NUTRITIONAL PRODUCT MARKET
The nutrition product market in Canada plays an important role in supporting a healthy lifestyle for millions of Canadians while also contributing greatly to Canada’s economy.
Canadians understand the importance of nutrition and supplement use. According to a 2010 Ipsos-Reid survey, 73% of Canadians take natural health products regularly. This number is only expected to increase, as the percentage of Canadians aged 65 and above will continue to grow. The elderly typically consume more vitamins and dietary supplements to compensate for the weakening in their absorption of nutrients and/or loss of essential vitamins or minerals, increasing demand for nutritional supplements.
Canada appears to have become an appealing target for many US companies selling natural health products as US expansion in the nutritional health market has slowed. Some US natural supplement companies have even seen their Canadian client base double over the past year. Although entering the Canadian marketplace seems like a no-brainer, integrating is not as easy as one would hope.
In the US, dietary products are regulated post-market, making it easier for new supplements to enter into a marketplace. In contrast, Canada requires dietary supplement products to be licensed before entering into the market by the Natural Health Products Directorate (NHPD). Prior to 2004, supplements did not require pre-market approval and many concerns were raised about consumer’s health and safety as well as the efficacy and quality of the products. That is why, in 2004, Heath Canada instituted the NHPD and the Natural Health Products Regulations to confront the concerns. The NHPD requires all supplements to become pre-approved before entering into the workforce. In addition, the Canadian sites that manufacture, package, label, and import all natural health products are required to have site licenses.
Today, many companies struggle to meet requirements set by Health Canada. Since 2004, the NHPD has processed over 70,000 applications and either withdrawn or refused 48% of those. In 2004, when the NHPR came into effect, the immense number of products that were already on the market but needed to be processed created a major backlog of applications. Since then, NHPD has received some heat from consumers and stakeholders to increase the speed of access to products. In order to maintain consumer safety while increasing speed of access, in 2012, NHPD published the “New Approach to Natural Health Products.” This document outlined a more flexible and efficient regulatory approach. Under the “New Approach to Natural Health Products,” application review times are based on the amount of information known to NHPD about the product. The higher the level of product certainty, the shorter the review time for the product.
The level of product certainty is broken down into a three-class system criterion. Applicants are encouraged to use NHPD monographs, which are essentially a written description of particular elements of an ingredient, to receive the quickest review. Class I products are those with a high level of certainty that can be indexed against an individual monograph. Class I applications are typically processed within 10 days, using the electronic Product License Application form (ePLA). Class II applications are those with medium level of certainty and are comprised of applications with multiple NHPD monograph ingredients. The safety of the combination of monographs must be assessed and are subject to an expedited risk-assessment that takes about 30 days. Class III applications have the lowest level of certainty and are comprised of products that either have ingredients or ingredient combinations never seen before, significant safety concerns, or previously unlicensed claims. Class III applications typically take up to 180 days. Thanks to the three-class system, NHPD has completed the review of all unprocessed applications as of February 2013. All needed documents can be found on the Health Canada website.
For US companies importing products to Canada, the situation is even more intricate. Every shipment of product entering Canada from the American-Canadian border can be inspected to ensure compliance with regulation. Customs agents are trained to spot-check shipments to verify that the supplements possess either a NHPD license or process number. In addition, all products must be manufactured, packaged, labeled, and imported in accordance with the NHPD’s Good Manufacturing Practices. Finally, all US products must be brought into the country by a domestic importer that has been issued a valid Site License by the NHPD. As long as US companies have a submission number for each product and an importer on record with a valid Site License, US companies may enter the Canadian marketplace. Although the system in place may become difficult at times, the benefits will likely outweigh the hurdles. The Canadian supplement industry is poised for sustained growth with a value CAGR of 2%, forecasted to reach sales of 1.6 billion Canadian dollars in 2019. In addition, Health Canada’s regulatory model is being recognized internationally, meaning markets all over the globe look favorably upon products licensed by Health Canada. Although the process is tedious, many American companies are seizing the fruitful opportunity and have begun to take charge of the Canadian nutrition product marketplace.
