Entering India's Dietary Supplement Market

How do you get dietary supplements into a country where there is no defined concept of them? It requires a totally different mentality and a tremendous amount of determination and patience.

With the second largest population in the world, India presents some excellent opportunities for U.S. dietary supplement manufacturers. The country has a historical predisposition toward medicinal herbs, yet there may be daunting challenges in marketing them as supplements. Its culture and business practices are very foreign--with all that term implies. Patience, persistence and long-term investment plans are important.

India's population exceeds 1 billion people, with a large number living in small rural villages. The country is made up of many cultures, with separate and distinct belief systems and ways of life. India has 24 states, each with its own laws and regulations.

Many Indian people are extremely poor; however, there is a growing middle class, with numbers varying between 150 million and 400 million, depending upon how "middle class" is defined. A more affluent population means customers with discretionary income who will increasingly suffer from lifestyle diseases, which supplements often address. The population of India, growing by 20 million annually, is also becoming increasingly urban.

Since its independence from England in 1947, India's trade policies have served to limit imports because the nation's political and social agenda was self-sufficiency. However, over the past few years, that has started to change, and imported products are becoming more commonplace. Products from the United States are popular, and those who can afford them are willing to pay a premium.

There is no "dietary supplement" concept--as the United States defines it--in regulation, marketing, the medical community or consumer understanding. A draft law reminiscent of the Dietary Supplement Health and Education Act (DSHEA) is in development in India to regulate manufacturing, importing and marketing of health foods/dietary supplements and other nutraceuticals. Also, the country's Central Drug Control Department has put some structures in place for dietary supplements, but it is taking a long time for states to cooperate, and some states have rejected the structures when their own rules and regulations conflict.

This means companies interested in marketing dietary supplement products must work within the current structure under which all products are registered as either food or pharmaceutical. Generally the manufacturer decides which route to take when registering a product. An obvious challenge is that some manufacturers register products as drugs and other companies register comparable products as foods, creating confusion among consumers. Industry members familiar with this environment advise registering supplements as foods, because the pharma process is more complicated and takes longer. However, in some states, such as Karela, supplements must be registered as pharma.

Registering a dietary supplement as a food is not necessarily a drawback in marketing. Because of their traditional medical modalities, such as Ayurveda, many Indians have for thousands of years seen food as having medicinal properties. Food is viewed as functional in that it has inherent impacts on health. However, functional foods in terms of fortified foods are relatively nonexistent in India at this point.

How a company registers a product influences how it is distributed. Retail distribution is very different from Western cultures. There are no mass discounters nor super-natural markets like Whole Foods. Some urban areas in India have grocery stores similar to those seen in the United States in the 1960s, with a few foods imported from the United States or Europe. Generally, people buy medicines from pharmacies and food from small specialty shops--meat from one, produce from another.

With dietary supplements, even when they are registered as a food, it may be advisable to first offer them through pharmacies. Whether food or pharma, directing initial marketing efforts to physicians and other medical professionals helps establish credibility for a product. Educating physicians also must be an essential part of a company's marketing program, since the nutraceutical concept is not generally understood in India. Sales can be generated when the doctor "prescribes" your product from the pharmacy. And once a product's credibility is established, it is easier to roll it over into broader distribution.

Instead of running through the hoops themselves, many international companies have chosen to partner with an existing Indian company. One industry veteran stated flatly that corruption can cause expensive delays, and emphasized the necessity of having someone there who knows the system to get things done. It is difficult for "outsiders" not used to this business practice and mentality to survive long term.

In support of this view, the government gives preferential treatment if a foreign company works through a manufacturing group. However, there are many challenges in trying to manufacture products in India, not the least of which is loss of control over product manufacturing and quality control. Partnering with an Indian marketing group may be easier in terms of maintaining manufacturing control, but more costly in terms of taxes and import duties.

Many companies that have attempted to establish a market for products they import into India end up frustrated by the Indian bureaucracy. However, the Indian government is set to offer assistance to the herb industry with an eye to increasing exports, which should impact imports as well. Plans include offering tax incentives to business people who help to grow the herb industry, and development of good manufacturing practices (GMPs) and pharmacopeial standards.

Also, a new independent association has been formed in India to address some of these issues. The Indian Health and Dietary Supplement Association was created to represent pharmaceutical, nutraceutical, herbal, direct selling and other service oriented industry companies, and plans to affiliate with the International Alliance of Dietary Supplement Associations in the near future. The association is planning a scientific conference to bring the industry and government together to share information, experience and perspectives on the use and regulation of dietary supplements.

Suzanne Shelton is president of the Shelton Group, a consulting firm based in Skokie, Ill. She can be reached at [email protected].