1. CBI - Ministry of Foreign Affairs Translating industry trends for health products to natural ingredients

2. Objectives  Learn how to recognise industry trends  Learn to determine results of these trends  Learn how to translate trends into opportunities and threats and O&T into action CBI - Ministry of Foreign Affairs 2

3. Industry trends  Regulatory developments  Economic developments  Market developments CBI - Ministry of Foreign Affairs 3

4. Regulatory developments  Harmonisation of EU herbal medicine regulations  In some countries (UK): stricter requirements than before  In many countries: redeveloping products as food supplements or medical devices  more innovation but also competition and substitution  Everywhere: Industry consolidation CBI - Ministry of Foreign Affairs 4

5. Regulatory developments (2)  Novel Food legislation  Barrier to introduce novel food (ingredients), including for food supplements!  Result: restricts innovation  Future: possible changes legislation to make imports of new food products easier  Result: (if changes are adopted) more options to innovate CBI - Ministry of Foreign Affairs 5

6. Regulatory developments (3)  Strict claim legislation food products and supplements (nutrition and health claims)  Delay in accepting health claims botanicals: Uncertainty!  Currently: 80% health claims rejected  Result: companies need to develop new strategies for applications  Result: careful in claims made for food supplements CBI - Ministry of Foreign Affairs 6

7. Economic developments Industry consolidation, result from:  Economic uncertainty  Regulatory changes: identify and document all ingredients along the supply chain  Larger players: more market power CBI - Ministry of Foreign Affairs 7

8. Economic developments (2) Industry shift:  Production from West to East:  West: focus on high-value – low labour input - organic  Extraction outside of EU: processing increasingly at source  WHO regulation have leveled playing field  Exporters: less willing to export raw materials  Governments limit export products without value addition  Some EU companies have large vested interests in extraction facilities  Others are open to DC suppliers of extracts, but new responsibilities – Safety in all its aspects CBI - Ministry of Foreign Affairs 8

9. Economic developments (3) Respond to risks:  Fast-changing sector – low margins  Decrease stocks  Changing raw material prices  Supply security  Going to the source – ensuring traceability  Towards sustainability of supplies – but also in pricing?  Natural resource management and use CBI - Ministry of Foreign Affairs 9

10. Economic developments (4) Shift in Pharmacological research and development to outside Europe In Europe:  Rising R&D costs  Regulatory requirements  Complex research areas CBI - Ministry of Foreign Affairs 10

11. Market developments  Diversification product range  Supply different segments  Active at different levels value chain  Demand specifications of ingredients to comply across segments  Growth of direct sourcing, increasing demand for:  Transparency  Supply security  Storytelling  Value addition opportunities for DC suppliers CBI - Ministry of Foreign Affairs 11

12. Market developments (2)  Increasing MAPs and extracts industries in Eastern Europe  Market opportunities DC suppliers  OR competitors for DC suppliers (temperate species)  Increased world demand European (German/Swiss) herbal medicine and supplements  Export to USA, Russia, Japan, China etc.  Some EU manufacturers and traders less dependent on EU market developments – global players  Growth of developing (Asian) markets  Strong pricing competition due to global market sharing  Alternatives and better bargaining position for suppliers CBI - Ministry of Foreign Affairs 12

13. Questions and Answers CBI - Ministry of Foreign Affairs 13