The 10 biggest threats to the supplement industry
December 2, 2013
![The 10 biggest threats to the supplement industry The 10 biggest threats to the supplement industry](https://eu-images.contentstack.com/v3/assets/blt09e5e63517a16184/bltafc06db067aebac6/64cbf83cdb0bcc7a8de33eaa/NewHopeNetwork_Horizontal_RGB.png?width=700&auto=webp&quality=80&disable=upscale)
The issue: Dealing with the FDA is a top concern for many supplement companies and rightfully so. The federal agency has substantially increased its monitoring and enforcement of the safety of dietary supplements, most notably by cracking down on Good Manufacturing Practice violations and initiating a draft guidance on New Dietary Ingredients. What to do about it: Stay on top of new cases and how the FDA is enforcing compliance. Specific issues to pay attention to are adverse event reporting, reporting rules regarding New Dietary Ingredients, Good Manufacturing Practices and Form 483 Warning Letters, issued by the FDA for GMP violations. Companies should develop a culture of compliance and dedicate the resources and the personnel to stay true to that mission.
The issue: The supplement industry has seen a recent flurry of acquisitions and mergers recently with major drug and CPG firms jumping in on the action as well. As the cost of doing business get higher, companies get bigger and competition gets tougher. What to do about it: Make sure your company is GMP-compliant. A company’s dedication to align with FDA regulations indicates the quality of its products and its potential for growth and longevity in the industry.
The issue: According to California's Safe Drinking Water and Toxic Enforcement Act of 1986, also known as Proposition 65, the state’s Office of Environmental Health Hazard Assessment publishes an annual list of chemicals known to cause cancer, birth defects or other reproductive harm. The 800-item list includes lead, which is problematic as it is naturally occurring in many supplements at minute levels. What to do about it: Explore proactive solutions like select formula changes that can help lower the risk of Prop 65 claims. Consider and understand potential defenses if a claim is made. The "naturally occuring defense" is often overlooked.
The issue: Regulation of GMOs in the United States is just at the beginning stages, causing confusion among consumers and controversy between health advocates and big business. What to do about it: The push for GMO transparency will likely be a grassroots effort stemming from the natural products industry and local communities. Manufacturers should partner with their respective communities to make sure they are on the right side of this issue.
The issue: There's always a chance that a natural disaster will disrupt your supply chain, delaying delivery of raw materials and packaging supplies or the shipment of finished products. What to do about it: Prioritize planning. Make a contingency plan that you can fall back on in the case of a Black Swan event, diversify supply sources so you aren't crushed by a single weather event and cultivate a reliable supply network.
The issue: The recently-enacted Food Safety Modernization Act and more stringent GMP compliance enforcement actions are making supply chain security and transparency of raw materials a top concern for dietary supplements and food manufacturers. What to do about it: Ensure your raw materials can be traced back to the source and have a back-up plan in place that will allow you to circumvent unexpected supply issues. Sourcing ingredients from China may be cheaper but it takes effort and money to ensure the quality and traceability of those supplies.
The issue: The increase in untrustworthy, profit-hungry ingredient suppliers has weakened the integrity of the raw-materials side of the dietary supplement industry. What to do about it: Realize that the quality of raw ingredients defines the quality of the final product and be willing to pay the price for top-notch ingredients. Raw material costs reflect total quality, infrastructure and supply surveillance costs, as well as compensation necessary for botanists and other professionals who maintain quality control. Be wary of “grifters” who make lofty promises and offer raw materials at below the market value.
The issue: The supplement industry has long had to deal with a degree of skepticism from the mainstream media, especially in relation to its regulatory efficacy and health claims. Consumers are increasingly swayed by negative event reports and call-outs by the FDA while increased demand pushes companies to keep making stronger, bolder claims. What to do about it: Focus your branding on wellness, not aggressive health claims that are ripe for critics to pick apart. Also, make compliance with all regulations a top priority.
The issue: Plaintiff class-action lawsuits are roping dietary supplement companies into perilous legal battles. The lawsuits surrounding DMAA are one of the most recent examples. What to do about it: Scrutinize your claims and make sure you can back them up. Be able to prove the safety of your ingredients when they are combined together and adhere to strict GMP regulations. Bring in your attorneys to review your company and find any legal holes you may not have addressed.
The issue: Though the Food and Drug Administration regulates supplement claims, it’s the Federal Trade Commission that oversees dietary supplement advertising. In recent years the FTC has prosecuted a number of cases involving big name companies like Nestlé, Dannon, POM Wonderful and lovate Health Sciences International. Richard Cleland, the agency’s assistant director of the advertising practices division warned that the FTC will continue to take action against companies making express and implied disease treatment and prevention claims. What to do about it: Carefully evaluate your marketing claims. FTC’s Cleland advised companies to spend as much on advertising as they do on research and to learn from previous FTC cases. As William Acevedo, partner at Wendel, Rosen Black & Dean LLP advised, “Companies cannot overstate the benefits of their products or assert that the supplements treat particular health conditions.”
The issue: Though the Food and Drug Administration regulates supplement claims, it’s the Federal Trade Commission that oversees dietary supplement advertising. In recent years the FTC has prosecuted a number of cases involving big name companies like Nestlé, Dannon, POM Wonderful and lovate Health Sciences International. Richard Cleland, the agency’s assistant director of the advertising practices division warned that the FTC will continue to take action against companies making express and implied disease treatment and prevention claims. What to do about it: Carefully evaluate your marketing claims. FTC’s Cleland advised companies to spend as much on advertising as they do on research and to learn from previous FTC cases. As William Acevedo, partner at Wendel, Rosen Black & Dean LLP advised, “Companies cannot overstate the benefits of their products or assert that the supplements treat particular health conditions.”
The supplement industry has reached an estimated $32 billion and continues to be ripe with opportunity. But the industry's potential is tempered by regulatory and business hurdles that threaten to bog down even the most passionate and dedicated industry professionals.
Here are the 10 biggest troubles facing dietary supplements today, plus what companies can do to avoid them.
This gallery is excerpted from the 2013 NBJ/Engredea Fear Report. Click here to learn more and purchase the report.
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