Chile witnessed increasing demand for vitamin and dietary supplements as a result of improvement of disposable incomes and living standards. Gerardo Sanchez saw an opportunity in this nice and established Nutrapharm in 2008. Sanchez speaks about his first five years as an entrepreneur and his efforts to regulate the food supplement segment.
Could you start by giving an introduction to Nutrapharm and explain why the company is interesting for the market?
Nutrapharm has been established in 2008 in response to the worldwide tendency to opt for natural products without toxins and harmful elements that contribute to people’s better health. At the time many supplement manufacturers were exploiting the low standards for safety and efficacy for natural health products and supplements. I saw an opportunity here to create a company offering natural food supplements with scientific back up.
Nutrapharm’s products improve the quality of life of people through healthy products, with strong scientific and clinical support. Our excellence products help in the treatment of some diseases and, more importantly, to the prevention of others and to improve, in an effective and safe way, the population’s life quality. Our products are 100 per cent natural and contain either by nature or by later development an ingredient or a set of ingredients which, in a specific concentration and with the recommended consumption frequency, show in studies to reduce the risk of getting chronic degenerative diseases or to improve people’s general state of health.
Chile witnessed increasing demand for vitamin and dietary supplements as a result of improvement of disposable incomes and living standards. Chilean consumers are more willing to spend their money on vitamins and dietary supplements because they are more aware of the preventive qualities of these products. Our products are used and recommended by doctors of different specialties.
What have been some of the key milestone achievements that Nutrapharm has enjoyed since it started in 2008?
Naturally every starting business one needs some luck. Our very first product for the weight loss market was extremely successful. I initially concluded a contract for 200 kilos of raw material. To be frank, I was not convinced whether we would be able to sell such quantity. However sales of this product were above everyone’s expectation and as a result I moved back and forth between Chile and the US to purchase a total of five ton raw materials.
For our second product we represented Cyanotech, a company that develops and commercializes natural products from microalgae. The product we distributed was very well received by physicians in the fields of sports and anti-age.
The third product we launched for weight loss has been our biggest success. We launched an advertisement campaign in order to increase consumer awareness, which turned out to be extremely successful.
These three successes have enabled us to invest in the future.
What could you tell us about the regulatory environment for supplements?
Within Latin America, food supplements are subject to diverse regulations.One of the main challenges is the categorization of supplements under either the food or the medicine umbrella.In Chile, food and health supplements fall within the food category.
A number of food supplements have clinical studies showing various health claims but are not regulated separately. And, because there is no control of these supplements, some companies with so-called “miracle products” do not meet quality standards and are a detriment to those producers who sell supplements with scientific backing. Furthermore consumers are limited in their options to access many quality products that are available in most developed countries.
I have always guided the company believing in assuring the highest quality standards for our products and this is illustrated by the fact that we have the only plant for food supplements that is GMP certified. Moreover our quality control laboratory is certified as an external pharmaceutical laboratory; our facilities cover all the requirements for a pharmaceutical laboratory. Having that said, Nutrapharm’s healthy products and functional foods are prepared with the latest technology. Nevertheless, our products are still labelled as food supplements. And this, I would like to see changed: to create a category in order to properly regulate products that benefit people’s health.
To achieve this, I have recently brought this matter under the attention of the National Pharmaceutical Agency, ANAMED, which is charged with the registration and regulation of pharmaceutical products. Furthermore, I am the President of ALIMSA, the Association of Producers and Importers of Food and Health Supplements. As ALIMSA we have held a series of meetings with the Public Health Institute (ISP), the Chilean Medical Association and the Health Commission to bring this under the attention and emphasize the urgency to regulate the food supplement segment.
How could you describe the network of natural products here in Chile?
The Chilean market is characterized by the vertical integration and dominance of three major pharmacy chains and four supermarket chains in the country. Since one and a half year ago, supermarkets have started selling natural health products and supplements. Since then supermarkets have significantly increased their share in the sector but is still very young.
Another sales channel is the independent pharmacies. However this is a challenging market for us. Firstly because of the logistics; covering the remote areas where the pharmacies are located. And, secondly payments from the independent pharmacies can take up a long time. Delay of payment is of course a difficult situation for a young company.
Are you also looking to export your products?
The approach towards food supplement regulation in Latin America varies from country to country, leading to various challenges in marketing food supplement products across the region. These differences create diverse conditions and further implications for the marketing and sale of food supplements.Having that said, we are currently in the process of registering our products in Latin American countries according to the requirements of the country. And, this year we are completing the registration process. The first country we will export to is Uruguay. We have concluded the relevant contracts and have already received the first order. Other countries we are looking at are Peru, Colombia, Mexico and Ecuador.
What is your strategy to demonstrate the importance of your products?
In terms of education we are focusing on three groups: physicians, pharmacies and the end-consumer. For every group, we use different approaches toward education and sales. We use a tool called: Publi Reportage, an infomercial. The infomercial is a newspaper article that aims to show the relevant aspects of our products. In addition we are currently in the process of launching a television commercial to bring our products under the attention of the end consumer.
My ambition is to grow awareness for the food and health supplements together with the ALIMSA members. Our products are beneficial for overall health and, more importantly, to the prevent people from getting sick. To this end I believe it is imperative to work with the authorities to train people about our products to follow healthy lifestyle habits.
Overall we see health awareness rise and perception increase that our products help improve the health and the body’s defense mechanisms in a safe way. On an international scale food and health supplements grow on a double digit rate, which is faster than the prescription drugs segment. Therefore we expect this area to grow significantly in Chile too.
On a personal note, what would you like to have achieved with Nutrapharm in five years from now?
First and foremost I never expected to be as successful as we are today. When I started this company in 2008, we were six people, a half year later 16 and today we are 94 people! We are constantly growing and I am thankful to be part of this success.
My ambition is to offer products to the market with scientific back-up. As Nutrapharm we want to compete with traditional pharmaceutical companies in some segments offering natural products without secondary effects and good results. Moreover we are actively conducting clinical trials. For example, we conducted a trial for a weight loss product that had wonderful results. We will continue to invest significantly in clinical trials to offer the best products to the market.
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