Pfizer Building Viagra As Pan-European Consumer Health Brand with Rx-To-OTC Switch in Norway TOM GALLEN [email protected]

No. 34 • 9 September 2019

Pfizer Building Viagra As Pan-European Consumer Health Brand With Rx-To-OTC Switch In Norway TOM GALLEN [email protected]

and expertise of its new consumer health joint venture partner GlaxoSmithKline PLC, however, as OTC versions of Viagra are ex- cluded from the scope of the deal.

MANDATORY CHECKLIST FOR PHARMACISTS As Norway has classified Viagra Reseptfri as a non-prescription medicine with guidance – a new OTC category introduced last year by the country’s medicines agency, Statens legemiddelverk – consumers looking to purchase the product will be required to speak to a pharmacist and com- plete a checklist to ensure its suitability. “The purpose [of the checklist] is to clarify whether the consumer has illness- es or uses medicines that prevent him from using Viagra Reseptfri,” the agency fizer Inc.’s blockbuster erectile dys- Norway is the second country in the explained. “If the conditions for non-pre- function treatment Viagra will soon world to switch Viagra, with the UK reclas- scription purchase are not met, the con- Pbe available without a prescription sifying the sildenafil-based drug at the sumer will be advised to contact a doctor.” in Norway after the firm secured the first end of 2017. (Also see “Viagra Connect hits The checklist (in Norwegian) comprises Rx-to-OTC switch into the country’s newly UK shelves” - HBW Insight, 13 Apr, 2018.) seven questions which the pharmacist created “non-prescription medicines with And now there are calls for Sweden to fol- must ask before Viagra Reseptfri can be guidance” category. low its neighbor’s lead in switching Viagra. supplied. If a consumer answers “yes” to Pfizer revealed that it was aiming to Sweden rejected a switch application any of the questions – which include “Have launch OTC sildenafil – under the brand from Pfizer in 2017 but the Association of you had a heart attack or stroke in the last name Viagra Reseptfri, which translates Swedish Pharmacies says the country’s 6 months?” and “Are you taking medicines as Viagra Prescription-free – in Norwegian medicines agency should review its de- containing ritonavir for HIV infection?” – pharmacies “in early 2020.” cision and make the drug available OTC the pharmacist cannot sell the product. Viagra Reseptfri (sildenafil 50mg) will with mandatory pharmacist advice. For those men judged suitable for Vi- be available from a pharmacist (in store The Norwegian approval means Pfizer agra Reseptfri, the pharmacist will still or online) without a prescription for men can now begin to build Viagra as pan- advise a visit to their doctor within six aged 18 years or older suffering from erec- European consumer health brand and months for a check-up given that erectile dysfunction. The maximum dose is potentially open up erectile dysfunction tile dysfunction can be an early sign of one tablet a day, with a pack size of up to as a new OTC category across Europe. The health problems such as cardiovascular eight tablets. firm will have to do so without the support CONTINUED ON PAGE 4

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CONTINUED FROM PAGE 1 terfeit drugs, the UK’s Medicines and potential for unintentional misuse and disease or diabetes. As purchases of Vi- Healthcare products Agency noted at possible abuse of the drug for recre- agra Reseptfri will not be documented the time of the switch. ational purpose. in medical records, pharmacists will rec- Making Viagra Connect available with- Meanwhile in the US, encouraging ommend that consumers inform their out a prescription would “help direct men signs that Pfizer and its France-based doctor that they are using the product. who might not otherwise seek help into rival Sanofi might be gearing up for an the healthcare system”, the MHRA claimed, erectile dysfunction drug switch are yet PHARMACIST GUIDANCE “and away from the risks that come with to lead to anything concrete. In 2016 we REDUCES RISK buying medicines from websites operat- reported that Sanofi was seeding the Commenting on the rationale for approving illegally.” field for potential introduction of an OTC ing OTC sale of Viagra, Statens legemid- Cialis (tadalafil) with a US survey show- delverk said the move would promote SILDENAFIL SWITCH - A ing nearly 75% of men say sexual health self-care, while the requirement for man- GLOBAL OPPORTUNITY is “critical” to their happiness, while at datory pharmacist guidance at the point Around the world sildenafil remains the same time Pfizer was recruiting a of purchase would “reduce the risk of mis- largely a prescription-only drug. Po- “global sexual health” brand manager use and side effects.” land became the first country to allow with responsibilities including shep- The guidance category gives con- men to buy sildenafil OTC in 2016 with herding market expansion through an sumers an extra layer of protection not the switch of Adamed’s MaxOn Active Rx-to-OTC switch. included within Norway’s historical OTC product, which is available at the lower Holding back a US switch could be the categories of pharmacy-only and gen- strength of 25mg. country’s drug classification system which eral sales list. Prior to the ‘true’ prescription-to-OTC does not subdivide its OTC category with Making Viagra available OTC would switch of sildenafil in Poland, New Zealand pharmacy-only and general-sales list clas- help to reduce “illegal and dangerous” had come closest to granting OTC status. sifications as is common across Europe. online purchases of erectile dysfunction Sildenafil, however, remains partially re- Therefore, any firm seeking to switch an drugs, the agency explained. “Illegal drugs stricted in the country. It is still a prescrip- erectile dysfunction treatment must con- are found in one of four controlled mail- tion medicine “except when supplied by a vince the US Food and Drug Administra- ings, and in many cases these are erectile pharmacist who has successfully complet- tion that a consumer can safety self-select dysfunction drugs. In 2018, around 8,000 ed the approved training program for the the product without the intervention of a drugs were discovered in postal and couri- treatment of erectile dysfunction in males healthcare professional. er shipping and around 30% of these were aged 35 to 70 years.” A petition to introduce a “pharmacists erectile dysfunction drugs.” Pfizer tried and failed to switch silde- category of drugs behind the counter” Combating the illegal supply of erec- nafil through the European Union’s in the US was rejected by FDA in 2015. tile dysfunction drugs was also a key centralised procedure in 2008. The firm (Also see “Petitions Denied For ‘Pharmacist reason behind the UK approval of OTC withdrew its Viagra application in the Category’ Nonprescription Viagra, Lipitor, Viagra in 2017. Erectile-dysfunction EU following concerns expressed by Chantix” - HBW Insight, 2 Apr, 2015.) treatments were a popular target for the European Medicines Agency, which criminals selling unlicensed and coun- included a lack of medical supervision, Published online 28 August 2019 Future Still Looking Bright For UK Switch, Even After Brexit – Q&A With PAGB’s Michelle Riddalls

DAVID RIDLEY [email protected]

he UK has for a long time been In an exclusive interview with HBW new senior director of Regulatory Affairs considered a ‘go to’ market for pre- Insight, the Proprietary Association of after spending over five years at Pfizer, T scription-to-OTC switches within Great Britain’s Michelle Riddalls points where she was involved in one of the the European Union. to the “forward thinking” approach to most high-profile switches in recent years, A unique combination of regulatory switching by the UK’s Medicines and erectile dysfunction drug Viagra Connect openness and strong retail infrastructure Healthcare products Regulatory Agency, (Also see “Switching Can Help Normalize has made the country very appealing for as well as the scientific advice offered Self-Care – PAGB’s Michelle Riddalls “ - HBW firms looking to extend the life of their by the agency to prospective switch ap- Insight, 13 Aug, 2019.) – also notes the im- prescription brands, or to widen access to plicants, as specific factors that make the portant role British pharmacists play in OTC medicines by switching them to gen- country appealing for switch. creating a positive switch environment in eral sales list (GSL) status. Riddalls – who in June became PAGB’s the country.

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The existence of a pharmacy (P) cat- A: I think the move away from protocols egory between prescription and general to checklists has made it a lot easier for sales list status and the use of checklists pharmacists to advise consumers on over complicated pharmacy protocols are OTC medicine use and has also helped two aspects of the UK’s switch system that pharmacists become trained and confi- enable pharmacists to act as enablers for dent in dealing with switched OTC prod- switch, she argues. “We very much see ucts. Pharmacists need to feel confident These factors will enable to the UK to in their decision of whether or not to continue leading European switch even if the MHRA as that supply an OTC medicine, and checklists the country leaves the EU in October, Rid- are a good tool to enable them to do dalls insists. forward-thinking that. By taking away the requirement to use them every time also helps phar- Q: Is the UK still a ‘go to’ market for switch? regulator and the macists feel more confident and have sheer volume of more natural conversations with their A: Definitely. Looking at the MHRA web- customers about OTCs. site, I counted 11 switches in total since switches that go Pfizer Inc.’s prescription-only to phar- Q: Where do you see the next generation of macy reclassification of Viagra Connect. through the UK UK switches coming from, in terms of cat- That’s quite a lot in less than two years. system shows that it egories or conditions? It’s perhaps true that these switches were not necessarily as high profile is staying that way.” A: Women’s health is an obvious one, as Viagra, which created a whole new with the World Health Organization re- OTC category, as did Glenmark Pharma- cently saying it would like to see more ceuticals Ltd.’s Maloff Protect. But that countries switching the oral contra- doesn’t negate the importance of these ceptive pill from prescription to OTC. switches because they still widened ac- I think this is very positive and would cess to medicines and enabled consum- volume of switches that go through the be potentially a sensible option, given ers to self-care more easily in all of these UK system shows that it is staying that that you’ve already got the morning af- established categories. High-profile, way. In my experience with Pfizer and ter pill out there non-prescription (HRA ground-breaking switches like Viagra, Johnson & Johnson, I found that MHRA Pharma SA’s ulipristal acetate-based El- by their very nature, occur less often, worked very collaboratively with indus- laOne). If used sensibly, what’s the risk one every few years rather than two or try to support the appropriate reclassi- of having the daily contraceptive pill as three every year. fications. For example, MHRA provides P with a pharmacist overseeing its sup- very good scientific advice before a ply? As I said before, having a P category Q: Have all the easy switches been done now? company submits a switch application. opens up the ability to explore switches That’s part of the switch model in the you might not have thought about, as A: No switch is easy. People might say UK. I think that’s really important be- you can balance the safety by using the ‘oh, that was an easy switch,’ but I can tell cause MHRA talks to applicants about pharmacist, which increases the chance you from experience that nothing about its concerns and also advises them what of switches being successful. a switch is easy or predictable. There they can do to address these concerns. are often unexpected hurdles that you This makes the UK a very positive envi- Q: How will Brexit affect the UK’s status as have to go through even with switches ronment to switch in. I think the legal switch leader? that might be seen as simple and easy. framework in the UK also helps. The fact This is because the reclassification pro- that you have a pharmacy (P) category A: To be clear, PAGB believes that it is in cess in the UK is rigorous, as it should means that the MHRA can be assured the best interest of the public and the be, to make sure that the safety of the that a switched medicine will be used industry is to remain aligned with the patient is paramount. But that’s what appropriately, as pharmacists can ad- EU and the European medicines sys- makes switching an exciting area to be vise consumers on its safe use. By con- tem to ensure consumers continue to involved in. trast to other countries, pharmacists in have timely access to OTC medicines. the UK can also actually choose not to However, there is one area of oppor- Q: How important is the MHRA as a supply an OTC medicine to a consumer tunity presented by Brexit which we “forward thinking” regulator in making if it is not appropriate. wouldn’t say ruled out all the negatives the UK an attractive country for firms to of regulatory divergence but could switch in? Q: Does it make a difference that phar- make some aspects of switching easier. macists in the UK can use checklists rather If MHRA becomes a sovereign regula- A: We very much see the MHRA as a for- than complicated protocols when advis- tor and regulatory processes are no ward-thinking regulator and the sheer ing consumers? longer aligned to the EU, Brexit could

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potentially allow companies to apply for national UK licenses Q: Aside from switching, how will Brexit affect OTCs? for new medicines rather than having to go through EU’s centralized procedure, which would mean that in the future A: Obviously, OTC medicines are part of the UK government’s firms would also not need to navigate this procedure also to no deal Brexit contingency plan.Prescription medicines are switch these medicines to OTC status. Medicines that were important, no one is going to say anything different from granted marketing authorization through the centralized that, but if consumers can’t get OTC medicines, there will be a procedure – which currently would need to also be switched knock-on impact on the UK National Health Service. This is be- through this system – would also be potentially open to be cause if people can’t get OTCs then they will go to a doctor or switched in the UK first. This would mean that one of the to a hospital. But the healthcare system is under huge pressure constraints for firms looking to switch in Europe would be already. So, from that point of view, OTCs are actually really im- removed and would potentially allow the UK to carry on trail- portant. We are pleased the government has recognized this blazing as it has in the past. But irrespective of Brexit, it is and is including them in the contingency plans. important that the MHRA should carry on taking a proactive stance towards switching. Published online 28 August 2019 Private-Label OTCs ‘Extremely Popular’ With German Consumers, Says McKesson, As It Extends Own-Brand Line

DAVID RIDLEY [email protected]

rivate-label OTC brands are popular with German consumers, profitable for retailers and their potential is far from ex- Phausted, according to McKesson Europe. In the pharmaceutical retail sector, the market share of private- label OTCs – which in the case of Germany, where pharmacy chains are not allowed, means wholesaler own-brands supplied McKesson’s New to participating independent pharmacies – already amounted to Private-Label Solero around 40%, a McKesson representative told HBW Insight. Skin-Care Range “Pharmacy quality” of the Solero range combined with advice from pharmacy staff gave pharmacies a “unique selling point” within the category. – McKesson’s offering more choice to consumers. Rather than competing with branded products, the firm said that private-label brands Andreas Thiede complemented existing and established brands by drawing attention to the wide range of OTC products available for self- treatable conditions. McKesson, therefore, responding to what it said was a “growing By combining branded and private-label consumer health- demand” for private-label products in Germany, was extending care products in their pharmacies, McKesson said that phar- through its Gehe subsidiary its “gesundleben” (“healthy living”) macists could leverage more effectively their OTC portfolio by OTC own-brand line with an acetylsalicylic-acid-based blood thinner, ASS-IPA 100mg TAH. “Sales in Germany’s blood thinner category alone are worth around €87m ($95.8m) per year and rising,” commented Gehe’s managing director for Sales and Marketing, Andreas Thiede. “With the introduction of ASS-IPA 100mg TAH, we are offering partner- McKesson’s ASS-IPA ing pharmacies a high-quality and at the same time inexpensive 100mg TAH Blood Thinner alternative.” Expanding on the strategy behind its “healthy living” range, McKesson said the brand not only “embodies the current zeitgeist” but had already developed a “strong brand presence” in pharmacies with “high recognition value for end users and patients.”

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The “award winning” range was focused on “high-volume prod- growing” customer demand, Thiede said that McKesson with ucts that at the same time guarantee a high margin for the phar- Solero was offering bricks-and-mortar pharmacies a way to macy,” the retailer continued. keep up with “increasingly fierce competition” from drugstores Cosmetic products were delivering some of the strongest and conventional retailers. sales growth in pharmacy, the retailer pointed out, which was The “pharmacy quality” of the Solero range combined with expert why the company had also launched this year a private-label advice from pharmacy staff gave pharmacies a “unique selling point” sunscreen range, Solero. “In 2018, about €1.2bn was generated within this category compared with the competition, he argued. by sales of cosmetics products and personal care for bricks-and- mortar pharmacies,” Thiede noted. By tapping into this “steadily Published online 22 August 2019 Latest Aleve PM Copy Could Have 180-Day Exclusivity From Additional Generic Competition

MALCOLM SPICER [email protected]

potex Inc. is the first OTC drug firm After 160-Count Label Approved” - HBW to take a swing at landing a type of Insight, 22 Sep, 2014.) Aexclusivity the US Food and Drug The first generic competition for Aleve Administration is granting to encourage PM wasn’t approved until October 2018, development of more generic competi- for Amneal Pharmaceuticals LLC’s for- tion to brand name products. mulation of the product. When Apotex US consumers currently don’t have ac- submitted its CGT-designated ANDA the cess to adequate private label and store Orange Book also included an active list- brand competition for Aleve PM (naprox- ing for Perrigo Co. PLC’s ANDA of a generic en sodium 220 mg/diphenhydramine hy- Aleve PM approved in May. drochloride 25 mg), the FDA decided on With Perrigo and Amneal having ac- 22 August in granting Apotex the agency’s tive approval to make generic naprox- first approval of an abbreviated new drug en/diphenhydramine OTCs, Apotex will application OTC generic with Competitive Bayer launched Aleve PM in September launch as the third private label/store Generic Therapy (CGT) designation and 2014, Perrigoo makes its Good Sense brand competition for Aleve PM, which with eligibility for a type of 180-day exclu- product, next page, and provides other was the first OTC to combine naproxen sivity unlike any other previously allowed generics of the naproxen/diphenhydramine for pain relief and diphenhydramine as a formulation on an ANDA approved in May for nonprescription drugs. sleep aid. The first Rx CGT approval, also this year. The FDA is authorized to grant CGT for an Apotex ANDA, also came with designation to a drug product for which The CGT program was established by other generics for the same reference it determines there is “inadequate ge- provisions in the FDA Reauthorization Act listed drug approved. neric competition,” defined as not more (FDARA) signed into law in August 2017 The FDA also approved Actavis’ ANDA than one approved drug of the same for- to incentivize and expedite the develop- for the formulation in January, but the mulation in the agency’s Orange Book, ment and review of generic drugs for firm has discontinued its product, accord- including the reference listed drug or products that lack competition. ing to the Orange Book. another generic. Apotex’ naproxen/diphenhydramine While the FDARA provision makes CGT CGT exclusivity blocks the agency from approval follows the same pattern the designation eligible for ANDAs submitted approving any ANDAs for the reference agency established with its first CGT des- with only the reference listed drug or one listed drug in the Orange Book – Aleve PM ignation in August 2018. (Also see “US generic approved, the language of the for OTC naproxen sodium 220 mg/diphen- FDA’s First Competitive Generic Therapy law doesn’t preclude the FDA from ap- hydramine hydrochloride 25 mg – for 180 Approval Comes With A Twist” - Pink Sheet, proving other applications for the same days following the sponsor’s launch of the 9 Aug, 2018.) formulation before the CGT-designated CGT generic. Aleve PM was approved in 2014 for product is launched, food and drug law Approval of a drug with a CGT designa- Bayer AG’s US consumer health busi- attorneys say. tion doesn’t award the product exclusivity ness as the first OTC to combine naprox- but makes it eligible. That’s because the en for pain relief and diphenhydramine EXCLUSIVITY ELUSIVE FOR OTCS sponsor forfeits the incentive if it fails to as a sleep aid. Bayer launched Aleve PM Aleve PM, for which Bayer enjoyed at least market the product within 75 days of the in September that year. (Also see “Aleve four years of market exclusivity, and its FDA’s approval. PM Enters Nighttime Pain-Relief Market generic competitors are indicated for use

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by adults and children 12 years and older to provide relief from occasional sleeplessness associated with minor aches and pains. Exclusivity FDA previously had authority to grant OTC drugs previously was limited to periods of not having competition in the marketplace. The agency is authorized to grant three-year market exclusivity periods to drugs that, through NDAs or ANDAs that include clinical trials, are made available OTC after being Rx only. Market exclusivity is optional and the FDA doesn’t require clinical trials for all drug ingredients proposed for Rx-to-OTC switch. Drug firms could be incentivized by the potential for market exclusivity to switch ingredients to OTC, but the lack of a guarantee they will gain a three-year head start on generic competition serves as a disincentive. OTC drugs that are marketed under the FDA’s monograph pro- in diagnosing, treating, and preventing various types of diseases gram, which account for the large majority of medicines available or conditions, and incentivizing generic competition for these nonprescription in the US, are not eligible for any market exclusiv- products can help ensure patients have access to the medicines ity when a new formulation or indication is added to a monograph. they need.” However, legislation to modernize and streamline the mono- FDARA’s CGT provisions “are intended to incentivize effective graph process, by changing it from a notice-and-comment rule- development, efficient review, and timely market entry of drugs making process that typically extends five or more years to noti- for which there is inadequate generic competition,” CDER stated. fications conducted internally by the FDA, includes a provision to Toronto-based Apotex, which provides a large variety of Rx allow some market exclusivity for firms that sponsor proposals for generic ingredients and far fewer OTCs, made its request for CGT certain changes. designation for naproxen sodium 220 mg/diphenhydramine hy- The House has passed three bills, one that was part of broader drochloride 25 mg prior to or when it submitted its ANDA. The legislation on unrelated federal issues, that would grant 18-month FDARA provision requires the agency to decide on an ANDA spon- exclusivity for approved monograph changes. But monograph re- sor’s CGT designation request within 60 days. form hasn’t gained traction in the Senate, where legislation has According to CDER’s draft guidance, with a CGT designation, included allowing two years of exclusivity. (Also see “Monograph sponsors that make their request prior to submitting ANDAs gain Reform Legislation In Play As FDA, OTC Industry Get Real On Chang- meetings with FDA staff throughout its development of the drug. es “ - HBW Insight, 23 May, 2019.) Additionally, the draft guidance says that with all CGT-designat- The absence of exclusivity for additions to an OTC monograph ed ANDA sponsors, FDA is required to: has particularly been a sore spot for sunscreen manufacturers. ● provide with timely advice and communication about their de- The Sunscreen Innovation Act Congress passed in 2014 imposed velopment of their drugs to ensure the gathering of the neces- timelines for the FDA to review and make decisions on propos- sary nonclinical and clinical data for approval; als for adding ingredients to it sunscreen monograph, but the act ● involve senior managers and experienced review staff when ap- didn’t change the agency’s standards for approving proposals and propriate; ingredient developers say without the potential for exclusivity ● assign cross-disciplinary project leads for review teams to facilitate should a proposal gain approval, they have insufficient incentive efficient reviews of development programs and applications and to invest in testing and research needed to clear the agency’s bar. serve as scientific liaisons between review teams and sponsors. The guidance also states that applicants can request that the LOW INTEREST LEVEL BUT ‘IMPORTANT ROLE’ FDA expedite development and review of CGT-designated ANDAs. In a draft guidance on preparing CGT requests published in Febru- In addition to identification of the reference listed drug linked ary, the FDA Center for Drug Evaluation and Research explained to an ANDA, CDER also recommends that in CGT requests spon- the designation is needed because “some drugs may not attract a sors provide information supporting assertions that there is “inad- high level of interest from generic drug applicants if there is a lim- equate generic competition” for the formulation. ited market for those products and/or if the products are more dif- ficult to develop.” Those drugs, however, have “an important role Published online 4 September 2019

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Perrigo Wakes Up UK Sleep Category With Liquid Nytol

DAVID RIDLEY [email protected]

errigo is looking to capitalize on a recent wellness trend towards improving sleep hygiene that it says is not be- Ping exploited by competitors with a new liquid Nytol brand extension. “At last there is an efficacious non-tablet sleep aid that pharmacists can have in their armory to help sufferers get a better nights’ Perrigo’s New Liquid Caramel sleep,” commented Neil Lister, Perrigo’s International vice-presi- Nytol Line Extension dent and managing director for the UK and Ireland. Available in UK pharmacies from September, Nytol Liquid Cara- mel Flavour was the brand’s “first clinically proven liquid diphenhydramine formula” in the UK, Perrigo pointed out. Describing Nytol Liquid as a “game-changing extension to the brand’s current temporary sleep aid portfolio,” the firm said that the product responded to desire for an alternative dosage form among the public, with one in three British consumers saying they In addition to the pharmacy training program launched at the don’t like talking tablets. beginning of this year to support the Nytol range, Perrigo has The launch would be supported by a £1.2m ($1.45m) media mar- created a guide on how ‘Good Sleep Matters for Good Mental keting investment, Perrigo revealed, with consumer-facing televi- Wellbeing,’ which will be distributed to UK pharmacists with a sion, out-of-home and digital advertising beginning in October. counter-top engagement tool to help pharmacists have the “right Alongside this marketing support, Perrigo said it was continu- conversations with patients on sleep and to help ascertain what ing its focus on helping pharmacists and pharmacy-staff get over type of sleep they are getting.” their misconceptions about sleep aids and have better conversa- “Our training and patient engagement tools will further aid tions with consumers about their sleep problems. healthcare professionals to have quality discussions with their

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customers and enable them to choose the on sleep and about 1hr 20mins of that is right course of self-care,” added Lister. about sleep apnoea,” he explained. “It’s the same for pharmacists. It’s not be- UNTAPPED POTENTIAL ing unkind to them, but they don’t get Explaining the strategy behind the Nytol trained, so the pharmacist is like a bunny Liquid launch and campaign, sleep expert in the headlights.” Dr Neil Stanley said that, while sleep was Because of this lack of training and a burning issue among British consum- knowledge, sleep products were not ers, OTC firms were currently not capital- given the prominence they deserve in izing on this wellness trend. pharmacies, Dr Stanley pointed out. “If we “In the last 37 years I’ve been work- would go to the local Boots, I’d defy you to ing on sleep, there’s never been so much find where the OTC sleep aids are. They’re chatter about the topic as there is today,” usually down by the foot fungus bit, it’s Dr Stanley noted. “But this up until now UK Sleep Expert And “How To Sleep Well” not a sexy place in the display.” hasn’t translated into action.” Author Dr. Neil Stanley Dr Stanley therefore welcomed a new One of the issues is a lack of under- focus on sleep from OTC manufacturers standing about sleep among the UK pop- continued, for example insomnia. “A lot and more pharmacy training campaigns ulation, he pointed out. of people have poor sleep,” he said. “But on sleep hygiene. “There’s a perception among consumers it’s not insomnia, we’ve got life. Life is “You have to engage with consumers that sleep tablets are bad,” he noted. “So, happening to us and we just want a bit and let them know that non-drowsy, changing the dosage form may make the of help.” non-addictive sleep aids exist and that product more attractive to somebody who Neither doctors nor pharmacists cur- they can help,” he said. “If you don’t be- doesn’t want to take tablet, and the idea of rently had the requisite knowledge to lieve in the products it’s never going to having something soothing a like a ‘night help people with their sleep problems, Dr work and that’s where the pharmacy cap of something’ could be appealing.” Stanley said, due to a lack of time spent on can play a part, to push sleep more than Consumers also often misdiagnosed sleep as part of their training. just this week’s special.” themselves as having something worse “Figures show that doctors in their sev- than just trouble sleeping, Dr Stanley en years of training get only 1hr 26 mins Published online 22 August 2019 � BEAUTY� CBD Suits Challenge ‘THC-Free’ Claims After Users Fail Drug Tests; Plaintiffs Bar May Just Be Warming Up

RYAN NELSON [email protected]

uits filed in US courts by individuals who were terminated from their jobs after testing positive for tetrahydrocannabi- Snol, which they attribute to defendants’ purportedly THC- free cannabidiol products, could be the trickle before the flood, industry attorneys say. “Setting aside the employment issues in these cases, the plaintiffs’ bar is likely to scrutinize CBD labels with the same skeptical eye they have taken to the food and beverage industry in recent years,” say Kelley Drye partner Kristi Wolff and associate Lee Baum- gardner in a 9 August post to the firm’s Ad Law Access blog. Patterson Belknap attorneys issue a similar warning in a 7 Au- gust article published on legal intelligence site JD Supra. Noting the same employment-related litigation, they state, “Manufactur- ers of CBD products should take pains to develop a sound strategy for thoroughly vetting advertising claims and anticipating the company advertised as THC-free in fact is not free of the psycho- wave of litigation that is likely to follow.” active cannabinoid associated with marijuana’s “high.” There are two cases that have attorneys’ attention at present. As a result of ingesting the firm’s Dixie CBD Hemp Oil Dew Plaintiff Douglas Horn filed a complaint against Medical Mari- Drops to treat persistent pain from a vehicle accident, Horn tested juana, Inc. in August 2015 in the US District Court for the Western positive for THC in random drug screening administered by the District of New York, alleging that an ingestible CBD tincture the trucking company where he worked. The company terminated

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his employment when additional urinaly- According to Horn, Medical Marijuana curately or falsely advertised, it’s fair to sis showed the same result, according to falsely claimed its Dixie product was legal, say that scrutiny on the advertising claims the complaint. safe to consume, had health and well- at issue were foreseeable based on what The New York federal court dismissed ness benefits, was adequately tested and we’ve seen in [other sectors],” the Kelley many of Horn’s claims in an April ruling. would not cause a positive drug test. How- Drye attorneys say. Among its findings, the court determined ever, the court held that at the time those They add, “Terms such as ‘free,’ ‘0%,’ that the deceptive transaction did not oc- statements were made, the defendant health claims, ‘free from’-type claims, and cur in New York – though Horn resides in may not have known them to be false and processing claims such as ‘organic’ have New York, and the product was shipped to intended to mislead consumers. been frequent targets in consumer class and consumed in New York – because the The court’s reasoning in the Horn case litigation. As the CBD industry grows, plaintiff viewed the defendant’s market- suggests that THC-free claims may be marketers will want to understand and ing outside the state. riskiest for companies marketing CBD follow these trends to fully evaluate risk.” Thus, the plaintiff did not satisfy territo- products, similar to how other absolute, Patterson Belknap’s Camille Fletcher rial provisions of New York General Busi- unqualified claims – eg, “100% natural” and Joshua Kipnees note the US Food ness Law governing deceptive business and “preservative-free” – have proven to and Drug Administration’s growing in- practices and false advertising, according be legal liabilities for food/beverage and terest in CBD products, with some 50 to the decision. personal-care companies in recent years. warning letters issued to CBD marketers That finding, among others, now is be- (Also see “Natural Brands Work To Deter since 2015. ing appealed. Lawsuits, Some More Successfully Than “When the FDA begins issuing warning The court did allow Horn to proceed Others” - HBW Insight, 15 Sep, 2015.) letters to manufacturers regarding label- with a fraudulent inducement claim that The Kelley Drye attorneys point to a ing practices, the class action plaintiffs’ bar Medical Marijuana challenged in its mo- similar case pending in California Supe- usually isn’t far behind,” they say. tion for summary judgment, determining rior Court for the County of Los Ange- The attorneys advance a number of that he had reasonably pled that the de- les, in which plaintiff Bianca Thurston theories on which plaintiffs could build fendants’ THC-free statements were false purchased CBD vape juices advertised cases against CBD product manufacturers, and intentionally deceptive. According to by Koi CBD, LLC as having “0% THC.” She including allegations that health benefit the decision, discovery showed that the used the products to treat or alleviate claims are unsubstantiated and therefore company had conducted its own testing, knee pain – an indication supported by false and misleading, or that the amount of concurrent with its THC-free marketing, the company’s anti-inflammatory and CBD or THC in purchased products differs that detected THC in its CBD oil. other health benefit claims – not expect- from what companies have represented Further, Horn sufficiently demonstrat- ing the products to cause her to fail her on labeling or in promotional materials. ed to the court’s satisfaction, for pretrial company’s drug test, which resulted in “While there are viable defenses to each purposes, that he had relied on Medical her dismissal. of these theories, a lack of merit has rarely Marijuana’s THC-free claims and suffered She too seeks damages, including for served as a barrier to the plaintiffs’ bar, and damage as a consequence of that reliance. lost wages, citing violations of California’s manufacturers’ costs of defending against Other representations made by the plain- Unfair Competition Law, Consumer Legal such litigation could be steep,” the attor- tiff as bases for his fraudulent inducement Remedies Act and other statutes. neys note. claim did not meet those criteria as required “While we do not know whether the by New York law, the court determined. products at issue in these cases were ac- Published online 22 August 2019 Accused Lab Operator: Like FDA, He Didn’t Find Falsified Sunscreen Results

MALCOLM SPICER [email protected]

he operator of a consumer health product laboratory says He also explained that he’s known for two-and-a-half years neither he nor the Food and Drug Administration found about federal officials’ investigation into product testing proce- T problems with his business before it was accused of fal- dures and the firm conducted its own internal investigation, lead- sifying results by testing sunscreen products on fewer subjects ing to “significant employee re-staffing.” than reported. AMA Labs, of New City, NY, filed civil fraud complaints against sev- “The FDA are the professionals,” says Gabriel Letzia Jr., owner and eral ex-employees who had pleaded guilty in May to criminal charg- executive director of AMA Laboratories Inc., in a statement submit- es of wire fraud and conspiracy to commit wire fraud. Letzia faces sin- ted to HBW Insight on 28 August. “Letizia didn’t find what the FDA gle counts of the same charges following the 9 August release of an couldn’t find but wound up getting indicted nevertheless.” indictment in US District Court for the Southern District of New York.

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Letzia said in his statement, which also was posted to social media platforms, that some former AMA Labs employees who lost AMA Labs “is registered with and their jobs following the firm’s investigation have opened a competing testing lab. routinely inspected by FDA who Additionally, AMA Labs “is registered with and routinely in- purportedly does a thorough job.” – spected by FDA who purportedly does a thorough job,” Let- zia said. However, “the FDA found no hint of dishonesty from owner Gabriel Letzia Jr. 1987 until 2017 when the company became the recipient of a search warrant.” The indictment announced by the US attorney’s office in the Southern District of New York alleges that Letzia and his business, “We believe the Company to be stronger and more efficient from 1987 through April 2017, defrauded customers by testing now than ever before,” he said in his statement. products with “materially lower numbers” of subjects than its The FDA has not commented on the fraudulent testing al- customers specified and paid for. (Also see “Sunscreen Test Lab leged against AMA Labs and whether the allegations will affect Used Fewer Subjects Than Reported, US Prosecutors Allege” - HBW the approval or compliance status of products it tested which Insight, 23 Aug, 2019.) currently are available. It has referred questions to the US at- Letzia pleaded not guilty in federal court in White Plains, torney’s office. NY, and was released on a personal bond. AMA Labs continues in business. Published online 29 August 2019 IFRA’s 49th Amendment To Safety Standards Coming Soon With QRA2 Updates

RYAN NELSON [email protected]

he International Fragrance Associa- fragrance creations, respectively, into tion’s imminent 49th Amendment The IDEA initiative compliance with the update, which will Tto its Code of Practice will imple- expand the set of product categories ment industry’s latest quantitative risk followed a 2011 used to establish safe use levels for der- assessment framework (QRA2) developed opinion from the SCCS mal sensitizers based on anticipated con- through a European Commission-backed sumer exposure. initiative to address fragrance allergens. that “was eye-opening For specific fragrance materials, the 49th The topic is of growing interest to regu- for the industry, Amendment includes 25 new standards lators, including the US Food and Drug and close to 40 revised standards, Leber- Administration in the US and the Commis- which became even muth says, adding that “numerous stan- sion, which in February 2014 proposed more aware of the dards have been reworded, clarified or expanding the list of fragrance allergens reformatted for greater clarity.” (currently 26) that must be declared on communication gap A number of the changes likely stem cosmetic product labeling. (Also see “EU existing between from the aggregate exposure model in- Watch: Next Steps Re Controversial CMR corporated in QRA2 “based on actual Ban Approach, Fragrance Allergens Label- all parties and, as consumer use of products,” which IFRA’s ing “ - HBW Insight, 10 Jul, 2018.) a consequence, the scientific arm, the Research Institute for South Bend, IN-based Lebermuth, Inc., Fragrance Materials, calls “a substantial ad- a custom fragrance and flavor creator knowledge gap of all vance” from the previous method that will and supplier of natural and organic es- refine safety assessments in accordance sential oils, expects notification of the 49th on fragrance allergens with more realistic exposure profiles. Amendment to come as early as the first and, more specifically, Industry’s first QRA framework met with week of September. criticism from the Commission’s Scientific Stakeholder consultation on the amend- on the methods to Committee on Consumer Safety, which ment ended in July. characterize them, reiterated in a 2015 opinion on methyl- According to Lebermuth, which has isothiazolinone safety that it had “no faith published a related guide, companies assess them and in the [QRA] model in its current form.” will have 25 months and 13 months from diagnose them.” (Also see “European Scientific Committee notification to bring existing and new TURN TO PAGE 14

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CONTINUED FROM PAGE 12 parties and, as a consequence, the consumers. From industry’s standpoint, Not Budging On Recommended MI Restric- knowledge gap of all on fragrance al- the most appropriate way to do that tions” - HBW Insight, 15 Jul, 2015.) lergens and, more specifically, on the without unduly burdening industry or IFRA has been working in close part- methods to characterize them, assess sowing confusion or alarm among con- nership with the European Commission them and diagnose them,” according to sumers unnecessarily is through digital and its advisory bodies to address the the IDEA Project website. channels rather than product labeling. issue of fragrance allergens through the SCCS’ opinion prompted the Commis- (Also see “IFRA Floats Alternative To EC’s International Dialogue for the Evalua- sion’s proposal to require more extensive Fragrance-Allergen Labeling Proposal” - tion of Allergens (IDEA), which brings to- labeling of fragrance allergens on cosmet- HBW Insight, 9 Jun, 2014.) gether leading international scientists in ic products. Adherence to the standards in IFRA’s workshops to improve existing method- An IFRA spokesperson said 23 August Code of Practice is voluntary, but the ologies, with progress reported annually that the trade group continues to work group reported 100% compliance across to the Commission. closely with the Commission to highlight its membership for consecutive years in The IDEA initiative followed a 2011 IDEA progress. the past. (Also see “IFRA Announces Fifth opinion from the SCCS that “was eye- It also is committed to helping sensi- Year Of 100% Compliance With Code Of opening for the industry, which be- tized individuals avoid exposure to fra- Practice” - HBW Insight, 20 Jun, 2011.) came even more aware of the com- grance allergens by delivering “mean- munication gap existing between all ingful and relevant” information to Published online 25 August 2019 Coty Begins Portfolio Pruning; Farewell, Younique RYAN NELSON [email protected]

oty Inc. will sell its controlling share es as they jockey to compete with digital- Consumer Beauty performance. The so- in Younique, LLC back to its found- focused upstarts. cial-selling business accounted for 10% of Cers as part of the firm’s drive to sim- Coty’s investment in Younique – touted the unit’s overall sales, which sank roughly plify its business and rediscover growth in at the time as “one of the most engaging 15% in the fourth quarter and 17% for the its Consumer Products division. and fastest-growing e-commerce compa- full year, reported. “Our presence in Younique for the nies in beauty” – occurred under the lead- past few years has been an accelerator ership of former CEO Camillo Pane. Pane SIMPLIFY PORTFOLIO, of our digital strategy, which has today held the position for just two years, begin- UPTRADE RANGES become one of Coty’s strengths,” states ning immediately after Coty’s transforma- In like-for-like terms, the consumer di- Chief Executive Officer Pierre Laubies in tive merger with more than 40 beauty vision’s Q4 and FY 2019 sales declined a 28 August release. brands from Procter & Gamble Co., before more than 11% and 10%, respectively, to He adds, “We now need to focus on our being replaced by Laubies in late 2018. $902.4m and $3.5bn. turnaround plan and the significant op- (Also see “Coty Announces New CEO, Board Portfolio simplification is central to a portunities which lie in our Luxury, Con- Changes Following Troubled Q1” - HBW In- turnaround plan unveiled by Coty 1 July. sumer and Professional businesses.” sight, 12 Nov, 2018.) (Also see “Coty’s Turnaround Plan Takes Coty paid around $600m in February Since Laubies’ appointment, Younique’s Aim At Excess Complexity; $3bn Write- 2017 for a 60% stake in Younique, which growth has slowed, spurring innovation down Reflects P&G Brands’ Erosion “ - HBW was founded in 2012 by brother-and-sis- efforts – including the launch of an aug- Insight, 2 Jul, 2019.) ter team Derek Maxfield and Melanie Hu- mented reality tool in early August to en- Consistent with previous messaging, scroft as a direct sales company powered able virtual product try-ons – and Coty Laubies explained in a same-day call to by independent “presenters” operating has seen a downturn in presenter levels discuss the strategy, “We are just funda- through social media. (Also see “Coty Ac- despite enhancements to Younique’s mentally going to simplify our portfolio. quires Peer-To-Peer Social-Selling Platform compensation program. We are fundamentally going to advertise Younique For $600M” - HBW Insight, 11 When Coty made its play for Younique, our key brands at scale, and we will be up- Jan, 2017.) the company was projecting $400m in trading our ranges. We will be reducing By incentivizing individuals to sell its fiscal 2016 revenues. In fiscal 2019, You- our number of sub-ranges from 25 sub- makeup, skin care and other cosmetics to nique contributed $358m to Coty’s top ranges sometimes for one brand, to seven.” their peers through “virtual parties,” You- line, according to fourth-quarter and full- He added, “I promise you, it will have an nique sought to “bridge the huge world year financial results issued the same day effect on our awareness, it will have an ef- of social media and the traditional home as the Younique breakup announcement. fect on our brand equity. And as a conse- party business model.” In its earnings statement, Coty cites quence, it will enable us to follow the pric- Social selling is now a growing compo- “softness” in Younique, including declines ing trend and the operating trends of the nent of traditional direct seller’s business- in presenter sponsorships, as a drag on its marketplace.”

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FY 2019 NET SALES DOWN 8% nership experience. We remain focused names Burberry, Calvin Klein and Gucci as Terms of the Younique sellback will not on serving our Presenters with innovative driving forces, specifically highlighting the be disclosed, according to Coty, but no products and leading-edge digital selling impacts of Burberry Her, Gucci Guilty and further adjustment to its intangible asset tools that make Younique the easiest way Gucci The Alchemist’s Garden fragrance base is expected as a result of the exit. to start and run a direct sales business.” launches. The transaction will be completed upon Coty’s net sales in fiscal 2019 slumped The company is projecting stable to regulatory clearance “as soon as practica- 8% in reported terms, or 3.5% like-for-like, slightly lower net sales in fiscal 2020 on a ble,” the firm says. to roughly $8.65bn. like-for-like basis and 5% to 10% growth CEO Maxfield states in the release, “You- The firm’s Luxury division continues in adjusted operating income after in- nique is excited to return to our entrepre- to lead its business, posting sales of ap- creased investment in priority brands. neurial roots armed with the knowledge proximately $3.3bn for the full year, up and insights gained from the [Coty] part- 2.6% reported, or 4.7% like-for-like. Coty Published online 28 August 2019 Natura Making Strong Headway In The Body Shop Transformation; Next Up, Avon

RYAN NELSON [email protected]

atura & Co. doubled net income and posted strong line with updated positioning to “reinforce the attributes of growth across its three major businesses in the fiscal our brand in a much clearer way in the hearts and minds of N2019 second quarter as it looks forward to wrapping its our consumers.” acquisition of Avon Products Inc., expected in the first quarter of The first such redesign in the UK, The Body Shop’s largest single the new fiscal year. market, is targeted for the fourth quarter. Already, the business’s own store like-for-like sales increased 6.7% in the UK in the second quarter and 4.6% in the first half, according to Filippo. “This is a very encouraging performance that demonstrates the successful first effect of the brand’s rejuvenation,” he said. Chairman of the Board Roberto de Oliveira Marques provided additional color: “What’s driving the performance is more con- version, higher ticket, which is associated with some of the campaigns that are being successful in lower discount.” He continued, “We are using UK as a pilot for us to stack some of the new brand positioning, some of the new message in terms of activism with The Body Shop. And we are very pleased to see it’s resonating and it’s becoming potentially a platform to expand to some other markets.” Costs associated with The Body Shop revamp totaled R$19.5 million for the quarter. Aesop, Natura’s Australia-based, luxury skin-, hair- and body- The Body Shop, acquired from L’Oreal SA in September 2017, care brand, recorded R$284.3m in Q2 sales, reported, an increase achieved 7.5% growth in the quarter, reported, contributing of 20.7% compared with the prior-year period. R$867.5bn ($209.3bn) to Brazil-based Natura’s net revenue of The firm opened six new Aesop doors in the quarter, bringing R$3.4bn for the period, up 9.8% compared with the same quarter total signature store count to 236. That’s 23 more than existed a a year ago. year ago. In a 15 August call to discuss second-quarter results, Finances Natura’s namesake direct sales unit grew 9.4% on a reported and Investor Relations Director Jose Antonio de Almeida Filippo basis to R$2.25bn. attributed The Body Shop gains to solid performances in the UK, In its same-day release, the firm notes that it has stabilized its Asia Pacific and Latin America, which more than offset the effects consultant base in Natura’s home and largest market, Brazil, with of 37 store closures over the past year as the firm works to opti- productivity per consultant increasing for the 11th consecutive mize the chain’s footprint. quarter, by 7.9%. While sales at The Body Shop decreased slightly in North A growing portion of its independent sales force’s sales are America, Natura leadership is confident about further trans- being transacted online, with digital consultants now total- formation efforts underway, including new store designs in ing 680,000.

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“In June, we successfully launched the convergence project to “We are using UK as a pilot for us to stack unify the online and offline commercial models for both existing and new consultants. The digital platform enables broader reach, some of the new brand positioning, customized offers and access to Natura’s digital account, an exclusive feature embedded in the consultant’s mobile platform, pro- some of the new message in terms of moting banking and financial inclusion, in addition to access to microcredit,” the company explains. activism with The Body Shop. And we “Disruptive” innovations from the brand in the second quarter are very pleased to see it’s resonating included Chronos Acqua Biohidratante, powered by Brazilian bio- diversity and prebiotic ingredients, as well as Lumina hair care, and it’s becoming potentially a platform featuring local bioactives to promote hair strength and elasticity, according to the firm. to expand to some other markets.” – In addition to strong top-line growth, disciplined cost management helped Natura more than double its income for the quarter Natura Chairman of the Board Roberto to R$66.6m. de Oliveira Marques

MEANWHILE, IN LONDON… Avon Products reported second-quarter sales and earnings 1 Au- gust, highlighting margin improvements from pricing and pro- Avon’s Zijderveld emphasized the company’s sharpened focus ductivity gains. on winning innovations, with 20% more sales coming from inno- However, its net revenue dropped 12% in reported terms, and vations with a 30% higher price point. active representatives declined 10% compared with the prior-year He previewed two upcoming launches in particular. Targeted period, or 3% versus the first quarter. for introduction in the third quarter, Distillery is a line of nine skin Chief Executive Officer Jan Zijderveld acknowledges in the and makeup products that “celebrates clean beauty without com- company’s release that recruiting and retention remain key priori- promising, using the highest concentration of active ingredients ties, while noting that pricing mix – up 9% for the quarter – and and less unnecessary fillers,” he said. more effective incentives were among factors that drove a 5% in- “This range … combines high performance, vegan-friendly crease in average representative sales. ingredients and beautiful textures and premium, environ- “We have continued to improve mix and tiering by increasing mentally conscious packaging with an ethical mindset,” the our focus on higher-priced categories, like fragrance, skin care and exec added. product bundles. Faster development and launches of on-trend In the fourth quarter the firm plans to roll out “a powerful duo innovation has allowed us to leverage pricing power on new of pollution protection products to defend and purify your skin,” items,” he says. according to Zijderveld. During a same-day briefing with analysts, Global President Still, with $67m in cost savings recorded in the second quarter Miguel Angel Fernandez outlined measures the company is tak- and $89m year-to-date – triple the levels achieved by Avon in fis- ing to enhance the representative experience. cal 2018 – Ali Dibadj of Sanford C. Bernstein questioned whether “This is a long-term journey to improve the key metrics of our Avon should be focused less on margin expansion and more in- business,” he said. tently on top-line growth. Part of that push involves cutting out unsustainable sales “Wouldn’t a Natura shareholder want to see more investment practices, which have contributed to weakness in Brazil in par- into the business?” he asked. He noted that while Avon is success- ticular. “There were many things that were just unhealthy in fully taking pricing, volume sales levels have been flat or declining the business that we’re reducing,” said Chief Financial Officer “for a remarkably long time,” signaling what he sees as a more ur- Gustavo Arnal. gent need for brand rejuvenation. Fernandez elaborated. “The previous recruiting narrative that Zijderveld, previously the head of Unilever PLC’s European busi- we had in the company for many years was come to Avon be- ness, maintained his confidence that Avon has the right strategic cause you’re going to get great products at the best price. So in model in place. many cases, we were recruiting the consumer that was looking for “I travel a lot and I’m getting amazing feedback from people. a discount. A lot of what you’re seeing in this healthier business Literally people said compared to a year ago this company feels … is a changing narrative to recruit someone that is interested in different, this brand feels different. We see on digital, we see cool building a business.” events, we see you in shopping malls, that brochure looks cleaner The unsustainable practices reference came up in Natura’s and better, the photography is looking younger. The markets are earnings call, with Robert Ford Aguilar of Bank of America saying, wow, we’re getting so much innovation that how do we in Merrill Lynch asking, “My only question is if those were fact manage it all?” known to you prior to coming to agreement on the price of He concluded, “Obviously as we go along we’ll get better and bet- the transaction.” ter at it. But you start sensing that it is making a huge difference.” Natura’s execs had said that they were not going to discuss the pending deal and declined to comment accordingly. Published online 27 August 2019

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JN2265 OTC Awards 2020 Open for Entries Advert A4.indd 1 2019/08/12 13:08 WELLNESS (DIETARY SUPPLEMENTS)

As FDA Decides CBD Regulatory Path, Sales March On For Suppliers, Retailers MALCOLM SPICER [email protected]

V Sciences Inc., a firm focused entirely on developing cannabi- Cdiol health care products, expands distribution of its nutritional and topical line to Vitamin Shoppe Inc., which sells products across the nutrition, health and wellness sector but sees CBD as a singular growth driver. San Diego-based CV Sciences on 22 August announced that its PlusCBD Oil products will be available beginning 22 September at Vitamin Shoppe stores in 30 states and Puerto Rico. The brand includes topical oil products, such as extra strength balm and recently launched Roll-On, and full spectrum oil hemp extracts including Gold Formula softgels and drops and Total Plant Complex sprays and capsules. PlusCBD Oil capsules and softgels are among the CV Sciences brand’s products that will “This category has generated immense become available at Vitamin Shoppe stores. interest from wellness consumers as they seek out the innovative benefits of CBD Leite also has said that Vitamin Shoppe’s fore the agreement was announced and hemp extract,” said Vitamin Shoppe CEO retail footprint and manufacturing his- a premium of around 59% on the volume- Sharon Leite in the announcement. tory give CBD supplement and personal weighted average price for the previous 30 The Secaucus, NJ-based firm, which is care product suppliers a sturdy platform to days. The firms said they expect the deal to being acquired by investment group Lib- reach consumers. “We have more than 40 close during the fourth quarter subject to erty Tax Inc., began offering CBD products years of experience in the supplements in- Vitamin Shoppe shareholder approval as in March with Unitrex Ltd.’s SpaRoom line dustry, and we want to continue to serve as well as clearance by regulatory agencies. of CBD hemp aromatherapy oils before a reliable place our customers can purchase CBD products also are offered by the adding Irwin Naturals Inc.’s namesake products they desire and trust, including firm ahead of Vitamin Shoppe as the US brand Full Spectrum Hemp Extract soft- CBD hemp extract,” she said when the firm largest nutrition, health and wellness gels and Garden of Life LLC’s Dr. Formu- announced adding CBD products in March. retailer, GNC Holdings Inc., which also lated Broad Spectrum CBD liquid drops to Vitamin Shoppe could use sales growth has struggled to grow sales as consum- its shelves in April. from CBD-containing products or any ers move to buying more online. GNC Since then, it began offering Au Naturel type of nutrition, health and wellness offers SpaRoom CBD aromatherapy oils Inc.’s Solaray CBD products and Budsworth product to help turnaround its prolonged and Myaderm Inc.s namesake brand and Labs LLC’s Uncle Bud’s skin care products sales and earnings slump. Bria Biotech Labs LLC’s Physicians Grade and has extended sales of CBD products When it announced an agreement to be topicals containing the ingredient. to 390 stores in 31 states. acquired by Liberty Tax, which owns Liber- Pittsburgh-based GNC isn’t being ac- ty Tax Services and recently began buying quired, but in 2018 it accepted a $300m CBD POINTS TO SALES GROWTH out firms in unrelated sectors, for around investment from Harbin Pharmaceutical At a June investor conference, Leite was $208m earlier in August, Vitamin Shoppe Group Co. Ltd. in an agreement that made clear where CBD products fit in Vitamin also reported a $3.6m net loss, 15 cents the Chinese firm its largest shareholder, Shoppe’s growth expectations. “We will per share, from continuing operations with a 40.1% stake and and five seats on its stand for true innovation working with with total sales down 7.6% to $270.9m in 11-member board. The deal also formed a our vendor partners to bring product to its 2019 second quarter. joint venture between the firms to market market first like MuscleTech protein, Uncle Liberty Tax, which intends to change GNC products in China. (Also see “Health Bud’s and we were the first to bring ingest- its name to Franchise Group Inc., offered And Wellness Market News: GNC In China, ible CBD products to the marketplace at $6.50 per Vitamin Shoppe share, a 43% Emme ABC Champ, USP Forum” - HBW In- scale,” she said. premium on its closing price the day be- sight, 21 Feb, 2019.)

PLUSCBD OIL IN 5,300-PLUS STORES Dowling and stakeholders across the US consumer health sec- CV Sciences says PlusCBD Oil product distribution reached tor are waiting for a regulatory framework to emerge from the to more than 5,300 US retail locations with the Vitamin FDA on using hemp- and cannabis-derived ingredients in non- Shoppe agreement. drug products. It currently deems the substances ineligible for Referencing Spins data for natural, organic and specialty prod- use as food additives and dietary ingredients because CBD was uct sales, the firm stated PlusCBD Oil was the top-selling CBD sup- studied as a drug, and has since been approved as a pharmaceu- plement in the natural products channel for the 13 weeks ending tical ingredient, before the agency was aware of their use in food 21 April. Among CBD products within topical analgesics, its Extra or supplements. Strength Balm lead in natural channel and multi-outlet sales over However, faced with an exploding market for the products, the past 52 weeks, according to IRI data. FDA for more than a year has exercised oversight that prioritizes While focused on CBD product development, CV Sciences isn’t enforcement on hemp- or CBD-containing food and supplement working only in nutritional and personal care products. It has two products making drug claims as it considers a regulatory pathway divisions, one developing synthetically formulated CBD-based for lawful use of the substances in non-drug products. (Also see medicine it will submit to the US Food and Drug Administration “With Another Warning, FDA Pledges Report On CBD Use In Non- for approval with specific indications. drug Products” - HBW Insight, 23 Jul, 2019.) The second division delivers PlusCBD and other botanical- The 2018 re-authorization of US Department of Agriculture based CBD brands intended to enhance quality of life and “backed programs, the farm bill, forced the FDA’s hand on hemp and by a formal safety review, growing body of case reports, and phy- CBD oversight in the food and supplement sector because it sician’s recommendations,” CV Sciences says. removed hemp from the Drug Enforcement Agency’s list of Earlier in October, CV Sciences reported second=quarter rev- Schedule 1 controlled substances. However, many firms, almost enues of $16.m, up 36% from the year-ago period. The results all smaller companies, already were marketing hemp- and CBD- were its highest quarterly totals and 14th consecutive quarter of containing food and supplement products as some states legal- sequential revenue growth. ized sales of marijuana. In a letter to shareholders asking for their continued support, Passage of the farm bill, though, stoked a larger frenzy to get CEO Joseph Dowling pointed out the firm during the April-June into the food and supplement space, and using CBD in beverages, period more than doubled the number of retail stores offering including beer, has emerged as a new market. (Also see “Canada PlusCBD Oil products. Is Large Firms’ CBD Test Market While US Weighs Allowing Sales” - “CV Sciences pioneered the CBD consumer product industry, HBW Insight, 20 Aug, 2019.) and as the regulatory framework emerges, our industry domi- nance and growth will continue and escalate,” Dowling said. Published online 22 August 2019 CBD Industry Group Commits To Compliance With EU Novel Food Law

TOM GALLEN [email protected]

here is no ambiguity in what the regulators want. They on a wide range of subjects from regulation and labeling, to man- want fully legally compliant products on the market,” ufacturing and testing (see sidebar.) “Tsays Dr. Andy Yates of trade group Centre For Medicinal Signatories to the charter must commit to gaining authoriza- Cannabis on the debate raging over the legality of CBD in the UK. tion to market their CBD products in the UK under the EU’s novel “The doors have closed for the current approach used by some food regulation. CMC says it wants to work with the European manufacturers by claiming that the rules are somehow different Food Safety Authority and UK regulator the Foods Standards for the cannabis industry.” Agency to ensure its members are “on the road to full compliance CMC is looking to end the current impasse between regu- within an acceptable and agreed time frame.” lators and industry by launching a quality charter for its For CBD products already on the market, CMC will seek a members to put CBD in the UK “on the path to regulatory grace period from FSA for those firms that have submitted a compliance.” It is also proposing a cannabis “kitemark” which novel food application. compliant CBD products could carry to give consumers trust To help firms navigate the novel foods pathway, the association in what they are buying. has partnered with consultancy firm Global Regulatory Services, “This new initiative exists to ensure that our members are fully which has 12 years-experience of gaining product approvals compliant to an agreed set of terms with the relevant regulatory through the regulation. bodies,” says Yates, “ensuring consumers can continue to access As novel food applicants can request data protection for their legal, safe and quality CBD products.” submission – which can last up to five years – firms will likely have Comprising seven pillars, the charter sets out rules for CBD firms to make individual applications to EFSA.

hbw.pharmaintelligence.informa.com 9 September 2019 | HBW Insight | 19 WELLNESS (DIETARY SUPPLEMENTS)

“All novel foods are closely linked to the process of extraction or production,” The charter’s seven pillars consultant Janet Worrell told HBW Insight earlier this year. “A novel food application Legal frameworks - Signatories to the charter must pursue the necessary authori- needs to provide data on the specification zations to legally distribute CBD products, CMC says. All CBD producers and sellers of the product, its production process, must have an understanding of the laws and regulations in their respective sectors, use and intakes, nutrition, microbiology, enabling full compliance. toxicology and allergy information.” (Also Testing - The CMC will facilitate a program whereby each submission of a raw see “With CBD Poised To Become A Novel material or finished product will be tested at accredited laboratories. Quality and Food In Europe, Industry Must Think Ahead safety is established through robust testing, the association says. To Gain Advantage” - HBW Insight, 7 Feb, Labeling - Signatories must adhere to a set of labeling guidelines to ensure that 2019.) the consumer understands what they are buying and is not misled. Under the regulation, each produc- Manufacturing - Using the ISO 9001 framework and cGMP, the charter includes a tion process results in a distinct approval, set of principles based on best practice accreditation organisations from around which is then valid across all EU member the world which members must adhere to. states. CMC’s decision to pursue the novel Controlled drugs - Members will adhere to the UK’s laws on scheduled substanc- foods route place it at odds with the ap- es, specifically zero detectable amounts of CBN and THC. The CMC will work with proach taken by other trade bodies to re- the relevant authorities to establish a definition of the term ‘detectable’. sist increased regulation of CBD. The Can- Marketing ethics - All advertising, whether online, offline or in-store, should not nabis Trades Association UK has initiated make reference to medical claims (as defined by MHRA), sexuality, violence, illegal a legal challenge against the European behavior, political affiliation or religious references through its imagery or language. Commission’s decision to classify CBD as Sustainability & social impact - The charter outlines principles for members that a novel food, while industry group Canna- help tackle pressing problems concerning land and natural resource use, respon- bis Professionals has threatened legal ac- sible waste management, fair employment and plastic pollution. tion against the UK’S FSA for its handling of the CBD quandary. (Also see “Cannabis Industry Taking Legal Action Against EU CMC member Mile High Labs has content 0.04%) and were thus “techni- Regulators Over CBD Novel Food Classifica- come out in support of the proposed cally illegal.” tion “ - HBW Insight, 20 Mar, 2019.)(Also see quality charter, insisting that self-regu- Furthermore, 11 of the oils tested “Cannabis Trade Group Threatens FSA With lation is “critical to the longevity of the had less than 50% of the advertised Legal Action As CBD Novel Food Row Inten- CBD industry.” CBD content, CMC reported, with one sifies” - HBW Insight, 9 Apr, 2019.) CBD oil sold in a high street pharmacy EXPECT TOUGHER REGULATION containing 0% CBD yet retailing for £90 TIME FOR INDUSTRY TO The UK’s CBD market has to date ben- ($110). (Also see “UK Body Calls For ‘Clear ‘WAKE UP’ efited from the “hands off approach” to Guidance’ On THC Levels In CBD Oils” - For Greer Deal, director of CMC’s partner regulation adopted by FSA, CMC points HBW Insight, 12 Jul, 2019.) GRS, the UK CBD industry must start work- out. However, the association expects that While major retailers such as continue ing with regulators, not against them. to change with its recent research reveal- to stand by their decision to sell CBD, phar- “Full compliance with the relevant regu- ing that not all products on the market re- macy groups have warned their members latory bodies is the only way that the future flect what is indicated on the label putting that such products could be considered cannabis industry can exist. It’s time that pressure on FSA to clamp down. controlled drugs due to the presence of those operating within this sector wake up A third-party blind test of 30 CBD THC. (Also see “Confusion Reigns In UK CBD to this reality and embark on the journey to oil products currently on the market Market As Regulatory Vacuum Allowed To becoming serious and sustainable partici- in the UK found that almost half (45%) Continue” - HBW Insight, 19 Jul, 2019.) pants,” Deer argues. “This is the opportunity had measurable levels of psychoactive for the cannabis industry to shine in Europe.” substance tetrahydrocannabinol (mean Published online 22 August 2019

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Hershey’s Latest Nutritional Space Sweet Spot: $397m For One Brands MALCOLM SPICER [email protected]

ne Brands LLC is the latest nutritional product startup to short-term borrowings. What little impact the agreement had on whet a large food and beverage firm’s investment appe- investors was positive as Hershey’s share price closed up slightly Otite as the Hershey Co. fortifies its “snacking” position with the same day at $158.68 and continued a slight increase to closing an agreement to acquire the maker of low-sugar, high-protein nu- prices of $159.38 and $160.48 the next two days. trition bars. Another firm know for sweet products, Nestle SA, also has been reaching into the nutritional space for new growth. Most recently, the Swiss firm in January announced a commercial license and supply agreement for co-exclusive rights to US firm ChromaDex Corp’s. Tru Niagen nicotinamide riboside ingredient in “certain products within the consumer health category” and exclusive rights to include Tru Niagen in Nestlé Health Science branded medical nutrition products. North America, Europe, Latin Ameri- ca, Japan and Australia are among the territories covered by the agreement. (Also see “Nestlé Grows Health Offering With Global Deal for Anti-Aging Supplement” - HBW Insight, 7 Jan, 2019.) A year earlier, Nestle acquired Canadian supplements specialist Atrium Innovations Inc. for $2.3bn from investors led by Permira One Brands’ Basix Bars and other nutritional bars have a new owner Funds. It said the deal announced in December 2017 supported with Hershey’s acquisition of the startup. its “pursuit of growth opportunities in consumer healthcare, complementing the company’s focus on its high-growth food and Hershey on 27 August said it agreed to pay $397m, or around beverage categories.” (Also see “Nestlé makes Atrium move” - HBW $325 million net of tax benefits, in an acquisition it expects to be Insight, 15 Dec, 2017.) slightly accretive to earnings in the first full year post closing. It in- However, Nestle investors aren’t sold on in its nutritional sec- tends to expand the existing One Brands offerings by leveraging tor strategy. Soon after the Atrium announcement, investment its capabilities in sales and distribution, category management firm Third Point, which at that time a 1.3% stake in Nestle worth and digital commerce. around $3.5bn, asked for an explanation and asserted that the The international marketer long known for the iconic Hershey’s acquisition combined with “rumors the company is bidding Kisses and other candy products looks to expand its nutritional on larger assets” in the consumer healthcare market confused market play with One Brands’ products, complementing the Oat- some shareholders. (Also see “Investors question Nestlé CHC mega business it added in its 2018 acquisition of Amplify Snack move” - HBW Insight, 16 Feb, 2018.) Brands Inc. Global beverage and snack firm PepsiCo Inc.’s nutritional sector Before announcing its One Brands deal, Hershey also was pre- strategy features its “Nutrition Greenhouse” collaborative accel- paring to add another nutritional product firm to its operations erator program in North America that provides startups $20,000 following a deal announced earlier in August. Through its C7 Ven- to participate in a six-month business optimization program. tures venture unit, it invested in in Fulfil Holdings Ltd., a maker of PepsiCo, which launched its first Nutrition Greenhouse in late vitamin-fortified, high-protein bars in the UK and Ireland. 2018, expects the program to accelerate participating companies’ The growing nutritional portfolio isn’t targeted to lead Her- growth with personalized mentorship from some of its brands, shey’s growth, though. including Quaker, Naked and KeVita, on marketing, distribution, Our beloved confection brands will continue to be the engine manufacturing, supply chain, packaging, label claims and fun- that drives our business while we broaden our better-for-you draising. (Also see “Health, Beauty And Wellness Business News: portfolio, offering more snacking choices for more consumers,” PepsiCo Incubates In Wellness, Cost-Cutting Spurs Profit At FitLife” said Mary Beth West, Hershey’s chief growth officer. - HBW Insight, 19 Nov, 2018.) One Brands launched in 1999 as Oh Yeah! Nutrition and founder Before beginning to incubate nutritional product companies, Ron McAfee relaunched with a new brand and company name in PepsiCo earlier in 2018 continued bulking up its portfolio of 2017. The relaunch expanded the Charlotte, NC, firm’s lineup from healthy food and beverages and nutritional lines by acquiring a single and multi-count boxes of One Bars into the natural foods startup marketing plant-based nutrition products, Health War- category with Basix Bars. rior Inc. (Also see “Health Warrior To PepsiCo: Latest Healthy Pivot The firms expect the deal to close in the 2019 fourth quarter Among Food And Beverage Giants” - HBW Insight, 31 Oct, 2018.) subject to customary regulatory approvals and other conditions. Hershey said it will finance the acquisition with cash on hand and Published online 29 August 2019

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Cambridge Esthechoc Beauty Chocolate Anti-aging Claims Unpalatable In UK EILEEN FRANCIS [email protected]

ambridge Chocolate Technologies Ltd. will have to cut down on the Csugar in advertising for Esthechoc Cambridge Beauty Chocolate after the UK Advertising Standards Authority found it made unauthorized claims, including that the product could optimize recovery from plastic surgery. The independent agency with authority to enforce UK advertising regulations evaluated three claims made on two websites for the 72.6% dark chocolate containing high levels of antioxidant astaxanthin Cambridge Chocolate and polyphenols and promoted as an Technologies’s advertising for anti-aging functional food. Esthechoc Beauty Chocolate was The Cambridge, England-based firm, too sugary for the UK Advertising which also makes its products available Standards Authority’s tastes. outside the UK, provided a summary document referencing multiple studies on astaxanthin and epicatechins, the ingre- Cambridge Chocolate provided a document stating dients in chocolate it says scientific litera- ture has shown have a beneficial impact the technology in its chocolate was examined for on skin, according to the ASA’s 21 August levels of polyphenols in a clinical study alongside red report. From one website, ASA evaluated wine, a dark chocolate and a capsule containing a whether the statement “one small Es- thechoc a day helps to regain your skin serum of resveratrol. health and slow down the ageing process” is a health claim, stating or implying a beneficial physiological effect on a function of the skin. a beneficial health effect on a function of included the statement, “confirmed un- As the UK currently is part of the Eu- the skin, further emphasized by the claim matched systemic circulation levels of ropean Union, food products marketed about “skin health,” meaning the claim beneficiary polyphenols that contribute there are subject to EU regulations and implied the product provided a health to a daily balanced diet.” To support the firms can apply for authorization of health benefit to skin and is a health claim. But claim, Cambridge Chocolate provided claims to the European Food Safety Au- it is not authorized on the EU Register nor a document stating the technology in thority, which reviews applications for accompanied by a relevant specific autho- the chocolate was examined for levels of adequate substantiation before issuing an rized health claim, breaching UK advertis- polyphenols in a clinical study alongside opinion for consideration by the European ing codes, it said. red wine, a dark chocolate and a capsule Commission and EU member states. Only The agency also determined another containing a serum of resveratrol, also a health claims listed as authorized on the claim on the same site, “Through reducing polyphenol. EU register of nutrition and health claims free radicals and increasing tissue oxygen- The ASA report did not provide de- are allowed in ads promoting foods. ation, Esthechoc promotes optimal recov- tails from the study on the polyphenol The “Esthechoc a day” claim was fea- ery from any intervention in plastic sur- levels between the firm’s product and tured online beneath text stating, “The gery,” is not allowed for food or beverage others, and trial demonstrated that the world’s first nutricosmetic with a strong, products in violation of ad codes. Stating same quantity of food was examined scientifically proven impact on the me- that a product will impact recovery from but the difference in quantity of poly- tabolism of ageing skin.” plastic surgery is a claim to prevent, treat phenols was not stated in the ad. Still, The ASA said consumers would inter- or cure human disease, it said. Cambridge Chocolate’s study suggest- pret the claim to mean the product had A separate website for the product ed the product contains more of the nu-

trient, which consumers would expect, to grow hair. (Also see “Hot Chocolate For the ASA said. ‘Rapunzel Locks’? UK Ad Watchdog Pounc- UK ad regulations require that comes” - HBW Insight, 21 Jul, 2017.) parative nutrition claims include nutri- ASA addressed functional food claims ents in an advertised product and oth- in a 2014 statement, saying it is likely to ers in the same category. “One product interpret “functional food” claims as gen- could be used as the sole reference for eral health claims which would need to comparison only if that product was be accompanied by a specific authorized representative of the products in its cat- health claim. egory,” the ASA said. In the US, the Council of Better Busi- The regulator noted Cambridge Choco- ness Bureaus’ industry-self regulation late’s study included one product in the forum has rapped functional foods mar- same category and the data provided keters for unsupported claims. In 2007, were not clear on whether the compara- a CBBB division advised Masterfoods tor product was representative of all dark Esthechoc Cambridge Beauty Chocolate USA to revise online claims about its Co- chocolates across the category. 72.6% dark chocolate contains high coaVia functional food snacks’ ability to levels of antioxidant astaxanthin and lower cholesterol and to associate the FUNCTIONAL FOOD MARKET polyphenols and is promoted as an anti- benefits with the formula’s plant sterols aging functional food. GROWING, CLAIM VIOLATIONS rather than the actual products. (Also LIKELY, TOO see “Masterfoods Should Clarify CocoaVia A number of other functional food prod- ments on the rate or amount of weight Information, But Claims Upheld – NAD” - ucts, foods that contain supplemental loss associated with the products. (Also Pink Sheet, 16 Apr, 2007.) nutritive benefits with added ingredients see “Pregnant TV Star’s Weight Loss Claim Functional food claims are likely to or higher levels of the foods’ existing in- On Instagram Tips UK Regulatory Scale” - draw more scrutiny in both the UK and gredients, have drawn the ASA’s attention HBW Insight, 2 Aug, 2019.) US as the market for the products is in the past few years, most recently White The ASA also reviewed advertising for projected to grow to a compounded Star Key Group Ltd.’s Skinny Caffe drinks chocolate-based functional food product annual growth rate of 7.9% to reach and teas. in July 2017. It determined Cocoa Locks $275.8bn by 2025, according to an April In a 31 July report, the agency con- drinkable hot chocolate mix was pro- 2019 report by market research firm cluded told the firm and a reality TV star moted with website claims that exceeded Grand View Research. promoting its brand in an Instagram authorized EU food health claims and mis- post violated UK ad codes for state- led consumers about its product’s ability Published online 21 August 2019

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