“This year FDA and FTC flexed their enforcement muscles. FDA was particularly active with regard to GMP inspections, spiking and adulteration issues and New Dietary Ingredients (NDIs), while FTC was busy slapping companies for misleading claims. Companies by now should be realizing that if they intend to operate in this marketplace, they must take these agencies very seriously—their future depends on it.
 
“Across the pond, the European claims regulations have raised concerns for the natural products industry. It looks as if the environment will become more stringent for the future and many experts believe innovation will stall and business will falter as a result.
 
“Elsewhere, there are many opportunities knocking with regard to dietary supplements and functional foods, especially in developing markets such as Brazil, Russia, India and China, or the BRIC countries. Blessed with more disposable income, consumers in these regions are turning their attention toward our industry’s products. As regulations catch up to consumer demand, expect a thriving market for these products during the next several years.
 
“Back in the U.S., consumers remain confident that dietary supplements and functional foods represent a partial solution to their healthcare needs. Now they just need a good reason to spend money in other sectors to bring the economy back to life.” —Rebecca Wright, Editor
 
“We’ve come off a year of phenomenal Food Policy activity triggered by the significant legislation occurring in late 2010. The major change in the food policy and nutrition landscape emanates from The Healthy Hungry-Free Kids Act, the Food Safety Modernization Act, the proposed USDA nutritious school lunch guidelines, the recently released Dietary Guidelines, mandated menu-labeling, and Wal-Mart’s (and numerous others’) private-public sector challenges to reformulate products. The emphasis is on healthier food access, affordability and expanded choice. Smart industry members are responding. Rarely are the directions for product development so plentiful and prescriptive—new opportunities abound!”—Nancy Childs, Professor of Food Marketing, Saint Joseph’s University
 
“2011 is the year that will be remembered in the dietary supplement industry as the time when FDA got serious about implementing the Good Manufacturing Practices (GMP) requirements of DSHEA. Companies that thought they were ‘under the radar’ found themselves in the bright lights of form 483’s and Agency Warning Letters. What will most surely follow is increased scrutiny by the insurance underwriters and the plaintiff’s bar as the file of official actions by the agency increases in size and scope. The good news is those companies that take their responsibilities under 21 CFR 111 seriously are going to finally enjoy some pricing power in their work effort in the years ahead.”—Mark LeDoux, Chairman & CEO, Natural Alternatives International, Inc.
 
“This year, the International Diabetes Federation declared diabetes a ‘global societal catastrophe.’ Governments worldwide are currently struggling to meet the cost of diabetes care and high blood sugar is already the fourth largest killer of Americans. An alarming 35% of American adults have prediabetes (79 million people), which is significantly higher than the 8.3% diabetics currently in the country. Prevention of this crisis has to be a top priority for the dietary supplement and functional foods industry. We must introduce nutritional solutions that help to maintain healthy blood sugar levels. What are you waiting for?”—Rhonda Witwer, Senior Business Development Manager, Nutrition, Corn Products International/National Starch Food Innovation
 
“New regulations, import worries, clinical documentation—work around it! The industry is poised for greatness—functional food and supplement use is at an all time high. Self medication, use of supplements for treatment and the switch from OTC/Rx is accelerating. Minor illnesses are a major attraction, mega health markets are in their second generation, 75% want multi-functional supplements and old nutrients, e.g., potassium, magnesium and protein are new again. Major issues— bioavailability, naturally functional, more contemporary “pill” forms, and the demand for fast-acting/effectiveness—are enormous opportunities as are the new virtually untapped markets, e.g., kids’ health, muscle health/body toning and the truly new conditions of aging.”—Dr. A Elizabeth Sloan, President, Sloan Trends Inc.
 
 “2011 continued to welcome considerable trade and consumption growth in developing markets, especially in the BRIC (Brazil, Russia, India, China) countries. Strong manufacturing and trade performance as well as growing optimism are stimulating consumer interest.
 
“Yet another regulatory hurdle in the U.S. will likely affect the abilities of companies to develop and market new products. The U.S. is caught between being a dynamic, creative market and one that is becoming weighed down by considerable regulatory oversight. To complicate these matters further, reduced funding at a federal level may make enforcement of new rules difficult to achieve.”—Paul Altaffer, Product & Business Development, RFI LLC
 
“China is on the radar of many U.S. and foreign companies looking to expand their global business. However, regulations and market entry difficulties have kept many at bay. Unlike previous years, 2011 has seen some movement by China’s State Food and Drug Administration (SFDA) to reform the industry. In fact, the agency released a draft document in the beginning of August outlining the reduction of allowable product claims from 27 to 18. This represented a move to dispose of claims not being used and/or not scientifically valid. There are also rumors of creating a notification system for certain vitamins and minerals, which would be a step in the right direction.
 
“There are also indications from a variety of players that there are plans to develop the specialty health food store concept in China. As these plans begin to unfold, the industry should see a boost in consumer demand and witness the birth of an appropriate sales channel for natural health products. Also in 2011, the U.S.-China Health Products Association added three new members: DSM, Lonza and Unigen. The association also introduced the industry newsletter, ‘China Updates,’ which covers all facets of China’s overall natural health products industry. ‘China Updates’ is free to those that sign up on the association’s website at: www.uschinahpa.org.”
—Jeff Crowther, Executive Director, U.S.-China Health Products Association
 
“Uncertainty pervades the global economy, the fiscal policies of our nation, our national politics and the nature of the perception of and regulatory outlook for our industry. We read daily about banks afraid to lend, companies sitting on mounds of cash and consumers hunkering down as their economic and health security are increasingly jeopardized. Optimism, diligence, science, investment, unprecedented cooperation among industry leaders and courage are needed now more than ever before to lead the way to a better appreciated and defensible nutraceuticals industry. Our industry can be a significant job generator if there is a supportive and predictable regulatory environment. During the next year, we will see whom within our industry steps up to the challenge!”—Paul Flowerman, President, PL Thomas
 
“I am an optimist and believe in the long-term health and validity of our industry. However, we face challenges from inside and out. Inside, we have to find ways to more efficiently guarantee product safety and quality. We have to be able to assure consumers of fundamental product quality and do so in a timely and cost effective way. We must also respond to repeated challenges about efficacy. This requires investment in science that helps define and substantiate product benefits.”—David Bell, President, Bell Advisory Services
 
“As a long-time partner of a brand marketing firm in the nutraceutical marketplace, I have seen many changes companies have made to their overall product promotion. But sometimes it just still seems to be the same old approach. With the advent and popularity of social media marketing, as we move into 2012, it would be good to see manufacturers do more than just post a Facebook or Twitter link on their website, and embrace social media as a real marketing vehicle. It’s amazing how social media can become an integral part of marketing if you invest a little time and energy.”—Sheldon Baker, Partner, Baker Dillon Group
 
“Now that cGMPs are finally implemented it is time for industry to stop turning a blind eye to fraud. An extraordinary number of raw material suppliers, and their customers, continue to use substandard, mislabeled and even intentionally adulterated ingredients.
 
“The consumers lose in the short-term as they purchase and use supplements without receiving the health benefits desired. But Industry loses in the long-term as consumers turn their backs to supplements as a result.
 
“‘My consumer in this channel is not educated, they don’t know any better, so I can sell them this cheap product with no actives’” is a direct quote from a leading marketing company. Really? Come on industry, let’s clean it up!”—Eric Anderson, vice president of sales and marketing, AkerBioMarine Antarctic U.S.
 
“We’re carefully watching the proposed NDI Guidance. If it passes, the burden on our industry will be extensive, even for minor formula changes. I can’t see FDA managing submissions efficiently. And, I don’t believe NDIs will make supplements safer. Our industry already has an excellent safety record. Take bitter orange, the source of Nutratech’s thermogenic ingredient, Advantra Z. There has been an average of only four adverse events reports citing bitter orange per year since 1969, and none established this ingredient as the cause. We must demonstrate that the proposed NDIs will cost companies and government dearly—yet not enhance consumer safety one iota.”—Bob Green, President, Nutratech, Inc.
 
“The omega 3 segment of the industry continues to be an exciting one, with development driven by a large body of ongoing science. GOED has specific plans for 2012 to further develop the business, including ‘upgrading’ the U.S. heart health claim to remove the qualifying health claim language, and submitting an Article 14 heart health claim in Europe.
 
“GOED also plans to undertake an Economic Impact Study showing how much the government could save if more people took omega 3s, which is the first step in convincing the U.S. and Canadian government agencies that sit on the DRI (Dietary Reference Intake) Steering Committee to give IOM the funds it needs to research a DRI.
 
“Lastly, while omega 3 awareness is universal in all developed markets, understanding of optimal intake levels and benefits is low, so we also plan to begin an international consumer education plan to expand the knowledge base around omega 3s.”—Ellen Schutt, Communications Director, Global Organization for EPA & DHA Omega-3s (GOED)
 
“The nutritional supplement industry entered 2011 with more focus and direction than it had in years. With cGMP’s firmly in place, AER’s defined and the realization that this industry could weather the current recession, industry took to peering into its crystal ball with intentions of moving forward. That crystal ball quickly turned into a snow globe in July when the long awaited NDI guidance was released by FDA. While eyes remain aimed at the future and innovation is still the desire, the vision is clouded by uncertainty until the blurry climate settles and clarity can once again be realized. It is time for us as an industry to work together with government and consumers to restore the clearness of vision we need to focus on the good we strive to provide.”—Scott Steinford, President, ZMC USA
 
“Given our country’s continuing economic woes and the controversial debate over healthcare reform, many Americans have accepted more responsibility for their personal health management and are turning to alternative and complementary measures in the hope of preventing illness. In an industry that is often under fire, manufacturing safe, scientifically validated ingredients has never been more important. This is one reason why Embria Health Sciences confidently pursued, and successfully completed, the challenging New Dietary Ingredient (NDI) process for EpiCor, our flagship immune health ingredient. We were also recently awarded NSF certification. Proactively pursuing regulatory accomplishments like these sets companies like ours apart, which will be invaluable to both manufacturers and consumers who put their trust in this industry.”—Paul Faganel, President, Embria Health Sciences
 
“The global population is aging, with many people aspiring to remain in good health well into their senior years. The functionality of ingredients and their natural origin have become major drivers in the international nutraceutical market. Consumers desire products that are backed by solid science and derived from a natural origin. Continuing investment into research and development, plus the size of manufacturing facilities is playing a more prominent role within our market.
 
“Naturex develops innovative ingredients that combine performance with sustainability. Naturex demonstrates solidarity with the communities around its sites through a wide variety of global and local community programs. Naturex’s outlook for 2012 is very positive. After an excellent first half of the year, our sales were up 14% at the end of August. Our good results are driven by strong and consistent growth in the natural ingredients market and by our ability to innovate.”—Antoine Dauby, Group Marketing Director, Naturex
 
“The herbal extract sector has grown since the 1990s based on therapeutic, traditional, culinary herb and traditional foods, such as fruits, vegetables and spices. Regularly consumed in the diet, they have a much better safety profile and extensive research is ongoing for the bioactive effects related to almost every other health issue imaginable.
 
“Draco is developing a brand new product line containing bioactives from food-based botanicals, including a large number that are flavor compounds. We will be offering bioactive functional flavors in a full spectrum extract base. This includes a fresh-cut ginger flavor extract with aromatic zingeribene and pungent gingerols for digestive and joint health and rosemary and lavender for memory and mood support, along with many others that have exciting potential to enable a higher level of full spectrum functionality integrating bioactives and flavors into functional food products.”—Brien Quirk, Director of R&D, Draco Natural Products
 
“Despite continued health education and awareness campaigns, weight problems and blood sugar imbalances continue to plague our society. True change is a collective effort, requiring governmental community and individual participation as well as help from the nutraceuticals industry.
 
“The industry needs to do a better job educating the public and building awareness of how even a small lifestyle change such as supplementing with efficacious and safe products may greatly impact lifelong health. Many of InterHealth’s branded ingredients provide steps manufacturers can take to help consumers maintain their weight, blood sugar and insulin levels. InterHealth’s ingredients can help make a difference and improve the quality of life for millions of Americans.”—Paul Dijkstra, CEO, InterHealth Nutraceuticals
 
“This has been a great year for National Enzyme Company (NEC). In 2011, we won ‘Exporter of the Year’ for the State of Missouri. We are so proud of this accomplishment because it demonstrates how NEC has impacted so many lives worldwide. Our capabilities are represented in more than 46 countries—from custom blends to tablets to encapsulation to convenience packaging. As the world economy goes through challenges, NEC had a record sales year, which correlates with the growing segment of digestive health and enzymes.”—Demetrius Bledsoe, MBA, National Enzyme Company, Director of Sales
 
“The R&D pipelines are gearing up and putting out more new products versus a year ago. We are seeing improvements or upgrades to old products as much as we are seeing completely new products. As an example, companies are adding vitamin K to bone health products that previously had none or had older less bioavailable forms of K.”—Dan Murray, Vice President of Business Development, Xsto Solutions
 
“We at the Natural Products Association (NPA) are seeing increased activity from the FDA, which is on track to do almost three times the number of GMP inspections this past fiscal year over 2010. We welcome increased inspections, but are concerned they have been uneven. There is also FDA’s NDI draft guidance, the impact of which could be significant next year. And we can’t forget the FTC or Congress. NPA will continue our strong advocacy in 2012, but we need an engaged industry to be most effective.”—John Gay, Executive Director & CEO, NPA
 
“Big companies spent big money on growing their healthcare businesses. To me, that’s the most noteworthy development in our industry this year. Consider three events: Nestle bought Prometheus Laboratories—a maker of diagnostics and drugs for gastrointestinal illnesses—for $1 billion. DSM bought Martek—a maker of algae-derived DHA and EPA—for $1 billion. PepsiCo declared that its Global Nutrition Group would grow from today’s $10 billion to $30 billion (a staggering $20 billion in growth!) by 2020. This is not driven by public-spiritedness—it’s just good business.
 
“Consumers will pay more for products that do more. And given that we’re living longer and are more obese than ever before, health is not only important for our quality of life, but it’s also expensive. We will look for non-pharmaceutical ways to manage our health, and we are finally seeing significant financial commitments to health via nutrition.”—Bob Jones, Principal, Scientia Advisors
 
“Despite a slow economy, food and beverage manufacturers are going back to new product development. We’re seeing it firsthand at Ganeden Biotech, with many companies, big and small, exploring probiotics in their products. Providing value for the consumer goes beyond just taste and price. Many of our customers are looking for ways to truly differentiate themselves from competitors and they are finding it in ingredients, similar to our probiotic GanedenBC30. I expect we’ll see many exciting new product launches in 2012 and many will include health and wellness benefits. We’re very excited about the future.”—Mike Bush, Vice President of Business Development, Ganeden Biotech, Inc.
 
“The current state of the industry is one of great peril and great potential. On one hand, we have to deal with FDA’s unrealistic NDI guidance, Senator Durbin’s legislation on label warnings and some very negative consumer press that distorts the science behind our products. On the other hand, consumer confidence in our products and sales overall keep inching higher. With GMPs firmly in place, responsible companies have more opportunities to distinguish their products. And emerging research keeps demonstrating the contribution of dietary supplements for health and wellness. Despite the threats, we can create a strong future and a thriving industry.”—Steve Mister, President & CEO, The Council for Responsible Nutrition (CRN)
 
“With 2011 coming to a close, the largest immediate concern industry still faces is the full implementation and compliance with GMP requirements. With more than 25% of FDA inspections showing serious lack of compliance, the agency is asking itself the question: Is industry taking GMP requirements seriously? If these dismal compliance numbers persist, the agency will be forced to react. This will not be good, and will only highlight quality problems in the media, which will bring additional questions regarding safety and purity that could lead to consumer concerns regarding supplements. And NDI questions will be big in 2012 too.”—Ed Wyszumiala, General Manager of NSF International’s Dietary Supplement Certification Programs
 
“I believe we are seeing some true opportunities emerging amidst these uncertain economic times. In years past marketers in the supplement industry had the luxury of launching numerous products often, especially when an opportunity arose. Some would succeed and others would be dropped—an acceptable risk when the cost of entry was relatively modest.
 
“Over the past year, however, I’ve noticed companies are beginning to focus their limited resources on a product or a few products that have the potential to make a significant contribution to the bottom line. If this is a real trend, it should lead to increased revenue with fewer SKUs, products with longer lifecycles and other similarities with the pharma and CPG products we have always envied.
 
“Another current issue is the lack of innovation. Traditionally innovation comes from smaller companies, or those with the stomach for risk. With smaller companies being constrained by tighter budgets, I’m seeing the concept of open innovation expanding. It seems larger companies are investing in emerging platform technologies pioneered by start-ups and smaller companies.
 
“Another trend I’ve observed is the increasing challenge of compliance with preventative health products. When times are tough, consumers are less willing to pay for a product with a long-term or assumed benefit. The bottom line is if the consumer does not realize an immediate benefit, scientific substantiation for the product had better possess unquestionable and broadly accepted efficacy.”—Greg Stephens, Founder, Windrose Partners

“Regulatory bodies have a continued and, perhaps increased, interest in governing food, food with special ingredients and dietary supplements. Because of the aggressive climate and increased scrutiny of labeling and advertising claims, companies venturing into the growing marketplace for specialty ingredients need to be meticulous about ensuring the accuracy and legality of the nutrient, health and structure-function claims they make.”—Sheila Campbell, PhD, RD, Consultant, Windrose Partners

The Chronology of Regulations Governing Conventional Food & Dietary Supplements

• The 1906 Federal Food and Drugs Act, amended in 1938 by the Federal Food, Drug, and Cosmetic Act  (FD&C Act), authorized FDA to regulate nutrients and other dietary supplement ingredients and products.

• The 1958 Food Additives Amendment and the Color Additive Amendments of 1960 provided further regulation.

• The 1976 Vitamin-Mineral Amendments allowed FDA to limit the contents of dietary supplements for safety reasons.

• In 1994, Congress enacted the Dietary Supplement Health & Education Act (DSHEA) to regulate dietary supplements under the food provisions of the FD&C Act, but replaced the food additive provisions with safety requirements for dietary ingredients.

• In 2002, Congress enacted the Public Health Security and Bioterrorism Preparedness and Response Act (PHSBPRA) to provide additional authority to assure the safety of the food supply.

•  In 2006, Congress enacted the Dietary Supplement and Nonprescription Drug Consumer Protection Act (DSNDCPA) to require mandatory adverse event reporting systems for dietary supplements.

• In 2007, Congress enacted the Food and Drug Administration Amendments to prohibit adding drugs or biologics to food and to authorize the creation of a “reportable food registry” to collect information about food constituents that may pose serious health risks.

• 2011 saw the enactment of the FDA Food Safety Modernization Act.