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Nutraceuticals: Big Pharma or Big Food’s next Big Growth area?

Evidence-based nutrition might seem a strong growth area for pharma but amidst the opportunities there are challenges…

Nutraceuticals: Big Pharma or Big Food's next Big Growth area?Think about the last time you made a visit to a GP as a patient. If it was a sick visit, you presented with a series of symptoms. Your doctor asked about them, and depending on your answers, had some follow-up questions to help give context to your condition, and then prescribed a treatment.

If it was a well visit, you may have had some blood drawn to check for things like cholesterol and triglycerides. Your blood pressure and heart rate are noted.  More questions asked and advice given.

Regardless of your reason for visiting the office, there is one topic that may well comes up in conversation – nutrition.

What do you eat? Are you getting enough iron? Too much salt/fat/sugar/wine?  Make sure that you are getting enough vitamin D. Folic acid for Mom.

Nutrition is fundamental to our health.  From an early age we hear this message from parents, teachers, and doctors. We must have a foundation of good nutrition so that our bodies and minds can reach their fullest potential.

If we are well, we need to make sure that our nutrition is balanced and complete.  If we are ill, we need to make sure that we're getting the right nutrition to allow drugs to do their job, and to support us in recovery or disease management.

Enter nutraceuticals. 

There may not be a formal definition of nutraceuticals, but one way to think of them is as any designed food or supplement that has a halo of health benefit.  And, of course, this creates a very broad category. Everything from vitamins, to sports drinks, to fortified milk drinks, to complete, pre-prepared diabetic meals could be considered as nutraceuticals. 

Nutraceuticals are not new. But there is a new level of activity and development in the category that could have a significant impact on pharma. Some might think that nutraceuticals are trivial and on some level driven by urban myth, like chicken soup for a cold, or by a PR agenda for a particular food – we all recall the 'superfood' days (a term which incidentally was banned in the EU in the summer of 2007).  But it is well understood that proper nutrition supports health. In particular, when a patient is struck with serious disease, like cancer or heart failure, maintaining good nutrition becomes essential for recovery.

Here is where there is an opportunity in pharma. Suppose that an oncology drug showed better outcomes when paired with a specially designed nutrition supplement produced by the same company as created the drug. Suppose that the outcomes were well studied to the point of inclusion in the drugs label. If outcomes for this combination treatment were sufficiently different than those of other therapies in the same class, could payers require the combination therapy before competitive monotherapies? 

There are a lot of 'what ifs' in that logic, but it isn't too far-fetched. Look at the bisphosphonates class of osteoporosis drugs, and the research that shows that they are more effective when taken with vitamin D. 

Beyond the sales potential of patented nutrition/pharmaceutical combinations, there is another reason to consider nutraceuticals. Sales reps could add these foods to their bag, and provide added value to the doctors they visit. If a pharma company were seen as creating products that support more of a patient's total well being, it is possible that this could play a small part in helping to improve a negative view of that company's salesforce.

What are some of the challenges that pharma might face to moving into the nutraceutical space? Institutional focus on drugs, and internal regulatory are two areas that seem to challenge most companies today. 

There has been a trend recently of companies consolidating focus on drug development.  Pfizer sold off their infant nutrition group to Nestlé, and BMS spun off Mead Johnson.  Still, Abbott maintains a strong presence in the space, GSK has a presence, and Pfizer has held onto its consumer healthcare group.

Another challenge is in the internal regulation of marketing. Regulatory groups in pharma are challenged to treat non-pharma products differently.  Medical, Legal and Regulatory reviewers within pharma tend to be appropriately conservative, and asking them to wear a different hat in reviewing marketing and sales materials for supplements or foods can lead to some contentious review meetings, and significant inconsistency in interpretation of regulations.

However, the greatest single challenge to nutraceuticals in pharma may not be internal. Food giants like Nestlé and Danone have recognised the potential for nutraceuticals in their own portfolios. For them, a push toward medical science in food is attractive for a number of reasons. They like the positive PR that can come from foods designed for health. Even better than the PR are the profit margins possible in this category. While a 25 per cent margin on nutraceuticals might be less than pharma is used to seeing in drug products, it is well beyond the single-digit percentages that food companies make on many of their consumer products. 

Big Food is acting a lot like Big Pharma lately
The multinational food companies now have their own scientific research institutes. They have sales forces selling some of their products to physicians.  They attend medical conferences, and sponsor studies and do continuing medical education.  Nestlé's acquisition of Pfizer's Nutrition unit demonstrates that they are interested in big deals. They are also interested in small deals – some nutrition start-ups that we've worked with say that they are only targeting the food companies as potential investors or buyers, ignoring pharma altogether. 

That doesn't mean that pharma is out of the game yet, only that there is some new non-traditional competition in the area. The next few years will be an interesting time to be involved in the dynamic nutraceuticals space. 

Read the PMLiVE editors' blog about nutraceuticals

Listen to the PMLiVE podcast about nutraceuticals

 

Article by
Bryan Russiano and Pat Thistlethwaite

Bryan is head of client strategy, North America and Pat Thistlethwaite is managing director North America, Across Health. You can email Bryan or email Pat.

18th April 2013

From: Sales, Healthcare

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