Destination India: Reconfiguring Gelatin Value Chain


By: Kirti Vatsa -- Senior Research Analyst

31 March, 2014

Destination India: Reconfiguring Gelatin Value Chain

1. Introduction: Bovine bone is one of the major raw materials for gelatine, which accounts for about 26% of gelatin production globally. Demand for bovine bone chips from gelatin industry in the US has been increasing and is expected to increase in future too. As a result, bone chips prices in US have increased by 20-25% in H2 2013 as compared to H2 2012 thereby leading to bovine bone gelatine price hike. The whitepaper analyzes alternate best cost sourcing destination for bovine bone chips, thus offering a possibility of cheaper bovine bone based gelatin to capsule manufacturers. 2. Main: India and China are the major producers of bovine bone based gelatin contributing 97% and 48% respectively. Since US gelatin manufacturers are advised by the FDA to source bovine bone from slaughterhouses in regions with negligible risk of BSE (Bovine Spongiform Encephalopathy) and SRM (Specified Risk Material) zone, India is a potential destination for sourcing bovine bones in order to manufacture pharmaceutical gelatin. Indian Bovine bone chips prices have been compared with the US prices to determine the possible savings in raw material. In addition, different source derived gelatin has been assessed to know about the major producers of bovine bone gelatin. 3. Recommendation: There is a possibility of sourcing bovine bone chips from India as there exists a cost saving opportunity for US gelatin manufacturers in order to avoid fluctuations in bovine gelatin prices. This supply chain reconfiguration initiative can be adopted by capsule manufactures. They need to interact with their gelatin suppliers to identify opportunities that exist for gelatin manufactures to source bovine bone chips from India.


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