Thursday Sep 02 , 2004
Catalyst - Strategy : Industry & Economy - Alternative Medicines

Herbal Hardsell

Madhumathi D.S.

They are widely accepted, rationally priced and are believed to be safe and devoid of side-effects. Herbal products are the new business opportunity.

TURMERIC, aloe, brahmi , neem, ginger, gooseberry, or tulsi - what would you have please? Take your pick from today's exotic herbal concoctions, these are your new do-good, feel-good things. They also call them pharmaceuticals, cosmeceuticals and nutraceuticals.

Perched colourfully on shop shelves, some of these brands simply hit you in the eye. The pundits call herbals the new sunrise industry; some would want a ride back to Mother Nature; to others they are simple business sense for cutting their losses before the WTO regime of product patents hits next year. They are there from tiny cough drops, headache roll-ons, skin and hair care items to therapies for stress, diabetics and HIV-positives. And the way companies and consumers have been rushing at these products, the herbal way is surely `in' and here to stay.

It cannot be a fad. For the companies, the story is just unfurling. For starters:

In 2002, modest-sized bulk drugs company Ozone Pharmaceuticals forays into uncharted herbal skin care. Two years later, its cream scripts a fairy-tale success and leaves an indelible, Rs 30-crore mark on skincare counters.

  • Capsules of powdered herbs from southern major Himalaya Drug Co are rolling off the shelves and adding at least Rs 15 crore to the company coffers each year.
  • Soaps, detergents and personal care giant Hindustan Lever Ltd (HLL) has tied up with an ayurvedic company to create its own herbal brands and space.

    The herbal scene is too vast and beauty, health and medicine would just be the cream of it. One such glowing tale is that of New Delhi-based Ozone Pharmaceuticals which hitched its growth to the ayurveda/ herbal wagon and set up Ozone Ayurvedics in 2001. Nomarks, its first product, is now a Rs 30-crore brand in the Rs 32-crore young subsidiary. It has spawned several competitors in its market. The scale of success with its herbal foray was so big that the company now has added three more specialised Nomarks products, one of them even for the elbows!

    Parminder Sandhu, Vice-President, Ozone Ayurvedics, says, "Nomarks and Itis (herbal eye drops) have pioneered the mark-removal and daily eye care categories. We will be launching some more products and expect Nomarks to become a Rs 60-crore brand this year."

    If Ozone chose the popular skin and beauty way, Bal Pharma of Bangalore ventured into the new herbal game in April last year by setting up Bal Vedics. Twelve therapeutic products and the appetite is still growing. HLL has tried to work up for itself a whole new lather with Ayush. It tied up with Arya Vaidya Pharmacy of Coimbatore for its expertise and has drawn up big retailing plans for the products.

    What draws companies to the herbal magic is the lure of the $62-billion global herbal market that is growing at 15-20 per cent a year and the nearly Rs 3,500-crore domestic market, says Ravi Prasad, President & CEO of old warhorse Himalaya.

    "The global consumer as well as the medical fraternity are realising the limitations of the present mainstream healthcare system. Those who earlier looked at the herbal system as just an alternative are now making it complementary to the mainstream healthcare system." And at the rate at which it is going, the future for the herbal industry across the world looks green and bright.

    With its 5,000-year history, ayurvedic medicine (which includes herbs as also minerals and animal parts) has always been a credible solution for healthcare management in India, says Dr R. K. Agarwal, Chairman of Natural Remedies, Bangalore.

    Where herbals are concerned, their scope and acceptance among consumers are vast universally, says Archana Dubey Maitra, Senior Sales & Marketing Manager, Bal Vedics. "People ask for alternative medicine like ayurveda due to its edge over allopathy in many areas, besides its cost-effectiveness." An increasing demand for ayurveda / herbal products has brought in the giants.

    Armed with plans to expand the portfolio and reach, Bal Vedics projects a turnover of Rs 10 crore by end-2007. It currently has 12 products including Prostowin, Stonex, Ayursulin and Immuwin to tackle problems ranging from those of the prostate and kidneys to HIV and diabetes. "Our first year of operation has been significant in terms of acceptance and awareness," says Dubey Maitra. "We would like to have our herbal products parallel to our main division products and take our range to 15-20 by end-2006 and take it across the country in a year after that." For now, though, these can be promoted only as food supplements in the West.

    According to Dr Agarwal, an authority on the subject, this only reflects a growing worldwide demand for nutraceuticals - substances not registered as drugs, but sold over the counter as nutritional and dietary supplements. The Ayurveda Drug Manufacturers' Association of India, which he heads, puts the size of the Indian market at Rs 5,000 crore. "This is very modest and could be enhanced substantially. If not in the near term, there is a distinct possibility of herbal products growing in the long term to a size comparable to the non-herbal market." That is just what the companies are banking on.

    The worry is that there are 8,000-plus manufacturers of whom 7,000 have sales of less than Rs 1 crore a year. "Though the laws are not very stringent in the domestic market, the export markets are fraught with stringent regulations, which render exports difficult," says Dr Agarwal.

    Which, according to Himalaya's Ravi Prasad, makes it a game cut out for the bigger and organised players; because to enter, succeed and sustain in herbal healthcare, for instance, a company should have strong R&D backing to create innovative products, good manufacturing practices to bring out products of consistently good quality and investments for all these.

    His worry is that an assortment of unorganised players is thriving in the ayurveda/ herbal domain, not all of them offering safe and validated products. The sector needs newer and established entrants with good marketing and communication back-up to strengthen it.

    Citing a recent study done by the Exim Bank, Bal Vedics' Dubey Maitra says the global market is growing much faster than the home scene. In spite of many big players rushing in with their cosmetics brands and special retail outlets, she says it is nutraceuticals that are making a mark.

    As one who came in early and has seen it all, Dr Muhammed Majeed, Chairman and Managing Director, Sami Labs Ltd, would agree. He says the herbal wave and the shift towards ayurveda, Chinese and other alternative medicine started 15-20 years ago because of the high cost of medication in the US. And thus was born the nutraceuticals genre - of food as medicine. From exporting standardised herbal products, Sami itself decided to jump into the ring, first with its selenium supplement. In the first year, SelenoCare yielded some Rs 2 crore and is being tested by the US National Cancer Institute on Cancer patients. More are to follow.

    From its dozen-odd Pure Herbs capsules alone, Himalaya rakes in around Rs 15 crore annually. Sold `OTX' (a combination of dispensing products over the counter with advice on usage) at its outlets, the powders are meant to attack infections, arthritis, diabetes and cholesterol. Dabur's Chyavanprash is a story by itself in fast-moving health goods (FMHG).

    Sami, a supplier of herbal actives to the likes of JK Helene Curtis, Avon, Estee Lauder, Amway, Godrej, HLL and L'Oreal, also has some big plans in the skin care segment. It plans to launch its Johara range of cosmeceuticals, a success in the Gulf, in the domestic market. "With the WTO regime coming into force from January 1, 2005, product patents will come into force in India," says Dr Majeed. "Hence, a number of pharmaceutical companies recognise that `new products' which are patented will not be available to them for marketing." Herbal products will not be patentable.

    Marketing is the key problem area for herbal medicines. They all agree that for effective marketing, scientific back-up is needed. Natural Remedies' Dr Agarwal says that as R&D is a costly and low-priority area for the majority of the 8,000-odd manufacturers, it saps their sales efforts of a key input. "Further, export regulations render our herbal products suitable only in the nutraceutical category."

    As CEO of Pill & Powder chain of pharmacy stores, Suresh A. P. Rao keeps seeing a growing brood of herbal seekers, cutting across gender or age. Interestingly, he says, Indian herbal companies, their brands pitted against MNC products, are now ever more aggressive with their range and have significantly scaled up electronic media adspends and point-of-sale push.

    "We have over the past two years seen a marked shift by companies towards marketing these herbal products across all the categories," he says. "Companies, especially those that made early entries (and tasted quick successes), are validating the results through various studies in India and abroad. This, in fact, is pushing the medical fraternity and the consumers to prescribe or take these medicines."

    Even with 44 per cent of the market share for Nomarks, Ozone's Sandhu says the company will be spending Rs 12 crore this year on advertising and promotions. Definitely, herbal companies with good practices, he believes, need not be shy of MNC brands. No wonder that after its scrub soap, face pack and elbow cream, Ozone has lined up a moisturiser and a body lotion for its loyalists.

    The hardsell also includes patient education, use of exclusive outlets and beauty and health consultants posted at the points of sale.

    The bad - or good - news from Dr Agarwal is: the country's herbal products makers have actively used barely 120 herbs or 1.6 per cent of the 7,500 Indian medicinal varieties. Could mean some happy digging for companies!