The Value of Product-Specific Data for Marketing and Sales ROI

Nutrasource Diagnostics Inc.The Value of Product-Specific Data for Sales

and Marketing Return on Investment

Friday, March 7th, 2014William Rowe, BA

President & CEOwrowe@nutrasource.ca

www.nutrasource.ca

Outline• About Nutrasource and our product commercialization

platform• Product claims and product-specific data• 3 unique case studies: food, raw material ingredient, dietary

supplement• 4 stages of development:

– Systematic scientific literature reviews– Product analytics– Human clinical trials– Health/product/marketing claims

• Return on investment• Additional Nutrasource information

www.ifosprogram.comwww.nutrasource.ca Booth # 176

About Nutrasource and Our Product Commercialization Platform

www.nutrasource.ca Booth # 176

About Nutrasource

• Nutrasource Diagnostics Inc. (NDI) is a full service R&D department for the consumer health products industry from ‘farm’ to ‘pharm.’

• Delivering commercializationsince 2002

Product Development:2 Key Scenarios

1. Launching a new product2. Re-launching/re-positioning an existing

product

Answering the 5 Key Questions

To help determine your product’s sales, marketing, regulatory and R&D strategy, we ask the 5 key questions:1. Where is it made?2. How is it made?3. What is it? 4. What would you like to say and what can you

say about it?5. What country would you like to sell it in?

From Concept to Claim/Market

Start with the End in Mind

www.ifosprogram.comwww.nutrasource.ca

Reverse the concept to claim pathway with the product claims as your starting point to ensure all research, development, regulatory, intellectual property and marketing are positioned with this common thread

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Product Claims andProduct-Specific Data

Product Claim: Part 1

Remember – your product claim (health claim, nutrient content claim, structure-function claim) drives your marketing, your collateral, and your intellectual property

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Remember – your product claim is the intersect point where science, legal and marketing converge and this iswhere ROI on newproduct launches andproduct re-positioningoccurs

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Remember – it is time to stop thinking about these aspects of product development as individual silos of activity but as one continuous commercialization strategy

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Product-Specific Data

Product-specific data is datathat provides unique and novelmarketing, sales and regulatoryinformation and positioningspecific to your product’sformula, its characterization,its attributes, and its impliedor direct health benefits

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Why is it important?

• Strengthen company name and product brand• Establish integrity and credibility• Create research rights and intellectual

property• Product claims substantiation• Increase sales exponentially

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General Observations

• Companies are providing very similar marketing messages within categories

• Companies do not see the ROI on clinical trials or similar larger budget research and development

• Companies see the FDA, EFSA and Health Canada as an adversary instead of an ally

• Companies fight the tightening of the regulatory environment instead of using it for marketing leverage

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3 Unique Case Studies: > Food

> Raw material ingredient> Dietary supplement

Case 1: Seafood Situation

• Company provided fresh seafood meals to the cruise line industry

• A rogue employee set up down the street began taking market share up to ~30%

• Regular marketing using terms like “fresh,” “natural,” “delicious”• Traditional marketing was not working

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Case 1: Product-Specific Data Difference

• Stability testing to demonstrate novel production process gave an additional 3 days shelf life over competitor

• Regulatory and nutritional analysis assessment to provide insight to more aggressive claims around EPA and DHA levels in seafood dishes

• Define reported adverse events profile from FDA in the public record to show low frequency of issues and strong lack of illness track record (over 1 billion meals served and only 10 reported events to the FDA)

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Case 1: The Result

• Rogue competitor shutdown in 3 months• Company returned to industry leading status

in category

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Case 2: Moving Right Along

• Company with an insoluble oat hull fibre wanting novel fibre claim applicable across multiple food categories for the US and Canada

• Precedent had not been set for one submission covering this many applications in various cereals, breads and pastas

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• Create systematic literature review on scientific rationale for metabolic controlled diets

• Design a ‘free range human’ study with assessment of 9 product arms following subjects for 5 months

• Use Radio Opaque rings to track stool volume and transit time

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Case 2: The Result

• Most widely applicable novel fibre claim ever approved in North America

• Company can transfer related claims up to the end user on the supply chain for food and dietary supplement applications

• IP around process technology allows company to retain IP and tie claim back into IP

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Case 3: Breast is Best

• Company required an implied breast cancer prevention claim

• Breast Cancer claims in Canada are a Schedule A disease claim typically

reserved for large scale pharmaceutical development• What to do next?

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• Systematic literature review to confirm theoretical formula optimization and biomarker identification based on published literature

• Health Claim strategy around brand name and actual claims relating to estrogen metabolite levels and ratios

• Clinical trial in pre and post menopausal women specific to health claim strategy and regulatory filing

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Case 3: The Result

• The only Natural Health Product ever licensed in Canada with implied breast cancer prevention health claims

• A publication in an oncology journal• ‘Immeasurable ROI’ according to the client

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4 Stages of Product Development:> Systematic Scientific Literature Reviews

> Product Analytics> Clinical Trials

> Health & Marketing Claims

Strategies and Tactics: Systematic Scientific Literature Reviews

• Assessment biomarkers of interest for your formula and claims

• Theoretical formula optimization from a claims perspective

• Jurisdictional assessments of level of aggressiveness around the claim

• Assessing the research gap of where you are vs. where you need to be for claims substantiation

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Strategies and Tactics: Product Analytics

• Contamination assessments• Stability assessments • Active ID and Concentration• Characterization of formula and unique attributes

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Strategies and Tactics: Human Clinical Trials

• Efficacy assessments• Safety assessments• Publication strategy• Biomarker strategy• Study design to answer as much as possible!!!

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Strategies and Tactics: Health/Marketing Claims

• Marketing collateral• IP strategy• Certification strategy• Government approval/compliance strategy• Label messaging strategy

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Return on Investment

Strategies and Tactics: ROI for New Product with Clinical Trial

Baseline Revenue $150,000

New Positioning Revenue $350,000

Baseline Revenue Growth 5.5%

Revenue Growth Increase 0.0%

Change in Profitability 0.0%

Investments $35,000

Discount Rate 10%

Net Present Value $54,939

Internal Rate of Return 45%

Payback 3.0 years

Dietary Supplement - Enhanced Competitive PositioningThe Scenario

The Business Case

Phase I Study

Phase IIa Study

Current Positioning

New Positioning

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5Ne

fit an

Sources: Frost & Sullivan (2005); NHP Insider (March 2012)

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Strategies and Tactics: ROI for New Product with Clinical Trial

• Such an investment would yield a 45% return and a 3 year payback generating a Net Present Value (NPV) of $54,939

• The NPV is a measure of how much profit the investment produces in today’s dollars and is determined by adding the discounted cash flows of the project over its lifetime

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Strategies and Tactics: ROI for Existing Product with Clinical Trial

Baseline Revenue $1,000,000

New Positioning Revenue $3,000,000

Baseline Revenue Growth 13.8%

Revenue Growth Increase 0.0%

Change in Profitability 0.0%

Investments $400,000

Discount Rate 10%

Net Present Value $511,387

Internal Rate of Return 32%

Payback 5.8 years

Nutraceutical (OTC) Supplement - Enhanced Competitive PositioningThe Scenario

The Business Case

Phase III

Phase IV

$300Inv

Current Positioning

New Positioning

Year 0 Year 1 Year 2 Year 3 Year 4 Year 5Ne

fit an

Sources: Frost & Sullivan (2005); NHP Insider (March 2012)

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Strategies and Tactics: ROI for Existing Product with Clinical Trial

• Such an investment would yield a 32% return and a 5.8 year payback generating a Net Present Value (NPV) of $511,387

• The NPV is a measure of how much profit the investment produces in today’s dollars and is determined by adding the discounted cash flows of the project over its lifetime

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Additional Information About Nutrasource and Our Services

Our Memberships & AffiliationsNDI is a proud and active member of:

Our Testing & Certification Programs

• Nutrasource is also the developer and exclusive provider of testing and certification program for:• Fish oils – International Fish Oil

Standards Program (IFOS™)

IFOS played a significant role in Renew Life’s ability to grow in the omega-3 category in 2013 despite the category’s decline of approximately

10%. – Peter Agostino, Renew Life

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Our Testing & Certification Programs

• Nutrasource is also the developer and exclusive provider of testing and certification program for:• Krill oils – International Krill Oil

Standards Program (IKOS™)• Sports & fitness supplements –

International Fitness Ingredient Testing Program (IFIT™)

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Diteba: Analytical and Bioanalytical Laboratory

• Testing performed in accordance with the U.S. FDA 21CFR Part 210 & 211, Health Canada GMP guidelines and ICH guidelines

• Licensed by Health Canada as a GMP drug establishment (#102117-A) and registered as a Drug Establishment with the FDA and licensed by Health Canada to handle controlled drugs and substances.

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Have a product you’d like to launch or re-launch? We can help!

Stop by the Nutrasource booth #176 for a one-on-one consultation with myself or a member of my team to

discuss your product R&D and marketing strategy.

Booth # 176

William Rowe, BAPresident & CEO

wrowe@nutrasource.ca

Connect with Nutrasource:www.nutrasource.ca

facebook.com/nutrasourcediagnostics@Nutrasource_NDI

linkedin.com/company/nutrasource-diagnostics-inc.

www.ifosprogram.com

Thank you!

The Value of Product-Specific Data for Marketing and Sales ROI

Health & Medicine

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