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How to Enter the Nutraceuticals Market

The nutraceuticals market provides nutritional-type products that have healing effects, therapeutic effects (“ceutical effects”) or that support health in ways beyond the effects attributed to nutrients such as vitamins, minerals, water and foods. Nutraceuticals can be topical or oral, and are used both to treat and to prevent various conditions of unwellness. People love nutraceuticals because: 

  1. They are natural;
  2. They are a drug alternative; 
  3. They have traditionally not been connected to big pharma (but that is changing rapidly); 
  4. People get the sense that they are doing something helpful to keep or make their body well.

First, let’s talk about “natural.” Many people wrongly equate “natural” and/or “organic” with terms like safe, good, beneficial, non-toxic – but these are misconceptions. Most – yes, most – natural products have the potential to be very harmful. One must learn which are beneficial, and in what quantities; processing a natural substance has a large influence on function and safety, so if you are thinking of getting into nutraceuticals, be careful and be insured.

The global nutraceuticals market is sizable already (more than US$383 billion in 2017, expected to grow to over US$560 billion by 2023, according to Thomasnet.com), and it’s expected to double in sequential five-year periods. How can newcomers enter the market? There are already thousands of products in the marketplace, but there are not really very many different types of products, i.e. there are a lot of “knockoffs” or copy-cat products. The only way a newcomer can compete if they are interested in producing similar products is by ensuring better quality and/or a lower price for the consumer, coupled with excellent marketing. As is generally true, however, you get what you pay for; high-quality products will cost more, but many consumers are not willing to pay for quality. Low-quality products often lack physiologically meaningful effects (i.e., they do not work as intended) – but if a consumer believes it may help, then sometimes it might, through a placebo effect.

Thousands of excellent nutraceutical ingredients are available, but evidence-based scientific research is important because it shows (not “proves,” because the result is specific to the conditions of the research) that an ingredient may work, how it may work, if it works on the intended target (human or animal) and if it is safe in the target species at the levels where beneficial effects occur. Is it safe both in the short-term (acute safety) and in the long-term (chronic safety)? 

A company providing nutraceutical products needs to be able to demonstrate both function and safety. It is for this reason that many companies opt for the route of contracting manufacturers that provide a line of generic nutraceutical products sold to different companies under different labels, letting these companies vie with each other for market share. The winner is the contract manufacturer, and the contract manufacturer with the greatest number of innovative products with unique selling points will be the biggest winner. 

Where to start

So, is there a way to get into the marketplace with a product that is safe, that works and that is truly unique, while protecting that product for the period of time needed to carve out your share of the market? The answer is yes. There are three main ways:

  1. Contract manufacturers (most good ones have in-house design and regulatory teams); a company may have the ability to obtain an exclusive license (costly) for unique product(s) for a fixed period of time. 
  2. Do it yourself – which some try, but there are usually areas in the pipeline between “concept” and “consumer” for which expertise is lacking. For example, if there is good evidence that the product works, how do you determine if it is safe in the way that regulators require? Or does it need to have regulatory approval prior to going to market? If regulatory approval is needed, then how is regulatory approval obtained? Will you be able to make the claims that you want to make? (The answer to that question is usually “no,” so other marketing strategies need to be created.)
  3. Partner with a contract research organization (CRO)    that helps companies and individuals with concept to-consumer (C2C) product development. This type of approach can be performed completely by the CRO, but more often is a partnership on one or more levels. For example, the CRO is approached by a company with an idea to use a specific ingredient, or combination of ingredients, to exert a specific effect; it is the company’s idea, but they need help to answer one or more of the following questions: Does it work for the intended species, using the intended route of administration? How much is needed for it to work in the way it is intended to work? Is it safe? Is it innovative enough to carve out a niche? Is there a high likelihood of obtaining regulatory approval? And so on.

Partnering with a CRO for C2C product development helps to ensure that the formulation is safe, effective and innovative, with enough unique selling points to have a high potential of retail success; it ensures a high success potential for regulatory approval (if needed); and, it ensures that the formulation can be adequately protected (patent or trade secret). Your partners should have the scientific and regulatory expertise to navigate all of the above. 

Launching on a large scale

In your corporate boardroom, the decision has been made to go large into the nutraceuticals market. The company has success with a small starter line of products. Going large brings big challenges because it is not simply the process of producing more product. One of the biggest challenges is sourcing adequate quantities of high-quality ingredients, and ensuring that these ingredients are, indeed, of suitable quality. The quality assurance department will need to test each incoming shipment to ensure it meets criteria for bioactives and absence of contaminants – both of these can be highly variable, even from the same supplier. One supplier may source ingredients from more than one producer, resulting in variability; there is also seasonal variability, year-to-year variability and so on. 

Ideally, your company will want to source from at least two suppliers – it is always important to have backups when upscaling production. Your quality assurance department may determine that it is best to blend batches of like ingredients, producing a large enough quantity for a three- to six-month product run. 

Nutraceutical ingredients are biological products, and thus degrade or decompose over time; therefore, high-quality storage facilities are needed to keep products out of the light, at the correct humidity and temperature. The same is true for the finished product, and regulators like to see stability (shelf life) data for ingredients and products.

Many producers of nutraceutical products are trying to fly under the regulatory radar. There is a decent amount of industry self-reporting (such as, a company reports a competitor to Health Canada or the FDA, especially when there are quality concerns), but for a legitimate company that is interested in people/animal health and plans to be in business for the long-term, it is best to take a regulatory approach from the beginning. This starts with using evidence-based research to support ingredient selection, product design (which ingredients, in what proportions, to achieve the intended effect), product effect(s) and product safety. 

In Canada, most nutraceutical products for humans must be registered as Natural Health Products, and for animals they must be registered as Veterinary Health Products. There are still thousands of products on the market that are not registered. How do you know if a product is registered? Read the label. Near the bottom of one of the labels it will state that it is registered, and there also will be a notification number that identifies that product within the Health Canada databases.

Invest wisely in C2C product development and you will be rewarded with a product for the long-term, that helps many people and/or animals, and that you can stand behind and be proud of.

The Nutraceutical Alliance has been helping people and companies with C2C product design for more than eight years and stands behind dozens of successful products, with evidence-based research supporting their function and safety.  

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