Budget and Planning - A Whole New Ballgame

By Len Monheit
[email protected]
Comment on this Editorial

The late summer and fall is typically budget and forecast time for many companies, as they plan for next fiscal or calendar year programs. With Expo East running several weeks earlier this year, and with so many market uncertainties, several companies have indicated they are a bit behind in their planning and forecasting.

For many organizations, despite access to surveys, trends and data, the forecasting and planning process remains a mysterious ritual where numbers are frequently picked from a hat (or a crystal ball) or developed to serve other objectives or agendas. Many organizations resist baseline budgeting (developing numbers from scratch) for either time considerations (its much easier to add 5% or drop 3% from last year) or because the baseline budgeting may uncover more questions and issues than it answers.

This year in particular, it may be critical for companies to go back to basic principles in their planning. Organizations may find new line items that need to be addressed as they predict operating costs and sources of income.

Following are some considerations to perhaps keep in mind in the coming year:

Bioterrorism or Food Security Act of 2002 – Food facilities providing product for sale in the US must register with FDA by December of 2003, must have an agent to be the potential liaison with FDA,and must provide prior notice of all incoming shipments into the US. Since dietary supplements are regulated primarily as foods, they are covered under this regulation. Although the initial registration must take place in 2003, the implications for 2004 could be significant, including administrative expenses, agent fees, and inventory issues should goods be held if prior notification is lacking. Some companies with offshore suppliers are being advised to increase on-hand inventory levels to prevent supply disruption.

Regulatory compliance - Although there is still some time before the total impact of GMP’s will be determined, let alone realized, some organizations are planning for what they expect will be an increase in record keeping, potentially a more formalized supplier certification or qualification process, and an increase in testing requirements, particularly for ingredients.

Adverse Events - Part of the subject of Senator Durbin’s Bill S. 722, a mandatory serious adverse event reporting system may be imminent for industry, whether this bill passes or not. If this is in fact the case, more record keeping and potential administrative resources will be required.

Marketing / education - Many companies, especially ingredient suppliers, have indicated that they plan to increase their value chain educational efforts. This means they not only will perform the research and clinical studies to generate the data, but they then must communicate not only to manufacturers and retailers, but ultimately to consumers. We are seeing evidence of this with October’s SupplySide West (October 1-3, 2003 in Las Vegas) with numerous vendor sponsored presentations, and also with a third day of educational programs. Expect this trend to continue.

Qualified Health Claims on Foods - FDA is now allowing these qualified claims opening up opportunities for a stronger association between nutritional products and health benefits. These claims can be made where there is ‘emerging evidence for a relationship between a food, food component, or dietary supplement and the reduced risk of a disease or health-related condition.’One of the early qualified health claims working its way through the system is the association between omega-3 fatty acids and reduced risk of cardiovascular disease.

The impact of this program could be on both sides of the ledger, with costs associated with the submission process, and success rewarded by increasing sales.

Government Programs and Grants - In both Canada and the US, programs exist which support either business development or research initiatives. Many companies have successfully accessed and leveraged these resources.

In the US, examples include the SBIR ( Small business Innovation Research) program,

specifically those offered in conjunction with the National Institutes of Health (NIH). http://grants1.nih.gov/grants/funding/sbir.htm and http://grants2.nih.gov/grants/funding/sbir.htm

An example which may be of interest to our community is:

HHS/NIH Opens RFA to Develop New Therapies For Type 1 Diabetes And Its Complications at http://www.zyn.com/sbir/bnews.htm#doe03a

In Canada, one example is the Canadian Heart and Stroke Foundation:


Technology and IT - Another financial impact that may occur involves technology. With an increasing business reliance on computers, technology and the Internet, companies may have benefited from certain process improvements while paying the cost of this reliance. The past several weeks have seen a blackout affecting much of Northeastern North America and the proliferation of numerous viruses and worms which have had serious impact on companies around the world. This has caused companies to focus on firewall and virus protection as well as redundancy of computer systems and more importantly, data storage.

As your organization completes its 2004 planning, be sure you’ve considered some of these influences and its potential impact on your organization.

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.