The nutraceutical revolution: its impact on food industry R&D

Stephen L. DeFelice, M.D.
Trends in Food Science & Technology, February 1995, Vol. 6

The nutraceutical revolution is in full swing and will dramatically change the nature of the food industry by the year 2000. The two primary messages are: (a) the industry must develop proprietary patented products and (b) the industry must develop the capacity to demonstrate the clinical benefits of such products. In this way the growth of the market as well as profit margins will significantly dramatically – increase. Presently, food companies lack the necessary know-how and must quickly and effectively obtain it if they are to join the nutraceutical revolution.

The nutraceutical revolution will lead us into a new era of medicine and health, in which the food industry will become a research-oriented one similar to the pharmaceutical industry. It is interesting to note that the US food industry presently spends less than 0.5% of gross sales on R&D, whereas the pharmaceutical industry spends well over 10%.

A few years ago I coined the term ‘nutraceutical’ in order to give a much needed identity and legitimacy to this amorphous nomenclatural area. A nutraceutical is any substance that is a food or part of a food and provides medical or health benefits, including the prevention and treatment of disease. Such products may range from isolated nutrients, dietary supplements and specific diets to genetically engineered designer foods, herbal products, and processed foods such as cereals, soups and beverages. It is important to note that this definition applies to all categories of foods and parts of food, ranging from dietary supplements such as folic acid, used for the prevention of spine bifida, to chicken soup, taken to lessen the discomfort of the common cold. This definition also includes a bioengineered designer vegetable food, rich in antioxidant ingredients, and a stimulant functional food or pharmafood.


Clinical evidence

The nutraceutical revolution began in the early 1980s, sparked off when the actual or potential clinical benefits of calcium, fiber and fish oil were supported by clinical studies published in distinguished medical journals, and when physicians began to educate their colleagues and consumers about these substances via the mass media. A continuous stream of published clinical studies followed, defining the potential benefits of a growing range of products on a rapidly expanding array of specific disease processes. Examples include the use of 13-carotene to prevent certain types of lung cancer, niacin to prevent recurrent heart attacks, pyridoxine to treat and prevent depression, vitamin A to treat measles, magnesium to treat hypertension, garlic to reduce atherosclerosis, fish oil for hypertension, cranberry juice to prevent urinary tract infections, antioxidants to reduce damage from

heart attacks, and countless others. For the first time in US medicine, physicians – convinced by the published clinical data – joined consumers in their broad belief that foods or parts of food have medical value. This marked the entry of nutraceuticals into the mainstream of clinical practice, giving rise to an increasingly urgent need to rationalize the scientific and medical development of these products, their commercial availability and the communication of information about them to the primary dual audience of physicians and consumers. Nutritionists, armed with more clinical as well as preclinical data, will play a more critical role in bringing about an effective physician-consumer interface.

Regarding the promise of nutraceuticals, they should be considered in two ways – potential nutraceuticals and established nutraceuticals. A potential nutraceutical is one that holds a promise of a particular health or medical benefit; such a potential nutraceutical only becomes an established one after there are aufficient clinical data to demonstrate such a benefit. Thus, folic acid was a potential nutraceutical until aufficient clinical evidence for its role in the prevention of neural tube defects was generated to make it an established one, whereas ginseng tea remains a potential nutraceutical because of a lack of aufficient clinical evidence for any indications. It is disappointing to note that the overwhelming majority of nutraceutical products are in the ‘potential’ category, waiting to become established.


More research

This sad situation spells the need for a dramatic increase in basic and clinical research. The food industry is presently comfortable with basic research but almost totally ignorant of the clinical research process.

The basic ingredients of any innovative or discovery process are: first, having an idea and second, testing it. The fewer obstacles between these two steps, the greater the innovative potential. For example, if Einstein or DaVinci felt the urge to create, they could simply walk to the blackboard or easel to express such creativity. The innovative process in assessing a nutraceutical, however, is considerably more difficult. It involves the identification of the nutraceutical substance (the idea), and its clinical evaluation (testing it). Thus, penicillin in a test tube is ‘undiscovered’ unless it is clinically tested and found to be medically useful. Similarly, antioxidants that have been found to protect rodents from deleterious cardiovascular conditions should not be recommended for humans until they have been proven clinically effective in humans too. In order to join the nutraceutical revolution, therefore, the food industry must take a giant step into an unknown area — the clinical evaluation of its products for medical and health benefits.


Exclusivity for claims

In the USA, the Foundation for Innovation in Medicine has proposed a Nutraceutical Research and Development Act (NRDA)’. Because of the many new economic and regulatory problems as well as opportunities presented by the nutraceutical revolution, and the emergence of a worldwide nutraceutical industry, we have urged Congress to pass the NRDA. Its key elements include a mechanism to create exclusive rights to medical or health claims for companies that invest in nutraceutical research and development, and the creation of appropriate channels for the review, approval and regulation of new products and claims. [The present Nutrition Labeling and Education Act (NLEA) provides for generic and not exclusive claims. The recently enacted Dietary Supplement Health and Education Act (DSHEA) is difficult to interpret but certainly provides a window of opportunity for some degree of claim exclusivity regarding structure, function, deficiencies and wellbeing.]

With regard to exclusivity, it is well established by practical experience that the availability of research-based proprietary claims leads to a research-based industry, stimulates the development and availability of technological advances, and provides a basis for regulations that facilitate and ensure accurate and approved information from companies. From a purely economic standpoint, companies desire to make health claims for food products because they increase sales. As the claims at present are not proprietary, however, the vast percentage of industry spending for such products is allocated to promotion instead of research and development. On the other hand, in the traditional pharmaceutical industry, where exclusive claims are usually created by the patent protection available to new molecular entities, investment in research and development is robust and the total of the combined US pharmaceutical research budgets exceeds that of the National Institutes of Health.

Perhaps the best evidence that exclusive claims will create a research-based industry is the US Orphan Drug Act (2), which was designed to facilitate the commercial development and availability of ‘orphan’ drugs, whose development costs are not recoverable by the developer, because the prevalence of the indicated disease is small. [That portion of the Orphan Drug Act that amended the Federal Food, Drug and Cosmetic Act (FDC Act) is entitled Drugs for Rare Diseases and Conditions; the Orphan Drug Act also amended section 227 of the Public Health Service Act (3), and the Internal Revenue Code (4).] Under the orphan drug system, testing requirements may be reduced and exclusive claims can be made based on company-sponsored research for a period of seven years after approval – regardless of the presence or absence of patent protection. In the 17 years before the approval of the Orphan Drug Act in 1983, there were only 34 approvals for orphan drugs. Since then, however, over 400 orphan drugs have been approved or are in the research and development pipeline for the treatment of over 100 diseases – an example of an outstandingly successful piece of legislation creating a new research-based health industry.

Regarding reliable information to the physician (who is the key player in the nutraceutical revolution) and the consumer, clinical studies conducted for orphan drugs are presented at scientific forums and published in peer-reviewed medical journals, and thus become part of the system where data are reviewed and scrutinized within the medical scientific community. This, in addition to a formal approval structure for health and medical claims by companies, has resulted in a medical and consumer media milieu that strives for accuracy. Using the Orphan Drug Act as a model for providing proprietary claims for nutraceuticals, companies that make the necessary investment in research and development should be granted exclusivity for seven years for health and medical claims on approved proprietary research. At the same time, the NRDA would create a system that determines the appropriate level of research requirements for individual nutraceuticals, allows accurate promotional claims, and provides the methodology for the review and approval of product innovations. The NRDA would also increase the safety of nutraceuticals by ensuring the adequate assessment of risk potential and appropriate quality standards providing post-marketing surveillance, and facilitating accurate and sufficient information on their proper use.

Because of the increasing role of nutraceuticals as competitors for pharmaceuticals both in the treatment and the prevention of disease – the almost religious tenet held by the US nutrition community that the role of nutrition should be that of prevention only, rather than prevention and treatment, is not at all supported by the literature and should be buried for ever- the NRDA provides a comprehensive and logical framework for the review of products and claims, utilizing what the Foundation terms the ‘nutraceutical index’. Using the nutraceutical index, independent experts selected by a Nutraceutical Commission (NUCOM) would evaluate a submission for registration both in terms of the advantages and disadvantages of a product’s availability and unavailability. Each submission would then be classified as either a medical nutraceutical (promoted to physicians only) or a consumer nutraceutical (promoted to physicians and consumers as well as other health professionals), depending on the request of the submission’s sponsor and the subsequent evaluation of the data.

Once a submission is judged approvable, final labeling – including product claims – would be determined and approved by NUCOM. The regulation of truth in claims in advertising and educational programs would be the responsibility of existing regulatory bodies such as the Food and Drug Administration, the Federal Trade Commission and the US Department of Agriculture.

Product quality, good manufacturing practices and other requirements could also be monitored and enforced by existing agencies under already established regulations and procedures. As an additional safety precaution, a post-marketing surveillance process, similar to that for drugs, could, on a caseby-case basis, be required to identify any adverse reactions or product quality deficiencies as well as continued or additional efficacy. Labeling might be modified by NUCOM if warranted by positive or negative findings revealed by the surveillance process or by subsequent research studies.

Frankly speaking, it is highly improbable that a logical system of approved exclusive claims will be enacted in the USA, Europe and Japan within the near future. Though moving in the right direction, we are observing instead a gradual ad hoc approach, whereby governments are relaxing the ground rules for nutraceutical medical and health claims in unsophisticated ways that encourage corporate spending towards promotion rather than research.

Is this a cause for pessimism regarding a renaissance of nutraceutical research? I think not. In my crystal ball, I see another force that is rapidly arising and will force governments to pass reasonable laws regarding claims in order to encourage discovery research – the force of the marketplace. Food companies are now beginning to realize that value-added products – products with profit margins higher than those of their competitors – will somehow be associated with nutraceutical benefits. Indeed, a survey in the New York Times reports that 40% of all food products in the USA either indirectly or directly make nutraceutical claims. This awareness coupled with the huge capital capacity of food companies will necessarily force companies to spend money on the research and development of such products, not only as a new market opportunity, but as a strategy for survival.

Returning to the issue of exclusivity, companies need not wait – at least in the USA – for government reforms. As mentioned previously, certain types of medical or health claims are now permissible under the recently enacted DSHEA. The message is clear – companies must now patent products with some type of advantage such as taste masking, etc., perform the clinical trials to demonstrate the general as well as the particular clinical benefit of the patented product and market it in a way that clearly distinguishes it from similar competitive products. Conceptually, this is not difficult to do. On the other hand, the food industry know-how is presently lacking. Regarding market size, the total US retail food market in 1992 was $503 x 109 ($320 x 109 at home and $183 x 109 at out-of-home locations such as restaurants). This market far exceeds the combined US pharmaceutical (~$70 x 109) and over the counter (OTC) (~$24 x 109) 1992 retail markets that total $94 x 109. It is not unreasonable to assume that 50% of this food market includes foods that are used for nutraceutical reasons by consumers. It is generally accepted that dietary supplements, sugar substitutes, fat substitutes, fiber-enriched foods, vegetables, virtually fatless meat, skim milk, lowcalorie diets, and so on, are consumed for health or medical reasons. Couple this with the fact that 100 million Americans take dietary supplements daily, and it becomes compellingly evident that an enormous foundation for an established nutraceutical market already exists. Using 1992 data, and assuming that at least 50% of food is used for medical or health reasons, we arrive at a $250 x 109 potential US nutraceutical market, which is ~2.5-fold greater than the combined ethical pharmaceutical and OTC markets. It is not unreasonable to assume that in the European Community, with a larger population than the USA, the potential nutraceutical market is at least equal to ours, which adds up to a combined market of $500×109.

In conclusion, I believe that the vastness of the potential nutraceutical market will be substantially more persuasive for much-needed change than the failed common sense and historical precedence approach. I am fairly sure that once this vastness is adequately understood and believed – in one way or another – nutraceutical research will begin to flourish mightily owing to the energy and creativity of corporate capitalism.



1. Regulatory Affairs (1993) A Comparison of the US, European & Japanese Nutraceutical Health and Medical Claim Rules, Vol. 5, Regulatory Affairs Professionals Society

2. United States Code (1983) (Suppl.) [21 U.S.C. §360aa-360ee], US Government Printing Office

3. United States Code (1983) (Suppl.) [42 U.S.C. §236], US Government Printing Office

4. United States Code (1983) (Suppl.) [26 U.S.C. §281, US Government Printing Office