The top issues & opportunities in dietary supplements: exploring the latest trends and developments affecting the dietary supplement market today and into the future.
The dietary supplement market may be poised for a wild ride after relatively flat performance during the last several years if the signs on the horizon are true.
Just as generic drugs have rocked the world of pharmaceutical manufacturers due to economic pressures, supplements are steadily benefiting from consumers' desire to be more responsible for their own health, wellness and disease prevention.
Supplement sales reached $60 billion globally and $20 billion in the U.S. in 2004, experiencing an average annual growth rate of approximately 4% since 2000. As this burgeoning industry looks to create and market the next generation of quality products to meet growing and ever-changing consumer needs, it will likely run across valleys like regulatory pitfalls and peaks like scientific advances in formulations.
To help the industry traverse this diverse landscape, NUTRACEUTICALS WORLD focuses on 14 hot issues and opportunities in 2006 and beyond.
1. The Research Agenda
Many companies in the supplement industry have realized the need for research, but devising a meaningful research agenda is a daunting task. And few actually understand exactly what this type of research requires.
Currently, the industry widely borrows and uses research from other companies or industries--a "law of the commons" practice--unlike the pharmaceutical industry, which maintains proprietary knowledge and science exclusively for one product. To use somebody else's science for one's own product is not appropriate in many cases, but individual companies currently have no incentives to spend significant amounts of money on the required research.
Therefore, research has largely defaulted to the federal government. Unfortunately, most government institutions do not have a clear sense of what should be studied to add value to public health and how to use validated materials with quality ingredients at required dosage levels to get meaningful results.
Indeed, some key studies sponsored or funded by the National Center for Complementary and Alternative Medicine (NCCAM), which is part of the National Institutes of Health (NIH), appear flawed in design or approach, especially those on St. John's Wort, echinacea and saw palmetto.
Members of Congress have already started having serious discussions with NCCAM about future dietary supplement studies and the need for an industry expert advisory group to provide guidance and advice to NCCAM. Indeed, efforts to form such a group have already begun.
Steven Dentali, vice president of scientific and technical affairs for the American Herbal Products Association (AHPA), Silver Spring, MD, recently addressed the Advisory Council of NCCAM to provide an update on applied standards to ensure the quality of research into herbal products and other biologically active test agents.
Mr. Dentali now chairs the five-member Product Quality Working Group (PQWG), which was approved in concept last summer and formed late last year to address this issue. In his address to NCCAM's advisory council, Mr. Dentali explained how the new PQWG reviews "just-in-time" information submitted by applicants for the highest scoring proposals before a funding decision is made. Investigators who research botanical preparations must follow guidance, which includes information on 20 different points, including identification of the source material, its source, its cleanliness and quality standards, extraction procedures and formulation, and stability and storage. Similar information is required for proposed research into products derived from animals, probiotics, placebos and other agents.
"While it may seem burdensome to require preeminent researchers in their chosen field to jump through NCCAM product quality just-in-time hoops, we cannot allow good scientific work to go to waste because the natural product link isn't adequately developed," Mr. Dentali said. "If scientists want NCCAM funds to study natural products, then adequate required expertise must be brought to bear."
After Mr. Dentali's presentation, NCCAM director Stephen Strauss asked him if the agency could use the text of his talk on its website to help researchers understand these new product quality requirements and thanked him not only for his help in chairing the PQWG, but also for teaching NCCAM what it needs to know regarding botanical product quality issues. Hopefully progress like this in other areas of dietary supplement research will continue.
2. China: The Great Opportunity & Problem
The China "effect" is damaging the industry. The dietary ingredient raw material flow (primarily botanicals) from China into the U.S. is so significant that it affects the industry's ability to compete on a quality-based platform, given the current economics.
How so? The retail products made from these raw materials reflect a low-price value equation. Consumers don't understand the price-value equation, and the price differential between the most expensive and least expensive products is far too great. This is a complicated situation. If one can buy a bottle of ginkgo biloba for a buck at the Dollar Store but then sees the "same thing" at Whole Foods for $20-$25, what does that say about the true usefulness and therapeutic value of these high-end products or the quality of the $1 product?
Part of the problem is "ghost manufacturing" in China. Consider this scenario: A U.S. company thinks it is contracting with "China Company A" with a spanking clean manufacturing facility, but Company A is actually subcontracting with a "ghost company" that has unsanitary production conditions, unbeknownst to the U.S. company. The point of this example is we must know who is actually making these products to assure GMP compliance.
3. New Dietary Ingredients vs. Old Dietary Ingredients
The FDA is struggling to develop a workable safety definition for dietary supplements. The Center for Food Safety and Applied Nutrition (CFSAN) has signaled that "New Dietary Ingredients" as defined by Section 8 of the Dietary Supplement Health and Education Act (DSHEA) of 1994 will be the gateway for both a working safety definition and enforcement policy for dietary supplements.
The key issue turns on the definition of chemical alteration. Any dietary ingredient that has been chemically altered as of October 15,1994 is, in FDA's opinion, a New Dietary Ingredient subject to the safety submission obligations under Section 8 of DSHEA. If adopted as an enforcement policy, thousands of currently sold dietary supplements would technically become "illegal."
4. Codex: Friend or Foe?
On July 6, 2005, the Codex Alimen-tarius Commission (part of Food and Agriculture Organization--FAO--and the World Health Organization--WHO) adopted global standards for the development of new upper limits (ULs) of nutrients in vitamin and mineral supplements.
The guidelines are based on risk assessment rather than recommended dietary intake (RDAs). Many countries use RDAs, resulting in significantly lower levels of permitted potency than those countries following a risk assessment/potency approach.
Here's the problem: at the initial meeting of FAO/WHO, scientists chose to determine risk assessment methodology behind closed doors without dietary supplement industry representation. This process needs to become transparent.
Most observers are optimistic that the potency levels will be raised from the current level of 1 to 1.5 times the RDA. But if the process ultimately results in low levels because of a privately discussed approach without industry participation, that will not be acceptable and we'll have to go back and revisit Codex one more time.
The FAO/WHO draft report was issued on January 12, 2006, and the industry is now scrambling to review and provide comments.
5. Material Fact Disclosure
The industry must agree on when and how to add statements of caution, warning, or interaction language to product labels, especially as herb/drug interactions become a significant issue. These statements can encompass proper and safe use guidance, recommended dosages, and who should not use a certain product.
This is important because it affects product liability insurance, risk management and consumer confidence in dietary supplement products.
Currently, the FDA is moving toward a material fact disclosure (MFD) concept. FDA may conclude a label is misbranded, mislabeled, or adulterated if a company did not tell consumers something it should have. There are hints that the FDA will begin some selective targeted enforcement based on this principle.
Consumers may claim "failure" to disclose based on discrepancies in product labeling between different brands as a basis for litigation. Consumer A will argue, "You should have told me this, but you didn't."
It is imperative that the industry develop a mechanism to agree on universal key language on labels. Such statements, once on a label, seldom come off.
6. Analytical Methods
The dietary supplement industry urgently needs to develop more and better analytical methods to test products. This is inherent in good manufacturing practices (GMPs).
The FDA views as the "gold standard" a limited number of official methods of analysis (OMA) of AOAC International, Gaithersburg, MD. Next, it considers unofficial but widely accepted methods that have gone through multi-lab validation studies.
The industry now has several collaborations to develop more robust methods, particularly with the Office of Dietary Supplements (ODS) at the NIH. Detection of intentional adulterants is one key area of informed analytical method development.
For example, the saw palmetto analytical working group is developing ways to catch intentional cheating with saw palmetto. Clever chemists can substitute palm oil and sell it in saw palmetto extract for a tremendous profit margin. Current analytical methods do not detect that type of adulteration. This will soon be corrected.
Other areas of focus include ginkgo and the rutin substitution, antioxidant fruit and berry powders and red dye substitutions, and hoodia products.
7. Global Sports Issues
The global sports market is gigantic and has enormous public interest. Many involved in professional and/or amateur sports use supplements. Yet, global anti-doping organizations have a general policy forbidding athletes from using dietary supplements, with a strict liability responsibility not to use something that would cause them to test positive for a banned substance.
Past allegations of doping violations, fraudulent supplement labels, and disgraced athletes who blame supplements as the excuse "du jour" have become commonplace. If an athlete is in the waning stage of his/her career, he/she may sue a supplement company for ruining a career and the financial loss they could suffer (retirement plan). It has been done and it will continue to be done.
But the industry has a window of opportunity to re-engage the national and international sports community in a better relationship if it makes trustworthy products to quality standards and with meaningful third party certification.
In October last year, the World Anti-Doping Agency (WADA) hosted an international symposium with 40 anti-doping organizations to discuss supplements in sports. The dietary supplement industry was also represented. Areas addressed included use and risks of dietary supplements, reduction of contaminants, and improved labeling and regulation of dietary supplement products. This collaboration will take time but can yield tremendous benefits to all sides.
8. Direct-to-consumer Advertising: Say Hello to Claims Confusion
Direct-to-consumer (DTC) advertising is creating a vastly underrated issue over who gets to promote what type of health claims to consumers. This is significant because billions of dollars are at stake.
Consumers are bombarded with messages daily to buy branded prescription drugs with claims that overlap over-the-counter (OTC) drug and dietary supplement claims. The top claims categories in the world include allergy, cold/flu, cholesterol, joint pain/inflammation and erectile dysfunction. Previously, the FDA set aside these claim categories for Rx pharmaceuticals--kind of like reserved parking spaces--ultimately scheduled for an "OTC switch."
Now these industries are stacking up on top of each other in important claim areas. Suffice it to say, consumers are really confused. Polls show they can't tell the difference between an RX claim, OTC claim, and health claims/qualified health claims and structure/function claims for dietary supplements and cholesterol reduction, as an example.
Yet, the FDA's final regulation prohibited claims for allergy, cold/flu, cholesterol management (now sort of permitted), and diabetes, saying these are "diseases" that are outside of the claims domain for dietary supplements.
We're going to see continued bumping and pushing from all sides. The dietary supplement industry failed to challenge the FDA's final regulation on structure/function claims and must now work to recover lost territory. It will require revisiting the definition of "disease" and reintroducing the concept that dietary intervention is the primary way to prevent disease, which is fundamental to a sound national healthcare policy.
We don't know when the FDA will meet its commitment to issue proposed GMPs for dietary supplements. But the FDA has gotten the message that the industry wants them now. Not having these regulations in place is the No. 1 criticism why dietary supplements are not regulated.
Expect significant changes. The regulations will have a new emphasis on front-end testing and inspection, and less emphasis on finished product testing (we hope). They will be tough on safety issues like adulterants and contaminants, which will affect raw materials coming into the U.S. from China. There might also be some new language about confirmation of ODI/NDI status to qualify for sale.
Of critical importance, the industry must develop a process to self-regulate GMPs because the FDA doesn't have the staff, money, or expertise to inspect or enforce these rules. This is a chance for the industry to distinguish itself in the eyes of regulators, Congress, the media and consumers.
Without the credible threat of enforcement, the good players will play better and the cheaters will keep cheating until the marketplace itself demands better performance. This will be driven by the retail, consumer and watchdog groups, as well as the competitive market environment.
One potential X factor: it's possible that small businesses will come together to sue the FDA to block implementation of GMPs. They might argue that the regulation unduly punishes small businesses and is inherently unfair. If you produce in small lots, testing costs often exceed product costs, hence, the new GMP requirements would put them out of business. This possible delay could cloud the full implementation of GMPs.
10. Present & Future Political Leadership
Two great leaders, U.S. Senators Orrin Hatch (RUT) and Tom Harkin (DIA), who have fought and won battles for the industry, continue to oversee the implementation of DSHEA and related legislative issues.
But the industry also needs the support of other key members of Congress who are interested in and understand its issues. Organizations like the Utah Natural Products Alliance (UNPA), Salt Lake City, UT, the National Nutritional Foods Association (NNFA), Washington, D.C., the Council for Responsible Nutrition (CRN), Washington, D.C., and the American Herbal Products Association (AHPA), Silver Spring, MD, must continue to educate Congress on the value of DSHEA and the role of supplements as a key part of personal health.
One critical legislative issue for the future will be intellectual property (IP) protection. Changing the patent laws could enhance research investments, create "mini" NDIs, and create shorter periods of proprietary ownership of science--all of which will help to attract billions of dollars in venture capital required for the industry to create the next-generation of quality products that will meet the growing consumer need for science-based and IP-protected products as the population ages and healthcare costs rise.
The trick is to balance investment and return on investment such that serious research generates serious sales revenues for a reasonable period of time, all without denying access to a large group of products already on the market.
11. Consumer Product Demand
In 2004, the top-selling supplement categories were sports, energy, and weight loss, totaling $5.8 billion, or making up 28% of total market share, according to Tom Aarts, executive editor of Nutrition Business Journal (NBJ), San Diego, CA. The categories that experienced the most growth included sexual health ($200 million, a 10% increase over 2003 sales), gastrointestinal health ($424 million, a 9% increase over 2003 sales) and diabetes ($508 million; an 8% increase over 2003 sales).
Mr. Aarts believes the growth through 2008 in specialties will be between 7-9%, driven mostly by essential fatty acids (EFAs), omega 3 fatty acids, fish oils, joint care products, heart health, hair and nail formulas, and weight management solutions. Another category he said would experience steady growth was sports nutrition, which he claims will grow 4-6%, driven by protein and energy formulas.
Steven Clarke, PhD, senior research fellow of Discovery Nutrition Science Research at McNeil Nutritionals LLC, a Johnson & Johnson company, earmarked the following health platforms as avenues for dietary supplements and functional foods/beverages.
* Weight reduction including meal replacements (i.e., Ensure) and satiety vehicles (i.e., Hoodia extracts)
* Weight preservation and/or gain, especially to aid recovery after surgery and to address ill health and emaciation from cancer
* Gastrointestinal health, such as prebiotic delivery (fructooligosaccharides or FOS) and probiotic delivery (Lactobacillus)
* Metabolic health, including management of glucose, lowering of cholesterol (i.e., Benecol One-Shot), control of blood pressure (i.e., dairy protein tri-peptide), and reduced oxidative stress of athletes.
12. Liquid-based Supplements as a Preferred Delivery Form
Consumers prefer dietary supplements in liquid-filled formulations, according to Lynda Doyle, director of business development for DSM Nutritional Products, Inc., Parsippany, NJ, and Hassan Benameur, PhD, director of liquids development, Capsugel, Colmar, France.
According to a 2004 Multisponsor Survey of vitamin users, 27% of adults preferred taking a liquid-filled product. This was second only to tablets, which was preferred by 34% of adults. "But then, multivitamins are primarily available in tablets," Ms. Doyle qualified.
So why do consumers prefer this type of delivery? Liquids are perceived as easy to use and swallow. And because liquid dosage forms are often higher in concentration, fewer or smaller pills can be taken. Liquids are also thought to be more stable and have a longer shelf-life, as well as more bioavailability.
Dr. Benameur spotlighted some innovative delivery forms that are taking liquids to the next level:
* Capsugel recently developed a liquid skin care oral blend of compatible liquid actives for a customer.
* Capsugel's Licaps CoQ10 showed 30% increased bioavailability over other popular forms (effervescent tablets, powder and suspension) in a study with 24 healthy volunteers. The increased bioavailability was made possible by a proprietary encapsulation process offering protection from oxidation, which can degrade formulas.
* Capsugel has also created a patent-pending product that combines vitamins, minerals, and herbs through a unique water-and-oil microemulsion formulation.
13. Distribution Trends
In 2004, the dominant distribution channel momentum shifted from retail (mass market distributors for food, drug, convenience, health and specialty retail) to direct channels (mail order, multilevel networks, practitioners and the Internet), according to NBJ's Mr. Aarts.
Although supplement sales growth via both retail and direct channels hovered around 6% each in 2003, sales growth took off for the direct channel, which posted close to 8% growth in 2004, while retail posted no growth at all.
More specifically, the top gainers in 2004 within the direct channel were the Internet (13% growth) and practitioners (10.5% growth), while mass market retail actually lost ground (-3.5% growth). The Internet posted $393 million in sales in 2004, while the practitioner channel took in sales of $1.4 billion--with Metagenics, Standard Process, and Integrative Therapeutics leading the pack).
"The numbers are phenomenal for a company to go direct, but do so responsibly," Mr. Aarts cautioned. "The FTC and FDA are coming after the direct-selling machines that falsely advertise or misrepresent. Contract manufacturers of ingredients or capsules are not liable, but we need to separate the good from the bad apples."
14. Emerging & Future Market Opportunities
Geographically, China and Eastern Europe are burgeoning markets, according to Peter Zambetti, global business development manager for dietary supplements at Capsugel.
China offers a huge population with growing disposable income, and Eastern Europe wants to be like Western Europe. "Moreover, people in these parts of the world believe in natural remedies because they have been used for hundreds of years. Their mothers gave them cod liver oil or bee pollen that can now be put in capsules and other forms," Mr. Zambetti said, adding, "Innovation and local partnerships are important strategies for achieving growth."
One example Mr. Zambetti pointed to was the situation in Romania. To capitalize on a market growing at a 25% rate, Capsugel at request brought in regulatory consultants to work with the Minister of Health and Agriculture, which created the Institute of Bioresources. This institution was set up to handle the growing popularity of herbs in Romania. It also helped develop a new law for inclusion of a positive list of botanicals allowed in Romania, which mirrors Belgian law.
Another emerging market resides in military populations. Support is available for dietary supplement development, especially from the No. 1 funding agency, Department of Defense's Combat Feeding Research and Engineering Board (CFREB), Natick, MA.
The combat feeding program, located in the Natick Soldier Center, is focusing on war fighter sustainment for the 21st Century and is looking for new supplements to add to Meals Ready to Eat (MRE), as well as novel nutrient delivery systems to enhance human performance. "Within five to 10 years, soldiers may be wearing a nanoparticle uniform, which cools in summer and heats in winter. They may also be taking performance enhancing supplements administered via a patch transdermal system," said J. David Gangemi, PhD, senior science advisor in the Office of the Assistant Secretary of Defense (Health Affairs).
Specific areas of development interest for the Advanced War fighter Sustainment Program include enhancing physical performance and stamina, sustaining mental alertness, hastening recovery from fatigue and bone health in women. "A major reason women are taken off the front line of action is stress fractures," Dr. Gangemi said.
In five to 10 years, other opportunities will likely show up in the area of nutrigenomics. Nutrigenomics revolves around the understanding of an individual's unique nutritional needs based on genetic makeup and meeting those needs to prevent disease. Nutrigenomics will eventually open up new markets for foods, drugs, and dietary supplements, including custom designed and/or custom prescribed dosages for optimum interaction with an individual's gene map.
Over the years, diet recommendations have been made by studying populations rather than individuals. Lactose intolerance is one example. Most encourage drinking milk but some individuals in a population are lactose intolerant. The chance of being lactose intolerant varies depending on one's genetic ancestry. Individuals that are descendents of Northern Europeans are more likely to tolerate dairy products than individuals from Southeast Asia, who are unlikely to tolerate it beyond weaning. "Overall, the genetic variability within a population is greater than between populations, with only a 10% genetic difference between Asians and Africans, for example," said Dr. Jim Kaput, PhD, senior scientist at the Center of Excellence in Nutritional Genomics at the University of California, Davis, and co-founder of the Laboratory of NutraGenomics Medicine at the University of Illinois, Chicago. "Through nutrigenomics, we want to tailor diets to the individual. As an example, low fat diets for a small number of people hurt the heart. And within population groups, some individuals might need more vitamin E or certain foods."
By Jacqueline Savaiano
RELATED ARTICLE: This article in a nutshell:
* The research agenda
* China: the great opportunity and problem
* New dietary ingredients vs. old dietary ingredients
* Codex: friend or foe
* Material fact disclosure
* Analytical methods
* Global sports issues
* Direct-to-consumer advertising: say hello to claims confusion
* Present & future political leadership
* Consumer product demand
* Liquid-based supplements as a preferred delivery form
* Distribution trends
* Emerging and future market opportunities
RELATED ARTICLE: Liquids Supplement Summit Held
Innovative success formulas bubbled up at distinguished gathering of nutraceutical leaders.
Business collaborations with health insurance benefits managers, entrepreneurial models for nutraceutical development, functional food ingredients as a business goldmine, and "new frontier" metagenomic technology to create nutraceutical enzymes--all were discussion highlights at the Liquids Supplement Summit held last October in Greenwood, SC.
The summit--"Expanding the Role of Liquid Nutraceuticals in Human Health and Economic Development"--brought together leaders from the scientific, technological, academic, government, health insurance and manufacturing arms of the $150 billion global nutrition industry.
Held at SC Bio, a biotech incubator for development and entrepreneurial ventures, the two-day summit was hosted by Capsugel, a global leader in capsule manufacturing and a well-credentialed supporter of the dietary supplement industry. Capsugel has expanded beyond capsules and now offers advanced liquid-fill formulas for its Licaps product line at two state-of-the-art laboratories, one in Colmar, France, and a second formulation center, which opened last fall in Greenwood, SC.
"The nutraceuticals industry needs to be prepared for the growing demand by consumers in the 21st Century, as more people understand they are responsible for their own health wellness and disease prevention. We were pleased to bring together the best and brightest in the industry to exchange ideas and work together for innovative solutions and to create products that are effective, safe, and meet desired health platforms now and in the future," said Robert Whitelaw, director of sales, marketing and business development at Capsugel.
In addition to the trends, issues and opportunities discussed by Loren Israelsen, executive director of the Utah Natural Products Alliance (UNPA), Salt Lake City, UT, and other experts, the following reflects insights that stood out in marketing approach and technology.
Business Collaboration with Health Benefits Managers
To market Corowise, its plant sterol product, Cargill Health and Food Technologies, Minneapolis, MN, set up a cholesterol management program with Welldyne's RxWEST, an innovative pharmacy benefits manager that sells the program to its corporate clients as a plan option with generic co-pays.
"The program has created a win-win situation for all parties," said John Hunsicker, Cargill Health & Food Technologies' director of business development. "Employers can save 12-20% in total cholesterol management costs, while employees can save $200-1400 in product and co-pay costs versus traditional pharmaceutical approaches." For RxWEST, the program is attractive because it is cost-neutral and offers the company a point of differentiation versus other Pharmaceutical Benefits Managers (PBM).
Entrepreneurial Models with Research Institutions
Through endowed chair investments and other strategic alliances with biotech companies and private industry in upstate South Carolina, Clemson University and its Institute for Nutraceutical Research are better leveraging their biotechnology expertise for economic development.
"We could turn tobacco into a completely different industry. We could expand the food industry with designer food products like protein products for the Department of Defense's combat feeding program," noted John Kelly, PhD, Clemson's vice president for public service and agriculture.
Creating Functional Food Ingredients from Existing Marine Products
Ocean Nutrition Canada Limited (ONC), Dartmouth, Nova Scotia, Canada, is a leading supplier of marine-based omega 3 fatty acid ingredients for the global dietary supplement and healthy food ingredient markets.
ONC's patented microencapsulation technology uses a double membrane system to coat small particles of fish oil, resulting in a smooth flowing powder that has no taste or smell. This omega 3 powder food ingredient, branded MEG-3, can then be added to a wide variety of foods so consumers can get all the health benefits of fish without having to consume fish.
"Clearly the opportunity for MEG-3 is huge," said Robert Orr, ONC's CEO. "Consumers are demanding healthier food products and our customers, such as Danone yogurt in Canada, Muller yogurt in the U.K., and Parmalat milk in Italy, are able to meet that demand because MEG-3 delivers a strong health benefit without altering the taste or smell of their products." Mr. Orr says the growth potential for omega 3's is unlimited, and that the size of this segment could easily triple the size of the global nutraceuticals market in the future.
'New Frontier' Metagenomic Technology to Create Nutraceutical Enzymes
Scouring various ecosystems all over the world, Diversa Corp., San Diego, CA, has recovered genes from microorganisms and recombined them into new pathways to create small, unique new molecules and enzymes for products with nutraceutical applications for osteoporosis, gastric stability and immune system enhancement.
As a key example, soluble protein could be engineered to express orally active antibodies to prevent diarrhea. "Maybe this could be added onto cereal or something to be used in Africa where children die of diarrhea en masse," explained Eric Mathur, Diversa's vice president of scientific affairs and molecular diversity. "This antibody could be used on a world scale."--J.S.
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|Date:||Apr 1, 2006|
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