As molecules dry up, pharma firms eye niche nutraceuticals

With rising demand for dietary supplements and functional foods, nutraceuticals segment is drawing interest from a lot of pharma players. The recent one to join the bandwagon is Delhi-based Mankind Pharma, which is looking at doubling its revenue from the segment from Rs 450 crore currently, in the next three years. 

This month, Mumbai-based pharma major Cipla too said that it entering the nutritional space by launching a full range of products in the next 12-18 months. With changes in lifestyle and increased awareness about fitness and healthcare, the consumption of nutraceutical products has seen a sharp rise in the past few years. Growing at a CAGR of 17%, the segment's size is estimated to touch $6.1 billion by 2020 from the current $2.8 billion, according to a study by Assocham and RNCOS.

Of the $2.8 billion market, the share of pharma companies is around Rs 8,000-8,500 crore, which is growing at 14%, according to pharma market research firm AIOCD.
Sheetal Arora, MD, Mankind Pharma, told dna, "The nutraceuticals segment is at a nascent stage but there is a huge potential. Since the last 4-5 years, there is a dryness of molecules and this has led to a move towards nutraceuticals. With middle class people more concerned about their health as well as drying up of new molecules in pharma space, nutraceuticals has a lot of scope in days to come. India is still small in nutraceuticals but it is growing very fast, especially in urban sector."

Mankind has a basket of 1,500 products with 400-500 molecules, of which nutraceuticals would be 30-35 molecules over a 100 product range. "Last year, 60% of new launches were of nutraceuticals. This segment accounts for 15% to our overall business," said Arora. 

Mankind Pharma, which is looking at a revenue target of Rs 4,200 crore for this fiscal and Rs 5,000 crore for 2016-17 from Rs 3,400 crore sales notched in fiscal 2014-15, plans to apply for dossiers in the US market in the next three years. "Our export market is very small as of now with an overall revenue contribution of only Rs 25 crore. We started exporting only two years back. Our revenue target for exports is Rs 150 crore by 2017. We currently have a presence in 15 countries such as Nigeria, Kenya, Sri Lanka, Cambodia, Vietnam, Myanmar," he said. He said the US is next on the company's radar.

"Our objective is to send our dossiers to the US in next three years. Our US plant would be ready by then, By 2021, we have a revenue target of Rs 500 crore in the US, and by 2025, the target is Rs 1,000 crore. We are still in the process of selecting the products for the US, which would be largely vanilla generics," Arora said. The company has acquired three acres of land at Udaipur to set up a facility, which will cater especially to the US market. With an investment of about Rs 250 crore so far, the facility, which has a capacity of 10 tonne per month, will be functional by March.

Mostly known for its over-the-counter products like condoms and contraceptives, Mankind Pharma earns only 10% to its overall revenue from this segment which it termed as Special Mankind. "Those who are not aware of us as a pharma company, they mostly know us for our Special Mankind segment. However, this accounts only for 10% of our overall revenue. Sales of Manforce group stood at around Rs 300 crore. The segment is growing very fast with a growth of 35% year on year against a company growth of 20% y-o-y," Arora said. 

He said the company's ad spends is approximately Rs 100 crore every year on the Special Mankind segment. 

With 75% of its portfolio in branded generics, Mankind is also looking at partnering companies for entering vaccines and insulin segments. The company has recently tied up to launch one gliptin (these are a novel class of oral anti-diabetic agent that enhance and prolong the physiological actions of incretin hormones by competitively antagonising the enzyme DPP-IV) in the next three months.