April 21, 2010, 8:21 pm

New research* from Business Insights has revealed that despite costs of over $10m to gain the right to claim that a food or drink product has a health benefit, investing is worthwhile.

Research from the independent business analyst has found that as consumers become more concerned and knowledgeable about their health they are self medicating. As a result large food and drink players, as well as pharmaceutical companies are focusing on the potential of the nutraceuticals market, triggering an increase in investment and takeovers – a trend which will continue to accelerate in the next five years.

This comes despite an increase in costs for clinical research needed to substantiate health claims made on both new and existing ingredients. In spite of the increased investment, a high proportion of the applications made in line with Article 13 health claim legislation are being rejected in the EU by the EFSA.

However, “the fact that we’re seeing so much growth in the market, despite the increased costs, illustrates the scope of potential” according toBusiness Insights analyst Dr Cheryl L Barton.

Food and drinks manufacturers such as Danone and Nestlé have invested heavily to bring novel nutraceutical products to the market with success in the health and wellness marketplace. However, with consumer healthcare divisions of some major healthcare companies also investing in nutraceuticals, most notable McNeil’s Benecol products, competition is high.

New technologies such as the technology to extract and analyse bioactive components are continually being developed. It is the smaller innovative nutraceutical companies that have been driving this, and as costs are high for the development of new ingredients and technologies, they become the targets of licensing deals and acquisitions. The Coca-Cola Company and Pepsi-Co in particular have been actively acquiring companies that specialize in products such as fruit juices, flavored teas and waters with added vitamins, minerals and herbs, that meet the needs of today’s marketplace.

Dr Barton continued: “Despite the limitations caused by the tightened regulation and cost, there is massive potential for growth. In this rapidly expanding market, companies will need to differentiate themselves with products that offer an immediate health benefit in days rather than months, to keep consumers coming back for more. Ultimately manufacturers have to balance the costs of gaining regulatory approval for a health claim, with the additional gains they might make through enhanced product credibility and price.”


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