Jim Wagner, Editor
Nutritional Outlook, June/July 2002
Nutraceuticals are in their formative years. But make no mistake, the nutraceutical boom is coming and it will be worth billions to the companies who define it.
How many billions? In a recent report, Datamonitor placed the market at more than $16.7 billion (divided into the $8.8 billion functional foods segment and the $7.9 billion dietary supplement market). The optimistic Dr. Stephen DeFelice, chairman of the Foundation for Innovation in Medicine, strongly believes nutraceuticals are worth $250 billion right now. Business Communications Corp., reports that ingredients for nutraceuticals are worth $1.2 billion. Clearly, the future is bright — and profitable — for companies that develop successful nutraceuticals.
Forecasting the size of the market is difficult because there is no clear definition for the term nutraceutical. The consensus is that a nutraceutical is a product with ingredients that have been shown by extensive research to confer a health benefit. But the term is used by everyone from supplement suppliers to food companies.
“A nutraceutical is any food or dietary supplement ingredient that provides a health benefit. It could be tea with ginseng. It could be a soy product with an added level of isoflavones. Certainly, high quality standardized herbal extracts qualify as nutraceuticals, but the term nutraceuticals as it stands today has become too broad to be useful. We really should be talking about functional foods or dietary supplements,” says Bill Keeney, general manager, natural ingredients, Hauser Inc., Boulder, CO.
“Nutraceutical is a term of convenience, not a scientific term,” says Cal Bewicke, marketing director, Acta Pharmacal, Sunnyvale, CA. “It was coined by people to define a nutritious food product. Lately it has come to mean a product which combines traditional food ingredients and active components.”
By this definition, nutraceuticals are products with standardized herbal extracts. “All of the standardized herbal extracts should be nutraceuticals because the actives have been concentrated and standardized to pharmaceutical quality,” explains bewicke.
Nutraceuticals may be defined by how they are regulated, says Phil Katz, president of Shuster Laboratories, Boston, MA, an independent R&D firm. “Right now, there’s little difference between a nutraceutical, a functional food and a medical food,” Katz explains. “Until there’s a clear definition, it’s a matter of what the label claims are. If you market a menthol-flavored candy, it’s a food and regulated under NLEA. Add echinacea, and it’s a functional food because consumers perceive it to have a health benefit. If you make a structure/function claim, it’s a supplement regulated under DSHEA. Add a cough suppressant and it’s an OTC drug. Someday, someone will lead the way and use the term nutraceutical and we’ll have a definition we can use.”
Who Will Lead?
While scientists grapple with the definition of nutraceuticals, companies are jostling to see who will take the lead in getting the nutraceuticals to market. Dietary supplement companies have the inside track thanks to years of research and product development. But pharmaceutical companies aren’t far behind. They smell profits, especially with DSHEA defining what can and can’t be said on labels.
Food companies could also be contenders. Their marketing and product development expertise is top shelf, and they have excellent distribution systems. Their only hurdle is manufacturing, which isn’t up to the GMPs of pharmaceutical companies. The situation is changing, however. “I think food companies could be the first to have nutraceuticals on the market,” says Gerry McKierman, vice president, Vitamin and Food Products Division, Takeda USA Inc., Orangeburg, NY. “Their manufacturing facilities have improved rapidly in recent years.”
“There seems to be a shake out going on,” says Katz. “Affiances and partnerships are forming between food companies, pharmaceutical companies and dietary supplement manufacturers. We are doing a lot of development for all these groups. Some herbal ingredients have even been considered for monographs to get OTC status.”
Eventually, one company will emerge as the “Microsoft” of the nutraceutical industry. A leading contender is General Nutrition Corp., Pittsburgh, PA. GNC has the size, distribution prowess and resources to risk going after the market. It already has animal and human research studies underway and a product development alliance with a small biotechnology firm, OmegaTech. The payoff may well be leadership in a very lucrative market, according to John P. Troup, Ph.D., vice president of scientific affairs, General Nutritional Corp.
At a nutraceutical forum sponsored by the Pittsburgh based company in January, Troup said the market could be $10-12 billion within the next three years. “The formula is simple,” says Troup. “Nutraceuticals will target the mainstream user. They will taste good and be convenient to use. They will employ blends of ingredients and uses. And they will target health conditions or issues that concern many Americans, ranging from cardiovascular health to osteoporosis.”
Troup has a clear vision for the evaluation of the market. The first generation of nutraceuticals already have a foothold. “Gatorade could be considered the first nutraceutical because it effects rehydration,” he explains. “Vitamin E could also be a nutraceutical because over 2,000 studies have reported its positive effect on the cardiovascular system. But I think the development process is just beginning.”
Troup believes the second stage of nutraceuticals will be defined by ingredients delivered in an assortment of products. “There will be products with ingredients that give a health benefit. We’ll see tocotrienols (vitamin E analogs) in foods and juices for maintenance of HDL and LDL levels. We’ll also see food and drinks enriched with calcium and isoflavones.”
The third generation of nutraceuticals will be novel products developed for specific ingredient dosage forms. “As time goes on, research will give us the data to break down specific dose responses for ingredients,” says Troup. “Then we can create products with specific ingredient blends for specific conditions.”
The fourth generation will team nutraceuticals with pharmaceuticals. “I believe there’s a fourth generation of nutraceuticals which will be delivered as foods,” says Troup. “Think about the evolution of foods. Once, foods delivered simple RDA’s, then they were fortified. Soon, they’ll work with pharmaceuticals to give the optimal intake of nutrients and supplements for a particular condition. Suppose you’re taking lovastatin for cholesterol. These new products will allow you to cut your dosage in half. But there’s an enormous amount of clinical work to do first. We’re at least five years away.”
Supplements or nutraceuticals? Whole Foods is in the middle of a 200 sku product launch that includes nutraceuticals. Photo courtesy – Amrion
Supplements As Drugs?
Purists may not like the idea, but nutraceuticals may result from supplement companies teaming up with pharmaceutical firms. “The next big wave in nutraceuticals will be more pharmaceutical companies partnering with herbal companies,” observes Bill Kenneny. “Schering-Plough, SmithKline Beecham, American Home Products, Warner Lambert and Boehringer Ingelheim are all working in the nutraceutical market. It’s only a matter of time before more get involved.”
“The pharmaceutical industry sees that the American public likes herbal products because they work and there are no side effects. Pharmaceutical firms once thought of herbals as ‘weeds and seeds.’ But now standardized extracts are major products and they realize there are profits to be made,” explains Cal Bewicke.
Dr. Stephen DeFelice believes that nutraceuticals will revolutionize the health care system. “What we’re seeing is the start of a new paradigm in health care,” says DeFelice. “Nutraceuticals are foods with medical benefits. By the year 2010, nutraceuticals will be patented delivery systems for pharmaceuticals. Supplement and pharmaceutical companies will dominate the segment they’ll drive food companies completely out of the market. ”
Nutraceuticals? Some experts consider any product with a perceived healthy benefit to be a nutraceutical. Photo courtesy – Pacific Foods
While companies struggle to positron themselves, product development marches on, launching what John Troup would classify as the second generation of nutraceuticals. Steve Ramirez, marketing manager for the Brand Partners Division of Amrion Inc., Boulder, CO, describes a line of nutritional supplements launching at Whole Foods, Austin, TX, between March and September. Whole Foods acquired Amrion last September. The line includes leading-edge nutraceutical formulas developed exclusively for Whole Foods.
“This is wave-of-the-future marketing,” says Ramirez. “Whole Foods will have nutritionals and nutraceuticals organized by structure/function. Consumers can find products grouped by 16 different categories including heart health, men’s health, digestive health and cardiovascular health.”
The nutraceuticals are based on research from the University of Alberta’s Department of Physiology. The line features four products including Cell-FX(TM) and Attenhon-FX(TM)
Carotenoids will certainly play a critical role in nutraceutical product development according to William McLellan, vice president, H. Reisman, Orange, NJ. There is an abundance of scientific information supporting the benefits of natural carotenoids versus disease states. Also, it appears that the two most powerful anhoxidant natural carotenoids are lutein and Iycopene.
Lutein is a natural carotenoid that offers protection against age-related macular degeneration (AMD), the leading cause of adult blindness in the western world. Unfortunately, there is no cure or medicine available, but science advises that six mg per day of lutein may help protect against AMD. This condition can occur at 50-60 years thus making the aging baby boomers prime targets. Lutein has additional scientific support with regard to protective benefits against lung cancer, breast cancer and cervical cancer in women.
Lycopene offers tremendous nutraceutical opportunities. A study at Harvard by Dr. Giovannucci over a six year period involving 48,000 males produced outstanding results. The men with the diets highest in lycopene experienced a 45 percent reduction in prostate cancer. Interesting to note, it appeared doserelated: the men who had half the lycopene intake of the highest group experienced half the success. Lycopene also plays a strong role in cardiovascular health and works in synergy with vitamin E.
Other ingredients are likely candidates for nutraceuticals. “Tocotrienol is promising for nutraceuticals because of its health benefits,” suggests Eileen Mowry, business manager for nutrition, Eastman Chemical, Kingsport, TN. “Studies show tocotrienols are powerful anhoxidants. Preliminary results indicate that it may have an anti-cancer benefit as well.”
Gerry McKiernan sees interest growing in beta glucan. “We’ve had a lot of inquiries about our natural fermentation-grade betaglucans. It’s important for cholesterol reduction In insoluble form, it targets colon cancer.”
Regardless of where the next product comes from, the nutraceutical market is bound to be a crucial market in the coming years. At a nutraceutical conference sponsored by GNC, William Watts, president and CEO said: “There is an enormous increase in health awareness among all Americans. At the same fume, there is an enormous concern for health care costs and the impact of managed care. The result is an opportunity called nutraceuticals.”
Intelligent Quisine Completes Test Market
Last year, Campbell Soup began test marketing the first and only clinically proven meal program, a line of frozen products called Intelligent Quisine (IQ) Developed over five years at a cost of $20 million, the line consisted of different meals for people with high blood pressure, high cholesterol and type-two diabetes. The meals were sold through direct mail and doctors who recommended IQ to their patients.
Intelligent Quisine never made it beyond its Ohio test market. Citing the recent decision to get out of frozen foods, Campbell discontinued the line in March. “This was always a test. We will take the learning and apply it where appropriate, in other areas of our business,” says Judy Freedman, director of communications for Campbell Soup.
“The results of the test market were positive, but Campbell is refocusing on our core businesses,” says Freedman. “Plus, with IQ, we needed more resources in the healthcare area to meet our goals for the line. The meals were well received, but IQ didn’t meet our business expectations.”