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Experts review critical issues from varying angles and perspectives.
By: Sean Moloughney
December 1, 2014
Quality, safety and efficacy will continue to determine success or failure in the modern nutraceuticals market, which is under increased scrutiny by federal authorities. In the 20 years following the passage of the landmark Dietary Supplement Health and Education Act (DSHEA), the U.S. nutraceuticals industry has become an integral part of both public health and the economy. About two-thirds (68%) of U.S. consumers reported taking supplements, according to a 2014 survey commissioned by the Council for Responsible Nutrition, and a vast majority (83%) expressed overall confidence in the safety, quality and effectiveness of these products. However, Good Manufacturing Practice (GMP) requirements continue to present challenges to many companies, as demonstrated by FDA warning letters that are made public on a weekly basis. Meanwhile, economically motivated adulteration has been a significant problem for decades. Keen understanding of what’s required under the law, along with appropriate testing methods and secure, transparent supply chains, will be critical to ensuring product safety. Empowered with new enforcement tools afforded by the Food Safety Modernization Act (FSMA), expect federal agencies to dedicate more time and resources to oversee the dietary supplement industry and enforce existing laws. This past June, a U.S. Senate hearing on weight loss products, which featured popular TV personality Dr. Oz, shined a spotlight on questionable science that supported sales of otherwise unproven products. Expect further FTC action against companies that fail to support claims, which includes use of the undefined term “natural” on products that contain artificial or synthetic substances. Additionally, expect debate to continue over labeling of genetically modified organisms (GMOs) and, more broadly, the role of science, technology and engineering in the food supply amid an expanding population and shrinking natural resources.
—Sean Moloughney, Editor, Nutraceuticals World
—Steve Allen, Co-Founder, Nutrition Capital Network
—Ellen Schutt, Communications Director, Global Organization for EPA & DHA Omega-3 (GOED)
—Scott Steinford, CEO/Founder, QX-Partners
—Peter Zambetti, Director of Global Development, Capsugel
—Steven Dentali, VP, Botanical Sciences, Global Product Science & Safety, Herbalife
—Nancy M. Childs, PhD, Professor of Food Marketing and Gerald E. Peck Fellow, Saint Joseph’s University, Erivan K. Haub School of Business
—Rhonda Witwer, Industry Consultant
—Greg Doherty, Managing Director Dietary Supplement Practice Group, Bolton & Company
—Daniel Fabricant, PhD, Executive Director & CEO, Natural Products Association (NPA)
—Steve Mister, President & CEO, Council for Responsible Nutrition (CRN)
—John Blair, CRN Chairman, and Senior Vice President, The Juice Plus Company
—Harvey Kamil, CRN Vice Chairman, and Vice Chairman, NBTY
—Jeff Crowther, Executive Director, U.S. – China Health Products Association
—Dan Murray, VP Business Development, Xsto Solutions, LLC
—Peter Leighton, Vice President of Product Strategy at Complete Nutrition and Founder of Abunda
—Paul M. Flowerman, President & CEO, PLT Health Solutions, Inc.
—Becky Wright, Marketing Director, Aker BioMarine Antarctic US
—Sebastien Bornet, Director of Global Marketing, Horphag Research (worldwide exclusive supplier of Pycnogenol)
—Will Black, VP Marketing, DSM Nutritional Products, NAA
—Weiguo Zhang, President, Synutra Pure
—Eric Anderson, Senior Vice President of Global Sales and Marketing, NattoPharma
—Michael Bush, Senior Vice President, Ganeden Biotech
—Elan Sudberg, CEO, Alkemist Labs
Industry Cycles: Convergence of Pharma & Nutra Ultimately, the dietary supplement industry continues to be driven by strong personal values. By Greg Stephens President, Windrose Partners
Most will agree that 2014 has been an exciting and challenging year in our industry. Consumer safety through cGMPs, other regulatory action and inaction by FDA, and a rapidly changing political scene are all hot topics. Certainly many colleagues will focus their comments on these and a range of other issues. I will focus my observations on another industry dynamic. As those who have roots in dietary supplements may have observed, there is a cyclical nature to the market. There are numerous examples, depending on one’s perspective. I am approaching it from the perspective of the ongoing convergence of the dietary supplement and pharmaceutical industries. During my first visits to Natural Products ExpoWest in the late 1990s, two concerns were voiced in the annual State of the Industry address: state licensure requirements by dietitians and the entry of Big Pharma into the supplement market. Sitting in the audience, I recall feeling more than a little self-conscious—my name badge exposing “RD” after my name and just under that, my employer name, a major pharma company. And yes, I was there to assess acquisition opportunities. Shortly thereafter, AHP (American Home Products, subsequently Wyeth) acquired Solgar, which added fuel to a frenzy of M&A activity. Also during this period, Bayer, Warner-Lambert and SmithKline launched or were test-marketing their own brands of botanicals. With their marketing and distribution expertise and seemingly unlimited resources, pharma companies were encroaching on a future growth area for supplements: the traditional food/drug/mass markets. This, combined with no real “heart” for the industry, caused them to be often viewed with a little disdain. Still, one industry executive observed, “Today I’m seeing the same guys wearing Birkenstocks and pony-tails—the only difference is they are now in Armani suits.” Post-acquisition was not as glamorous as expected. During integration and implementation of growth strategies it seems the “low hanging fruit” was not as accessible as pharma marketers had imagined. Supplement companies had a seemingly unlimited number of SKUs, few of which reached the pharma threshold of viability. And they didn’t truly understand the culture of the market, particularly the natural foods channel. Also, formerly the sweetheart of the media, consumers began to read negative stories on supplements. This eventually led to a dive in the market. As quickly as they closed, the acquisitions became divestitures. Having bought Solgar for a reported $425 million, Wyeth divested the company seven years later for just more than $100 million. The list goes on. Such acquisitions continued but with less emphasis on dietary supplements and more on branded “nutritional” products, like Abbott Labs acquisition of EAS. Today, pharma continues to flirt with supplements but with more targeted indications and limited SKUs. Now we’re seeing the pendulum swing in the other direction. At an industry gathering not long ago, a pharmaceutical executive made the observation that supplement companies are now encroaching on space traditionally exclusive to pharma, specifically medical foods. During the growth phase of medical foods, the industry would usually see a handful of product launches annually. Over the past two years this number has escalated dramatically. Fueled by a category permitted to make nutritional disease management claims and no requirement for FDA premarket approval, it is estimated that there have been at least 10 times that many launches over the past year. Much to the chagrin of the nutra-pharma companies, most of these products come from companies with roots in the dietary supplement industry. (Certainly, many supplement companies are misguided as to the regulatory requirements for medical foods.) Many dietitians entered the profession because of our passion for health and wellness through nutrition. Career opportunities now abound for dietitians with supplement companies. As far as heart goes, the dietary supplement industry continues to be driven by strong personal values. Regardless of your background and company, this industry is made up of passionate, caring people. Despite the cyclical nature of the industry, our common goal remains: providing safe and efficacious solutions to improve the health of patients and consumers.
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