More Big Smiles to the Nutraceuticals World

This nutraceuticals blog is not intended to follow the goings-on in the world of real estate, but one real estate developer company recently caught my eye when he agreed to purchase a nutraceuticals company.

In yesterday’s edition of the Boston Herald, a brief story on the foray into the nutraceuticals business by Cincinnati developer Charles Kubicki Sr. appeared in a newsfeed on Nutraceutic. According to the paper, an investment company headed by Kubicki will purchase Berkeley Premium Nutraceuticals for $4 million.

Berkeley sells a number of different herbal dietary supplements and is best known for its "male enhancement" pill, Enzyte, which claims to aid in sexual performance. The company has extensively marketed the product in television ads featuring a character named Smilin’ Bob. Moving forward, Kubicki said Enzyte will remain a brand but the company name will change.

The real interesting thing about this story is that Kubicki purchased Berkeley, which had fallen into bankruptcy amid fraudulent management activities (I know – more bad public relations for the nutraceuticals industry – just what we need in this economy) because of its strategic physical real estate location in Forest Park; the developer owns the building that is being leased by Berkeley and feared another buyer would move Berkeley and its jobs out of the area.

This should bring more big smiles to the nutraceuticals world; Kubicki also plans on reducing his ownership stake in the company to 25 percent, transforming the company into more of an employee-owned business.

Don't Skimp on Nutrition in a Bad Economy

Scanning the Web the other day, I noticed an article in a Mississippi newspaper that touched upon a sensitive nutraceutical and the importance of pediatric nutrition.

I think we all agree across America that the economy stinks, and many adults are probably bypassing nutrition and pricey dietary supplements to tighten up the proverbial household belt. I consider myself among people in the know when it comes to making sound nutritional choices (a personal byproduct of my chosen profession), but over the weekend I found myself devouring a fast-food meal at McDonald's that didn't even cost five bucks. And I wasn't alone: the lines were nearly out the McDoor.

While adults may be able to weather mild nutritional skimping, babies cannot.

Getting back to the article, the reporter rehashed recent headlines involving a Florida infant and his mother who diluted her son's baby formula with extra water. The mom, who received free baby formula from the state government WIC program, ran out towards the end of the month.

Luckily, the child survived a near-deadly decision that must never be made when it comes to infant nutrition.

The article really sent this message home when it quoted a nutritional expert from Weill Cornell Medical College, Dr. Barbara Levine:

• Parents must remember infant formula is a nonbreast-fed infant's sole source of nutrition.
• PBM Nutritionals, a supplier of store-brand infant formula found at leading retailers, recommends parents breast-feed or use formula responsibly.

"If money is an issue, parents must understand that store brand infant formulas cost up to half the price of comparable national brands," Levine said. "And the FDA sets the nutritional and quality standards for all infant formulas, so store brand formulas have to meet the same strict guidelines as national brands."

Dr. Levine maintains a nutrition blog focused on omega-3 and B-vitamins at dhaandbvitamins.org and is a strong advocate - as I am - of omega-3 and omega-6 supplementation in infant formulas.

It's a rough economy, but I urge parents to save money on other non-necessities:

• Cable TV Channels
• Cigarettes (Lose the Habit!)
• Eating Out
• Designer Clothing

If you have a baby, don't breastfeed and are struggling (as we all are) financially, state WIC programs offer assistance, as do store brand formula alternatives at mega-stores.

Cutting back on nutrition is not an option, especially when it comes to babies. Remember, your health must come first, so don't skimp on nutrition in a bad economy; try store brand nutritionals, including vitamins and supplements for adults, or cutout other things that won't affect how you - or your baby - look, feel, and thrive.

Labeled

In my previous observation, I mentioned the phrase "pharmaceutical benefit" when discussing nutritional products and condition-specific marketing. There is a fine line between marketing a nutraceutical such as a functional food or a dietary supplement and making health claims.

1. The label - and by "label" I mean the marketing extension of the label, including Internet content and other forms of marketing - must not in any way convey that the product can cure or prevent a condition or disease.
2. Once a nutraceutical is presented to a consumer in a way that implies it can cure or prevent a condition or disease, the product enters the realm of a prescription drug in the minds of consumers and the U.S. Food and Drug Administration.

While the majority of Americans are now using nutraceuticals, they face a major problem: the market is flooded with products for which unsubstantiated medical-health claims are being made. The industry and FDA are working to create a free flow of information on product safety, but more work is needed to bridge industry with regulators.

This afternoon, I read a news report on this subject that centered on Minnesota-based Wilderness Family Naturals, an organic ingredients supplier of dietary supplements and food products, which allegedly made disease claims on the labels of their brands. FDA has clearly begun to take action against companies that make such claims; in this case, FDA alleges Wilderness Family product labels played up potential health benefits for specific conditions and diseases such as cancer, diabetes, heart disease, chronic fatigue syndrome, HIV, AIDS, and arthritis.

I dare to make an analogy...

***

During my first high school football practice, I failed to heed repeated warnings while attempting to play defensive back and stood up straight (as opposed to staying low and keeping my knees bent).

The result?

My shoulderpads were pushed into my throat and I landed on my back.

"You just got labeled!" cried the junior varsity coach.

***

I believe the same battle cry is being heard in the nutraceutical badlands of Minnesota.

Fatty Acids in '09

Last week I read that Martek continued to create value for its shareholders in a year riddled with diminished returns, layoffs, and widespread panic in the global stock markets. The company has carved a niche for itself, especially in the infant nutrition world, where it is a dominant supplier of fatty acids to infant formula companies.

Martek supplies formula companies with docosahexaenoic acid (DHA) and arachidonic acid (ARA) derived from microalgae; scientific research has linked these omega-3 and omega-6 fatty acids to developmental health benefits:

• Visual Development
• Mental Development

In fact, the company credited infant formula customers with generating $77.3 million of its fourth-quarter revenue, which certainly proves the strategic value of identifying a need and then targeting a market niche. Although Martek has experienced rising costs associated with raw materials, it is fairly optimistic going into 2009, which sets it apart from most companies in corporate America.

Experts have always agreed that breast milk provides the best nutrition for babies. In reality, however, some mothers will decide to supplement their natural milk with formula or rely on formula exclusively to provide their children with the next best thing.

This is where Martek comes in: it has nearly cornered the market on providing infant formula companies with fatty acids. Today DHA and ARA supplemental ingredients are found in leading infant formulas:

• www.enfamil.com
• www.similac.com
• www.nestlegoodstart.com
• www.parentschoiceformula.com
• www.membersmarkformula.com
• www.brightbeginningsformula.com
• www.vermontorganicsformula.com

Aside from infant nutrition, Martek’s DHA products are making headway in a variety of nutraceuticals, including dietary supplements and fortified beverages and foods. According to the company, sales of its dietary supplements rose 22 percent to $5.4 million, while its contract-manufacturing operations experienced a growth of 24 percent to $3.7 million.

Listen to a nutraceuticals industry veteran: identify a niche market, develop a nutritional product with a pharmaceutical benefit, and contract manufacture for other companies and you will end up with a nice little business plan. If martek sticks to its business plan, I guarantee it will weather the storm and enjoy continued (albeit reasonable) success with fatty acids in '09.