FDA TSE Advisory Committee Meeting July 17, 2003 U.S. Market Dynamics for Bovine Bone Gelatin George E. Masson President/CEO Rousselot Inc. President, Gelatin Manufacturers Institute of America (GMIA)

Gelatin Manufacturers Institute of America, Inc. TSEAC July 2003 GMIA – Gelatin Manufacturers Institute of America Founded 1956 Association of Gelatin Manufacturers 6 Members, NAFTA-Based 8 Working Committees: Technical Regulatory Environmental Safety Raw Materials Tariff & Trade Public Relations Audit

Gelatin Manufacturers Institute of America, Inc. TSEAC July 2003 GMIA – Gelatin Manufacturers Institute of America Represents 22% of Global Gelatin Production Represents 96% of NAFTA Gelatin Production 3 Members are GME Member Affiliates

Gelatin Manufacturers Institute of America, Inc. TSEAC July 2003 GMIA Objectives Monitor and inform members of regulations affecting gelatin Serve as industry liaison with regulatory authorities Gather and distribute technical information to members Promote broader knowledge of gelatin and encourage wider consumption Provide discussion forum and liaison on technical, environmental and safety issues Facilitate the exchange of technical information with gelatin associations in other parts of the world

Gelatin Manufacturers Institute of America, Inc. TSEAC July 2003 Photographic use Dietary supplements Drugs Cosmetics Food All grades are made using the same basic manufacturing processes to assure the safety of the final product Use of bovine bone gelatin in the US

Gelatin Manufacturers Institute of America, Inc. TSEAC July 2003 Global Gelatin Production (2002) (metric tons) CountryTotal Gelatin Production Bone Gelatin Production Europe117,00029,000 USA60,00017,000 Other92,00033,000 Total269,000 (US$ 1.5 billion) 79,000

Gelatin Manufacturers Institute of America, Inc. TSEAC July 2003 QUESTION 1: Can the US gelatin industry supply total US capsule industry’s needs? US gelatin production, 100% US Bones 17,000 MT from which used for photo and non-capsule appl. 11,500 MT so for capsules, availability 5,500 MT TOTAL need for US capsule industry 10,000 MT lack of US gelatin production 4,500 MT The answer is NO. About 4,500 MT of bovine bone gelatin have to be imported, mainly from Europe, Japan and India, whether derived from US bones or bones from other countries.

Gelatin Manufacturers Institute of America, Inc. TSEAC July 2003 QUESTION 2: If at least 4,500 MT of gelatin have to be imported, can the total gelatin need be derived solely from US bones? TOTAL US bones production 133,000 MT Bones used for photo in EU (30,000) MT photo in US (60,000) MT pharma outside US (15,000) MT Available for pharma in US 28,000 MT TOTAL need for US bones for 10,000 MT of gelatin = min. 60,000 MT There is a lack of at least 32,000 MT of US bones to supply the US capsule industry with gelatin solely made from US bones. This deficit has to be sourced from bone suppliers outside US.

Gelatin Manufacturers Institute of America, Inc. TSEAC July 2003 QUESTION 3: What alternatives are there to US bones? ORIGINSouth America Australia New Zealand EuropeAsiaAfrica TONNAGE6,000 MT50,000 MT140,000 MT USDANot restrictedRestrictedNot restricted EU-GBRCat 1Cat 3Cat 2 FDACompliantCompliant when from herds determined BSE- free & timing of vertebrae removal 20,000 MT Compliant 10,000 MT Compliant E.P. (EMEA)Compliant Total Availability 6,000 MT 50,000 MT20,000 MT10,000 MT (1) (1)Excluding PRC (2)In EU, removal of vertebrae mandatory for ruminants over 12 months; all bovine bones used for gelatin manufacturing are vertebrae-free. (3)According to GME and auditable; all skulls and vertebrae removed; might be more, used by non-GME members (4)Meets EMEA Guidance provided alkaline process exclusively (5)No vertebrae / spines or other SRM’s per EU definition (2) (4) (3) (5) (3) (5)