July 23, 1998
Big Manufacturers Enter Herbal-Supplement Market
Judge Rebuffs F.D.A. on Effort to Ban Diet Supplement (June 17) St. John's Wort, the Herb Du Jour (Dec. 14, 1997) In Germany, Humble Herb is a Rival to Prozac (Sept. 9, 1997)
By DANA CANEDY
he makers of herbal supplements are in the business of selling stamina and serenity in a bottle. But as the public's appetite for such products as St. John's wort and echinacea has strengthened, the business itself has become anything but serene.
Once largely the province of obscure manufacturers with limited distribution, these pills and powders are no longer consigned to a spot next to the bee pollen at the local health-food store. Now they carry trusted brand names and command premium shelf space in supermarkets, drug stores and mass retail chains around the United States.
With billions of dollars in sales up for grabs, however, the battle for market share has become intense, pitting large drug companies and consumer products makers against one another.
At the same time, questions about the value of those pills and powders have become more pointed, courtesy not only of government regulators and consumer advocates but also of drug companies that have opted to stay on the herbal sidelines.
The big new makers and retailers of the supplements argue that they are simply providing natural solutions for good health in an age of self-medication, and that they are drawing criticism in part because their products are seen as cut-rate competition for high-profit pharmaceuticals.
Products like St. John's wort, whose fans see it as an alternative to Prozac, and echinacea, which is touted as effective in boosting the immune system, are plant-based substances whose properties can help to alleviate everyday ailments, their manufacturers say. They are also quick to note that the substances have been used for centuries in Asia and Europe and are increasingly being accepted as an adjunct to Western medicine.
But industry critics say the manufacturers' motives are anything but wholesome. Like clothes designers who slap their labels on lines of jeans, the manufacturers are simply seeking to cash in on the latest fad that has turned mainstream, the critics say. The difference, they add, is that putting respected names on herbal remedies lends undeserved credibility to a loosely regulated industry of products with sometimes questionable safety and efficacy.
Whatever the motivation, the competition to establish leading brands is intensifying. Celestial Seasonings Inc., known for its teas, is counting on its earthy image to sell a line of 17 herbal supplements introduced in April. The products include a formula containing St. John's wort called Mood Mender, which the company says is useful for a positive outlook.
American Home Products Corp., which makes Centrum vitamins, is seeking to capitalize on that brand by extending it to herbal remedies scheduled to hit store shelves later this year.
Bayer Corp., which makes One-A-Day brand vitamins and minerals, is entering the market next month with a line of products that combines vitamins and herbs. They include formulas for "a healthy emotional balance," which contain St. John's wort and a second supposedly mood-enhancing ingredient, kava, and another containing Ginkgo biloba, an herbal substance that "helps support memory and concentration."
And Warner-Lambert Co. says it is testing substances that may become part of a line it plans to introduce, possibly later this year.
Even Wal-Mart has got into the act with private-label supplements it introduced last year and sells near store pharmacies under the name Spring Valley.
What has all of these companies suddenly hopping on the herbal bandwagon is greater consumer demand, particularly among aging baby boomers, for products that offer the hope of staying youthful. A frustration with traditional health care is also a factor.
"What we are trying to do is respond to what the customer is asking us for," said Paul Beahm, a divisional merchandising manager at Wal-Mart. "More and more, the public is focused on prevention and health care needs, and the vitamin and nutritional supplement category is one they've been asking for."
Moreover, a law that watered down the Food and Drug Administration's regulatory authority over dietary supplements, including herbal products, has made the industry much more palatable to retailers and marketers.
As a result of all this, retail sales of the supplements have increased sharply, growing by 18 percent just last year, to $3.6 billion, and 43 percent since the regulatory changes were adopted in 1994, according to the Nutrition Business Journal, a trade publication. By the year 2000, the industry is expected to grow by an additional 50 percent or so.
"The increase in consumer confidence in these products is indicative of the overall explosive growth in this category," said Stephen Hughes, president and chief executive of Celestial Seasonings. "As the major brands and more established companies come into this category, it's going to segment the category into premium brand and the others, and every major mass retailer and drug retailer is looking at private label."
But not everyone sees the trend as a healthy one for consumers.
"It's important to understand that this is not about health and this is not about well-being; this is about money and jumping on a bandwagon," said David Kessler, a former head of the F.D.A. and now dean of Yale University's medical school. Kessler waged a vigorous but unsuccessful battle against the law that virtually stripped his former agency of its authority to regulate herbal and other dietary supplements.
For healthy people, most of the products pose little or no risk, and some, containing garlic and ginseng, may even be helpful, Kessler said. The danger, he said, is that some people with potentially life-threatening illnesses will use the products in place of standard medical treatments. That has always been a risk, but the marketing giants now pushing into the industry can pitch these formulas to more consumers, he said.
"The way they are positioned in the marketplace can lead people down roads to ineffective treatments," Kessler said, pointing to products whose names, he argued, could cause consumers to think they could be used instead of prescription drugs. "If you promote a product as Mood Mender, you have a responsibility to that person who is depressed, and if that product doesn't work, you are doing harm."
"People with specific illnesses look at these products a different way than the healthy person," he added, "and it is through their eyes that the marketplace must be judged."
In some cases, critics say, the supplements can be quite dangerous indeed. The F.D.A., for example, is attempting to rein in the use of the herbal stimulant ephedra, which is sold by various companies in a formula under different names. The formula, which manufacturers say is safe, has been linked to more than a dozen deaths nationwide. Marketers promise that the pills provide an amphetaminelike rush, aid in weight loss and even increase sexual sensation, but medical experts say they can cause heart attacks, strokes and seizures.
The big-name herbal pill dispensers now entering the market say they are sticking to more "mainstream" substances and argue that those formulas are safe and effective when taken by healthy people in recommended doses. Besides, they say, unlike the little-known manufacturers that once dominated the industry, they have the research and development budgets and purchasing clout to insure product quality.
"We spend tens of millions of dollars putting together manufacturing and quality-control processes," said Elliot Friedman, chairman and chief executive of Pharmaprint Inc., which is producing the supplements that American Home Products is planning to market under the Centrum name. "The big companies are very protective of their brands."
That may be, but the critics say consumers have a false sense of security about the regulatory oversight of supplements. They mistakenly assume, the critics contend, that the supplements are subject to the same scrutiny as toothpaste, cough drops and other seemingly benign products under the F.D.A.'s watch. The agency requires those goods to carry general cautionary labeling and dosage information, and it imposes limits on the claims that can be made in marketing.
Herbal supplements are regulated by a looser set of standards. Before the passage in 1994 of the Dietary Supplement Health and Education Act, manufacturers were prohibited, for instance, from making claims about the potential benefits of their products. But the revised guidelines allow companies to advertise the health effects of herbal supplements -- without having to conclusively prove their effectiveness -- so long as the wording does not suggest that the products prevent, treat or cure disease.
That gives companies much greater range in making product claims than manufacturers of, say, mouthwash. While a company cannot claim an herbal supplement cures cancer or relieves depression, for example, it can say that it "promotes prostate health" or "aids in mental focus."
Critics also worry that pharmaceutical companies will attempt to classify some products as herbal supplements instead of as drugs to skirt the rigorous process required to bring a drug to market.
That complaint is at the heart of a battle between the FDA and Pharmanex Inc., which manufactures a product called Cholestin, which it sells as an supplement in Wal-Mart and other big chains. The F.D.A. wants to ban the substance, maintaining that it is an unapproved drug because it contains a natural form of a key chemical in the cholesterol-lowering prescription drug Mevacor, made by Merck & Co.
Last month, Pharmanex won the first round in the battle -- which was prompted by Merck's complaints about the product -- when a judge issued a preliminary injunction lifting the F.D.A.'s administrative ban of Cholestin. The company contends that the product is a natural alternative for people who are too healthy to take the drug.
Meanwhile, as other drug makers begin producing herbal pills, the F.D.A. is struggling to find a way to exercise its limited oversight authority.
American Home Products declined to provide an executive to discuss its supplements business beyond issuing a statement through a public relations representative saying, "Herbals represent a large and growing market with increasing consumer acceptance."
In fact, analysts estimate that the Centrum line alone has the potential to generate $80 million in revenues within a year of its introduction, a figure Friedman calls "on the low side." His company's share would be 10 percent of pretax revenues.
Friedman said the industry's growth could be even greater as more retailers make room for brand-name supplements on their already crowded shelves.
"Consumers are looking for a name they trust and, to be honest, that's why we went with Centrum," he said. "Pharmacists know it, doctors know it and consumers know it. That is the edge in bringing these new people into the fold."
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