Nutraceuticals: Rich in Potential
A shift to preventative health will see nutraceuticals emerge as a growth area across mature and emerging markets.
The strong growth and globalization of the nutraceuticals sector may be down to the ingenuity of brand managers as much as food scientists, but it also reveals a lot about current trends in healthcare and the cultural, economic or demographic factors underlining them, across both mature and emerging markets. What is interesting about the nutraceuticals boom is that no-one has really agreed yet what these products are exactly, or at least where they sit in standardized legal and regulatory terms either at country level or worldwide.
Stephen DeFelice, founder and chairman of US non-profit the Foundation for Innovation in Medicine, is credited with inventing the term ‘nutraceutical’ in 1989. The Foundation defines a nutraceutical as “any substance that may be considered a food or part of a food and provides medical or health benefits, including the prevention and treatment of disease”.
That might cover anything from chicken soup to a dietary/herbal supplement sold in a quasi-medical format (e.g., tablets, capsules), or a functional food that looks like an ordinary food consumed as part of the regular diet (e.g., yoghurt, margarine), but whose claimed health properties go beyond its basic nutritional function.
Many regulators, however, would be reluctant to support DeFelice’s notion of nutraceuticals treating disease, which in most cases would push them over the line into medicinal status and much more stringent approval processes.
Difficult to define
The US regulates the category principally as dietary supplements, although functional foods may also be treated as conventional foods, medical foods or foods for special dietary use, depending on the claims they are making. In Europe, nutraceuticals are generally treated as food supplements, but can fall into other categories such as novel foods, foods for specific groups, enriched/fortified foods or just general foods. Japan has foods for specified health uses (FOSHU), as well as foods with nutrient function claims, foods for special dietary uses, fortified foods and non-regulated health foods.
Both within and between these national and regional regulatory frameworks are distinct variations in the nature, scope and legal status of health, nutrient, structure-function or disease-risk reduction claims – effectively what distinguish nutraceuticals from pharmaceuticals making explicitly medicinal claims – as well as in the associated requirements for supporting evidence and marketing authorizations.
We can more easily identify the core drivers of the nutraceuticals phenomenon and why they are attracting interest from both sides of the food/pharmaceutical divide.
There are a number of overarching global trends, such as increased life expectancy and the growth in associated diseases of ageing, changing work patterns, a burgeoning middle class in developing markets, and a decline in the spread of communicable diseases.
In parallel, chronic non-communicable as well as age- and lifestyle-related conditions, such as diabetes, obesity, cardiovascular disease, mental illness, Alzheimer's and Parkinson’s, are growing at an alarming rate, especially in emerging markets.
Both the conditions themselves, and their impact on already over-stressed healthcare systems, are aggravated by sedentary lifestyles and other factors that may, ironically, be associated with improved economic status, such as poor diet and dependence on emotional props such as alcohol or tobacco.
As countries worldwide feel the pinch from economic recession and population ageing, and as the erosion of the traditional family unit puts more pressure on the state or the elderly themselves to deal with the consequences of ageing, a strategic shift in research-based pharmaceutical industry towards high-cost specialty drugs is further taxing healthcare systems and exposing patients to heavier out-of-pocket costs for medicines – albeit offset to some extent by increasingly sophisticated generic and biosimilar alternatives.
As concerns build over economic stability and long-term healthcare availability, the emphasis within healthcare systems and the wider population is shifting to preventive health and fitness – i.e., mitigating disease risk rather than treating disease once it has taken hold.
This trend manifests itself largely as self-care, and an appetite for food supplements, functional foods and drinks, sports nutrition or ‘superfoods’. It is also bolstered by growing interest in personal nutrition and food science, as well as lifestyle preferences for ‘natural’ and organic food products.
These drivers are key factors in the dynamic growth trend for nutraceuticals seen more recently in emerging markets such as India, China and Brazil, as manufacturers look for new openings to offset the plateauing trend in the US or Europe.
In forthcoming articles, I will be looking specifically at the opportunity for nutraceuticals in each of these countries, which are all characterized by:
• A fast-expanding middle class with the educational resources to understand better the relationship between diet and health, as well as the disposable income to pay for premium-priced food products
• An interest in global trends such as body consciousness, sports, fitness and healthy living
• A long-term view that is prepared to invest in disease prevention and self-care
Some pharmaceutical companies have maintained a stake in dietary supplements and in food or drink brands that align with their consumer-healthcare interests. BASF, for example, has long been associated with vitamins production but in more recent years has built up a nutraceuticals presence through its Nutrition & Health division.
Abbott markets nutritional-support products such as the Ensure range, used in the elderly or in post-surgical care, or Glucerna for diabetics. Pfizer Consumer Healthcare is a big player in dietary-supplement brands such as Centrum, as well as non-prescription medicines, as is Germany’s Merck Consumer Health (Bion, Seven Seas).
The main push in nutraceuticals, though, has come from large food and fast-moving consumer goods (FMCG) companies, such as Danone, Nestlé, Amway, Kellogg’s, General Mills, Arla Foods and Fonterra. These players are tapping into the potential for higher-margin, premium food brands with a scientific aura, as well as the cultural shift towards preventive medicine, ‘natural’ products and self-care.
Nestlé Health Nutrition, for example, offers products such as Novasource Renal, addressing the nutritional needs of people with chronic renal disease. Abbott Nutrition’s Glucerna range is designed to help adults with diabetes manage their blood glucose levels. In the food-supplement arena, glucosamine and chondroitin are widely used to maintain bone health in arthritic conditions.
Food and FMCG companies can leverage their expertise in nutrition science, taste, flavouring and variable formats, consumer marketing and advertising, market research, branding, and strong relationships with retailers and distributors.
At the same time, though, pharmaceutical companies are interested in developing a more holistic health profile that fits with the systemic trends outlined above and eases their reliance on premium-priced and cost-pressured medicines.
It can also open a gateway to emerging markets and to high-volume sales generated directly from consumers – albeit at lower margins but with a substantial reduction in R&D costs and regulatory barriers.
What these players lack in consumer-market experience they can make up for with in-depth research capabilities; well-established relationships with healthcare professionals who can provide medical/scientific endorsement for more advanced nutraceutical brands; and familiarity with the longer lead times that will apply as nutraceuticals are positioned more overtly for disease risk-reduction or even therapy.
Indeed, increasing collaboration between the food, FMCG and pharmaceutical sectors is likely to be an important step towards the true amalgam of food and medicine suggested by the nutraceuticals concept.
In the meantime, it remains a market with rich potential for continued growth. In particular, population ageing and its associated challenges will create new frontiers for nutraceuticals addressing issues such as cognitive function, mobility and cardiovascular or gastrointestinal health. Living longer need not always be about living with illness, and nutraceuticals can help to untie that knot.
In next month’s column, we will look at the challenges and opportunities for the nutraceuticals market in India, one of the fast-growing emerging markets.