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“China can be both opportunity and threat”
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December 12 , 2014
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Basic Chemicals, Pharmaceuticals & Cosmetics Export Promotion Council (CHEMEXCIL) was set up by the ministry of commerce & industry, Government of India, with the objective of promoting exports of items such as dyes and dye intermediates, basic inorganic & organic chemicals, including agrochemicals, cosmetics, soaps, toiletries and essential oils, speciality chemicals, lubricants and castor oil. In an email interaction with Anurag More, Satish Wagh, CMD, Supriya Lifescience Ltd, and chairman, CHEMEXCIL, delves deeper into the current pharmaceutical and cosmetic industries scene in India and the challenges going ahead. Excerpts:
Throw some light on the current pharmaceutical and cosmetic industry in India. What is its size, and at what rate is the industry growing?
The size of the Indian cosmetics industry globally is $274 bn, while that of the Indian cosmetic industry is $4.6 bn. According to analysis and figures given by the Confederation of Indian Industries (CII), the total Indian beauty and cosmetic market size currently stands at US$950 mn and is showing growth between 15 and 20 per cent per annum. Industry sources estimate a rapid growth rate of 20 per cent per annum. The overall beauty and wellness market that includes beauty services stands at about US$2,680 million, according to CII estimates.
How are the regulations governing the Indian pharma and cosmetic sectors different from those overseas?
Lot of differences are there in cosmetic regulations in India, compared to USA and the EU. According to Indian regulations, the manufacturer for sale of cosmetics should get the pre-marketing approval before entering the market but (that is) not required in USA and the EU. In the statement of labelling, the expression of expiry date is different in the three regions. In the EU, it depends on durability of product in 30 months, but in USA there is no legislation for expiration date. However, the stringent regulations governing cosmetics in each country or jurisdiction have one common goal: To protect the consumer by ensuring safe ingredients and finished products. And there is need to enhance the regulations of safety information and control standards of cosmetics in India. So there is need to harmonise the regulations regarding safety, stability, and labelling issues.
What regulatory hurdles do companies exporting pharma and cosmetics face, and what steps are being taken to overcome them?
The overall SWOT analysis of cosmetic and toiletries industries is as follows:
Strength
The cosmetics industry has emerged as one holding hug potential for further growth. It is contributing to the economic growth of the country. If we look around we find that what existed 20 or 30 years ago in cosmetics industry has totally changed. The cosmetics industry is more mature. During three to four decades, from 1970 to 2010, the industry has gained momentum. Its extensive development trend is expected to continue well into the coming years. The average for breakthrough technology is around US$2-3 million. Fast innovation and new retail concepts are key to this booming industry. Most of the market leaders have the presence in major markets. Consumer spending has climbed up to 75 per cent and expected to rise. Rising salaries and increasing disposable incomes will fuel market growth in future as well.
Weakness
The cosmetics industry is bound to depression and declination. Product prices are invariable; prices of products keep changing according to market trends. Indian consumers are price-conscious and demand value for costly products. Promotion budgets are getting bigger due to stiff competition. Moreover, the industry is dominated by market leaders. Due to lack of distribution network, some international brands have less presence in the rural market.
Opportunities
Ageing baby-boomers, who have the high spending power, tend to spend more on beauty products. Emerging markets that have high economic growths i.e. Europe, Latin America, and Asia are replacing the matured and developed Western markets. Future growth will depend on strategy to grow through merger & acquisition to increase global presence. Many reputed local brands in the market have their pulse on the local consumers.
Threats
China can be both opportunity and threat because it has the high ability to develop products and compete in global markets. The regulatory system is complex and not stringent compared to drugs. Most of the time, newly launched products are vulnerable to uncertainty of regulatory review. Some products face recall from the market. The European Union has already banned animal-tested products so, alternative to animal tests would raise manufacturing costs in the future. Recently there is growth in counterfeit goods in the market. Due to intense competition, companies have to make up on price. Market leaders dominate the cosmetics industry, so lot of pressure exists on smaller companies in terms of quality and price of products.
What amendments do you suggest to the same?
To establish long lasting potential of the brand, companies have to spread awareness through aggressive marketing strategies with focus on continuous product promotion. Frequency of advertisement should be increased in the television and print media so as to increase advertisement recall. Cosmetics companies should emphasise on gift promotion since it is the best way to introduce new cosmeceutical products in the market. Trial packs and free samples of all the products of the complete range should be introduced so as to facilitate first-time users.
Moreover, cosmetics companies with high priced cosmeceutical products should focus more on marketing and sales team to persuade the consumers about benefits. Tie-ups with beauty parlours to organise exhibition and competitors for the target audience could be a pleasing promotional scheme. Hence, cosmetic companies can successfully enter Indian cosmeceutical market by applying the competitor-oriented strategy that suits Indian consumers’ taste and fashion.
What are the steps taken by the association for the development of the industry?
As an export promotion measure, CHEMEXCIL had implemented successfully lot of export promotional activities for the benefit of its member-exporters which included participation in exhibitions / buyer-seller meets both abroad and in India, conducting of educative seminars like skill development programme, open house meets with DGFT in various regions, building up of Indian chemical inventory, registration of substances of firms in European countries (i.e. REACH) and so on. Further, CHEMEXCIL had successfully organised its 39th and 40th Export Award Function on August 30, 2013, at Mumbai by honouring 75 outstanding exporters who had excelled in their export performance during the years 2009-10 and 2010-11. m
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