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Editorial: Perspectives on Globalization

By Len Monheit

I fight this battle repeatedly – how important is a global perspective in understanding the dynamics of our evolving industry? Can one exist in a myopic North American or U.S.- only environment and be ready to face all competition, develop new and innovative products, understand and rationalize all emerging science, effectively manage convoluted supply chains, and maintain long-term control of one’s business prospects? I submit that the answer is a resounding ‘NO’.

Let’s take today’s news for instance – headlined by two acquisition notices. In the first, Israel-based Frutarom continues with its seventh acquisition of the year. Until a short time ago, the company was principally a food ingredients and flavor company; with its recent acquisitions, as made quite evident at SupplySide West, the company is intent on developing itself as a global health ingredients company, specifically with the acquisition of the Acatris portfolio of wellness ingredients. Perhaps more significantly in the news this morning, US-based supplement company Natrol has agreed to be acquired by Plethico Pharmaceuticals, based in India. Exactly what will transpire in the wake of this acquisition is unclear, but this represents another example of global forces (and hard cash) impacting the US dietary supplements sector.

Other examples in recent weeks include the announcement that Spain-based Natraceutical Group had acquired Canada-based Cevena Bioproducts its Viscofiber® (oat and barley beta-glucan) ingredient, enhancing its position as a ‘global’ functional ingredient supplier. And not too long ago, Renaissance Herbs announced that it had been acquired by Avestha Gengraine Technologies Pvt. Ltd. (Avesthagen), based in Bangalore, India. One obvious impact of the move is an enhancement of Renaissance’s ability to compete and grow internationally, including an enhanced ability to bring products to market, also internationally.

In more than just TCM and Ayurveda are we seeing international forces at work as consumers seek health options. Yogurt shots and in fact, the entire current emergence of the probiotic market and significantly increased consumer awareness of the health potential of these products can be traced to international forces, including beverages in Asia, significant science from Scandinavia, and a much more ready market adoption in general in the EU.

Now let’s talk about the supply chain.

Fundamentally, a product is only as good as its weakest link – in this case, the weakest link in the value chain. With very few exceptions, any product in either a food or supplement value chain must cross at least one geographical border from origin of ingredients to distribution. Those challenging the principle of Country of Origin labeling of food products, currently being contested in Washington realize this, acknowledging that almost all ingredient sourcing initiatives will take executives (and their quality control departments), to far flung reaches of the world including the Amazon, India, Eastern Europe and China. We’re seeing savvy companies recognize the value of global relationships including international ‘tie-ups’, particularly in the ingredients world, including A. M. Todd Botanical Therapeutics with first Ningbo Green-Health Pharmaceutical Co., Ltd. and subsequently with Tang-An Medical Co., Ltd.

Other organizations with entrenched international positions are capitalizing on regional expertise and strengths, understanding that a global position can help to buffer them from the realities of international economics (including sagging currencies), can engage local research communities (often with extensive government support) and can allow for the entry of new capital at critical times. The entire multi-level channel is significantly buoyed by opportunities to enter markets with emerging middle classes, and in this case, an understanding of classifications and the global regulatory environment is absolutely critical. (Last week’s European Court of Justice decision that garlic capsules are not necessarily a medicinal product by either presentation or function will certainly have ramifications around the world, especially where by definition, food supplements are treated as medicines.)

Switching to science, one cannot conceive of nanotechnology or the field of nutritional genomics without tracking international scientific developments, just as the emerging body supporting omega-3 fatty acids consists of global science input, and ultimately regulatory treatment including claims for these products will have to consider the totality of the evidence – globally.

Some may be bothered by the realization that many of their options will ultimately depend on international forces, in the form of economics, product availability, substantiation, R & D and other factors that they may perceive to be outside of their direct control. Smarter organizations are investing in developing the international tentacles and relationships to prepare for that environment and business reality.

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