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The Best of Times in the Worst of Times

12.01.07

What a difference a year makes. Last year at this time, the industry continued to undergo an exercise in patience as it awaited the "impending" release of final GMPs. Instead, it witnessed the passing of a new law pertaining to adverse event reporting for dietary supplements in late December. It wasn't quite the move the industry anticipated, but a majority of companies welcomed the new law nonetheless.

At last, this past June, FDA unveiled new GMPs for dietary supplements. The industry finally got what it wished for, and most viewed the new regulations as an opportunity to begin rebuilding consumer confidence that has been lost through several years of the mainstream media and others toeing the "unregulated" line.

Actually, the market could not be more ripe for nutraceutical products, particularly functional foods. Buoyed by the high double-digit growth rates of segments such as omega 3's and probiotics, the future seems bright. Unfortunately, the outlook for the U.S. economy could not be more bleak. The U.S. dollar continues to weaken, the housing market is crashing and fuel prices continue to soar. All of these factors will impact your business directly or the consumers that buy your products.

This month our "Word from Wall Street" columnist, Adam Ismail, analyzes the weakening of the U.S. dollar, which is a situation that every business must continue to monitor, especially since a majority of this industry's raw materials or services come from outside the U.S. The other situations like rising fuel costs and the housing debacle will continue to shrink consumers' disposable income, a situation that could prompt them to walk away from often premium priced healthy products. But the solution is not cheaper products. This industry must convince consumers that its products, whether they come in the form of dietary supplements or functional foods, are an indispensable part of their daily lives. Consumers should no longer view these products as luxuries, but rather necessities.

In other developments, the downward spiral of U.S. healthcare continues-bad news for mainstream medicine, hopefully good news for nutraceuticals. In this issue, Erik Goldman, our "Healthcare Practitioner Corner" columnist, provides an eye-opening look at family practice and primary care physicians. These gatekeepers are typically the first stop for patients, but they are increasingly unsatisfied with their professions and the state of healthcare. As a result, they are turning to nutraceuticals or exploring alternative medicine professions as a way to remedy their own situation. And the statistics seem to support this. According to a recent study conducted by Ipsos-Public Affairs, more than three-quarters of doctors and nurses recommend dietary supplements to their patients. In addition, these doctors and nurses also seem to practice what they preach, as nearly three-quarters of them also take dietary supplements.

Earlier this year the melamine scandal brought forth concerns regarding the supply chain across a range of industries, including this one. Our "From the Corners of the World" columnists, Paul Altaffer and Grant Washington-Smith, offer some valuable insight into China and its true impact on this industry. While it continues to lead the charge of being the least cost, most efficient producer of goods, it also continues to be a highly sophisticated and technologically advanced manufacturing powerhouse.

All of these issues and more are also covered in our "State of the Industry Update," which starts on page 38. We received more responses this year than any other from executives regarding their perspectives on how the market is performing and in what direction it is headed in the future. Responses covered everything from GMPs to the overall economy to supply chain issues.

Speaking of the supply chain, don't forget to consult our "International Buyers' Guide," which starts on page 62. It is the source you can trust to be the most comprehensive, up-to-date listing of suppliers, contract manufacturers, consultants and associations in the industry.