Patanjali’s credibility crisis: A knock-on effect on the booming Ayush market?

That the court had to ask them to repeat the apologies in newspapers and other media underscores the gravity of the situation. Interestingly, this order is in line with the trend where Indian courts are issuing orders against companies making exaggerated claims about their wellness products. These are indeed welcome developments. 

The Patanjali order involves a case between the Indian Medical Association (IMA) and the Union of India where the former alleged that Ramdev had made statements labelling allopathy as “stupid and bankrupt science". 

The IMA argued that there had been a serious, blatant, and wilful violation of laws, leading to the court-mandated apology. This controversy has broader implications for the Ayurveda industry. 

According to data from the ministry of Ayush, which regulates the traditional system of medicines in India, the domestic market size is estimated at $43.4 billion. This market is not only massive but also has the potential to expand fast. The global market size for herbal products is estimated at $657.5 billion. Besides, Ayush exports from India, including merchandise and services, were at $1.54 billion in FY20.

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Recognizing this potential, the Indian government has offered a huge range of support to the sector through several modes. The Ayush Export Promotion Council, for instance, set up in 2022 helps tackle the obstacles for the registration of Ayush products abroad. 

The ministry has signed 24 agreements with various countries for cooperation, including another 40 with international institutes for undertaking collaborative research. Prime Minister Narendra Modi has himself on several occasions made laudatory references to the sector and highlighted its potential. All of these have had a salutary effect. 

The market for Ayush products from India has begun to build up. Critically, while the market for wellness products was rising globally, Ayush products from India sought to add a therapeutic angle to those.

Given the scale of this build-up, the strictures by the Supreme Court on Patanjali will attract global attention, especially since the ministry of Ayush has been all this while promoting Ayurveda as a viable alternative to allopathic drugs and claiming it was safe to use these traditional medicines.

To be sure, the range of research and development on these products is still limited and their efficacy has at times been questioned. There have also been setbacks with courts and regulators abroad. Indian pharmaceutical companies have therefore been careful in obtaining licences to sell these products.

The usual route has been to obtain clearance as a supplement or something comparable instead of as primary drug to use on patients. Yet for decades Kerala's ring of Ayurvedic platforms have offered great value for money and no questions need to be raised about their efficacy. Similarly, Ayurvedic drugs from established pharmaceutical players have now become a standard issue as over-the-counter drugs in most pharmacies across India. It has helped. These are significant breakthroughs. 

The court order highlights that Patanjali broke this particular covenant when Ramdev waded into these controversies unabashedly. As a result, the assiduous regulatory build-up for the sector has been impacted. 

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Also, by linking Ramdev's reputation with the drugs from the company rather than offering sound therapeutic reasons for promoting those, Patanjali has hurt the industry’s credibility. This was not necessary. Remember, the company’s range of products had become a big challenge for established fast-moving consumer goods players in a very short period.

Given the reputation it had built up, the promoters needed to be careful before making the sensational claim for their products. For instance, despite the presence of other Ayurveda product companies in India, Patanjali had become the poster boy for the sector. 

This is something that happens to any sector that takes off. The first mover has the advantage of capturing a large segment of the market, but at the same time has the onerous responsibility to set the standards by which the industry would be perceived.

Although Himalaya, Zandu, Dabur and Hamdard are much older companies, and pretty successful in this space, they did not capture the narrative the way Patanjali sought to. 

The real concern now is that the recent controversy might extend beyond the company, and hurt the overall reputation of the Ayurveda industry. This situation was highly avoidable.