Editorial: SupplySide West Musings and Meanderings

Another trip to Las Vegas has come and gone and amidst the over-stimulation often typical in that city, business and substance were both to be found - on show floor and off. Fundamentally, despite a contrary economy, energy and buzz on the show floor were good, although in my opinion, I think that a full re-examination of show floor activity will find that especially Day 2 and to a certain extent on Day 1, attendee depth was a bit more shallow than in previous years.

Dominating conversations were twin themes – the economy, and sense of innovation, or lack thereof. In discussions on the former, concern was high, panic was not evident at all, and most companies I spoke with did report solid recent sales activity, although I sensed higher levels of concern in those companies with an unclear value proposition. Obviously most vulnerable in this category are pure distributors, many relying heavily on foreign goods and in relationships that demand partial or complete payment up front. In its own right this lengthy turnaround cycle as cash becomes tighter may mean inventory fluctuations, putting pure distributors at a further disadvantage than they may already feel as client demands rise in anticipation of GMP compliance on a broader scale.

As far as innovation is concerned, several individuals I spoke with shared my general observation – new product introductions are slower, rather, what is happening is that the advances are occurring in product differentiation (delivery systems etc.) as well as in select cases, a deepening of the substantiation base on ingredients. One other observation pointed out to me is that companies are also investing more in being creative in their market positioning, something quite predictable in an environment when expectations of suppliers continue to rise. Differentiation continues to be a challenge, and a variety of responses including branding strategies, technical differentiation, the proliferation of company ‘stories’ and evolutionary simplification of messages in tough to convey categories (ie. immune) were all evident.

Probably a good and worthwhile move was the extension of show hours from a total of 10, to 14.5 hours over the two days, with little evidence that the expanded show time hindered session attendance. In fact, for the few vendor presentations I was able to attend, numbers were generally around 25-30 or more (one was 9), and the quality of presentations was typically excellent.

One of the most interesting sessions I attended had to do with a company response to a petition to the FDA. In this specific case, Sabinsa was formally responding to the Glaxo Smith Kline / ADA petition requesting that all weight loss claims be considered disease claims rather than supplement claims. In the discussion involving panelists Loren Israelsen (UNPA), Michael McGuffin (AHPA), Marc Ullman (Ullman, Shapiro, Ullman), David Seckman (Natural Products Association) and Steven Mister (CRN), it became evident that while all approved of Sabinsa’s actions in directly filing a response, the group was a bit less clear about just when a company should use its individual leverage rather than waiting for or relying on the trade association to act. The question was posed in the context of the excellent job done as industry gatekeepers by the associations, and how this had the potential to create a sense of complacency in individual companies who often therefore feel, “The association will take care of it. I don’t have to do anything.” The counter-argument is that while in the case of weight loss, an association can make general statements about substantiation of ingredients, for instance, it is only the company itself that can really provide detailed substantiation and therefore really challenge some aspects of the GSK petition.

This issue is obviously related to the fact that many industry companies are not active either as members of associations, or within the association as members, yet may be the most seriously hurt should just one of these petitions find its way through the system and into regulation/legislation.

The group all felt that this particular petition was going nowhere, but also spoke for some time on the petition filed against stevia under Section 912 of the Food and Drug Administration Amendments Act of 2007 (FDAAA) (comments scheduled to close today with apparent apathy on the part of the industry with the exception of the trade associations). The proposed regulation should be of significant concern as the following language should illustrate: “prohibits the interstate shipment of foods containing an added drug or a biological product that has been the subject of substantial clinical investigations, the existence of which has been made public”.

In its Supplementary Information FDA notes:
“Specifically, if a food contains a substance that is an approved drug, that is a licensed biological product, or that has been the subject of substantial clinical investigations that have been made public, and if the substance was added to the food to have an independent biological or therapeutic effect on the person consuming it, rather than to enhance the safety of the food, the food is now barred from interstate commerce if any substantial clinical investigations of the substance were instituted…..”

Obviously the impact on functional foods and therefore on a significant amount of ingredient potential, could be significant. While the trade associations have all weighed in on this issue, as noted above, they would do so in an umbrella sense. For industry and economic impact on a more granular level – well, let’s hope that stakeholders have at least provided that information to their associations. In the meantime, stevia is apparently the test case so far, and we must wonder what’s next.

I guess all of this boils down to the fact that, in and out of trade shows, industry participation in the regulatory process is a must. As I’ve said before, if you are not part of the process, you lose the right to criticize the resulting environment.

Too many of the harshest critics have lost that right.

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