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Health claim report finds EU supplements market will shrink 25%

An economic impact assessment (EIA) of the European Union nutrition and health claims regulation has found it will strip the non-vitamin and mineral supplement market of €1.031bn, or about 25 per cent of its value.

Of an EU market estimated to be worth between €8.2bn and €8.6bn retail in 2009, between €3.87bn and €4.1bn was accounted for by supplement sales in ‘other substances’ such as probiotics, herbal products and glucosamine and chondroitin.

The prediction is fed by the fact about 95 per cent of health claim submissions for these substances have been rejected by the European Food Safety Authority (EFSA) and therefore would lead to the billion euro market reduction at retail level.

The EIA was presented at a health claims conference organised in Brussels last week by the group that commissioned it – the European Health Claims Alliance. Author Graham Brookes, managing director at GBC Ltd, said the loss translated to €645m at manufacturing level and €242m in gross profit.

The regulation would cost 13,300 jobs across the 27-member EU bloc, he observed, noting business bottom lines had already been affected since EFSA began publishing health claim opinions in the second half of 2008.

“Levels of business uncertainty have, however, already increased. Some companies have already incurred costs of adjustment associated with negative opinions/assessments by EFSA (an average of €126,700 expenditure/company) and levels of research/development and new product development are ‘on hold’ in some businesses.”

Brookes estimated the total cost of generic article 13.1 submissions at between €4.51m and €7.65m.

Article 13.5 and article 14 claims cost in the vicinity of €0.26m and 1m per dossier.

Changes to stock and packaging required by the regulation would add €291m to costs, resulting in 66 per cent loss in gross profits in the ‘other substances’ market, and 41 per cent in the market including vitamins and minerals.

“Levels of net profitability are expected to fall substantially for companies with relatively high levels of dependency on ‘other substances’ sales. This is likely to threaten the viability of a number of businesses, most of which are small-medium enterprises (SMEs).”

“There is expectation in most companies that the costs of bringing and sustaining a product in the market will increase significantly, raising the barriers to entry in the market.”