authority Governed by: Dept. of Health and Ageing Governed by: Japan Health and Nutrition
Implemented in: 1994 Implemented in: 1991 Food Association
Implemented in: 1991
The definition covers products (other than tobacco ) The definition covers:
containing: • Herbal medicines Functional foods are foods that can have
• �Vitamins • Vitamins and minerals three functions:
•� Minerals • Nutritional supplements • Nutrition
•� Herb/botanicals •� Sensory satisfaction
•� Amino acids •� Physiological improvements
•� Concentrate, metabolite, constituent, extract
India
Regulation: Food Safety and Standards Act (FSSA)

Effective from: Passed in 2006, yet to be implemented
• Foods for special dietary use are specially processed or formulated to satisfy particular dietary requirements which exist because of a particular
physical or physiological condition or specific diseases and disorders and which are presented as such wherein the composition of these foodstuffs
must differ significantly from the Indian Standard (IS) composition of ordinary- foods of comparable nature, if such ordinary foods exist and may
contain one or more of the following ingredients, namely :-
• Plants or botanicals or their parts in the form of powder, concentrate or extract in water, ethyl alcohol or hydro alcoholic extract, single
or combination
• Minerals or vitamins or proteins or metals or their compounds or amino acids ( in amounts not exceeding the Recommended Daily Allowance for
Indians) or enzymes (within permissible limits)
• Substances from animal origin
• Dietary substances for use by human beings to supplement the diet by increasing the total dietary intake
Source: US Food & Drug Administration website; Health Claim Evidence Requirements in Japan,(Yamada et al); Health Canada – Natural Health Products Directorate website;
European Union Directive; European Parliament directive on food supplements; Department of Health & Ageing, Therapeutic Goods Administration, Australia website;
The Russian Federation Chamber of commerce and Industry website, Food Safety and Security Act of India, 2006

Drawing on the common aspects from the definitions across different
countries, for the purpose of this report, definition of "Nutraceuticals" has
been restricted to
Formulations or foods with health benefits that are taken orally in addition to the normal diet
and can even be taken over prolonged periods in concentrations which are lower than the
Recommended Daily Allowance (i.e. below the therapeutic range) to:
• Supplement the diet to help prevent nutrition related disorders
• Provide structure/function support that may help prevent specific diseases like
diabetes, cancer, obesity through beneficial and proven effects that go beyond the known
nutritional effects
• Fulfill special physiological needs of the body such as like pregnancy, lactation, sports,
infancy and sedentary lifestyle
Further to this definition, following 3 categories have been considered under

the purview of "Nutraceuticals"
1
ds l
foo iona
Foods that have specific Dietary supplements provide nutrients

sup
ct
Die ents
physiological benefits and/ that are missing or are not consumed

Fun
plem
tary
or reduce the risk of in sufficient quantity in a person's diet

chronic disease 3 Key
nutraceuticals Key product segments
Key product segments categories
• Vitamin supplements
• Nutrition fortified foods 2
like fortified flour, • Mineral supplements
fortified oil, fortified
• Macronutrients
malted powder
3 Functional • Antioxidants
• Probiotic foods like yogurt
beverages
• Tonics
• Herbal extracts like Chyawanprash,

Liquids that quench thirst along with replenish- non-herbal extracts like cod liver oil
ing minerals, provide energy, prevent ailments,
and promote healthy life styles
Key product segments
• Sports and energy drinks
• Fortified juices
• Glucose powder

The global nutraceuticals market is estimated at USD117 billion,
(INR5148 billion) of which India’s share is a meager 0.9%
US, Europe and Japan are key markets for nutraceutical consumption Indian nutraceuticals market in 2008 is USD 1.0 billion
Geographic split*
Switzerland 3% Functional foods

Rest of EU 6% 54%
Italy 3%
UK 2%
Japan 22%
France 6%
Germany 5% Functional beverages

India 1% 14%
Rest of Asia 7%
US 36%
Others 9%
Dietary supplements
32%
Source: Frost & Sullivan, Cygnus Source: Primary interviews, Industry sources, Ernst & Young analysis
* Based on 2007 estimates
Globally, this market is expected to reach USD177 billion in 2013 growing at a CAGR of 7% driven
by the fast growing dietary supplements category
Global nutraceuticals market
200
180
7%
160 AGR
C
140 71
120
USD billion
100 38
80 49
60 39
40
57
20 40
0
2007 2013
Functional foods Functional beverages Dietary supplements
Source: BCC and Nutracueticals brochure FICCI
The dietary supplements category is expected to be the fastest growing product category
globally with a CAGR of 11%.

The nutraceuticals market in India is estimated to be at least INR44 billion with
functional foods forming largest category with 54% share
Indian nutraceuticals market

43.9
(2008)
Functional foods 23.9 Functional beverages 6.0 Dietary supplements 14.0
Nutrition Sports and Vitamin

22.7 0.5 3.0
fortified foods energy drinks supplements
Mineral
Probiotic foods 1.2 Fortified juices 5.2 1.0
supplements
Macronutrients 2.2
Glucose powder 0.3
Antioxidants 2.4
Tonics 1.4
Extracts 4.0
Note: All figures are in INR billion.

Source: Primary interviews, Industry sources, Ernst & Young analysis
The functional foods market is the largest followed closely by the dietary supplements market
which has a 32% market share. The functional beverages market in India is relatively nascent.
Note:
While we have not validated the efficacy of the products constituting these segments nor the studies backing their claims, the attempt here has been to estimate the market
size of those segments where some research exists to substantiate health or nutrition claims.
Segments such as iodized salt have been excluded from the market sizing exercise as large scale fortification of these products has led to consumption not primarily for the
fortification benefits but for regular food value.
Please note that in the energy drinks market, caffeine rich products have not been included.

Various nutraceutical product segments exist across the need hierarchy…
Nutraceutical products aim to fulfill different consumer needs based on which they can be classified
as – Enhancement segments, Condition specific segments and Foundation segments
Enhancement segments
High protein • There are a few product segments such as
supplements sports and energy drinks catering to health
enhancing needs of the consumers
Energy drinks
Sports drinks
Glucose drinks
Antioxidants Condition specific segments

• Product segments like vitamin supplements,
Vitamin mineral supplements etc. cater to the needs
supplements arising out of condition specific health concerns
Mineral
supplements
Macronutrient supplements Foundation segments

Nutrition fortified foods, e.g., (fortified flour) • Foundation products segments cater to the
consumer trend towards wellness and healthier
Probiotic foods, e.g., (yogurt) lifestyles. These product segments promote
general well being are largely targeted at all
Extracts, e.g., (chyawanprash) age groups.
Child* Young adult* Adult* Old age*
Lifecycle stages
*Note: Child: 0 – 4 years; Young Adult: 5 – 14 years; Adult: 15 – 59 years; Old Age: 60+ years
Source: Ernst & Young Analysis
Though a product category can be classified into a specific need-segment based on its predominant use, some product types may
transcend across need-segments
For example cod liver oil, along with meeting foundation needs of boosting the immune system, will also cater to prevention needs of
lowering cholesterol

...And product segments catering to foundation and condition specific needs
are the largest and growing the fastest
While the global industry is growing at a CAGR of 7%, the Indian industry
has been growing at a CAGR of 18% in the last 3 years
Glucose drinks
Enhancement
Sports and energy drinks

needs
0.3
0.5
Customer needs assessment
Mineral supplements
Antioxidants
Condition specific
3.1
0.9
needs
Tonics Extracts
1.4 2.4
Vitamin supplements
Probiotic foods
3.8
Fortified juices
Foundation needs
2.2 1.2
Macronutrients
2.5 4.6 15.7 5.2
Fortified oil
Fortified flour
Fortified malted powder
0%-10% 11%-20% 21%-30%
Percentage growth rate (3 years CAGR)

Market sizes in INR billion
Dietary supplements Functional foods Functional beverages
Source: Primary interviews, Industry sources, Ernst & Young analysis
The functional food and beverages categories consisting of nutrition fortified foods, sports and
energy drinks, fortified juices and probiotic foods are growing faster, driven by wider distribution
across FMCG channels as well as aggressive mass marketing

This growth in the nutraceuticals market in India is driven by several factors
y
ibilt
18%
ccess
A
4
ss
arene Increased accessibility
Aw
3 due to emergence of
ility
newer channels
fordab Increasing physician
Af
2 awareness and media
penetration
e
enc
Afflu Reducing affordability
1 of sick care, driving
Affluence of working consumers towards
population with wellness
changing lifestyles
Affluence: Increased affluence of the ever-growing working population with changing
1
lifestyles is leading to changes in dietary habits
Increase of working population by 30 million Increasing income levels of the

from 2005 to 2015 Indian population
Percentage split of population Projected distribution of income classes
120%
1.09 bn 1.18 bn 1.25 bn
100% 6%
8% 9% 10% 9% 11%
80% 22%
26%
30%
60% 60% 62% 63%
40% 72% 65% 58%

20%
32% 29% 27%
0%
2005 2010 2015 2001-02 2005-06 2007-08
<15 years 15-60 years >60 years <0.09 mpa 0.09-0.2 mpa >0.2 mpa
Source: Census 2001 Source: NCAER 2005
Growing disposable income and lifestyle changes such as shift in dietary habits towards higher
fat has resulted in increasing incidences of chronic disorders. This in turn is likely to fuel the
demand for nutraceutical products.

Affordability: Reduced affordability of sickness related expenditure is driving consumers
2
towards wellness
Out-of-pocket expenditure constitutes 64 % of Average cost of in-patient treatment both

healthcare expenditure in India as compared in rural and urban India has doubled in the
to 18% globally last decade
Composition of healthcare expenditure Average cost of inpatient treatment
70 12000
64 10800
60
Percentage of expenditure
10000
50
44 8000 6900
40 34
INR
6000
30 4800
24 3900
18 4000
20
10 6 6 2000
4
0 0
Government Out-of pocket Private and Other Rural Urban
exp. on exp. on social
healthcare healthcare insurance
1995-96 2004-05
Global India
Source: WHO statistical information system 2008
These factors are driving consumer towards health and wellness related services in order to lead healthier lifestyle and
prevent spiralling sick care costs.
Share of consumer’s wallet on healthcare expenditure

is expected to go on increasing
100
Growth in slimming centers, gyms and
25
spas market (2005-2008)
80 42 34
5
Share of wallet
56
5 9.5 5.0 4.6
4.5
60 4.5 CAGR CAGR CAGR
5.5 12 14
4.0 33% 23% 31%
12
5 12 3.5
INR billion
40
10.5 25.5 3.0
14 2.5 2.5
2.5
22 1.9
20 6 19 2.0
9
12 6 1.5 1.1
5
3 13 1.0
4 7 9
0 0.5
1995 2005 2015 2025 0.0
Slimming Gyms Spas
Health care Education & recreation centers
Communication & transportation Personal and household products
FY2005 FY2008
Housing & utilities Apparel
Food, beverages & tobacco Source: Ernst & Young — FICCI Wellness Report, 2009
Source: Marketing white book 2008

Awareness: While increased physician awareness is driving prescriptions of nutrition
3
supplements, penetration growth of media and diagnostic centers is helping create awareness
Physician awareness
about health benefits High media penetration With growing diagnostic
of nutraceuticals has is improving consumer centers, the awareness
fuelled growth in nutrition awareness about health disorders and
related prescriptions at deficiencies is increasing
26 % CAGR in recent years
Growth in nutrition related prescriptions Media penetration (2007-08) Indian diagnostic market (INR billion)
450 45% R
GR
410 40% AG
400 CA 40% 36% .1%C 156
26% 16
(Percentage of population)
Number of people reached
350 35%
Numbers millions
30% 116
300 25%
260 25%
250
20%
200 64
15%
150
10% 6%
100
5%
50 0%
0 Mobiles TV (Cable Print Internet 2006 2010E 2012E
FY 2005 FY 2007 and satellite)
Source: Industry sources Source: Industry reports Source: CRISIL, Cygnus Research,
Note: Population 1 billion Ernst & Young Research
Physician and consumer awareness together are driving growth of nutraceuticals.

Accessibility: Emergence of newer distribution channels is fuelling accessibility
4
to nutraceuticals
Emergence of wellness products and

Growing organized retail has emerged as a
services related retail outlets is also
new channel for distribution of nutraceuticals
driving accessibility of nutraceuticals
Expected growth in wellness related retail stores (2007-2009) Growth of retail shopping mall space (2001-2012)
29% R)
30000 CAG
1,400 CAGR 58% ar
ye
1,163 CAGR 25000 (4 24,300
1,200 %
36% 19
1,000
'000 sq. mtrs.
1,000 CAGR 20000

R)
Number of stores
737 AG
800 700 C
15000 ar 12,755
ye
600 (8
86% %
400 400 10000 75
CAGR 276%
400 32%
CAGR
156 CAGR 5000
200 85
45 6 20 35 259
0 0
Apollo Med Plus Medicine Fortis Reliance GNC 2001 2008 2012
Pharmacy Shoppe Healthworld Wellness
Existing 2007 Planned 2009
Source: Company websites; Ernst & Young analysis Source: ICRIER, India Retail Report

The Indian nutraceuticals market is dominated primarily by pharmaceuticals
and FMCG companies with very few pure play nutraceutical companies
Pharmaceutical and FMCG players active in the nutraceuticals space have diversified by
introducing product extensions and developing variants under existing brand names.
Direct selling
FMCG dominated segments with player

such as Dabur, Nestle, Amul, Pepsico
and pure-play nutraceuticals players
such as Amway
Distribution channels
Nutrition
Pharmaceutical dominated
Sports fortified foods
segments with player such as
drinks GSKCH, Emami, Ranbaxy, Elder
Energy Fortified
Grocer
drinks juices
Probiotic
foods
Glucose drinks Mineral

Macronutrients supplements
Extracts, tonics Vitamin
and stimulants supplements
Chemist
Antioxidants
1–5 players 6–10 players 11+ players

Consolidated Extent of fragmentation Fragmented
Source: Ernst and Young analysis

Note: Extent of fragmentation has been derived based on the number of companies commanding greater than 80 percent market share
• Largely, the market is fragmented. However, the FMCG dominated segments are relatively
less fragmented as compared to the pharmaceuticals dominated segments.

Many new players have announced aggressive investment plans
Player Expansion plan

Alkem Laboratories • Alkem Laboratories has invested over INR1 billion to create exclusive manufacturing facilities for their health
foods business.
• Alkem Health Foods is expected to generate a turnover of over INR3-5 billion annually within a few years.
Plethico • The company recently acquired a USD100 million nutraceutical company named Natrol Inc in the US and is
planning to launch its 700 odd products in India and other global markets.
• Plethico, is also setting up a INR1 billion plant in Dubai to make medicated lozenges, is targeting a turnover of
over INR30 billion within five years.
Divi's Laboratories • Divi's Laboratories has set up a INR350 million nutraceutical plant and a separate arm, Divi's Nutraceuticals.
• The company has already developed potential vitamin products such as Astaxanthin, Betacarotene,
Canthaxanthin and Lycopene.
Mission Vivacare • Mission Vivacare is investing over INR800 million in modern manufacturing facilities to launch its products
globally under the brandname - Mission VivaPrime. Its prime targets are the US and Europe.
GNC • Plans are on to open 150 stores by 2009, has an exclusive master franchisee tie-up with Guardian pharmacy
which is investing approximately INR1 billion
• Operates approximately 4900 stores worldwide

Vitabiotics • Plans of investing INR1.2 billion in a manufacturing unit to roll out its entire range of products in India
Robert Schwartz • Plans of increasing footprint through Manipal Cure and Care as well as 50 additional health and wellness
centers by 2011
Source: "Drugmakers cash in on health supplement segment", 22 August 2008 Business Standard, Primary interviews

Even though the current nutraceuticals market is pegged at INR44 billion, there
exists a large latent potential market
Nearly 70% of the undernourished population (280 million) has inadequate purchasing power
to consume a calorie sufficient diet and hence is not a latent potential market. However, out of
the remaining 750 million population, nearly 148 million people can be potential customers for
nutraceuticals based on their affordability.
It is observed that the top 3 MPCE1 groups in urban areas and the topmost MPCE1 class in rural areas
(collectively referred to as "segments with affordability" from hereon) spend a significant amount
(25 per cent more than average) on processed foods & beverages and would, therefore, have greater
affordability to buy nutraceuticals.
Per capita monthly average expenditure on processed Percent population by MPCE classes (100%=1.03 billion)
foods and beverages (INR)
Spend above urban average

MPCE classes
Four segments with

271 >2540 2% affordability
make 14%
126 1880 – 2540 2% of population or
148 million people
91 1380 – 1880 3%
59 930-1380 6%
580-930 7%
335-580 4%
Below food poverty line 2
0 – 335 0.4%
93 Rural - >1155 7%
24 Rest of rural 69%
74 Urban average
31 Rural average
Source: NSSO 2006-07, Report of the National Commission on Macroeconomics and Health 2005
Note:
1. MPCE (Monthly per capita expenditure) – As per NSSO definition, for a household, this is the total consumer expenditure over all items divided by its size and expressed on a
per month basis. A person’s MPCE is understood as that of the household to which he or she belongs.
2. People below food poverty line have been considered to be those with monthly per capita expenditure on food less than the minimum expenditure required to consume a diet
sufficient in calories and nutrients as defined in the report of the National Commission on Macroeconomics and Health, 2005

This latent potential market is estimated to be atleast two to four times the
current market size (between INR89 billion and INR172 billion)
Hierarchy of nutritional needs Most likely consumer profiles considered for market sizing* Potential Current
market market
range
• �People going to the gymnasium and engaged in moderate to heavy INR INR
work-out routines, who have an enhanced need for nutrient intake 1.2- 1.5 0.8
which can be met through dietary supplements like whey proteins billion billion
Enhancement
needs
“For enhanced
functioning”
People belonging to “segments with affordability” and likely to have the INR INR
following conditions: 49.7 – 9.8
• �Adults (>20 years) likely to face vitamin deficiency disorders due to 99.5 billion
significantly lower than recommended fruit & vegetable consumption billion
Condition • �Pregnant and lactating women with an increased requirement for
specific needs nutrient intake like proteins, iron
• �Other women in the age group of 15-49 years suffering from any
“For addressing specific conditions”
form of anemia
• � Children aged between 4 to 17 years and consuming proteins
needed for growth at less than RDA levels
• �People belonging to segments with affordability who consume INR INR

sufficient or excess calories (at least 90% calorie intake of 38.0 - 33.3
recommended norm) and need products to maintain and 71.4 billion
Foundation needs
promote a normal, healthy life billion
“For maintaining normalcy of being”
Total INR INR

88.9 - 43.9
172.4 billion
billion
Source: NSSO 2004-05, NSSO 2006-07. NNMB 2007, Ernst & Young-FICCI Wellness report, 2009, Primary interviews, Industry sources, Ernst & Young analysis
Key assumptions*
• Segments with affordability (as defined earlier) form the consideration set for this analysis
• The following three scenarios have been considered for analysis:
• Scenario 1: Segments with affordability in urban areas spend 25% of their processed foods and edible oil expenditure on products
that cater to foundation needs. This is in line with their current spending levels on foundation product segments. In this scenario,
there is no spend assumed on foundation products by the segment with affordability in rural areas. In case of condition specific
needs, 50% of the current nutrient intake gap is met through nutraceutical products, while for enhancement needs 75% of the
enhanced nutrient requirement is met through nutraceuticals.
• Scenario 2: Segments with affordability in urban areas spend 40% of processed foods and edible oil expenditure on products to
cater to foundation needs. In this scenario too, there is no spend assumed on foundation products by the segment with affordability
in rural areas. In case of condition specific needs, 75% of the current nutrient intake gap is met through nutraceutical products,
while for enhancement needs 90% of the enhanced nutrient requirement is met through nutraceuticals.
• Scenario 3: In addition to segments with affordability in urban areas spending 40%, those in rural areas spend 10% of their
processed foods and edible oil expenditure on products that cater to foundation needs. In case of condition specific needs, 100% of
the current nutrient intake gap is met through nutraceutical products, while for enhancement needs 100% of the enhanced nutrient
requirement is met through nutraceuticals.
*Refer Annexure 1 for details

However, there are critical impediments to convert this latent opportunity into
a market
4
Critical impediments to growth
3 Lack of credibility
of nutraceuticals
High prices of
2 nutraceuticals
Inadequate resources
1 for implementation
of regulations
Regulatory framework
not yet implemented

Regulatory framework to govern the nutraceuticals market in India has not been implemented
1
as yet
The Food Safety and Standards Act of 2006, passed by the Indian Parliament, brought into existence
the Food Safety and Standards Authority of India (FSS or FSSA), which is the responsible body for
framing rules and regulations to govern the nutraceuticals market.
However, rules are yet to be framed and this scenario lends an environment that is not conducive for
the growth of nutraceuticals.
Genesis and current state of FSSA
Pre 2005 2005-2006 Post 2006
• Multitude of laws and

• A
► need felt for integrating all
ministries governing food and • While the act was passed in 2006, its
existing laws under one
food processing such as: implementation has not been enforced even
• G
► roup of Ministers (GOM) appointed three years down the line since rules have not
• T
he Prevention of Food
by Government of India to propose been framed. Further, while there are panels
Adulteration Act, 1954
the Integrated Food Law that have been formed to take forward different
• The Fruit Products Order, aspects of the Act but too little has been
• F
► ood Safety and Standards Bill
1955 achieved by such panels in this time period
2005 introduced in parliament
• The Meat Products Order, and referred to the Standing • A
► s a result,
1973 Committee on Agriculture
• There is very limited check on the
• The Vegetable Oil Products • R
► ecommendations made by safety, efficacy and quality of the
(Control) Order, 1947 standing committee incorporated nutraceutical products. resulting in
• The Edible Oils • F
► SS Bill passed by parliament increased risk to health of consumers
Packaging Order and signed by President • The claims made by many products are
on 23 August 2006 un-validated and left to discretion of safety
• Varied standards under
these laws regarding officers, leading to increased chances
manufacturing, processing, of corruption
packaging etc. of foods. • This is also resulting in many court
cases that are under disputed
• This is also acting as a deterrent

for large foreign players planning
to enter the Indian market
Source: Primary interviews and Ernst & Young analysis

2 Even if regulations are established, resources available to enforce them are insufficient
There is a lack of resources in terms of Food safety officers and Central food laboratories to monitor
compliance to regulations.
Monitoring reach Current strength estimates Extent of inadequacy Underlying assumptions
Food processing • 0.18 million food • Understaffing is such that • E
► ach food safety officer can
units processing units each food processing unit handle 4 inspections per
can be monitored only once month of required quality
• 2,000 food safety officers
in 2 years which is much
below international norms
► Retail outlets • 7 million retail outlets • Each retail outlet can be • E
► ach food safety officer
monitored once in only 12 years. can handle 25 retail outlet
inspections per month
Sample testing in lab • 250 food testing laboratories • Each sample from retail outlets • E
► ach lab can handle 25
and food processing units can only samples per day
be monitored once in 4 years.
Source: Primary interviews and Ernst & Young analysis
Case study (Attempted optimization of Authorities are aware of the severe

existing staff from Maharashtra FDA, 1995) shortages in the number of food safety
officers and there have been attempts to
The Maharashtra Foods and Drugs department was increase the strength, but despite efforts
understaffed. There were 200 food inspectors and 140 drug
inspectors and both fell short of required numbers for the
the number of such resources continues to
state. Coverage was inadequate due to not just understaffing be inadequate.
but also because there were separate cadres of drug officers
and food officers with limited resource sharing.
In Maharashtra FDA, a drug inspector requires a basic
qualification of B.Pharm whereas a food inspector requires
any B.Sc qualification. This means that if trained on the job,
all drug inspectors could technically learn and perform the
duties of food inspectors too.
With the number of establishments under foods category

increasing, there was an effort by the department in the year
1995-96 to create a unified cadre of such Food and Drugs
Control Officer having degree in B. Pharm thereby increasing
the number of food inspectors to 340 (70 percent increase) .
However, there was resistance faced from many food and

drug Inspectors on account of organization level mapping.
As a result of this, no consensus could be evolved and the
proposal was dropped.
Source: Primary interviews

3 Prices of nutraceutical products are high, severely limiting growth in demand
Prices of nutraceutical products in the Indian market are prohibitively high when compared to the
conventional foods. In a highly price sensitive market such as India, this is a severe limitation on the
growth in demand for nutraceuticals.
Price of Percentage increase in price

Product Quantity conventional food/ for functional food functional
pharmaceutical beverages/dietary supplement
Conventional and functional foods
Salt 1 kg INR11 73% for low sodium variant
Atta 1 kg INR18 139% for nutrient fortified mix for atta
Conventional and functional beverages
Chilled beverages 330 ml INR20 350% for energy drink
Pharmaceuticals and dietary supplements
Multivitamin tablets 10 tablets INR15 233% for vitamins in the form
of dietary supplements
Source: Ernst & Young analysis
Note: Prices based on various brands available in the market

4 There is a lack of credibility of nutraceuticals in the minds of consumers
A survey of consumers in 13 Asia Pacific countries including India, showed that for most
nutraceuticals more than 30% of the respondents felt that they do not offer any additional
health benefits
Percentage of respondents who believe these products do not offer any additional health benefits
42%
Percentage of respondents
31% 32%
24%
Cholesterol Whole grain, high Fruit juices with Iodine enhanced

reducing oils fiber products added supplements/ salt
vitamins
Source: AC Nielsen Survey
This lack of belief in the benefits of nutraceuticals is further aggravated by the unsubstantiated
claims made by certain products.
This loss in credibility of nutraceuticals in the minds of consumers is the key limiting factor in
the growth of the market.

Some of the key ingredients with health claims used by Indian nutraceutical players
Over and above the micro and macro nutrient ingredients available in the market, there are host of
ingredients used by nutraceuticals companies with diverse set of heath claims providing structure
function benefits such as carotenoids, dietary fiber, fatty acids, flavonoids, isothiocyanates, phenolic
acids, plant stanols/sterols and polyols. Below mentioned are few examples of ingredients used by
Indian nutraceuticals players.
Ingredient Used by industry categories Health claim as per industry sources

Omega 3 and Omega 6 Functional foods Omega 3 and omega 6 benefit people suffering from
(Nutrition Fortified foods): inflammatory and autoimmune diseases, while also
e.g. omega fortified malted beverages reducing cholesterol, and hence, various heart risks.
Lactobacillus and bifidobacterium Functional foods (Probiotic foods): Lactobacillus and bifidobacterium improve
e.g. probiotic yogurt intestinal microflora and aid better digestive
abilities. They help in prevent diarrhea, other
gastrointestinal infections, irritable bowel syndrome,
and other inflammatory bowel disease
Beta glucan Functional foods: Beta glucan is a soluble fibre that soaks up the
e.g. oat enriched foods cholesterol in our digestive system and help Reduce
the amounts of "bad" (LDL) cholesterol in the body
Phytoestrogens Functional Beverages: Reduces the risk of many kinds of cancers,

e.g. soya milk drinks cholesterol and risk of coronary heart
disease, chances of osteoporosis.
Tocopherols Functional foods: Known for their cholesterol lowering ability. Prevent or
e.g. rice barn fortified oil delay heart disease and related complications, cataracts
and macular degeneration, prostate and other cancers.
Retard the aging process and boost immune

function and promote healing of burns,
eczema, and other skin problems.
Ginseng Dietary supplements: Believed to cure lethargy, arthritis, impotence,

e.g. Tonics and stimulants senility also effective anti-aging properties
Beta-carotene Dietary supplements: Helps prevent night blindness and other eye problems,
e.g. Beta-carotene in antioxidants skin disorders, enhance immunity, protects against
toxins and cancer formations, colds, flu, and infections.
Beta-carotene is also a powerful antioxidant and
helps guard against cancer and heart disease.
Source: Frost & Sullivan, Websites of Tata Tea, Pepsico, Godrej, Saffola

Section III
Way forward

Summary
• Agenda for government
• Lay down rules to govern quality and claims of nutraceutical products
• Take measures to ensure availability of adequate resources for implementation

of laid out rules
• Encourage R&D in the field of nutrition and deploy PPP models to serve needs
of the undernourished segment of population
• Agenda for private sector
• Product development: Develop customer focused products addressing specific

needs of different consumer segments
• Product differentiation: Differentiate products by focusing on credibility

building and/or lowering prices of products
• Product promotion: Increase awareness of the benefits of nutraceuticals

through advertizing and physician education

Impediments
Way forward
I. Agenda for government
1 Lay down rules to govern quality and claims of nutraceutical products

Regulatory
framework not A. Revise RDA levels to make them applicable for the Indian population's current lifestyle
yet implemented
B. Develop rules which specify proven nutrients, permitted health claims, product approval process,
standards and Good Manufacturing Practice
Take measures to ensure availability of adequate resources for implementation of

Inadequate 2
laid out rules
resources for
implementation
A. Recruit and train a well-staffed cadre of food safety officers
of regulations
B. Scale up food control infrastructure by outsourcing testing of food samples to private laboratories
Encourage R&D in the field of nutrition and deploy PPP models to serve needs of the
3 undernourished segment of population
A. Establish a dedicated fund focused on nutraceuticals research and support nutraceutical players by
providing them with research infrastructure
B. Deploy PPP models to cater to the needs of the undernourished section of the population
Lack of credibility II. Agenda for private sector

of nutraceuticals
Product development: Understand consumer needs and invest in research to come

1 up with products to meet those needs
2 Product differentiation: Build credibility and lower prices of products
A. Adhere to all rules laid down by the government and obtain external institutional approval to build
credibility of products
B. Reduce prices to target a larger customer base

High prices of
nutraceuticals Product promotion: Increase awareness of the benefits of nutraceuticals through
3
mass marketing, advertising and education of physicians

Agenda for Government
1 Lay down rules to govern quality and claims of nutraceutical products
In India, while the Food Safety and Standards Authority, created as per the Food Safety and Standards Act 2006 (FSSA), has plans to lay
down rules by end of 2009 based on panel recommendations, it will be enforced state by state over an extended period of time. Here, it is
of critical importance that not only are the rules made exhaustive to govern quality and claims but their implementation is also expedited.
A Revise RDA levels to make them applicable for Indian population's current lifestyle
Develop rules which specify proven nutrients, permitted health claims, product
B
approval process, and Good Manufacturing Practice
i Recognize list of nutritional ingredients with proven health benefits
ii Define the list of permitted health claims and specify quantity of ingredients required to make those claims
Setup a process for introduction of new nutraceutical products and define the nature and range of evidence required
iii to substantiate product claims
Case study of Japan:

After the introduction of FOSHU regulation in Japan, in the year 1991, the number of FOSHU approved products increased from
2 in 1993 to 192 in 2000 (CAGR of 90%). The sales of FOSHU approved products, however, increased slowly till 1996 and picked
up pace from year 1997 onwards ( CAGR of 82% till year 2000) thus indicating that with effective implementation of regulation,
market growth is not hindered in the long run but infact it grows in a compliant manner.
400 15 15
9.8 300
300
10
6.2 192
200 5 153 150
5
100 69 80
50 100 50
2
0 0
1993 1995 1997 1998 1999 2000
No. of FOSHU approved products Sales of all FOSHU approved products (USD 10 million) Sales per product (USD million)
Source: Japan health food and nutrition association

1.A. Revise RDA levels to make them applicable for Indian population's current lifestyle
India is currently using the RDA (Recommended Dietary Allowance) system with norms last defined 20 years ago (year 1989) by
ICMR (Indian council of Medical Research). These norms are outdated and do not reflect the lifestyle changes as well as the considerable
nutritional research accumulated in this period. The need for urgently revising these norms has also been identified in the 10th Five Year
Plan acknowledging that the existing RDA norms are overstating nutrition needs and should undergo revision. At the same time, countries
such as the US, Canada, Australia and New Zealand have replaced the RDA system with more advanced systems (Dietary Reference Intakes
in the US and Canada, Nutrient Reference Values in Australia and New Zealand). These advanced systems have noteworthy merits for India
to learn from but the time taken to adopt them would also be significant, and is a longer term measure that is needed.
2
Introduce a more appropriate system to plan diets for
population groups and individuals based on concepts such as
1 Dietary Reference Intake (DRI)*
Revise RDA levels to factor in
effects of changed lifestyles and
new research in the field of nutrition • RDA is an "average level" of nutrient intake which
prevents the development of deficiency disorder.
They are meant to assess and plan dietary adequacy
Revision of RDA levels should be
of population groups. But they end up being used to
taken up as an immediate activity:
plan diets of individuals which can be misleading.
• As per the 10th Five Year Plan, the
• There are advanced concepts such as the Dietary
reference (male and female) weights used
Reference Intake (DRI) framework which are used in some
to calculate RDA in 1989 for Indians were
developed countries. DRI provides the nutrient norms that
not accurate. They were higher than the
Need helps prevent the development of risk factors for chronic
average weight of Indian men and women
diseases related to inadequate intake for that nutrient.
• Also, since then the trends of physical
• DRI norm is an umbrella which includes RDA level,
activity and dietary habits of Indians
Tolerable Upper Intake level, Adequate intake
has changed considerably
level and Estimated Average Requirement level.
• Considerable nutritional research Each one of these levels have specific application
has also accumulated in the last 20 when it comes to establishing the recommended
years which would change some base intake at an individual or group level.
assumptions of calculating RDA
Comparison of RDA and DRI levels in USA for

Energy requirements for average Indian male
some nutrients shows considerable changes in
is nearly 13% lower across activity categories
recommended levels of nutrients between 1989
compared recommended levels as per RDA of 1989
and 1997
Energy requirements of average Indian male Vitamin A levels for women Folate levels for women
19 to 50 years 19 to 50 years
Case 13% 12.5% 122%

13% 13% 3000
1000
3800
3293
2425 2115 2875 2492
800 700 400
180
Sedentary Moderate Heavy 1989 RDA 1997 DRI 1989 RDA 1997 DRI
Activity category
Recommended as per 1989 RDA Recommended Dietary Allowance (RDA)
Requirements as per average Indian male weight Tolerable Upper Intake Level (UL)
Source: 10 Five Year Plan, planning commission

th
Source: US Department of Agriculture, food and nutrition information center

Develop rules which specify proven nutrients, permitted health claims, product approval
1.B.
process, standards and Good Manufacturing Practice
Rules with regards to proven nutrients, permitted health claims, product approvals, standards and GMP need to be defined exhaustively.
ii Define the list of permitted health claims and specify quantity of ingredients required to make those claims
Setup a process for introduction of new nutraceutical products and define the nature and range of evidence required
iii
to substantiate product claims
Scientific panels have been set-up within the FSSA for defining rules to govern nutraceuticals market &
label claims. Apart from Codex guidelines some of the practices that can be referred to while framing
these rules are illustrated in the table below:
Summary of international practices
USA Japan Canada India

Regulation governing nutraceuticals
What are the regulations Dietary Supplement Foods for Special Health Natural Health Food Safety & Standards Act
governing nutraceuticals Health and Education Use (FOSHU) Act; Foods Products Regulation
across countries? Act (DSHEA) with Nutrient Function
Claims (FNFC) Act
Key clauses for maintaining quality standards

Is a defined list of proven    To be decided
nutraceutical ingredients and Rules of the act not laid down
their functions available? yet, hence no list currently
available
Can a new product having   To be decided
ingredients which are already Regulations which specify the
(Each new product needs (Each new product
marketed be launched approval process have not been
FOSHU approval) needs approval and
without approval/license? framed yet
product license)
Can a new product having  To be decided
a "new dietary ingredient" Regulations which specify the
(Pre-marketing (Each new product needs (Each new product
not previously marketed approval process have not been
notification along with FOSHU approval) needs approval and
be launched without framed yet
evidence of safety has product license)
approval/license?
to be submitted)
Is Good Manufacturing To be decided
Practices (GMP) in place Rules specifying GMP/standards
for manufacturing of would be part of the rules of the
nutraceuticals? act when they are laid down
Management of claims on label
Is a claim specifying To be decided
the beneficial effect on The act only specifies that
(Permitted without (The claim and the (The claim and the
structure or function of claims should not be false or
validation but with supporting evidence is supporting evidence is
the body permitted? misleading. Rules to govern
a disclaimer) tested and validated in tested and validated in
claims are yet to be laid down.
the approval process) the approval process)
Is a risk reduction To be decided
claim pertaining to The act only specifies that
(Only for a pre-defined (The claim and the (The claim and the
any specific disease or claims should not be false or
list of nutrients with supporting evidence is supporting evidence is
condition permitted? misleading. Rules to govern
proven results) tested and validated in tested and validated in
claims are yet to be laid down.
the approval process) the approval process)
Enforcement and monitoring of regulations
Is monitoring done To be decided Act has not been
through inspections implemented yet.
(Exception based (Exception based
and random sampling of
monitoring through monitoring through
products in market?
sample testing) sample testing)
Is a record of adverse events To be decided
required to be maintained? Rules yet to be laid down in the
(Mandatory. Alerts (Mandatory. Alerts
act with regards to manufacturer
issued to consumers issued to consumers
maintaining a record of all
based on no. of adverse based on no. of adverse
adverse events
events reported) events reported)
Source: US Food & Drug Administration website; "Health Claim Evidence Requirements in Japan,(Yamada et al); Health Canada – Natural Health Products Directorate
website; Food Safety and Standards Act of India, 2006

• B
► ased on overall health and nutrition status of the country, key risk factors to health need to be identified.
• N
► utrients or functional ingredients which have science based evidence of reducing these risks should be identified and
included in the list of recognized ingredients for nutraceuticals.
• T
► his list can be expanded as products with new ingredients get approval after scientific evaluation.
Approved functional ingredients differ by country
Functional food category Approved functional ingredients*

Japan Brazil
Foods for gastrointestinal health (Dietary fiber, lactulose, fructo-
(Oligosaccharides, Lactobacillus, oligosaccharides, inulin)
Bifidobacterium, Psyllium husk, indigestible
dextrin, wheat bran, low molecular sodium,
alginate, partially hydrolyzed guar gum)
Foods for those with high blood pressure
(GABA, peptides)
Foods for those with high blood glucose
(Indigestible dextrin, L-arabinose,
wheat albumin)
Foods for dental health
(Xylitol polyols, tea polyphenols, CPP-ACP)
Foods for bone health
(Soy Isoflavone)
Foods for those prone to anemia
(Heme iron)
Foods for people with high cholesterol/
triglyceride levels and body fat (Soy protein, chitosan, low (Beta-glucan, Psyllium, Quitosan, plant
molecular sodium alginate, peptides, sterols, soy protein, Omega-3)
diacylclycerol, plant sterol/ stanol
(esters), green tea catechin, middle
chain fatty acid, degradation products
of globin protein, Psyllium husk)
Foods for people with high cholesterol/
triglyceride levels and body fat (Lutein, lycopene)
Source: The World Bank - Agricultural and Rural Development Discussion Paper 30 – "Health Enhancing Foods"

Define the list of permitted health claims and specify dosages of ingredients required to
ii
make those claims
• T
he scientific panel on management of claims within the FSSA needs to frame a policy on the nature of claims that would
be acceptable
• The level of regulatory control needs to be in line with the nature of claim – while a low level of control is sufficient for
nutrition content claims, a high level of control is required for risk reduction claims ( types of claims and their definitions
are provided below)
• For nutrition content claims and health claims, rules could specify the ingredient content limits. Further, for health claims a
list of acceptable claims needs to be identified based on scientific evidence
Claims made on the labels of nutraceutical products are generally classified into three types and the level of regulatory
control exercised on each type could vary as shown:
Nutrition claims Health claims
1 Nutrition content claims 2 Structure/function claims 3 Risk reduction claims

Types
• Nutrition claims state, • S
tructure-function claims • R
► isk reduction claims
suggest or imply that describe describe the relationship
a food has particular between using a
• A
nutritional ingredient’s
nutritional properties. medicinal ingredient
effect on a structure or
and reducing the risk
• F
oods which claim to be physiological function in
Definition of developing a specific
sources of the human body, or
disease or abnormal
• Energy • Its support of physiological state
an anatomical,
• Protein
physiological, or mental
• Carbohydrates function
• Vitamins • N
on-specific claims of overall
health are also included
• Minerals
• Source of calcium • "► Maintains healthy gums" • "Reduces risk of

Examples heart disease"
• High in fiber and low in fat • " ► A factor in the
maintenance of good • "Lowers blood cholesterol"
health"
Level of
Low Medium High
regulatory
control
• N
► o pre-approval of FDA • N
► o pre-approval is required • C
► laim has to be for one of
required is required the ingredients in the pre-
• P
► re-launch notification
approved list of proven and
• N
► o evidence is required to to FDA is required along
qualified health claims
Case (US be submitted with evidence of claim
FDA claim • T
► he quantities of nutrients
• N
► utrients and quantities are • A
► long with the claim a
regulations*) required for the claim
required to be mentioned disclaimer is required on
to be made are also
on label label mentioning that the
required to be specified
claim is not FDA approved
Source: Codex guidelines for use of nutritional and health claims; US FDA website

iii Setup regulatory process for introduction of new nutraceutical products
• T
he process for introducing a new nutraceutical whether approval based or notification based should be clearly specified as
part of the rules and regulations of FSSA.
• For an approval based system, the authorities responsible for processing the application and granting approval should be
identified and trained for standardization in implementation.
• For a notification based system, a channel should be set-up to hear, record and process consumer grievances or adverse
event reports
• In the Indian context, opting for an approval based process may lead to a regulatory bottleneck and delays. On the other
hand, a large proportion of the Indian consumers may not have adequate awareness or education levels because of which a
notification based process might lead to compromising consumer safety. Hence a hybrid of the two processes needs to be
conceived and implemented
• The nature and range of evidence required to substantiate a particular health claim needs to be defined clearly.
Process for introduction of a new nutraceutical product
Level of Approval/license based Notification based

regulatory
control High Low
• Manufacturer applies for approval to the • F

or a new product with ingredients which are
recognized authority (local governments, FDA) already marketed, no approval is required.
Manufacturer notifies the FDA prior to launch.
• The application by manufacturer includes the
evidence to substantiate product claims • I f there is a health claim associated with the
Key product, then the notification includes evidence
• The responsibility to ensure the safety and
to substantiate claims
features efficacy of the nutraceutical product in the
market lies with the authority granting approval • T
he responsibility to ensure safety and efficacy
of the nutraceutical product lies with the
manufacturer
• C
► onsumer safety can be ensured and misleading • R
► educed burden on the FDA with lesser
claims can be barred centrally resources needed to control the market (labs
& inspectors)
• R
► educed effort on monitoring, through sampling
Advantages and testing of products from the market • L
► esser time to market for new products
• R
► educed reliance on consumer reporting of • R
► educed scope for corruption which might be
adverse events prevalent in strictly controlled environment
where licenses are granted
Japan*: USA:
• A
► ll new products have to get approval to be sold • P
► roducts with ingredients which have already
as a FOSHU product been marketed do not need approval. A
notification has to be given with evidence to
• T
► he application for a product is required to
support health claims
include documentation regarding:
• F
► or new ingredients, the pre-marketing
Cases • I► ts effectiveness based on scientific evidence
notification has to be 75 days prior to launch
including clinical studies
in which period the FDA can analyze evidence
• I ► ts safety based on historical consumption and raise concerns with the manufacturer
pattern
• T
► he manufacturer is required to maintain
• A
► nalytical method for determination of the a record of all adverse events reported by
functional component consumers. Monitoring Monitoring is done
based on exceptions
• S
► amples of the product are also tested in a
public food laboratory before approval is granted
Source: Health Claim Evidence Requirements in Japan,(Yamada et al); US FDA website


2. Take measures to ensure availability of adequate resources for implementation and
enforcement of regulations
Current challenges What needs to be done?
Formalize mechanism to capture data on exact numbers
• Sharing of data on infrastructure and its electronic storage is critical to

manage and track the inspection of all food processing units, retail outlets,
stockists by food safety officers. Coordination and implementation across
Insufficient strength of Food key stakeholders across public bodies such as local governments and state
level FDAs is required and periodic status reports need to be made possible
Safety Officers (FSO) to inspect
and evaluate food processing
units, stockists and retailers
Evaluate gaps in number of food safety officers and recruit to fill those gaps
• State Food and Drug Administrations need to assess gap in required

and available food safety officers and recruit to scale up and meet the
required number
Authorize an external agency to evaluate and grant approval to products
• An external agency could be appointed to evaluate nutraceutical products

for safety and efficacy based on the standards and GMP framed as a part of
regulations
• Approvals by this agency would be in the form of a mark on the product which
Inspection of nutraceutical products would help build credibility for tested and proven products
would require more specialized
knowledge and processes
Train Food Safety Officers to improve quality of inspection of facilities
• Food safety officers should be trained in a phase-wise manner to inspect

facilities for manufacture, packaging, distribution and sale of nutraceuticals
Develop a network of central food testing laboratories
• Infrastructure needs be scaled up to have at least one central laboratory in

each state as role model
Insufficient facilities for testing and
analysis of food samples • All central laboratories need to to follow Good Laboratory Practices or get
accreditation
• Approximately 250 laboratories
• The quality of equipment and

analysis of these laboratories needs Appoint private laboratories and outsource testing of food samples
to be appropriately upgraded • Evaluate competence of private laboratories
• Authorize competent laboratories to conduct tests on food samples for FDA
Source: Primary interviews; Ministry of Food Processing industries website; Industry sources

Encourage R&D in nutritional food sector and deploy PPP models to serve needs of the
3.
undernourished segment of population
Current challenges What needs to be done?
Establish a dedicated fund for nutraceuticals research
• Encourage research in the field of nutraceuticals by funding relevant research

and development in nutraceuticals
Provide R&D infrastructure support to nutraceutical players for conducting

research
• Allow use of public research facilities and food laboratories to nutraceutical

Lack of investment and focus on
companies to give an impetus to R&D
research & development in the
Collaboration between industry and academia
• Encourage collaborations between education and research institutions and the

industry so that there is a vigorous exchange of ideas.
• Set up a central nutraceutical technology and research center. This center can
be a forum where eminent people from R&D institutions, medical institutions,
nutraceutical manufacturers, regulators, researchers can interact and exchange
ideas to fuel growth of the industry
Public-private partnerships
• Deploy PPP models in the government schemes to supply food to the

Imbalance of nutritional undernourished segment of the population
ingredients in the food provided
to the undernourished through • The private partner could provide fortification of the food so that required
government schemes nutrients are delivered. They can also provide surveillance and logistics
management services to ensure the responsible supply of unadulterated
micronutrients.
It is a part of the government agenda to meet nutritional deficiencies in the undernourished segment
of the Indian population
Major goals of "National Nutrition Plan" to be met by 2012
• R
► educe the prevalence of underweight condition in children under five years to 20%
• Eradicate the prevalence of severe under-nutrition in children under five years
• R
educe prevalence of anaemia in high risk groups (infants, pre-school children, adolescent girls, pregnant and lactating
women) to 25 %
• Eliminate vitamin A deficiency in children under five years as a public health problem and reduce sub-clinical deficiency of
vitamin A in children by 50 %
• Reduce prevalence of Iodine deficiency disorders to less than 5 %
Source: 11th Five Year Plan, Working group on integrating nutrition with health

These goals are to be achieved through multiple health and nutrition interventions planned by
the government
Some nutrition interventions undertaken by different sectors of the government
• I► ntegrated Child Development Scheme (ICDS)
• N
► utrition Program for Adolescent Girls (NPAG)
• I► ron and Folic Acid supplementation of pregnant women
• V
► itamin A supplementation of children of 9 to 36 months age group
• N
► ational Iodine Deficiency Disorders Control Programme
• M
► id day meal for primary school children
Source: 11th Five Year Plan, Working group on integrating nutrition with health
However there are gaps in the implementation of these existing nutrition interventions which can
be filled by ensuring participation of the private sector through Public Private Partnerships
Some Issues Role of private sector
Inadequate intake of micro- Partner with the government in supplementation and fortification of the food dispensed
nutrients by the beneficiaries through government initiatives
of government schemes
Inadequate supplies Provide surveillance and logistics management services to ensure the responsible supply of
reaching the point where unadulterated micronutrients
food is dispensed
Source: India Micronutrient National Investment Plan 2007-2011 , Micronutrient India ; Network for Social Accountability website ; Ernst & Young analysis
Case study 1 – PPP to provide supplementary nutrition

• Britannia "Tiger" biscuits, fortified with iron were distributed to school children as a part of the Mid Day Meal program in 2007
• The biscuits were given in addition to the rice based meals. This provided the children with 10% of the daily RDA of iron.
• The Naandi foundation which partnered with Britannia in this particular project in Andhra Pradesh hopes to extend this program to
other parts of the country.
Source: Naandi foundation website
Case study 2 – PPP to fortify food provided as a part of government schemes

• H
einz partnered with ICDS (Integrated Child Development Scheme) and an NGO to provide micronutrients to children in a three month
Public Private Partnership project in 2007.
• A
s a part of this initiative, more than 17,000 children between 6 months and 6 years of age were given "sprinkles plus" a
micronutrient powder mixed in their food.
• T
► he successful implementation of this project demonstrated that anemia can be reduced if such initiatives are implemented at pre-
school level in the "anganwadis" of the ICDS.
• H
► einz is working on a scale up project to reach several million at risk children with "sprinkles plus"
Source: Heinz website
Agenda for private sector
Agenda for private players in the nutraceuticals market
1
development
Develop consumer focused products

Product
and product variants for different target segments
2
A. Build credibility B. Lower prices
Ensure publication of efficacy studies and Improve processes/technology to

differentiation
research results in scientific/medical journals reduce cost of production

Product
Obtain approval of reputed Lower pricing of products to target a

external institutions larger consumer base
Educate physicians Formulate health claims Use general media

about published as per published research to communicate
research on nutrition and approvals benefits & differentiation
promotion
Product
Physician awareness Public awareness
Health

1. Product development: develop consumer focused products for different target segments
Develop consumer focused • Understand nutrition needs of different segments of consumers

products for different • Develop relevant nutraceutical products targeted at different consumer segments
target segments with regard to their preferences and taste
Enable easier diagnosis • Considering a large proportion of the population is not aware of their specific
nutritional deficiencies, there is also a potential market for a nutrient deficiency
of nutrient deficiency
diagnostic test/kit
Leverage traditional Indian

knowledge in herbs and
• C
► onvert the nutritional properties of herbs and botanicals as per knowledge
botanicals to develop new derived from traditional Indian sources into products for consumer
nutraceuticals
Case study 1 – Identifying customer needs and positioning products to meet these needs
• C
► alcium Sandoz switched to the OTC route from the ethical pharmaceutical route in 2000
• S
► ince then, Novartis has continuously identified needs of different target segments of consumers and positioned variants for
each segment.
Consistent growth in sales (INR million) of the Calcium Sandoz brand

after introduction of multiple variants to cater to specific user needs
320
CAGR 15%
Launch of Launch of ‘Calcium Launch of ‘Calcium

120 ‘Calcium Sandoz Sandoz Woman’ Sandoz Soft Chew’
Growth’ specifically for older woman in various flavors
for children targeted at children
in their semi-teens
2001 2002 2003 2004 2005 2006 2007 2008

Source: Novartis India website; Industry sources
Case study 2 – Collaboration with the government to innovate nutraceuticals from traditional
medicine knowledge
Avesthagen and Indian Council of Medical Research (ICMR)
• A
► memorandum of understanding was signed between Avesthagen Limited, a knowledge based Lifesciences Company and
the Indian Council of Medical Research (ICMR) for the formulation, coordination and promotion of biomedical research for
three years.
• A
► s per the agreement both the parties will be exploring possibilities to innovate nutraceutical development from traditional
and folk medicine by knowledge sharing. The agreement will open new avenues for research on traditional Indian medicinal
plants and their nutritional properties.
Source: Express Pharma, 1–15 September 2008

2. Product differentiation: build credibility and lower prices of products
In the absence of intellectual property protection, product differentiation in case of nutraceutical products can be achieved either through
building credibility of the brand/company or through prices lower than existing players in the market
Way forward
• Adhere to all rules and regulations laid down to govern manufacture, distribution
and sale of nutraceutical products
• F
ollow standards, GMP, claim regulations and approval process for nutraceutical
products
Build credibility of the
brand/company • Get results of efficacy studies published in medical journals as proof of
efficacy and safety of the product
• Obtain approval of reputed and trustworthy external institutions for the

product and its claim
• Lower prices of nutraceutical products to target a larger consumer base instead of

Lower prices of a niche segment
nutraceutical products
• Focus on cost reduction in manufacturing to help improve affordability of products
Case study 1 – Reputed external institution in USA granting approvals to nutraceutical products
• The USP (US Pharmacopeia) Dietary Supplement Verification Program in USA is a voluntary testing and auditing program.
• T
► his program validates the quality, purity, and potency of dietary supplement finished products through:
• Comprehensive laboratory testing against standards
• A thorough manufacturing and quality control document review
• An on-site manufacturing facility audit
• Random off-the-shelf testing
• U
SP's expertise in setting standards of quality for medications for 200 years helps in lending credibility to products which carry
its approval
Source: US Pharmacopeia Dietary Supplement Verification Program website
Case study 2 – Efficacy studies for a product published and external institutional approval taken
• A
chilled fruit juice product "Sirco" from Provexis launched in the UK contains the patented Fruitflow bioactive food ingredient that
reduces blood platelet aggregation, a significant contributing factor to thrombosis, which can cause heart attack or stroke.
• I n May 2006, Provexis, announced a scientific endorsement for Sirco; two scientific papers, which detailed the clinical efficacy of Sirco,
were published by the American Journal of Clinical Nutrition (AJCN), an internationally recognized journal in the nutrition field.
• T
► his followed the 2005 announcement of a three year collaboration with registered heart health charity, Heart UK, which allowed
Provexis formal approval for its Sirco product, allowing Sirco to wear the Heart UK logo on its packaging.
• S
uch endorsements on the packaging of the product from renowned institutions offer credibility to claims that the product is good for
the heart.
Source: "Functional Food and Drink Consumption Trends"-Datamonitor
3. Product promotion: increase awareness of the benefits of nutraceuticals through mass
marketing, advertising and education of physicians
Increase physician awareness • G

► et the relevant research published in research and medical journals so that it
reaches the physicians as a part of their CME(Continuous Medical Education)
• T
► here is a need to educate the consumers about the relation between a healthy
life and a diet rich in nutrition
• B
► ased on the profile of customers identify various media channels of
Increase public awareness communication such as TV, newspapers, magazines, direct selling etc.
• C
► reate the right content for communication which addresses customer needs or
creates awareness to activate latent needs
• S
► election of the right strategy need not be cost/investment heavy
Case — "Revital" is Ranbaxy’s adult health supplement which transitioned from prescription to OTC
in 2002.
• R
► anbaxy used a well thought out television creative
Increase in sales of Ranbaxy’s ‘Revital’
to target the consumer directly through advertizing.
after switching to OTC channels
"Revital" was positioned to fit into the users hectic
83 lifestyle empowering them with energy strength & mental
CAGR 20%
sharpness, enabling them to enjoy life to the fullest,
hence making them live the brand punch line of “Jiyo Jee
Bhar Ke”
40
• T
► he advertising was spread over three phases:
• I ► n the first phase the commercials sought to

demonstrate the pre-use scenario and post-use
benefits.
2002 2007
• T
► he second phase showed how a consumer of
Source: ‘Revital’izing the brand, Express Pharma 31 march 2006; Industry sources "Revital" was able to make the most of his life which
his colleagues and friends are unable to do.
• T
► he third phase is in the form of testimonials by
regular users of "Revital"
Annexure
Annexure 1: Estimation of potential market
Market size estimation for foundation needs: Target market of people belonging to segments with
affordability and consuming at least sufficient calories but needing products to maintain and promote
a normal, healthy life
No. of consumers Percentage population Amount willing to

Parameter belonging to segments willing to buy spend on products that
with affordability* nutraceuticals for their meet foundation needs
general well-being
• P
► opulation belonging to top 3 • T
► he population consuming at • A
► mount willing to spend on such
MPCE classes in urban areas least sufficient food (>90% of products would be in proportion
and topmost MPCE class in norm of 2700 kcal/day), would to spend on food categories like
Assumption rural areas have the propensity to further processed food and beverages
buy nutraceuticals to maintain
• T
► he number of actual • T
► his spend would increase with
their general well-being.
consumers will vary with increasing MPCE and would
each scenario with growing • T
► he proportion of such vary with each scenario
awareness population would vary with
MPCE class
Source NSSO 2006-07 NSSO 2004-05 NSSO 2006-07, Ernst & Young analysis
Potential market for foundation needs – (INR billion)
Scenario 1 Scenario 2 Scenario 3

38.0 60.8 71.4

Market size estimation for condition-specific needs (1/4): Target market of adults (>20 years)
likely to face vitamin and mineral deficiency disorders due to significantly lower than recommended
fruit & vegetable consumption
No. of consumers
Percentage
belonging to Vitamin Price
Percentage adults
segments with intake gap per unit
Parameter adults >20 consuming
affordability per adult vitamin
years vitamins less
per day gap
than RDA
• P
► opulation • T
► he overall age- • A
► ssuming that • T
► he gap is arrived • R
► epresentative
belonging to top wise break-up the households at for the most price of the most
3 MPCE classes of population in which fruit extensively commonly used
Assumption in urban areas for urban and and vegetable tracked vitamins multivitamin
and topmost rural areas was consumption is supplement is
• T
► he extent of this
MPCE class in equated to the less than average considered
gap varies with
rural areas respective MPCE (which is still
MPCE classes
classes lower than ICMR
norms), will be • F
► urther, the
facing deficiencies tendency
in vitamins to address
this gap with
• ► The proportion of
nutraceuticals
such households
will vary with
would vary with
each scenario
each MPCE class
Source NSSO 2006-07 NSSO 2004-05 NSSO 2004-05 NNMB 2007 Ernst & Young
analysis
Note: Prices based

on various brands
available in market
Potential market for vitamins for adults (INR billion)

4.1 6.2 8.2

Market size estimation for condition-specific needs (2/4): Target market of pregnant and lactating
women with an increased requirement for nutrient intake like proteins, iron
No. of women Percentage Nutrient

consumers belonging pregnant and intake gap Price
Parameter to segments with lactating women per pregnant per unit
affordability in the age group woman per day nutrient
of 15-49 years
• W
► omen belonging to • T
he overall • The gap is arrived • R
epresentative
top 3 MPCE classes proportion of at for the key price of the most
in urban areas and women in the age representative nutrients commonly used
Assumption topmost MPCE class 15-49 years for proteins and iron protein and iron
in rural areas urban and rural supplements is
• T
he extent of this
areas was assumed considered
gap varies with
to be applicable
MPCE classes
for the respective
MPCE classes • F
urther, the tendency
to address this gap with
• B
► ased on the birth
nutraceuticals will vary
rate figures, number
with each scenario
of pregnant and
lactating women
were arrived at
Source NSSO 2006-07 NSSO 2004-05 NNMB 2007 Ernst & Young analysis
Note: Prices based on various

brands available in market
Potential market for nutrients for pregnant and lactating women (INR billion)

20.1 30.2 40.3

Market size estimation for condition-specific needs (3/4): Target market of other women in the age
group of 15-49 years suffering from any form of anemiao
No. of women Percentage Iron

Percentage
consumers non-pregnant, intake gap Price
women
belonging to non-lactating (mg) per per mg
Parameter consuming
segments with women in the woman of iron
iron less
affordability age group of per day
than RDA
15-49 years
• Women belonging to • The overall • Women suffering • The extent of this • Representative
top 3 MPCE classes proportion of from any form gap varies with price of
in urban areas and women in the of anemia and MPCE classes the most
Assumption topmost MPCE age 15-49 years belonging to this commonly
• F
► urther, the
class in rural areas for urban and age group would used iron
tendency
rural areas was have maximum supplements
to address
assumed to be impact due to loss is considered
this gap with
applicable for of iron through
nutraceuticals
the respective blood during
will vary with
MPCE classes menstruation
each scenario
• The number of • Proportion of
pregnant and such women
lactating women belonging to
is subtracted from the high income
the total figure groups was
considered
Source NSSO 2006-07 NSSO 2004-05 NFHS 3, 2005-06 NNMB 2007 Ernst & Young
analysis
Note: Prices based

on various brands
available in market
Potential market for iron for other women (INR billion)

18.9 28.3 37.8

Market size estimation for condition-specific needs (4/4): Target market of children aged between
4 to 17 years and consuming less than RDA proteins needed for growth
Percentage Percentage Protein

No. of persons Price per
children children intake
belonging to gm of
Parameter in the age consuming gap (gms)
segments with protein
group of protein less per child
affordability
4-17 years than RDA per day
• Population • The overall • Households in which • The extent of this • Representative

belonging to proportion overall protein gap varies with price of the
top 3 MPCE of children in consumption is less MPCE classes most commonly
Assumption classes in this age group than RDA limits, used protein
• Further, the
urban areas in urban and were considered supplements
tendency
and topmost rural areas was is considered
• T
he proportion of to address
MPCE class in assumed to be
such households this gap with
rural areas applicable for
would vary with nutraceuticals
the respective
each MPCE class will vary with
MPCE classes
each scenario
Source NSSO 2006-07 NSSO 2004-05 NSSO 2004-05, Ernst NNMB 2007 Ernst & Young
& Young analysis analysis
Note: Prices based

on various brands
available in market
Potential market for proteins for children (INR billion)

6.6 9.9 13.2
Potential market for condition-specific needs (INR billion)

49.7 74.6 99.5

Market size estimation for enhancement needs: Target market of people going to the gym and
engaged in moderate to heavy work-out routines, who have an enhanced need for nutrient intake
Additional
Percentage protein intake Price per
Parameter No. of gym goers needing enhanced needed gm of
protein nutritions (gm/day) protein
• B
► ased on annual • Typically a • Protein requirement • Representative
size of gym market proportion of these of such people price of the most
and average gym goers who is usually 20% commonly used whey
subscription per user are engaged in higher than RDA protein supplement
Assumption moderate to heavy for an average
work-out would be sedentary male
needing enhanced
• H
owever, the
protein nutrition
tendency to address
this additional
requirement with
nutraceuticals
will vary with
each scenario
Ernst & Young - FICCI Primary interviews, Ernst & Young analysis
Source Wellness report, 2009 NNMB 2007, Ernst &
Note: Prices based on
Young research
various brands available in
market
Potential market for enhancement needs (INR billion)

1.2 1.4 1.5

Annexure-2
An understanding of Dietary Reference Intakes (DRI)
Reference values known in the United States as Recommended Dietary Allowances (RDAs) and
in Canada as Recommended Nutrient Intakes (RNIs) were used through the 1990s. They were
established primarily to set nutrition and health policy.
In 1994, in response to significant changes in the nutrition field as well as the recognition that for many nutrients
Need the single RDA values did not meet the expanding needs for nutrient reference values, the IOM began an initiative to
develop a new, broader set of values known as the DRIs. The U.S. and Canadian governments supported this initiative
In 1997, the first DRI report was released. In the subsequent years, RDA/AI levels for other nutrients
were described
Dietary Reference Intakes Definitions
Estimated Average Requirement (EAR): Reflects the estimated median requirement and is particularly
appropriate for applications related to planning and assessing intakes for groups of persons.
Recommended Dietary Allowance (RDA): Derived from the EAR and covers the requirements for 97% of
DRIs the population.
Tolerable Upper Intake Level (UL): Highest average intake that is likely to pose no risk.
Adequate Intake (AI): Used when an EAR/RDA cannot be developed; average intake level based on observed
or experimental intakes.
DRI has significant advantages over older RDAs. The new DRIs
Include upper levels of intake, where appropriate. Upper levels were not defined in the older RDAs prior
1 to 1997. This provided a safe upper limit for nutrient intake.
Specifically highlight concepts of probability and risk for defining reference values. The EARs use the
median values to calculate the RDA levels taking into account the distribution of dietary requirements
Advantages 2 for each nutrient (where possible). This accurate calculation of the DRIs was useful in their application to
determine adequacy of diet at an individual level. The older RDAs used the average values determined
from a group of the population and extrapolated to determine RDA levels...
Incorporate chronic disease endpoints within the array of endpoints that may serve to establish
3 adequate intake or upper intake levels where possible. The older RDAs used appearance of signs or
symptoms of deficiency disorders as endpoints
Source: Dietary reference intakes for calcium, phosphorus, magnesium, vitamin D, and fluoride/Standing Committee on the Scientific, Evaluation of Dietary Reference Intakes,
Food and Nutrition Board, Institute of Medicine.USA; The Development of DRIs 1994-2004: Lessons Learned and New Challenges: Workshop Summary- Food and Nutrition
Board, Institute of Medicine, National Academy of Sciences, USA

Annexure-3
Case studies: Approved functions and functional ingredients
Japan:
In the mid 1980s Japan was faced with a crisis having an ageing population with its increasing health problems and the expected
increases in health care costs as a result. This pushed government-initiated research to investigate, in-depth, the role foods can play in
reversing and preventing the prevalent chronic health conditions. "Foods for Special Health Use" (FOSHU) regulations were framed and
implemented by the Ministry of Health, Labor and Welfare (MHLW) in 1991, which recognized various health conditions for which a list of
preventive foods was made.
FOSHU functions and functional food components

FOSHU function Approved products (number) Main functional ingredients
Foods for gastrointestinal health 254 Oligosaccharides, Lactobacillus, Bifidobacterium, Psyllium
husk, indigestible dextrin, wheat bran, low molecular
sodium, alginate, partially hydrolyzed guar gum
Foods for people with high cholesterol/ 117 Soy protein, chitosan, low molecular sodium alginate,
triglyceride level and body fat peptides, diacylclycerol, plant sterol/stanol (esters),
green tea catechin, middle chain fatty acid, degradation
products of globin protein, Psyllium husk
Foods for those with high blood glucose 71 indigestible dextrin, L-arabinose, wheat albumin
Foods for those with high blood pressure 64 G A B A, peptides
Foods for dental health 34 Xylitol, polyols, tea polyphenols, CPP-ACP
Foods for bone health 26 Soy isoflavone
Foods for those prone to anemia 3 Heme iron
Source: The World Bank - Agricultural and Rural Development Discussion Paper 30 – "Health Enhancing Foods"; "Health Claim Evidence Requirements in Japan", Yamada et al
In April 2001, a new category was introduced by MHLW "Foods with Nutrition Function Claims" (FNFC)
under which 12 vitamins including vitamin A; thiamin; riboflavin; vitamins B-6, B-12, C, E, D; biotin,
pantothenic acid, folic acid, niacin as well as minerals calcium, iron, zinc, magnesium and copper have
been standardized
Brazil:
Functional food regulations were introduced in Brazil in 1999, and since then over 200 products have been approved with 14 different
functional property claims.
Food Components and related approved functions

Approved functions Functional ingredients
Foods for maintenance of healthy blood triglyceride levels Omega 3
Foods for protection against cellular damage from free radicals Lutein, Lycopene
Foods for intestinal function Dietary fiber, Lactulose
Foods for balanced intestinal flore Fructo-oligosaccharides, inulin,
Foods to reduce absorption of fats/ cholesterol Beta-glucan, Psyllium, Quitosan, Plant sterols
Foods for reduction of cholesterol Soy protein
Source: The World Bank - Agricultural and Rural Development Discussion Paper 30 – "Health Enhancing Foods"

Annexure-4
Case study: Regulations governing nutrition and health claims
USA:
Claims on nutraceutical product labels are governed by DSHEA and NLEA in the USA
Nutrition • N
► o pre-approval required
content
• G
► uidelines provided for content level and evidence required
claims
• N
► o pre-approval required
Structure/
• P
► re-marketing notification to the FDA 30 days prior to marketing the product
function
claims • M
► anufacturer responsible for having sufficient evidence to back-up the claims made
• D
► isclaimer on the label stating that the claim is "not approved by FDA" and "the
product does not prevent, cure, treat any specific disease or condition"
Risk • P
► re-approved list of permitted risk reduction claims for certain ingredients is available
reduction • I► f the product contains one of these ingredients in specified quantities, the related claim can be made
claims
Pre-approved list of permitted risk reduction claims:
• C
► alcium and Osteoporosis
• D
► ietary Lipids (Fat) and Cancer
• D
► ietary Saturated Fat and Cholesterol and Risk of Coronary Heart Disease
• D
► ietary Non-cariogenic Carbohydrate Sweeteners and Dental Caries
• F
► iber-containing Grain Products, Fruits and Vegetables and Cancer
• F
► olic Acid and Neural Tube Defects
• F
► ruits and Vegetables and Cancer
• F
► ruits, Vegetables and Grain Products that contain Fiber, particularly Soluble
• F
► iber, and Risk of Coronary Heart Disease
• S
► odium and Hypertension
• S
► oluble Fiber from Certain Foods and Risk of Coronary Heart Disease
• S
► oy Protein and Risk of Coronary Heart Disease
• S
► tanols and/or Sterols and Risk of Coronary Heart Disease
Source: US Food & Drug Administration website

Annexure-5
Case studies: Regulatory process for launch of a new nutraceutical product
Japan:
As per FOSHU, all manufacturers that seek approval for their products need to go through the approval process before they can market
their product.
Process of FOSHU approval

• M
► anufacturer submits application to the Office of Health Policy on
Newly Developed Foods (The Office) under the MHLW
Manufacturer
• ► The application for a product should include documentation
5. Grant of
regarding: approval 3. Submit
samples &
• I ► ts effectiveness based on scientific evidence including 1. Submit 4. Submit
application analysis get analysis
clinical studies
• I► ts safety based on historical consumption pattern

Ministry of Health, National Inst.for
• A
► nalytical method for determination of the functional component Labor & Welfare health & nutrition
2. Consultation &
recommendation
• E
► xpert committees evaluate the application for efficacy Council of pharma affairs Food safety
& food sanitation commission
• O
► pinions of the Food Safety Commission is taken to
evaluate safety
Source: ‘Health Claim Evidence Requirements in Japan,(Yamada et al)
• I► f application is appropriate, the MHLW notifies the manufacturer

to send samples for testing to the National Institution of Health
and Nutrition
• A
► fter validation and testing of samples is done, the product is
granted FOSHU approval

Acknowledgements
Ajit Singh Priya Parab
President Proprietor
Health Foods and Dietary Supplements Association Vihaan Naturals
Anil Bhanudas Sawant Dr. R.B.Smarta

Manager-Marketing Managing Director
Ayuherb Healthcare Interlink Marketing Consultancy Pvt. Ltd.
Arun Kelkar R. D.Joshi

Managing Director (Former Secretary General OPPI)
Hexagon Nutrition Pvt. Ltd. Director – Business Processes
Interlink Marketing Consultancy Pvt. Ltd.
Dr. Bhushan M. Karnik
Managing Director Ranjit Puranik
GCI Nutrients (India) Pvt. Ltd Chief Executive Officer
Shri Dhootpapeshwar Ltd.
Chanchal K. Chadha
Regional Vice President – Dr. Vilas Shirhatti
International Sales and Marketing Head - Technology
NBTY Inc. Marico Industries
Deepali Shukla Dr.S.K.Sharma

Head - Marketing Manager - Marketing
Amway India Zandu Pharmaceuticals
Farhat Navlakhi Saxena S.W.Deshpande

Chief Executive Officer Advocate
R R Oomerbhoy Pvt. Ltd. Former Joint Commissioner FDA- Maharashtra
Himanshoo Nayak Sanjay Singh

General Manager – Business development Technical manager
Elder Pharmaceuticals Plethico Pharmaceuticals Ltd.
Dr. Michael Lelah Shrihari Shidaye

Technical Director Vice President - Sales, Marketing and Business development
NOW foods Piramal Healthcare Ltd.
Dr. P.I. Suvrathan Dr. U.Y.Rege

Chairman Proprietor
Food Safety and Standards Authority of India Mukta Technical Consultancy Services
Pradeep Patil Vikram Trivedi

G.M - Marketing Senior Research Manager – R&D
Zandu Pharmaceuticals. Zandu Pharmaceuticals

Glossary of terms
Glossary of terms (1/3)

Term Explanation
AI Adequate Intake
AJCN American Journal of Clinical Nutrition
Antioxidants A compound that helps to protect cells against damage by free radicals eg: flavonoids
BCC Business Communications Company
B Pharm Bachelor of Pharmacy
B Sc Bachelor of Science
Chronic Illness/disorder Illness/disorder that is long term or permanent and requires prolonged treatment
CAGR Compounded Annual Growth Rate. The standard formula is: (last number/first number)^(1/periods)-1
CCP-ACP Casein Phosphopeptide-Amorphous Calcium Phosphate
CME Continuous Medical Education
CVD Cardio Vascular Disease
DALY Disability-Adjusted Life Year.DALY is a measure of overall disease burden. It was originally
developed by the World Health Organization. DALYs are calculated by taking the sum of these two
components. In a formula: DALY = YLL (Years of Life Lost) + YLD (Years Lived with Disability).
DRI Dietary Reference Intake.DRI is a system of nutrition recommendations from the Institute of
Medicine (IOM) of the US National Academy of Sciences. The DRI system is used by both the
United States and Canada and is intended for the general public and health professionals.
DSHEA Dietary Supplement Health and Education Act
Under the DSHEA, the dietary supplement manufacturer is responsible for ensuring that
a dietary supplement is safe before it is marketed. FDA is responsible for taking action
against any unsafe dietary supplement product after it reaches the market.
EAR Estimated Average Requirement
FDA Food and Drug Administration
FICCI Federation of Indian Chambers of Commerce and Industry
FMCG Fast Moving Consumer Goods
Fortified foods Foods with nutrients added in addition to the levels that were originally
found eg: edible oils fortified with vitamins A and D
FNFC Foods with Nutrition Functional Claims
FOSHU Foods for Special Health Use
FSO Food Safety Officers
FSS Food Safety and Standards

Glossary of terms

Term Explanation
FSSA Food Safety and Standards Act
GABA Gamma-Aminobutyric acid
GDP Gross Domestic ProductGDP is a basic measure of a country's economic performance and is the
market value of all final goods and services made within the borders of a nation in a year .It calculated
as: GDP = private consumption + gross investment + government spending + (exports − imports)
GMP Good manufacturing practice
GOM Group of Ministers
GSK CH Glaxo SmithKline Consumer Healthcare
ICDS Integrated Child Development Scheme
ICMR Indian Council of Medical Research
ICRIER Indian Council for Research and International Economic Relations
INR Indian rupee
IQ Intelligence Quotient
KCal Kilo calories ( 1 Kilo Cal = 1000 calories)
LDL Low density lipoprotein
Maternal Mortality Rate Number of maternal deaths related to childbearing divided by the number of live births
MPA Million per annum
MPCE Monthly Per Capita Expenditure
NABL National Accreditation Board for Testing and Calibration Laboratories
NCAER National Council of Applied Economic Research
NFHS National Family Health Survey
Niacin Vitamin B3- important for normal function of gastrointestinal and
nervous systems, deficiency of which leads to pellagra
NLEA Nutrition Labeling and Education Act
NNMB National Nutrition Monitoring Bureau
NSSO National Sample Survey Organization
OTC Over The Counter
Probiotic food Food containing live micro-organisms which on consumption in adequate amounts,
confer a health benefit to the consumer eg: Probiotic ice cream
PPP Public Private Partnerships
RDA Recommended Dietary Allowance

Glossary of terms
Term Explanation
RNI Recommended Nutrient Intakes
SD Standard Deviation
Thiamin Vitamin B1 which helps to maintain appetite and growth, deficiency of which causes beri beri
UL Tolerable Upper Intake Level
USD US dollar
USP United States Pharmacopeia
WHO World Health Organization

About FICCI
Set up in 1927, FICCI is the largest and oldest apex business organization of Indian business. Its history is very closely interwoven with
the freedom movement. FICCI inspired economic nationalism as a political tool to fight against discriminatory economic policies. FICCI’s
commitment is now directed at changing the economic landscape of India, through reforms that expand the space for private sector and
public private partnerships.
FICCI is the rallying point for free enterprises in India. It has empowered Indian businesses, in the changing times, to shore up their
competitiveness and enhance their global reach.
FICCI maintains the lead as the proactive business solution provider through research, interactions at the highest political level and
global networking.
In the knowledge-driven globalized economy, FICCI stands for quality, competitiveness, transparency, accountability and business-
government-civil society partnership to spread ethics-based business practices and to enhance the quality of life of the common people.
FICCI- Western Regional Council is the western regional arm of the Federation of Indian Chambers of Commerce & Industry, which has
14 domestic and 7 overseas offices. In addition to supporting FICCI, New Delhi, FICCI-WRC organizes its own conferences, seminars,
workshops and networks with visiting delegations from several developing countries.
FICCI WRC actively provides sectoral services in brand protection, boating, business matching, design, gems & jewellery, nutraceuticals,
progressive Maharashtra, textiles, technical textiles and wellness.
For more details contact:

Dr. Vaijayanti Pandit/Ms. Amita Kardile (+91 9890069558)
Director
FICCI Western Regional Council
Plot no. 33B Krishnamai Building
Sir Pochkhanwala Road, Worli
Mumbai 400 030
Telephone: +91 022-24968000
Fax: +91 022-24966631/32
E-mail: drvpandit@ficci.com/amitak@ficci.com
Head Office
Federation of Indian Chambers of Commerce & Industry
Federation House
Tansen Marg
New Delhi 110 001
Website: www.ficci.com

Notes

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Nutraceuticals

Critical supplement for

4 Nutraceuticals— Critical supplement for building a healthy India

Nutraceuticals— Critical supplement for building a healthy India 5

This document aims to present:

• Critical impediments in achieving latent potential, and

• Way forward for the government and private sector

6 Nutraceuticals— Critical supplement for building a healthy India

Nutraceuticals— Critical supplement for building a healthy India 7

8 Nutraceuticals— Critical supplement for building a healthy India

Nutritional status of the

10 Nutraceuticals— Critical supplement for building a healthy India

• Majority of the undernourished population (380 million) faces a challenge to

Nutraceuticals— Critical supplement for building a healthy India 11

15 leading risk factors in developing countries with high mortality rates*

1 Underweight 13% 15%

Unsafe healthcare injections 1% 1%

0% 5% 10% 15% 0% 4% 8% 12% 16%

Nutrition related risk factors

Source: World Health Report 2002, WHO

Deﬁnition of key nutrients

• Includes carbohydrates, fats & oils, proteins & amino acids

• Includes vitamins, trace minerals (iron, zinc)

Nutraceuticals— Critical supplement for building a healthy India 13

Risk factors Key adverse outcomes

Russia Brazil China India

Source: NFHS, World Bank, World Development Indicators 2007

Maternal mortality rate per 10,000 live births, 2005

Percentage Percentage women

* Children between 6-35 months of age

Prevalence* of vitamin A deﬁciency symptoms (1990-2003)

India WHO cut-off level

India WHO cut-off level

Total goiter rate (Iodine deﬁciency disorder)

India WHO cut-off level

Cardiovascular diseases – Diabetes — Number of patients (millions)

Brazil Russia China India Russia Brazil China India

Source: WHO 2009 Source: WHO 2000

Nutraceuticals— Critical supplement for building a healthy India 15

Russia Brazil Nigeria China Uganda India

Source: India Micronutrient National Investment Plan 2007-2011

16 Nutraceuticals— Critical supplement for building a healthy India

Calorie intake as a percentage of norm

<100% 100%-120% >120% 21%

Source: NSSO 2004-05 Source: NSSO 2004-05

Growth in slimming centers and gyms market (INR billion)

Slimming centres Gyms

Source: Ernst & Young — FICCI Wellness report, 2009

Nutraceuticals— Critical supplement for building a healthy India 17

Calorie sufﬁcient nutrient deﬁcient

population- 570 million

80% of norm Calorie consumption

Undernourished population – Calorie sufﬁcient nutrient deﬁcient population–

Nutraceuticals— Critical supplement for building a healthy India 19

Hierarchy of nutritional needs

Enhancement These nutrition needs are for “enhanced

20 Nutraceuticals— Critical supplement for building a healthy India

Nutraceuticals— Critical supplement for building a healthy India 21

Natural Nature-like Man made

22 Nutraceuticals— Critical supplement for building a healthy India

24 Nutraceuticals— Critical supplement for building a healthy India

• As a concept, “Nutraceuticals” is in its stage of infancy with several developed

• There are four key underlying drivers for this growth: