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The 19th Annual NBJ Summit 2016 Thomas Aarts
Co-Chair, Nutrition Business Journal
June 13-16, 2016
Presentation Contents
I. Our Industry in Perspective
II. Recent Press and Trends Update
III. Thoughts on the Summit Theme: The Trust Imperative
IV. CEO Dinner Progress Report - Key Takeaways from Dinner Discussion and Challenge to the Industry
- Update on Industry Initiatives
I. Our Industry in Perspective
-5.00%
0.00%
5.00%
10.00%
15.00%
20.00%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Rx Drugs
Supplements
U.S. Growth in Supplements ($39B in 2015)
vs. Prescription Drugs ($425B in 2015)
Source: IMS Health & Nutrition Business Journal
• The mission of Nutrition Capital Network (NCN) is to:
– Facilitate the financing process for small to mid-size companies
– Introduce investors to the next generation of successful brands and technology in the nutrition, health & wellness, and natural/organic product industries
– Create a vibrant network for collaboration and partnerships
NCN will accomplish this mission by:
– Creating a series of meetings, events, and virtual tools to connect companies and investors
– Facilitating capital flow for the betterment of business and society
Since October 2007, NCN has hosted 27 investor meetings and presented 475 companies, 56% of which have raised capital or completed a transaction.
Nutrition Capital Network (NCN)
NCN’s “Ecosystem”
26 industry
experts
(screening
committee) 27 meetings 260+
investor groups
2,350+
cumulative
applicants
475
presenting
companies
47 investor
members
56% of companies
have raised money
or completed a
transaction
II. Recent Press and Trends Update
Recent Press on Industry Challenges
Taking Vitamin D May Not Reduce Risk of Falls
January 4, 2016
Statins and Memory Loss: Is There Reason to Worry?
June 8, 2015
Teen Sports Faces a Nutritional-Supplement Debate
January 12, 2016
Supreme Court Says Glaxo Must Face Racketeering Lawsuits…
June 6, 2016
FDA Approves New Nutrition Panel That Highlights Sugar Levels
May 20, 2016
Recent Press on Industry Opportunities
Can Regulators Keep Up with the Supplements Industry?
January 19, 2016
Should You Take a Vitamin? Do You Know What a Vitamin Is?
May 26, 2016
GNC, NY AG Deal: Herbal Supplements Were In Compliance
March 31, 2015
Recent Press on Industry Challenges
Donald Trump, Bad Science, and the Vitamin Company that Went Bust
March 2, 2016
Donald Trump’s Amway-Style Naturopathic Health Scam Slam
August 29, 2015
Personalized
Lifestyle Medicine
Accessible
Diagnostics
(Genetics &
Biomarkers)
Nutrition, Rx,
Lifestyle
Therapies
Public Health
Initiatives
(e.g. ObamaCare)
P4 Medicine
(Personalized,
Preventative,
Predictive,
Participatory)
Lifestyle
Healthcare/
Medicine
Healthcare
Crisis
Sources: PLMI, Eric Topol, G. Ferrier
*Innovative = Simpler, Faster, Better,
Real Time Products & Services
Private Health
Initiatives
(Insurers,
Corp. Wellness)
Innovative*
Diagnostics
Innovative*
Self Care
(Quantified Self)
Mobile
Technology
Social
Networks
Computing
Power
Big Data
The Future of Healthcare Driven by Paradigm Shifts in Medicine and Technology
Recent Personalized Approaches with Nutrition and Supplements
Your Scientific Path to Wellness
Recent Personalized Approaches with Nutrition and Supplements
Optimized Efficacy
Integrated Therapies
Higher Compliance
Genomics
Lab
Assays
Metabolomics
Small Batch
Automation
Precision
Formula Personal Profile “N of 1”
Enabling Precision Medicine and Disrupting Pharma and Nutrition:
“Consumer Friendly Personalization”
Recent Personalized Approaches with Nutrition and Supplements
Diagnostic Product
QuantifEye MPS II EyePromise Line of Products
III. The Trust Imperative
It’s All About Trust
“In the global market,
trust can be built or
destroyed at incredible
speed.” - Stephen Covey
It’s All About Trust
“Rising levels of transparency
will require companies to
protect the interests of their
customers and employees,
even when it sometimes costs
money in the short term.”
- Martha Rogers & Don Peppers
It’s All About Trust
It’s All About Trust… From the “Dark” Issue to the “Trust” Issue
Rick Polito,
Editor in Chief
NBJ
NBJ Trust Issue Takeaways
• Consumer trust in the supplement industry could be stronger
• The public needs a quick way to tell the good products from
questionable ones
- It is not clear that consumers understand third-party
certification seals yet
• Online and brick-and-mortar retailers have an important role in
curating supplements to keep the bad players off the shelves
- Responsible retailers are interested in helping with this
initiative
• Substantial opportunities exist to improve industry trust
- For example, the product registry and GRMA projects are a
positive beginning
Source: Nutrition Business Journal
71% 67%
52% 51% 45%
39% 33%
20%
SmallBusiness
ThePolice
Banks Newspapers PharmaIndustry
SupplementIndustry
BigBusiness
Congress
How trustworthy, are the following industries or institutions?
Among Supplement Users
Substantial Opportunity Exists to Improve Industry Trust
Source: Nutrition Business Journal
IV. CEO Dinner Progress Report
Objectives:
• Discuss the issues and challenges facing the nutrition and dietary
supplement industry
• Build key relationships across leaders in our industry so that we can grow
the “pie” for everyone
• Share the important parts of our culture with a new generation of leaders
• Move forward with a coherent message and new information that will move
our industry in the right direction
2016 CEO Dinner Progress Report
• Responsible members of the Industry must start talking concrete actions
• We should carefully refrain from talking about DSHEA and its apparent
deficiencies
• We need to support a product standard such as NSF, USP, or UL (one is
better than three) at retail to show that our products are safe and high
quality
• Now is the time to embrace the concept of product/facility registration
or notification
- It’s time to support the creation of a registry of dietary supplement
products similar to the NDC
• The industry must consider changing enforcement oversight and funding
2015 Annual CEO Dinner and Summit Summary Conclusions
2015 NBJ CEO Summit Polling Results
Question to audience: To enhance consumer trust, do you
support industry adopting a pre-market notification model?
A. Yes
B. No
Source: 2015 NBJ CEO Summit
A. B.
66% 34%
Coding System for Dietary Supplements?
NDC 0280-1200-80
labeler product
code package
code
NDS Code?!
Just like an NDC code - why not an NDS Code?
Participants: over 80 raw material suppliers, manufacturers,
MLM’s, practitioners, mass market and pharma
Source: GNC proposed at UNPA Summits (November 2015 and February 2016)
Quality Seals &
Facilities
Certification Group
• Establish
Standards
Threshold
• Facilities
Certification
• RM & Finished
Products Quality
Seals
Raw Materials GMP
Group
• Establish RM
cGMPs
• Traceability
Standards
• Testing
Requirements
Industry Product
Notification Database
& Numbering Codes
• Review and
recommend on
advisability of
industry database
• Mechanics of
industry notification
and numbering
system
Media Strategy
Group
• Improve customer
confidence
• Answer
Government
Regulators
• Answer Media
In Late 2015, GNC Proposed R.A.I.S.E. Regulatory Alliance for Industry Supplement Excellence
2016 CEO Dinner Summary Conclusions
• Summarized key industry initiatives
• Discussed a socialization strategy in order to message our
accomplishments
• Agreed that we need to:
- All support the key initiatives, especially the product registry
and the botanical raw materials best practices project
- Work on a coordinated socialization/messaging
- Identify champions to lead this initiative as we had with the registry
• Once progress is made, we need a strategy to communicate with the
following stakeholders:
- FDA
- Regulators
- Retailers
- Media
- Consumers
• Since 2015 NBJ Summit 2015, the industry has coalesced around a
coordinated effort to raise standards for supplements in all categories
• Key companies and trade groups have joined in programs to elevate
the industry to new levels of quality and trust
• Notable efforts include:
- Product Registry led by CRN
- GNC Quality Control Initiative led by GNC and AHPA
- Product Quality Certification Scorecard led by NPA and GNC
- Global Retailer and Manufacturer Alliance Initiative led by
NSF and top retailers
- Attorney General outreach led by CRN, AHPA and UNPA
A Summary of Key Industry Initiatives
Objective: Create a searchable dietary supplement database that:
- Demonstrates “self regulation” and accountability by industry;
- Allows identification, evaluation and comparison of products; and
- improves retailer, consumer, media and regulators’ perception of the
industry
The database would have tiered access levels for consumers and
general public; industry by permission (retailers, B2B customers and
suppliers); and FDA
Participation would be open to all willing industry participants but
required for membership in CRN (and hopefully by other trades)
Source: CRN at UNPA Summit (February 2016)
Dietary Supplement Registry Led by CRN - Background
• CRN announced in April it is developing an online product registry
for launch before the end of 2016
• Will be open to all members of the industry with finished products;
all industry strongly encouraged to participate at no cost
• Will provide basic product information and a copy of product labels
• Initially intended to serve regulators, although open access will
promote transparency and build trust with retailers and consumers
as well
Dietary Supplement Product Registry – CRN Update
Source: CRN
• Establishes more visibility and accountability by the industry
for the products its companies place in the market
• Helps answer such questions as:
- What’s in the marketplace?
- Who markets which products?
- Which ingredients are in which products?
Source: CRN
Dietary Supplement Product Registry – CRN Update
• CRN and industry leaders acknowledge that the registry
alone will not solve all the issues facing the industry - but
providing transparency is the first step to better addressing
other issues by identifying what the industry looks like
• You cannot patrol what you cannot see
• A registry creates a framework on which other tools—whether industry self-policing initiatives or gov’t enforcement strategies—can be built.
Source: CRN
Dietary Supplement Product Registry – CRN Update
Best Practices in the Herbal Ingredients
Supply Chain
Good Agricultural and Collection Practice Program
• Revision of “Good Agricultural and Collection Practice for Herbal Raw Materials,” issued in 2006 by AHPA and American Herbal Pharmacopoeia
• Recommendation for best practices for herb farming (GAP) and wild herb collection operations (GCP)
• Revised GACP will address:
- GAP: propagation material, site selection, fertilization, irrigation, crop maintenance and harvest
- GCP: permits and permission, site selection, equipment, identification, sustainability, timing and handling
- Post-harvest handling
- Personnel (training, safety and hygiene)
- Record keeping and retention samples
Botanical Raw Material GMP Initiative
• AHPA will draft guidance on good manufacturing practice for various operations that supply herbs and herb-derived ingredients (i.e., extracts) to supplement manufacturers
• The revision process engages experts in these affected operations (herb suppliers and extraction companies)
• Resources exist in federal GMP regulations:
- 21 CFR 110: Current food GMP
- 21 CFR 117: New food GMP (and hazard analysis)
- 21 CFR 111: Current dietary supplement GMP
37
Global Retailer & Manufacturer Alliance
Progress continues in all categories of the GRMA as the dietary
supplement standard nears completion:
- Joint Committee holding monthly meetings
- Active Task Groups (TG) meeting bi-monthly:
-- Audit Criteria & Interpretation
-- Audit Scope & Duration
-- Grading & Scoring
-- Auditor Competency & CB Oversight
- Drafts being reviewed for each Task Group section of standard
- Gap analysis conducted of FSMA/21 CFR 117 against 21 CFR
111 for inclusion of relevant requirements
- Joint Committee for GRMA Dietary Supplements – Completing
rough draft standard for the August Summit meeting
- Finalize draft language and approval will be completed and
submitted for review by Q1 2017
- Publish final standard by Q1 2017
Source: NSF
• The NSF Non-GMO True North standard was created to assure the
integrity of non-GMO claims and to grow the breadth and diversity of non-
GMO/GE verified products sold at retail and non-GMO certified
ingredients sold throughout the supply chain.
• NSF Non-GMO True North incorporates elements from the EU and
Vermont GMO labeling requirements and pulls best practice from
commonly used leading food safety standards.
- Expand the scope of products eligible for independent non-GMO
certification
- Meets consumer expectations of non-GMO supply chain, not just
absence of GM DNA.
- True North Accepted by Whole Foods for GMO transparency
requirement
38
The NSF Non-GMO True North Standard
Source: NSF
National Animal Supplement Council (NASC) Preferred Supplier Program
3 areas of focus for the Seal:
1. Promoting the Seal downstream through educational initiatives
2. Maximizing value to NASC members and keeping the regulatory
environment stabilized. NASC continues to work closely with both the
state and Federal agencies (FDA/CVM) achieving positive progress
3. Having trust and confidence in the supply chain (Preferred Supplier
Program)
- Quality Raw Materials
- Quality Processes
- Quality Components & Services
- Quality Products
• Suppliers that qualify for the program are promoted throughout the industry
• Petco continues to be a strong supporter
- Petco is in the process of including the NASC Seal on all Petco
private label products
Source: NASC
Thank You!
Appendix
1. Responsible members of the Industry must start talking and proposing concrete actions to enhance consumer confidence, transparency and scientific support of our products and our industry
2. As part of this dialogue, we should carefully refrain from talking about DSHEA and its apparent deficiencies, such as the lack of oversight of raw material producers and brokers, and instead focus on solutions such as:
- Expanding product quality requirements to the point of origin of materials
- Extending GMPs and testing requirements downstream to the raw material producers and their distributors
3. Support a product standard such as NSF, USP, or UL (one is better than three) at retail to show that our products are safe and high quality (e.g., NASC is a great model for this)
2015 Summit Position Paper: Suggestions to Change the Narrative
4. Although we believe industry must continue to thoroughly reject the premise and the need for pre-market authorization, now is the time to embrace the concept of product/facility registration or notification
5. It is also time to support the creation of a registry of dietary supplement products similar to the NDC code system employed on all over the counter drugs. The system works very well and is managed by the FDA.
6. Finally, industry must consider changing enforcement oversight and funding
2015 Summit Position Paper: Suggestions to Change the Narrative
?
1. Industry initiated
2. Broadly implemented &
supported
3. Broadly available to the
industry
4. Tiered for companies who
want more,… for a price
5. Informative about the product
(e.g., unique identifier)
6. Consumer facing, with
additional access for B2B and
FDA
7. Iterative/Modifiable
8. Rapidity to launch
9. Compatible with continued
support of the ODS DSLB
10. Portable, ultimately
accountable to the industry,
not the vendor
Source: CRN at UNPA Summit (February 2016)
Dietary Supplement Registry Led by CRN - Principles CRN is Looking for…