The Czech Republic?s entry to the EU will open new opportunities for its well-established food supplements market. Dr Václav Bazata characterises the current situation and assesses what needs to be done to meet EU regulations
Many still view food supplements in the Czech Republic as an emerging market, but there are signs that it is much closer to being fully developed than many people think. According to data from IMS Health, a pharmaceutical industry analysis firm, retail sales of nutraceuticals and cosmeceuticals in Czech pharmacies have risen from $66.92 million in 2002 to $110.5 million in 2003, showing a faster growth rate than over-the-counter medicines.
Indeed, food supplements are competing in pharmacies with OTC medicines, with both consumers and pharmacists rarely drawing a distinction between the two types of products. There is no doubt that the market is highly competitive, and without sales representatives regularly visiting pharmacists and physicians, maintaining good sales and launching new products can be quite difficult.
On the other hand, the spending power of Czech consumers is on the increase. The Czech Republic has a population of just more than 10 million inhabitants, with per capita GDP standing at $8,667 and an average monthly salary of $616 in 2002. Although this may not sound like much in US dollars, the Czech koruna (crown) goes a lot further in the Czech Republic than the dollar does in the US. Indeed, the purchasing power of the koruna in the Czech Republic is such that an equivalent average salary in the US would be twice the given amount, or roughly $1,200 per month.
Characterising the market
An overview of the health products market and Czech consumers? attitudes to health reveals seven main factors. These are:
- a continuing trend for self-medication (especially in the younger generation).
- price sensitivity among consumers who are looking for value.
- demand for advisory and consultation services at pharmacies.
- a tendency for people to consult their general practitioners on how food supplements may interact with medication (unfortunately, very few older GPs have adequate knowledge of this area).
- informed customers in cities and towns who are unlikely to remain faithful to brands.
- more faithful customers in the countryside who are more sensitive to TV ads.
- poor off-the-shelf sales in supermarkets because of the lack of on-the-spot consultation in these types of outlets.
The majority of food supplements are distributed by pharmaceutical distributors, such as German companies Phoenix and Gehe, and UK distributor Alliance Unichem. There are also other distribution channels, such as health food shops, which are not as developed as chains like Reformhause in Germany, companies? promotional shops and Internet trade with mail orders—but these types of outlets are still in the minority.
Entering the EU
Harmonisation with EU legislation is practically finished in terms of medicines, but not yet with foods. Existing Czech law continues to regulate nutritional foods with an inconvenient and strict licensing system, incorporating a ?double checking? procedure where two regulatory authorities assess a product before it can be launched. This system means that, in the first instance, food producers or marketers must apply for evaluation of the product by the National Institute of Public Health (SZU) with laboratory testing for heavy metals contamination and microbial purity tests. If the product passes these tests, an evaluation statement confirming safety is issued that also gives quasi-approval of label information. The product then has to be submitted to the Ministry of Health?s Department of Chief Hygienist for the granting of the final approval/licensing number.
In general, food legislation has sections dealing with:
- permitted food additives with strict set limits.
- quality of food additives with detailed parameters set by strict contaminant limits.
- permitted flavourings and natural aromas.
- claims restrictions.
- contaminants with strict limits of pesticides including microbial contamination.
If food manufacturers comply with all of these points, it would seem sensible and justified to have a much simpler approach to approval. Indeed, the old system is set to be replaced by new decrees in May when the Czech Republic joins the EU.
Under the current regulatory framework, food supplements are a special category of foods covered by detailed regulation. There is a ?positive? list of 31 different vitamins and minerals each with maximum daily intake limits, although allowed forms, as listed in EU Directive 2002/46/EC, are not covered. There is also a positive list of 59 herbs and botanicals and an additional category of nutrients incorporating amino acids, essential fatty acids, flavonoids and plant/herbal extracts (46 items), as well as a further category of enzyme concentrates, such as yeast biomasses, algae, colostrum and bifidogenic bacteria. All the ingredients covered by these positive lists do not require the submission of complex justifying data, which is needed for other ingredients.
Levelling the law
The EU?s widely discussed Traditional Herbal Medicine Directive, which threatens to restrict some herbs and herbal isolates to pharmaceutical use only, should make little difference to the Czech Republic. This is because the State Drug Control Agency has already published a draft list of traditional and non-traditional ingredients, and pharmaceutical botanicals are covered in the previously mentioned ?positive? lists. Botanicals are divided into three categories, those with: very strong active principles, strong active principles and others. Those classified as having very strong active principles cannot be used in food supplements, only in drugs.
The Czech Association of Special Foods (CASP) has been named the official commenting body for new legislation and will help oversee the implementation of Foods for Particular Nutritional Uses (PARNUTS). This has been split into two new decrees in the Czech Republic, the first of which covers all the usual PARNUTS categories and was introduced in February. The second decree is being drafted now and regulates food supplements and the fortification of foods with vitamins and minerals. This decree will be fully harmonised with EU Directive 2002/46/EC, permitting the same vitamins and minerals, but prescribing some limits. It will also overtake the current system of positive listings of other ingredients, excluding botanicals, where it has been decided to replace it with a negative list.
The other main issue is the fate of the current licensing system, which is set to be replaced by a more liberal, simplified approval process. However, the exact form of this is yet to be decided and will depend on a consensus between the Ministry of Agriculture, which has the legislative power, the Ministry of Health, which issues the specific decrees relating to PARNUTS, and the industry itself.
A legal framework, whereby companies making foods, supplements and sports nutrition products would only need to notify the authorities with a model of the label before launch, is currently being debated in Parliament. This might be acceptable to all, including the CASP, bearing in mind that there is a strong need for a public domain database of permitted products, which can be monitored by experts for consumer protection. In addition, the CASP, in conjunction with the Chamber of Pharmacists, aims to create a new, distinctive, quality assurance symbol, to give consumers confidence and help convey important information.
Despite the complexities of changes in health foods legislation, the Czech market continues to perform and is growing at a healthy rate. Special food category products, sold preferably in retail pharmacies and specialised shops, are becoming well known to the population for their health benefits.
Dr. V?clav Bazata is chairman of the Czech Association of Special Foods.
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