“Part of it is economics; you can’t afford to get sick,” said George Pontiakos, president and CEO, BI Nutraceuticals, Long Beach, CA. “The trusted, consultative, medical resource is not out there; your family doctor is not there anymore and people are recognizing they have to take their health into their own hands.”
It’s not all economics, though. Many people simply want to live healthier lives and botanicals are simply part of that goal. “Consumers continue to demonstrate their interest in and demand for natural ways to improve their health,” said Mark Blumenthal, founder and executive director, American Botanical Council (ABC), Austin, TX, and editor of HerbalGram and HerbClip.
Increasing demand for botanical remedies is both a national, and international, trend. In fact, the global herbal supplement and remedies market is expected to reach $93 billion by 2015, according to a new report by San Jose, CA-based Global Industry Analysts, Inc.
In the U.S., sales of herbal supplements increased more than 3% in 2010, reaching more than $5 billion, according to a new report published in HerbalGram, ABC’s quarterly journal.
The driving force behind these sales figures are the estimated 77 million Baby Boomers, many desiring to stay healthy and fit well into old age. “Menopause for women, prostate for men and cardiovascular health,” are some of the concerns compelling consumers to reach for botanical remedies, according to ABC’s Mr. Blumenthal.
It’s no surprise that botanicals addressing age-related health concerns topped the U.S. sales charts in 2010. In the food, drug and mass market, botanicals that experienced the biggest sales increases included black cohosh, with 14% growth, cranberry, which rose 15%, and ginger, which increased 17%, according to SymphonyIRI Group, Chicago, IL.
Fourteen percent, 15% and 17% growth are impressive sales increases in any market, and particularly telling when these numbers appear during a recession. Overall sales in this channel increased more than 6%. The top-selling single herbs in dollar sales were cranberry, saw palmetto, soy, garlic and ginkgo, SymphonyIRI said in its report.
Botanicals that experienced some of the largest increases in sales in the natural channel included, resveratrol, with 11% growth, stevia, which increased 12%, and turmeric, which grew 11%, according to SPINSscan data.
Europe: Herbal Hot Spot
The European Union (EU) is home to the second largest nutrition products market in the world, behind the U.S., according to Global Industry Analysts, Inc.
“Botanicals are regarded as safe and healthy, with relatively few side effects in contrast to synthetic drugs,” said Joerg Gruenwald, PhD, president of Germany-based consulting firm Analyze & Realize.
Common health concerns in Europe, as in the U.S., reflect those of an aging, increasingly industrialized nation. “The most important health concerns are overweight/obesity, cardiovascular diseases (e.g., heart attacks, stroke), cognitive and physical performance,” said Mr. Gruenwald.
Currently, some of the top-selling botanicals in the EU include ginseng, echinacea, ginkgo, St. John’s Wort and prickly pear.
Despite the sales potential the EU represents, several key regulatory factors are slowing growth. As of the end of April 2011, “Products with botanicals that develop a pharmacological action have to be registered as a drug. That means many herbal products, which have been on the market as supplements, will need a registration, which is a very time and cost intensive procedure,” Mr. Gruenwald explained. “Few companies will have the necessary financial background for such investments.”
As of January 2011, the U.K. Medicines and Healthcare products Regulatory Agency (MHRA) recorded 187 traditional herbal applications, of which 84 have been granted. So far, not a single product used in Traditional Chinese Medicine (TCM) or Ayurvedic medicine has been licensed, according to the Alliance for Natural Health.
“In my view, one of the main obstacles for the registration of traditional medicines—often very complex mixtures—from Asia include the quality dossier requirement of developing and validating a quantitative assay for the determination of every active ingredient present in the finished product. Many Ayurvedic or TCM herbal medicinal products contain 10, 20 or 30 active substances,” said Josef Brinckmann, vice president of research and development, Traditional Medicinals, Sebastopol, CA.
Further slowing growth is the fact that the EU continues to move toward harmonizing legislation between countries. For example, one country may classify a product as a drug, while another may classify the same product as a supplement. As regulatory adjustments and implementation rolls out in the EU, the opportunity for growth continues to attract foreign manufacturers, although barriers to entry will be insurmountable for many.
One of the biggest hurdles affecting foreign herbal product manufacturers and marketers “are the EU-residency requirements, none of which can be fulfilled by employees of a foreign company situated outside of the European Economic Area (EEA),” Mr. Brinckmann explained. Even if the foreign company employs EU citizens, “they will not meet the requirements since residency is required. This is, I believe, the most problematic and expensive area for any foreign company,” he said.
Brazil: Botanical Climate
Another notable botanical market is Brazil, as regulations continue to change and opportunity continues to knock. The economy is relatively stable, wages are rising for many, and education and consumer demand for dietary supplements are increasing.
“Brazil is going through a period of rapid growth, and consumption of health and beauty products is growing accordingly,” said Paul Altaffer, vice president of business and product development, RFI Ingredients, LLC, Blauvelt, NY. “Supplement sales are soaring as consumers are buying international and domestic branded products. As the economy grows so does income—and Brazil’s income inequality gap is narrowing, meaning more Brazilians can afford what a short period of time ago were considered luxury goods.”
Brazil shares the same health concerns experienced by most industrialized nations, including obesity/overweight, lack of energy, stress, heart issues and immunity, according to Mr. Altaffer.
The aging population in Brazil, similar to the EU and the U.S., is also a driving force behind consumer spending. In fact, consumers over age 60 are estimated to contribute about 13% of Brazil’s total income, according to a Euromonitor report.
Addressing these concerns are some of the top-selling botanicals, including guarana, mate, acerola, acai, camu camu, cha de bugre, catuaba and boldo, Mr. Altaffer said.
But with opportunity also comes challenges, especially as regulations continue to evolve and thwart more dramatic sales increases. One factor contributing to this slowing pace is the group of South American countries currently banding together to develop uniform regulations.
Countries involved in this process include Brazil, Argentina, Paraguay, Chile and Uruguay. Consensus and stability are still elusive as these diverse countries attempt to transform the regulatory landscape.
“The system is quite bureaucratic. It becomes more complex as a result of Brazil’s (primarily) effort to come up with a common regulatory environment (similar to CODEX in Europe),” Mr. Altaffer explained. Needless to say, the pace of adopting new regulations has been slow.
The emerging regulations are intended to bring Brazil “in line with U.S. and European regulatory frameworks. Brazil emulates the Europeans. As a result, supplements must all be registered with ANVISA (Brazil’s regulatory agency for health products and services), demonstrating safety/toxicity, efficacy and so on,” Mr. Altaffer added.
Asia: Naturally Ripe for Growth
While Europe may represent one of the largest regional markets, “in terms of growth rate, the Asia-Pacific market, led largely by China and India, is set to pave the way with the highest CAGR (compound annual growth rate) of [nearly 11%] through 2015,” according Global Industry Analysts’ most recent report.
The Asia-Pacific countries share certain similarities, including a long-standing tradition of botanical medicine, current economic growth and an increase of people moving from rural lifestyles to urban centers.
This exodus from rural to more industrialized environments “is escalating the incidences of health conditions like stress, obesity and hypertension. Due to this, there is greater focus on health maintenance and management as well as preventative care,” according to Nabeel Manal, CEO of Himalaya Herbal Healthcare, Bangalore, India.
Botanicals including holy basil, neem, ashwagandha and turmeric are “widely known herbal remedies in India that combat lifestyle-related disorders,” said Mr. Manal.
Helping to support herb sales in emerging markets, including India, is the evolving retail environment, which is increasingly designed to resemble more of a “western shopping experience.” For example, larger supermarkets, chain stores and malls are opening up in both rural and urban settings. The Modern Retail Format (MRF), with its organized aisles and easy access to merchandise is very different from the small, family-owned shops commonly found in most communities.
The MRF “offers better product visibility and allows customers to read information on product labels before making the purchase. This has increased the sale of herbal supplements in India,” Mr. Manal explained.
As demand grows for natural products so has regulatory oversight. Licenses for new herbal supplements are monitored by a central regulation committee, regulations are established for product quality and excipients, companies are required to report on microbial counts and purity for every product, and all manufacturers are required to have periodic inspections for adherence to Good Manufacturing Practices (GMPs).
With an ancient history of botanical medicine, increasing incomes for many, and an embrace of the western-style shopping experience many industry analysts expect India to continue offering herbal opportunities.
In December 2010, FDA held a press conference, sent letters to trade associations, issued warnings, recalled products, and posted a message to consumers about the problem of “misbranded drug products masquerading as dietary supplements,” as reported by the American Botanical Council.
The FDA action was quickly and broadly broadcast on personal and professional websites, as well as in media outlets, including The New York Times, The Washington Post, The Los Angeles Times, USA Today, The Seattle Times, The Wall Street Journal, National Public Radio, and ABC, MSNBC and Fox News.
With actions like this many consumer and industry experts are wondering if the botanical industry is experiencing an increase in adulteration or just higher quality control standards and greater visibility. Apparently, the jury is still out.
“No, adulteration is not worse than it was 10 years ago. The recognition of it is much more prevalent,” said Roy Upton, president of the American Herbal Pharmacopoeia, Scotts Valley, CA. “Ingredients that suppliers would have accepted before are no longer meeting identity specifications, are found to have been sulfited (requiring declaration on labels), treated for microbial reduction (irradiation or ethylene oxide—both illegal for supplement ingredients), or do not meet other quality specifications.”
Mr. Upton also pointed out that: “herbs [companies] have traded for 30 years (i.e., adulterants) are no longer acceptable by manufacturers.”
Conversely, other industry experts believe incidences of economically motivated adulteration are indeed on the rise. “Commodities are going up but consumer demand for below ingredient prices is rising. There are good extract manufacturers everywhere but the real issue is they want to win the business,” said BI Nutraceutical’s Mr. Pontiakos.
Although there has never really been a comprehensive test of botanical raw materials or finished products to provide an accurate baseline, according to ABC’s Mr. Blumenthal, “I believe it is reasonable to state that there is a growing consensus among many in the herb industry and herb community that, yes, there is and has been an unfortunate growth in the adulteration of both raw materials as well as finished dietary supplement products that are made with such adulterated materials.”
Illegal label claims represent another area at least a portion of the industry continues to grapple with. While most manufacturers are in compliance with the laws, FTC, which regulates advertising, seeks legal action against manufacturers using misleading health claims.
In one of last year’s major legal actions, “as part of its ongoing efforts to uncover over-hyped health claims in food advertising,” the FTC issued an administrative complaint charging the makers of POM Wonderful 100% Pomegranate Juice and POMx supplements with making false and unsubstantiated claims that their products could prevent or treat heart disease, prostate cancer and erectile dysfunction, according to the FTC website.
As cited in the Wall Street Journal (October, 2010), Lynda Resnick, the entrepreneur who helped start POM Wonderful LLC said, “We’re going to fight this.” Although the case is ongoing, POM Wonderful has adjusted its advertising.
Media coverage will continue to sway consumer buying habits, although recently the industry has not experienced the type of challenging media spectacle seen in past years with targeted herbs—ephedra, for example.
Most recently, in December 2010, the Annals of Internal Medicine published a clinical trial on a proprietary echinacea formula. The trial results did not show a statistically significant benefit for the echinacea product. According to Mr. Blumenthal, “It’s not a compelling result in either direction.”
Future Trends: That’s Hot
The Amazon herbs cat’s claw and dragon’s blood are gaining sales ground in both dietary supplements and cosmetics, “and this is long overdue,” according to Chris Kilham, renowned Medicine Hunter.
Schisandra, “which has languished in relative obscurity despite its mammoth health benefits, is now getting attention. And cocoa (Theobroma cacao) appears to be the greatest of all the superfruits and a life-saving medicine. So there is a lot going on in a very dynamic market right now,” he added
Although acai took a sales hit in 2010, other botanicals with compelling research considered “exotic” in the western markets that are expected to increase in sales include baobob, camu camu and maqui.
Boswellia may also see a bump in sales as research continues to emerge. “Boswellia has a dramatic impact on cancer and, in essence, can teach the body how to heal itself,” said Dr. Ajay Goel, PhD, director of epigenetics and cancer prevention at Baylor Research Institute in Dallas, TX.
Botanicals associated with anti-inflammation, including turmeric and ginger should also continue enjoying sales growth as studies continue to support benefits. As recently as this past February, a study demonstrating benefits of ginger root capsules in treating chemotherapy-induced nausea and vomiting in the young was reported in HerbClip.
Many consumers are seeking convenient ways to incorporate healthy habits into their daily lives. Therefore, delivery systems such as capsules, tablets and functional foods continue to attract consumer attention and dollars.
Foods infused with botanicals, sometimes called “functional foods,” represent some of the easiest and most popular ways for consumers to incorporate botanical ingredients into their daily lives.
“Phytosterols, green teas, antioxidant herbal extracts and natural sweeteners are the botanicals that successfully crossed the threshold of functional foods. Several botanicals such as ginseng, acai and guarana are already recognized as crossover ingredients,” according to Global Industry Analysts.
For the experienced health food shopper, Fair Trade certification is not a new category, but some wonder whether today’s price-conscious consumer is willing to spend the extra money associated with certified products. Yes they are, according to recent research. In natural supermarkets, sales of Fair Trade certified products increased 16%, and in the conventional food stores 35%, according to a SPINSscan report, 52 weeks ending December 25th, 2010.
Yet despite this glowing report will customers continue spending the extra money these certified products typically require? Traditional Medicinals’ Mr. Brinckmann remains skeptical. “I do not believe that a majority of this minority are actually willing to pay appropriate retail prices for assurance of ecological, economical and social sustainability. Even so-called conscious consumers may still be more attracted to ‘deals’ and ‘discounts’ than to ‘appropriate’ and ‘fair’ pricing structures for all stakeholders in the supply chain,” he concluded.
About the author: Julie Dennis has been working in the natural products industry for approximately 20 years as national educator for two highly respected dietary supplement brands, regional sales manager at a multimillion-dollar dietary supplement company, CEO of a start-up botanical supplement line, industry consultant and founder of NaturalCommunityReview.com. Published work includes contributions to The Los Angeles Weekly, The San Mateo Weekly, Nutraceuticals World, Vitamin Retailer and WE Magazine. She has also provided editorial support for books including, The Handbook of Clinically Tested Herbal Products, the American Botanical Council’s Clinical Guide to Herbs, and Dolphin Mysteries: Unlocking the Secrets of Communication, Yale University Press. She can be reached at firstname.lastname@example.org or 530-478-1737.
The botanical drug industry is steadily growing despite high costs of approval.
Over the past decade, a new U.S. botanical drug industry has been steadily growing, according to Freddie Ann Hoffman, MD, CEO and founding member of the Washington, D.C.-based consulting firm HeteroGeneity, LLC, which focuses on the development of complex, heterogeneous products, such as botanicals, for the U.S. market.
Unlike dietary supplements, products classified as botanical drugs are intended for use in the diagnosis, mitigation, treatment, cure or prevention of disease, and also affect the structure or function of the body, Ms. Hoffman explained. In the U.S., these disease claims classify the product as a drug under the federal Food, Drug and Cosmetic Act.
Any product not already approved as a “drug” must be approved under a New Drug Application (NDA) with FDA prior to being marketed.
To study a new drug, the drug’s sponsor must first file an Investigational New Drug (IND) application with the FDA. This allows the drug to be studied in humans to obtain the safety and efficacy data required for U.S. drug approval.
Furthermore, the product must be manufactured under strict conditions with a high-level of reproducibility and documentation, including the collection of nonclinical, and clinical data, using rigorous experimental designs, Ms. Hoffman said.
Regardless of the high cost of pursuing a drug approval, for many manufacturers the appeal outweighs the price. There are approximately “500 INDs for botanical drugs that have been submitted to FDA in various stages of development. Many of these future drugs offer novel mechanisms of action,” Ms. Hoffman noted.
While not a “botanical,” FDA approved a complex natural drug from an omega 3 fatty acid rich fish oil in November 2004. This drug is now marketed as Lovaza (GlaxoSmithKline), and according to IMS Health has had annual sales exceeding $1 billion dollars since 2009.
In October 2006, the green tea extract Veregen was also approved as a “new” drug, and is now a prescription drug approved for topical use to treat genital warts. Further, several older botanical ingredients, such as psyllium, are regulated as both “food” and “drug” ingredients.
The potential benefits for the manufacturer pursuing a drug classification include significantly stronger labeling, such as direct clinical indications and promotional claims, warnings, precautions and contraindications for clinical use, and therefore “buy-in” by U.S. healthcare professionals—with possible reimbursement for prescription drugs. There is also significant protection of proprietary information, including trade secrets—i.e., competitors cannot “borrow” science, unless the second drug is a “generic equivalent.”
“To claim ‘generic equivalency,’ the active(s) from both drugs must be administered to human subjects and demonstrate comparable absorption and distribution patterns, in conformance with standardized ‘bioequivalence’ testing procedures,” Ms. Hoffman explained.
Also, approved NDAs are given a period of exclusive marketing rights wherein FDA is prohibited from accepting another NDA submission for an identical product.
“There are many diseases and conditions that do not respond to a single drug. Cancer is one of these, as is HIV infection and other infectious and inflammatory conditions. The standard of care for these conditions is to use a ‘cocktail’ of drugs,” said Ms. Hoffman. “Because botanicals are such complex products they may be able to hit multiple targets to prevent the resistance formed by malignant cells and some infectious agents, for example.”
“Nature is a fantastic biochemist, which offers infinite possibilities for drug exploration,” she said, adding that if proven to work under strict U.S. drug law, “the future for complex drugs in the U.S. is wide open and bright.” —JD