Growing opportunities in the nutraceutical sector
Advances in genomic technologies mean personalised medicines will become a reality in the next decade.
Many of these medicines will be preventative – based on a prediction of what your genes say about you and what diseases or health challenges you are likely to be affected by.
The vast majority of diseases and health concerns are influenced by a combination of genetics and the environment you are exposed to, which includes diet, exercise, and stress levels.
Alongside the increasing development of personalised preventative medicine, there is now an enormous growth of information available about how food and environmental factors affect our health.
Of course, we all understand there is a crossover between diet and health. No one could be immune to the plethora of diet and healthy living advice available.
In fact, it has become so overwhelming it’s no wonder many of us rebel and reach for that extra piece of chocolate cake!
The crossover between food and health is captured by the burgeoning ‘nutraceutical’ industry. The term nutraceuticals was coined in the late 1980s to describe food products that have a medicinal benefit and include functional foods (such as vitamin-enriched products), nutritional supplements, sports drinks, and medically formulated foods.
KPMG recently released an interesting report on the future of nutraceuticals – predicting that sales will reach US$250 billion by 2018.
This is substantial when compared to the US$900 billion pharmaceutical market, but relatively small compared to the US$5 trillion worldwide food industry.
So, are nutraceuticals drugs or food? And who drives their development and sales – the pharmaceutical industry, food industry, or a different industry altogether?
According to the KPMG report, it is likely to be a combination of food and pharmaceutical industries.
Food companies have a greater understanding of nutrition and food formulation, and a good track record of consumer research and relationships with mass-market distributors.
However, food businesses lack the depth of scientific resources that are needed to come up with major innovations.
Food innovation tends to revolve around modest improvements such as reduced sugar, salt, or fat levels – unlike the game-changing innovations required for nutraceutical developments.
Nutraceuticals hence have a longer development pipeline than food, and regulatory requirements are more complex as well.
Pharmaceutical companies, on the other hand, have strong scientific resources and are used to playing in highly regulated markets with long and risky development times for products.
Where they face difficulties is in their lack of direct knowledge and relationships with consumers, as most of their marketing efforts are aimed at medical professionals.
What does all this mean for New Zealand?
In my view, we are in a prime position to capitalise on our production base of high quality raw food products. We are a long way from lifting many of those products into the nutraceutical market, but there are some exciting exceptions.
Manuka honey is a stunning example of what can be done with raw, natural products.
Companies like Comvita, are developing nutraceuticals and functional food products built around manuka honey and its medicinal benefits.
Having said that, Comvita has significantly invested in both the science behind their honey products and the marketing of their products – and are gearing up to reap the benefits.
Whenever I visit high-end Asian supermarkets and health stores, and I see those beautifully presented Comvita products in the giftware section, I literally leap about in excitement! Please, please, please, let this be a sign of the future for New Zealand food!
However, as the saying goes – “one swallow does not make a spring”.
As a country, we will need to invest heavily in science, product development, commercialisation, and marketing to make the most of nutraceutical opportunities.
One look at the state of commodity prices right now is enough to know we need to be serious about this.
High-tech is the way for our national economy to go, but let’s make sure that much of that high-tech is associated with what we are so great at: agriculture and producing high quality food.
To read the KPMG report, please click here.