Editorial: Is It Really Just Background Noise Or Should It Be Center Stage?

By Len Monheit
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SupplySide East a few weeks ago, was a thought-provoking event. Although show-floor activity was mediocre, behind the scenes, there was a lot going on. And what was not being said was perhaps most important of all.

The event began with the FDA presentation and discussion surrounding proposed GMP’s. In several meetings over the next day, business opportunities and challenges were discussed including the fact that many in the industry seem to be waiting for an indication that the industry is out of its ‘funk’ before investing significant time, money and energy into it. This is discouraging and probably accounts for the subdued atmosphere observed by many attendees. True, the show numbers were good – higher than last year with a sold out show floor. But numbers don’t show everything.

The state of the industry discussions and educational sessions I attended were informative. In the former, I was amazed at the range of different perspectives presented by participants and struck anew by how diverse an industry we operate in. Many traditional supplement ingredient companies expressed their intention to focus on penetrating the functional food industry, beginning with the IFT show in Chicago in July.

The subject of insurance came up several times, with discussions surrounding the creation of a Captive Insurance Group within

SupplySide East 2003 Poll

the industry as a strategy to offset cost-prohibitive or unavailable insurance. One of the offshoots of such a program would be a motivated and proactive risk management approach from within or with the support of the industry with a mandate for minimizing insurance costs. As a part of a self-regulation program, proactive risk management is an excellent concept, and perhaps should not be limited to an insurance cost context.

There were some notable Vendorworks presentations including new science on the Effects of Loders Croklaan’s Safflorin ™ on Human Immune Response, with promising results being displayed and an indication that research and clinical studies are being done to support nutritional and natural products.

On the show floor, one could not help but notice the lack of International participation, possibly partly due to SARS concerns as well as other international issues and pressures.

And also on the show floor for the first time, intellectual property and patents were aggressively protected with Sabinsa’s presentation of a temporary restraining order to Alchem International, Inc. on the very show floor, the only place it could act to prevent the company from displaying and selling patent-infringing products.

Many show attendees were wrestling with the anticipated cost of compliance with new regulations, the possible limiting of markets in Europe due to Codex and EU initiatives, while still others wondered at the apparent demise of Pan Pharmaceuticals in Australia, a major player involved in pharmaceutical, OTC and supplement manufacture, not only in Australia, but with exported products to several other countries too.

Recapping the series of events and its impact on the dietary supplement industry specifically in Australia is alarming and while it was reassuring to hear it being discussed in North America, it reiterates the fact that we truly operate in a global marketplace:

"In every crisis, there is opportunity, and smart, responsible companies see this now."


An OTC product triggers an investigation into a company that manufacturers drugs, OTC’s and supplements. Systemic problems are found in the manufacturing and quality control processes despite a drug-like GMP environment under the guidance of the TGA. (Therapeutic Goods Administration). Products are recalled – drugs, OTC’s and supplements, affecting many countries and companies who rely on these goods. Store shelves are depleted, consumer confidence takes another serious blow.

The Complementary Healthcare Council (CHC) of Australia has hired a firm to handle communications to place the Pan Pharmaceuticals issue into perspective. This firm, Client Solutions Pty Ltd, has expertise in crisis management and media relations and is to be the industry voice during the crisis. Its first message re-stated the commitment to consumer safety and product quality in the natural healthcare industry, and, noted that the industry was working with the Therapeutic Goods Administration (TGA).

Industry vulnerability and waning credibility has been the subject of numerous debates over recent years, and certainly has been at recent events including SupplySide. Some argue that two mechanisms ideally operating synergistically would alter the process measurably. The first would be an aggressive campaign to rebuild industry credibility globally including gathering and presenting compelling data supporting science, efficacy and safety. The challenge is the availability of solid irrefutable science, demonstrable efficacy and behavior and products to the contrary. The second is ongoing responsible behavior where, despite the fact that the regulations allow certain things, they provide a baseline and guidance only for industry activities including claims and that a series of voluntary industry programs are applied on top of the regulations themselves, covering both ingredients as well as finished products.

In other recent news and activities of note, the Illinois House unanimously (117-0) passed a bill to ban outright OTC sales of ephedra dietary supplements. In the US, there have been increased calls for self-regulation to augment regulations and rules imposed by FTC and FDA. At the same time, there is evidence that the trade associations are collaborating more effectively, including some trans-North American collaboration. The cost and the process of compliance with the proposed GMP’s in the US and Canada is expected to have serious (possibly fatal) ramifications for small companies with good products.

It is becoming increasingly more obvious that the well informed, networked and managed will be able to survive the challenges the industry faces. This means trade show and trade association activity and building different types of relationships with value chain partners. It also means an awareness of global issues which either are or can impact us here in North America.

In every crisis, there is opportunity, and smart, responsible companies see this now.

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