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April 3, 2001

Adding Value to natural products: U.S. NRI’s ventures


The efficacy of herbal medicines is being increasingly recognised now in the developed countries, particularly because of their holistic effect on the body and minimal side effects. The result has been that what was once an exotic and esoteric product line confined to speciality shops is now rapidly becoming mainline merchandise in western supermarkets. The fact that these "phytoceuticals" do not need clearance by the Federal Drug Administration in the U.S., as they are natural products, has helped in marketing them in that country.

Making waves in this field is an Indian scientist – entrepreneur, Dr. Muhammed Majeed, who had migrated to the U.S. In 1974, A. Ph.D. in Industrial Pharmacy from St. John’s College in New York City and held progressively responsible research positions with U.S companies such as Pfizer Inc., Carter Wallace and Paco Research. Before quitting in 1988 to found his own enterprise, Sabinsa Corporation. He started with supplying raw materials to generic drug companies. Inordinate delay in getting his products cleared by the FDA because of some internal upheavals in the agency ate up almost his entire capital.

Originally from Kerala, India’s spice State and famous for its Ayurveda practitioners, Dr. Majeed was long familiar with the medicinal properties of herbs. He felt that there could be a market for herbal products in the U.S. Accordingly, in 1991 he establised a 100 per cent export – oriented associate company in Bangalore, Sami Chemicals & Extracts (P) Ltd., which would collect raw materials from India, process them and send them on to Sabinsa Corporation in the U.S. for distribution there.

The idea clicked and, because of its emphasis on application research, standardisation and quality, pretty soon Sabinsa was outpacing all its competitors in the natural products business in the U.S. Its revenue grew many times between 1991 and 1995 to reach $8.5 million; in 1997 the revenue was around $28 million. Exports from Sami Chemicals crossed Rs.32 crores last year.

The Indian company now has two factories at Kunigal (acquired in 1993) and Shimoga (established in 1995) in Karnataka and a quality control cum R & D centre in Bangalore. A new corporate office on a four acre site at Nelamangala near Bangalore is coming up. The total investment in India is of the order of Rs.18 crores. On the cards is a speciality farm in Karnataka to cultivate special herbal plants native to temperate regions of the world.

U.S. Operations.

Within the U.S., Sabinsa has expanded by setting up a distribution facility in Utah and Internationally a marketing office is being established in Japan this year. Says Dr. R.K. Bammi, President (Research) of Sabinsa. :The Japanese market for our products is expected to touch Rs.10 crores per annum in the next few years."

Sabinsa is also expanding into areas such as indigo-based dyes used to make blue jeans. A joint venture with a company in New Jersey (U.s) will lead Sabinsa in to the flavours market. A research centre in South Brunswick is developing new products such as an extract from red wine to prevent heart attacks and an anti-cancer agent from broccoli. A beginning as been made in biotechnology with research on the use of enzymes to accelerate chemical synthesis.

The product portfolio of Sabinsa is now over 50 strong including a vast range of phytomedicines and fine chemicals used by the pharmaceutical industry.

What distinguishes Sabinsa from other companies of its like is the high emphasis given to R & D which unveils a new, value added market for traditional natural products sold earlier as low value commodities. For example, hot peppers are sold in bulk at several rupees per kg. But the capsicum oleoresin extract from hot pepper, usedin anti-inflammatory drugs, sells perhaps at several hundred rupees per kg. However, even more effective in neuropeptide activity is Capsaicin, one of the components of capscicum oleoresin. Sami Chemicals makes an extract containing as much as 95 percent capsaicin which sells for as much as $4,000 a kg.

Another example us turmeric, an ancient spice that has for long found use as a food flavour and in Ayurveda as a blood purifier, stomach tonic, anti-inflammatory agent, cold remedy with milk and skin healer. Recent research has shown that turmeric is a richsource of certain phenolic compounds called Curcuminoids having anti-oxidant properties which curb free radical activities that lead to ageing problems. Sabinsa’s research has come up with a unique prepration from turmeric called C3 Compled. Ninety five per cent of this complex is made up of three different curcuminoids ( bis- demethoxy curcumin, demethoxy curcumin and curcumin) which together are most efficious in preventing free radical activity. Needless to say, the C3 complex will be of much higher value than traditional turmeric based preparations.

Similarly, Sabinsa has pioneered in India the extraction of an anti-arthritic preparation from waste prawn shells. This natural medicine has no side effects, unlike the steroids used for arthritis treatment in allopathy. According to Dr. Bammi, the Chinese also have a similar preparation from prawn shells, but the Sabinsa process is more economical since it is a single step one compares to the multiple step process used by the Chinese.

In the recent past, Sabinsa Corporation has come under attack in India for a patent they have taken out on a particular use of Piperine, an extract from black pepper. As usual, highly emotional accusations have been made that Sabinsa is out to monopolise the export of black pepper and its oleoresins by the exercise of this patent.

"This is nonsense" says Dr. Majeed. "Sabinsa’s patent is on the use of Piperine specifically to increase the bio-availability of nutritional compounds such as vitamins, amino acids and minerals. It is not a product patent and we cannot, nor do we intent to, stop anyone from exporting black pepper Piperine or its oleoresin from India. Because of our substantial investments in research, development of new markets and clinical trials for new uses of active principles in spices, much larger and higher value markets have developed for the extracts from Indian spices in developed countries. We deserve recognition for this and not misinformed criticism."

N. N. Sachitanand,