Natural Products Insider

JAN-FEB 2018

INSIDER is the leading information source for marketers, manufacturers and formulators of dietary supplements, healthy foods and cosmeceuticals. Since 1997, INSIDER has been serving the needs of the global nutrition industry.

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38 INSIDER January/February 2018 on environmental issues. The backlash is not surprising. Yet, hopefully Nestlè will have learned from past mistakes made by major pharma companies embarking on such ventures. Case in point, the early acquisition of Solgar Vitamin & Herb by Wyeth Pharmaceuticals (American Home Products) became a disaster when the pharma infrastructure and perceived arrogant culture was imposed on Solgar. Planned growth was stalled, and many of its existing health food retail customers were lost. Less than 10 years after paying over $425 million for Solgar, Wyeth sold the company to NBTY for $115 million. Nestlé Health Science, however, already has a strong portfolio of specialty nutrition products, and will likely be able to bring Atrium's practitioner-grade nutraceuticals into mainstream health care channels inaccessible to smaller brands.Nestlé also pledged that Atrium will be an independent business unit and will continue to operate as it did prior to the acquisition, with no changes to its strong executive team, brands or management style. Though Atrium will be operating independently, expect to see its practitioner channel brands launching new medical foods. It would not be the fi rst company in this channel to do so. Though slowed by FDA in 2015, Metagenics has been proactive in medical foods for several years, and is expanding its portfolio. Also, Integrative Therapeutics recently launched a medical food into the practitioner channel with an elemental formulation like Nestlé's Vital ® . Other supplement companies are beginning to market therapeutic nutritionals in the traditionally pharma-dominated health care institutions. Orgain is beginning to fi nd success marketing its nutritional beverages through allopathic physicians and dietitians, as well as gaining some distribution in health care institutions. The lines between big pharma and high-quality supplement companies continue to blur. The Nestlé-Atrium deal is not the only big play happening in the practitioner space. Right about the same time, Mitsui—one of Japan's biggest keiretsu (grouping of enterprises), and one of the world's largest corporations—announced a strategic investment in Thorne Research, another key player in the U.S. professional channel. The objective is to expand Thorne's nutraceutical and functional diagnostic testing business in the United States while simultaneously growing the brand into Japan's burgeoning wellness industry. Thorne already has a large network of practitioner-customers in the United States, as well as an ongoing exclusive research collaboration with the Mayo Clinic. What does the future hold for the practitioner channel? This market segment will remain viable and highly dynamic for years to come. The channel's many strengths and opportunities include: Premium price points. Steady increase in the number of physicians, nurses and other professionals who are interested in supplements and other non-pharma alternatives. Greater opportunity to leverage science by addressing an educated customer base (practitioners) that understands scientifi c language. Higher bar for entry, with relatively fewer competitors compared with DTC retail. Reputation for quality, safety and effi cacy, along with the inherent credibility that comes with a practitioner recommendation. Expanding opportunities for medical foods and highly targeted therapeutic nutritionals. Some regulatory leeway by FDA and other regulators allowing health practitioners to make broader claims for supplements. The infl uence of a "learned intermediary," which confers somewhat greater latitude in claims/ marketing language, and freedom to leverage clinical data. The "learned intermediary" concept bears some explaining. Offi cially, restrictions on disease claims outlined in the Dietary Supplement Health and Education Act of 1994 (DSHEA) apply equally to practitioner-only and DTC retail brands. Some prescription vitamins (e.g., prenatal), though, have no legal defi nition of "professional-grade supplements" or anything of the sort. From a strictly legal perspective, a practitioner-only supplement sold in a doctor's offi ce is no different from a no-name discount product in a convenience store. In practice, however, regulators recognize the guidance of a "learned intermediary," such as a physician, nurse or other health professional, can mitigate potential risks associated with indiscriminate supplement use. Such guidance will depend, in part, on a clinician's understanding of the products. This, in turn, requires clear unambiguous communication. While the "learned intermediary" principle does not give practitioner channel companies a green light for making disease claims, attorney Todd Harrison and others in the fi eld believe it does give more latitude in the use of clinical data to explain clearly what specifi c ingredients or formulas can do. Harrison, a partner with Venable LLC, said federal and state offi cials generally choose to leave the practitioner channel alone. To date, there have not been any major legal challenges to practitioner dispensing. This is, in part, because regulators are reluctant to interfere with doctor-patient relationships, but also because practitioner-focused companies are small, and much bigger fi sh to fry are on the retail side of the supplement industry. However, this does not mean the practitioner channel is an indefi nite regulatory safe haven. Just because regulators haven't made moves against professional brands does not mean they never will. Gre g Stephens (gregstephens@ windrosepartners.com) is president of Windrose Partners LLC (windrosepartners.com), a strategic consulting fi rm specializing in medical foods, clinical nutrition, dietary supplements and functional foods. Erik L. Goldman (erik@ holisticprimarycare.net) is editor/co-founder of Holistic Primary Care-News for Health & Healing (holisticprimarycare.net), a medical publication serving 60,000 clinicians with news about non-pharma alternatives for preventing and treating common chronic conditions. Health Practitioner Channel

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