SOFTGEL CAPSULE MARKET ANALYSIS

Market Challenges And Opportunities

Global Softgel Capsule Market- Drivers

• Rising global nutraceuticals industry: The nutraceuticals industry has been growing rapidly across the world in the past decade. More people are becoming health conscious and prefer consuming dietary supplements, functional foods and beverages infused with natural ingredients that provide health benefits. Softgel capsules have emerged as one of the most popular format for delivering oil-based supplements as they help in ensuring the ingredients are absorbed efficiently by the body. The easy to swallow soft and gelatinous outer shell of softgels makes them ideal for supplementing ingredients such as fish, krill, algae, and flaxseed oils that have various health promoting properties. Manufacturers in the nutraceutical space are continuously innovating and introducing novel product formulations by using softgels to cater to the rising demand. This has significantly boosted the consumption of softgel capsules. Market players are also focusing on new product launches and marketing strategies to raise awareness among consumers about the benefits of supplements containing omega-3, probiotics, vitamins, and other nutrients delivered through the softgel format.
• Increasing geriatric population: As the elderly population continues to grow, we are observing a consequent rise in cardiovascular diseases (CVDs), peripheral artery diseases (PADs), and other age-associated vascular and arterial conditions. This demographic shift is crucial for the softgel capsule market because older individuals are more susceptible to such health issues that may necessitate interventions also the geriatric population often has specific dietary and medication needs due to chronic diseases and age-related physiological changes. Since, softgel capsules are easier to swallow as compared to other dosage forms, they are more suitable for elderly patients. This contributes to an increased demand for softgels in the pharmaceutical and nutraceuticals industries. Thus, the rising geriatric population is a significant market driver for the softgel capsules industry. For instance, in October 2021, according to the World Health Organization (WHO) Prospectus, the number of individuals over the age of 60 was 1 billion in 2020, and this is expected to significantly increase to 1.42 billion by 2050. The world's population of adults aged 60 and older would have doubled (to 2.17 billion) by 2050.
• Preference for convenient and innovative dosage formats: Consumers lead a fast paced lifestyle and prefer convenient dosage formats that fit into their daily routine smoothly. Softgel capsules have emerged as one of the most preferred delivery methods because they are easy to swallow as compared to traditional hard pills. Their gelatinous exterior and softer interior ensures comfortable ingestion. Manufacturers have also stepped up their efforts to innovate newer softgel formats, shapes, and sizes to enhance the supplementation experience. Some of the innovative offerings include bite-sized softgels targeted towards kids and women. Burst releases softgels that dissolve rapidly in the mouth and softgels are infused with flavors. These innovations are making supplements consumption a more pleasant and hassle-free experience for users. The flexibility and design versatility of softgels is enabling market players to launch sachets and snack-inspired formats as well. All these factors are positively impacting the growth of the global softgel capsule market.

Global Softgel Capsule Market- Opportunities

• Emerging markets in Asia Pacific and Latin America: Asia Pacific and Latin America are showing significant potential for growth in the global softgel capsule market. Several factors contribute to this potential, and exploring these can be crucial for strategic decision-making and tapping into new opportunities. Here's an insight into the state and prospects of softgel capsule in these regions:
  • Asia Pacific:
    • Demographic Factors: The Asia Pacific region has a large and growing population, which includes a significant number of elderly individuals, especially in countries like Japan and China. This demographic trend is driving the demand for pharmaceuticals and nutraceuticals, which is in turn boosting the softgel capsules market.
    • Economic Growth: Many Asia Pacific countries are experiencing rapid economic growth, thus resulting in increased healthcare expenditure and a rising middle class that is more conscious about health and wellness.
    • Local Manufacturing: The region is increasingly becoming an attractive location for pharmaceutical manufacturing due to lower costs of production, skilled labor, and favorable government policies, thus supporting the local softgel capsule market.
    • R&D Investments: Companies are investing in research and development within the region to cater to local health concerns and preferences, which may include the development of herbal and traditional medicine-based softgel products.
  • Latin America
    • Market Potential: Latin America, with countries like Brazil, Mexico, and Argentina, showing significant market potential due to its large population and unmet healthcare needs. The region's pharmaceutical market is rapidly expanding.
    • Regulatory Improvements: There have been improvements in healthcare regulations, thereby making it easier for companies to introduce new products, including softgel capsules, in these markets.
    • Healthcare Accessibility: With efforts to improve healthcare accessibility in Latin American countries, the demand for effective and easy-to-administer medications is rising, thus benefiting the softgel capsule segment.
    • Local Partnerships: International companies often enter into partnerships with local businesses to navigate regulatory landscapes and distribution channels more effectively, which can be advantageous for the softgel capsule market.
  • Both regions present unique opportunities, such as large and growing populations, increased health awareness, rising disposable incomes, and improving healthcare infrastructure. However, companies aiming to enter these emerging markets must navigate challenges such as varying regulatory environments, competition from local manufacturers, and the need to adapt marketing strategies to local preferences and cultural nuances. To capitalize on these opportunities, market players may need to develop region-specific strategies. This might include setting up local manufacturing plants to reduce costs, tailoring products to local health concerns, and navigating the regulatory landscape with the help of local partnerships.
• Rising healthcare expenditure: One of the significant factors influencing the growth rate of the global softgel capsule market is the growing healthcare expenditure, which helps in improving its infrastructure. For instance, according to the International Health Care System of the U.S., in June 2020, U.S. government organizations aim to improve the healthcare infrastructure by increasing funding, setting legislation, and national strategies, and cofounding and setting basic requirements and regulations for the Medicaid program. Similarly, in November 2022, the Canadian Institute for Health Information reported that the total healthcare expenditure in Canada was US$ 331 billion in 2022, or US$ 8,563 per Canadian, while health expenditure represented 12.2% of Canada's gross domestic product (GDP) in 2022, following a high of 13.8% in 2020.
• Innovation of advanced softgel encapsulation technology: Innovation of advanced softgel encapsulation technology is an important driving force shaping the industry's future. Here’s how it impacts the market:
  • Improved Bioavailability: New technologies in softgel encapsulation enhance the bioavailability of active pharmaceutical ingredients (APIs). This is particularly significant for drugs with poor solubility or stability, as the advanced formulation techniques, used in softgel encapsulation can increase the effectiveness of the medication.
  • Vegetarian and Clean Label Options: There is a growing demand for vegetarian and clean label products among consumers. Advances in softgel technology have led to the development of alternatives to gelatin, such as starch or carrageenan-based capsules, to cater to this market.
  • Targeted Delivery Systems: Encapsulation technologies allow for targeted drug delivery. Softgel capsules can be engineered to release the API at a specific rate, site, or time, enhancing therapeutic outcomes and minimizing side effects.
  • Combination Products: New encapsulation technologies enable the combination of two or more active ingredients within the same softgel capsule, which can be released independently. This is a major advantage for multi-therapy treatments.
  • Improved Stability and Shelf Life: Advanced encapsulation methods improve the stability of the encapsulated compound, protecting sensitive ingredients from environmental factors and extending the product shelf life.

Global Softgel Capsule Market- Trends

• Increasing demand for softgel capsules with high strength and stability: The trend of increasing demand for softgel capsules with high strength and stability is indeed notable in the global softgel capsule market. Such demand is driven by the needs of both consumers and healthcare providers for more reliable and effective delivery of pharmaceutical and nutraceuticals compounds. The key factors contributing to this trend are outlined below:
  • Consumer Preferences: There is a growing consumer preference for softgel capsules that offer convenience in terms of ease of swallowing and dosage accuracy. High strength and stability ensure the integrity of the capsule until ingestion and support the preservation of the encapsulated compound’s efficacy.
  • Product Differentiation: Pharmaceutical companies are leveraging high-strength and stable softgel capsules to differentiate their products in a competitive market. Such capsules can enhance the perceived quality and value of the products.
  • Technological Advancements: Innovations in encapsulation technologies have led to the development of more robust softgel shells that can resist harsh environmental conditions, such as humidity and temperature fluctuations, thereby improving the stability and shelf life of the products.
• Rising uptake of Kosher and Halal certified softgel capsules: Global softgel capsule market is experiencing a rising uptake of Kosher and Halal certified softgel capsules. This trend reflects a growing demand from consumers who adhere to Jewish and Islamic dietary laws, respectively. Here are some insights into how this is influencing the market:
• • Consumer Demand: There is a growing global population of consumers who follow Jewish and Islamic dietary rules. These consumers are looking for products that comply with their religious practices, including medicines and supplements.
  • Market Expansion: Kosher and Halal certifications allow manufacturers to tap into new market segments and expand their consumer base. It opens doors to markets in the Middle East, parts of Asia, and other regions with large muslim populations, as well as jewish communities globally.
  • Trust and Quality Assurance: Kosher and Halal certifications are often associated with quality and rigorous manufacturing standards, making these products appealing even to non-religious consumers who perceive the certification as a mark of high quality.

Global Softgel Capsule Market - Restraints

• High production cost associated with softgel capsules: The issue of high production costs associated with softgel capsules in the global softgel capsule market is a significant one that manufacturers must contend with. The factors contributing to these costs include:
  • Raw Material Costs: Quality ingredients, such as gelatin, vegetable-based alternatives, and the active pharmaceutical ingredients (APIs), often are premiumly priced. Especially vegetarian or specialty gelatins, like those needed for Kosher or Halal products, can be costly.
  • Complex Manufacturing Process: Producing softgel capsules involves a relatively complex manufacturing process. It requires specialized encapsulation equipment and technology, which can demand substantial capital investment and maintenance costs.
  • Quality Control and Compliance: Stringent regulations governing the pharmaceutical and nutraceutical industries require extensive quality control procedures, including the need for cleanroom environments and regular audits. Adhering to these standards increases overall production costs.
  • Research and Development (R&D): Continuous R&D is necessary to develop, test, and improve softgel formulations, which is an ongoing cost factor for companies, seeking to innovate and maintain competitive advantages.
  • Labor Costs: The production of softgel capsules often requires skilled labor for machine operation, quality inspection, and compliance management, which can lead to higher labor costs as compared to less labor-intensive manufacturing.
  • Packaging and Storage: Softgel capsules may require specific packaging to protect them from moisture and other environmental factors. climate-controlled storage can add to operational costs.
  • Economies of Scale: Smaller manufacturers might struggle with higher per-unit costs due to lower production volumes. Achieving economies of scale that effectively reduce costs can be a barrier for entry or expansion in the softgel market.

Counterbalance: The key market players need to reduce the labor costs in comparison to the less labor-intensive manufacturing process. Packaging should be made in environmentally friendly manner to reduce packaging costs.

• Availability of alternative drug delivery formats: The presence and availability of alternative drug delivery formats can indeed affect the global softgel capsule market, providing both challenges and opportunities for market players. These alternative formats include:
  • Tablets: These are the most common drug delivery format, often preferred for their stability, ease of manufacture, and cost-effectiveness as compared to softgels.
  • Capsules (Hard-shelled): These can be more easily produced in a variety of sizes, are suitable for both powder and liquid substances, and can sometimes be more cost-effective than softgels.
  • Chewables: These are particularly favored for pediatric and geriatric populations who may have difficulty swallowing traditional pills or capsules.
  • Effervescent tablets: Offering quick absorption and a pleasing method of drug intake, these tablets can be an attractive alternative to softgel capsules for certain consumer segments.
  • Coated tablets: With specialized coatings, these tablets can provide controlled release of medication, target specific areas of the gastrointestinal tract, and mask unpleasant tastes.
  • Powders and granules: These allow for flexible dosing and can be added to food or beverages for ease of intake.
  • Liquid formulations: Solutions and suspensions can be preferable in instances where the patient cannot swallow solid formulations, though they may have a shorter shelf life than softgels.
  • Transdermal patches: These tablets offer a non-invasive delivery system and provide controlled release of the drug over time.