The higher regulatory hurdles being constructed in Europe and, to a lesser extent, the United States for dietary supplements and functional food ingredients have many industry participants âwailing and gnashing their teethââas Nutrition Business Journal writes in our upcoming 2010 Functional Food and Beverage Issue. But, not everyone believes increased regulatory enforcement and claims scrutiny will spell bad things for the global supplement and functional food and beverage industries. In fact, according to David Atkinson, managing partner and founder of Circadia Ventures LLP, tighter regulation in both Europe and the United States is âsupporting rather than inhibiting investor interestâ in the functional food and supplement sectors.
Atkinson made this point during Nutrition Capital Networkâs February 16 Webinar, âTrends in International Financing for health and Nutrition Companies.â Although he acknowledged that increased regulation is âsetting high hurdlesâ and âincreasing the costs to the industry,â Atkinson said he does not believeâas many in the industry doâthat these consequences of stepped-up regulatory oversight âwill kill the embryonic sectorâ of the health and wellness market. âWe believe the high hurdles will bring much-needed barriers to entry to the industry and will increase and improve consumer confidence,â he added. âUltimately, it will allow some higher pricing â¦ and add value to the underlying IP and technology of the industry.â
Investors, Atkinson said, are increasingly interested in the health and wellness space because, âdespite the increased regulatory environment the industry faces, it is still likely that a functional food ingredient with very clear, proven clinical benefits could be on the market in half the timeframe of a new drugâwhile the actual capital costs of getting that product to market are likely to be only a fraction of what a drug would cost.â
Atkinson cited the small, publicly listed U.K. company Provexis as an example of a functional ingredient company that is attracting growing investor interest. âProvexisâ current market cap is over Â£74 million ($116 million)âa year ago it would have been a fraction of that,â Atkinson said. Helping to fuel investor appetite for this small-but-growing ingredient company is the fact that Provexis was the first company to gain an Article 13.5 health claim approval from the European Food Safety Authority (EFSA) for its tomato extract, Fruitflow.
As NBJ discusses in detail in our upcoming 2010 Functional Food and Beverage Issue, EFSAâs positive opinion has made a huge difference to Provexis. âWe got our approval on the 17th of December, and we have since received a very high level of interest from global food and beverage players,â said Provexis CEO Stephen Moon. âThe change has been instant. Itâs almost like we have got through the desert and finally arrived at the oasis. It has raised the profile of the company.â As Moon explained, the benefits have gone far beyond his companyâs ability to commercialize Fruitflow, which has been clinically proven to inhibit platelet aggregation and has been licensed to DSM. âThe financial and investment community has now seen the potential of Provexis, and itâs enabled us to raise substantial capital, which is going to help us drive forward our total pipeline.â Most recently, in December 2009, Provexis announced it had raised Â£2.1 million ($3.4 million) via an open offer to its shareholders.
NBJâs 2010 Functional Food and Beverage Issue publishes later this month. To order a copy or become a subscriber visit the NBJ subscription page.
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