The NutraCeutical Revolution: Fueling a Powerful, New International Market

Stephen L. DeFelice, M.D.
The Foundation for Innovation in Medicine

Within the next two decades, the NutraCeutical Market will approach the size of the ethical pharmaceutical market. NutraCeutical is the name I have given to a nutritional product – a single entity or combination which includes special diets – that reasonable clinical evidence has shown to have a medical benefit that its manufacturer cannot claim to the public or the physician under present regulatory policy. Making a medical claim for a nutritional product makes that product a drug, according to the prevailing reasoning of the regulatory agency; claims made for drugs must be approved by the government.

Present U.S. regulations, for example, permit a company to sell Vitamin C as a nutritional supplement without government approval, provided that the company does not make claims regarding its medical benefits. If a company were to write on the label that Vitamin C is indicated for its unquestionable efficacy in the prevention and treatment of scurvy, that would be considered a medical claim and clearly in violation of present FDA regulations. Unfortunately, present laws permit a company to sell a nutritional product but prohibit it from informing physicians and the public about the established benefit of the product.

Traditionally, the dynamics between the U.S. political and health communities have led to the present system of contradictions. Times have changed, however, and the NutraCeutical Revolution soon will render present government regulations obsolete. Indeed, recent comments from FDA Commissioner, Dr. Frank Young, are a tacit recognition that such change must occur.


Technology Fuels The NutraCeutical Market

The NutraCeutical Market has been given impetus by explosive modern day technology that will isolate and produce mass quantities of a multitude of natural substances never before available.

A substantial percentage of these substances will be nutritional products that will have strongly suggestive or definitive preventive or therapeutic benefits. Demonstrating such clinical benefits of these nutritional products will create an environment in which medical claims will be made at nominal cost and without substantial regulatory interference. This radical change in the procedure for making medical claims will lead traditional pharmaceutical and food companies to make enormous investments in nutritional research that would be likely to produce evidence of clinical activity for nutritional products in general.


Physicians and Media are Factors

The foundation of the NutraCeutical Revolution involves two very powerful and recent phenomena.

1. General physician acceptance of the value of nutrition in total health care. Until recently, medical claims for nutritional products were generated by advocates of nutrition outside the mainstream of medicine. Also, the majority of clinical data supporting such claims were questionable or of poor quality. Nevertheless, the public, responding to market forces, wisely accepted the value of nutrition, despite the absent endorsement of physicians. (Indeed, one can say that the hidden public demand preceded the market forces.)

Then, voile! Calcium, fiber and fish oil arrived- supported by strongly suggestive, but not definitive, clinical data – in rapid succession. Surprisingly, U.S. medical experts embraced the clinical data with wholehearted enthusiasm, giving birth to a new U.S. phenomenon in which both physicians and consumers now have become nutritional partners in a very real sense.

2. The mass media have emerged as the primary sources of medical claims: The legitimate mass media always had a strong hunger for nutritional news, but were reluctant to write or speak about nature’s medical benefits because of the disapproval of U.S. expert physicians. When good clinical studies supported the potential clinical values of calcium, fiber and fish oil, the medical and consumer media responded with massive educational programs supporting these products; these efforts far exceeded the impact of even the most powerful advertising and public relations programs. This mass media “promotion,” moreover, cost the producers and distributors of these nutritional compounds virtually zero dollars.

The conclusion is clear: Supported by reasonable clinical data accepted by physician experts, the mass media has now become the powerful and legitimate promotion agency of NutraCeutical products.

It is important to note that, for the first time, a significant number of these nutritional products will have some type of commercial exclusivity, ranging from limited patent protection to specialized knowhow in production processes. The more exclusivity, the more a company will be encouraged to invest to demonstrate the clinical benefit of a given product because of the anticipated high profit margins. The degree of exclusivity of any natural substance, however, rarely approaches that of an artificial molecule, and the sponsor frequently is discouraged from making the heavy investment necessary to obtain FDA approval for its nutritional product, particularly when such approval is not necessary to make claims. Nevertheless, we can expect a dramatic increase in the number of NutraCeutical registrations for either prescription or OTC use. Indeed, don’t be surprised if a single NutraCeutical product will be sold both as a registered and non-registered entity with either the same or different trademarks.

Increased physician acceptance of the medical benefits of nutritional products combined with the consumer’s enthusiastic acceptance of such benefits will convince legislators to modify* Federal regulations so that NutraCeutical products may be incorporated under the firmly established regulatory umbrella without requiring high-cost FDA approval for making medical claims.


The NutraCeutical Marketplace

The organizational structure of NutraCeutical companies will be similar to that of present U.S. pharmaceutical companies, and will include divisions of research and development, licensing, sales and marketing. Interestingly enough, no corporate structures presently are tempermentally and logistically capable of entering this new market. The major health food, general food and pharmaceutical companies will not be the pioneers. Smaller, innovative companies – as have happened in the field of genetic engineering – probably will be the first to successfully demonstrate the legitimacy of this new market.

Some future NutraCeutical companies – unlike drug companies that cannot own pharmacies- increasingly will purchase food store outlets and create multiple, highly competitive chains. To increase their competitiveness and market penetration, pharmacy sections will be established in each outlet, not as separate units, but as a logistical complementary service. Other distribution channels – such as supermarkets, which generally do not sell specialty nutritional supplements- inevitably will convert to the demands of the new market. Let there be no doubt that the pharmacynutrition single counter will be the major mode through which nutritional products will be made available to the public.

These companies will “go public” and seek to sell their products in the OTC and ethical OTC markets.

I know that all of you in this Harvard biomedical management course are accustomed to the classic pharmaceutical system in which a drug is researched and medical claims must be approved by a regulatory body before the drug is marketed to the physician. But, this new market has arrived- and it is exciting.

And finally, I now can see the beginnings of an additional new phenomenon, the CosmeCeutical Revolution. But that’s another story which I’ll discuss In our next course.