Editorial: And That's the News

By Len Monheit

[email protected]

With the announcement earlier this morning that Numico was intending to sell Rexall, and was placing GNC on probation with other actions planned, more pressure was immediately brought to bear on the industry. According to a Reuters story, Rexall may fetch only $200 million, compared to its 2000 purchase price of $1.8 billion. Numico is taking a significant goodwill write-down (over 1.3 billion euros on Rexall alone) and this may cause re-evaluation of other publicly traded industry companies.

This week’s election victories of Senator Tom Harkin (D-Iowa), and Representatives Dan Burton (R-Ind.) and Dennis Kucinich (D-Ohio), key industry supporters can continue their efforts in Washington with strong mandates from their constituents. According to the NNFA, this, combined with the power shift which removes Sen. Richard Durbin (D-Ill.) from the chair position of the Senate subcommittee on government reform, could prove an excellent opportunity (perhaps the last such opportunity) for the industry to work together and create sustainable momentum in Washington. Senator Durbin had been quite vocal in his industry and DSHEA criticism, and with him no longer chairing this committee, perhaps proactive action will bear fruit.

This combination of events is a classic example of the factors at work in what really is a complex, global business environment. Business drivers and expectations of investor return (unrealistic or not), political issues and agendas, the power of the media, and a moving scientific frontier effect our business, livelihood, perception and reality. It’s frustrating to know that investor oriented decisions in the Netherlands will impact retail store operations in the US at some level, but this is the environment we operate in. It’s complicated to anticipate how to construct strategy in light of the political landscape and a powerful pharmaceutical lobby.

And the pharma companies are facing their own challenges as blockbuster drugs come off patent, and their pipelines of new drugs have not provided a high return on their research dollars. We talk in this industry about the lack of blockbuster products in the last few years, but with the exception of the ‘little blue pill’, if it weren’t for an aging population, the pharma sector could be considered to be facing some of the same issues we are, although with more resources to bring to bear and a long history of working together to build their industry.

Developments in analytical science and communication have had a major impact on numerous sectors ranging from the environment through all health related industries. Instrument sensitivity, technique development and a micro approach means that detection limits are pushed and compounds and impurities are detected that never would have been, leading to higher and higher expectations and demands.

On the communication front, the pace of news and the level of dialogue amongst shareholders, clients and all stakeholders has increased dramatically. On the markets, this is one of many factors leading to oscillating prices. In client/supplier interactions, once again, expectations are rising. And the media is absorbing it all, picking and choosing those stories that drive readership and viewership in an increasingly competitive environment.

So where is this all heading?

It’s not the news that really counts--it’s what you make of it. By itself, the election results are interesting, but we collectively have to determine what actions will be triggered. The same holds true for the upcoming Numico sale, the impact on Rexall and GNC operations, and what this will do to marketing and the marketplace. For some of us, opportunities will be created, for others, action will be required. Having the information allows us to make the choices needed to operate and grow our industry and businesses.

There are complex factors at work that impact us all the time. Awareness of as many of these as possible allows us to maximize the chance of success.

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