Seeking a niche market where specialized equipment and testing could serve unique needs, personal interest led him to consider the natural health products (NHP) sector, which requires testing for regulatory and labelling purposes on retail items such as pharmaceuticals, nutraceuticals and food and beverage products. But he knew he needed a full outside assessment of the opportunity. “Yes, the industry has grown with awareness of alternative health treatments, and associated services such as testing should also grow. But we needed to look at the industry and see whether there is projected growth and what the opportunities are.”
Through the National Research Council’s Industrial Research Assistance Program, and with the help of industrial technology advisor Lesley Esford, Mr. Yee applied to the CMC’s Management Advisory Services program for consulting assistance in conducting an unbiased market overview of the natural health products industry which he could then present as part of his business plan to investors.
Pauline Patenaude, CMC, of the consulting firm Marketing Directions in Calgary, took the assignment. Using sources such as books, academic articles, industry journals, websites, Harvard Business Review case studies and selected first-hand interviews within NHP companies and industry associations, Ms. Patenaude compiled a high-level overview of the industry – consumer trends, health claims, testing concerns, pertinent company practices, major industry players and potential partners and sources of information. She also identified potential competition strategies.
In her 16-page report, Ms. Patenaude drew out a number of key facts and gaps in the marketplace for emphasis. For instance, she summarized a number of health issues for which natural health supplements had shown some therapeutic capability – such as glucosamine sulfate, MSM and chondroitin for connective-tissue repair, omega-3 fatty acids and plant sterols for cardiovascular dysfunction and phospholipids for brain function.
She also identified possible strategies to pursue, such as that of ConsumerLabs.com in the US, which reviews natural health supplements for consumers to give them assurance that products meet advertised levels of active ingredients, and that of PharmEng, a Canadian consulting company that assists foreign and domestic herbal medicine makers to meet Canadian regulatory requirements.
She also noted that the National Health Products Directorate’s new process for expedited assessment and licensing of homeopathic medicines creates an opportunity for a test laboratory that can assist manufacturers in meeting the requirements and completing the applications.
“Mr. Yee is very knowledgeable in the area, so it was a good collaborative relationship as we reviewed the opportunities in the natural health products marketplace,” says Ms. Patenaude. “I was able to start documenting the opportunities and help guide him forward as he began this transition.”
Based in part on Ms. Patenaude’s contribution, SLC has since made its initial foray into NHP testing. With its existing mass spectrometry equipment, it was able at the end of 2008 to secure a contract to conduct tests for anti-oxidant capabilities – by testing for oxidative stress markers on DNA – of a tea product. The same laboratory equipment is also capable of testing for other types of DNA markers, as well as testing for nutritional content of the full range of B-vitamins.
Furthermore, Mr. Yee recently purchased robotic and fluorescent plate-reading technology that will enable SLC to become one of the few laboratories in North America to conduct ORAC (Oxygen Radical Absorbtion Capacity) tests, an anti-oxidant test that ascertains the relative capacity of a food or beverage to absorb free radicals.
Mr. Yee stresses that the transition is still in early stages, but getting experienced assistance from a professional consultant came at a crucial point. “The report helped bring us expertise in marketing, which we do not have, and identify market opportunities to set a direction for our business,” says Mr. Yee. “To us, the low cost was helpful and encouraged us to get the input. Many small businesses wouldn’t do it if they had to pay full price.”
Yet that “outside input” is critical in at least two ways, notes Ms. Patenaude. “When presenting to investors, it’s always good to have the kind of outside third-party point of view that we were able to provide. And to write a full-scale market review is very time-consuming for someone who is running a company full time. We can do that much more efficiently and objectively than he could.”