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ChangeWave Alliance Report:
The rise of retail medicine signals big future for science-based nutrition
By Josh Levine
Food-as-medicine is a concept increasingly accepted -- and even embraced -- by consumers.
Due to advancements in medical science and a vast compilation of nutritional studies, the old saying "you are what you eat" is now virtually accepted as a universal truth.
Even though science-based nutrition -- including food-as-medicine -- is thought to hold great promise, growth has historically been lackluster due to a deficit of physician focus on smart nutritional habits and preventive medicine.
A recent ChangeWave Alliance survey on retail medicine indicated this may be changing, as bioactive foods, dietary supplements and nutritional counseling showed increased momentum within the healthcare industry.
I should add that these trends especially bode well for an exciting little company that we've recommended in our ChangeWave MicroCap Investor advisory service. But more of that later. Let's first look at key trends.
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Food for Thought
The business of retail medicine focuses on unique, personalized products and services that help patients manage their healthcare, but these products and services are paid for by the patients and not their insurance company. It's a robust business, according to the 279 healthcare industry respondents who participated in our most recent survey.
Seventy-six percent of our respondents who work in a medical practice, hospital or clinic said they see a trend toward retail medicine at their location. They cited nutrition and dietary products and programs as the biggest growth drivers.
Moreover, 24% reported that their medical work locales sold dietary products and services directly to their patients -- and another 14% said they plan to begin doing so in the next 12 months.
But what dietary products and services are sold currently at these practices, hospitals and clinics? And what ones will begin to be sold during the coming year?
Diet & Nutritional Products/Services Sold to Patients
Current and Future Market Share
Among those who sold dietary products and services at their practice, 70% said they sell nutritional counseling and services and 65% said they sell vitamins. Similarly, among those who said they plan to begin selling dietary products and services in the next 12 months, 55% said they will sell nutritional counseling and services, 50% said vitamins, and 50% said dietary supplements.
We noted that the strongest momentum is in bioactive foods, which increased from 14% currently to 26% of respondents who reported that their locale plans to begin selling them in the next 12 months.
Bioactive foods contain bio-molecules that modulate metabolism and treat specific conditions such as high blood glucose levels. Such foods are just beginning to come to market on a mass scale, and some analysts believe they may revolutionize how certain conditions are treated.
NXXI -- Healthy for Your Portfolio
Turning to one of our favorite microcaps -- New York-based Nutrition 21 (NXXI) is developing both dietary supplements and bioactive foods to treat specific conditions such as high blood glucose levels.
What makes Nutrition 21 stand apart from the crowd is that it's a true bioscience company -- not a run-of-the-mill reseller -- that approaches nutrition in a way similar to how pharmaceutical firms create their drugs:
* NXXI develops products based on a strong foundation of research and development and has an extensive patent portfolio that it has aggressively and successfully defended.
* The company performs numerous clinical studies with leading academic, institutional and government partners.
* NXXI proactively engages and educates the medical community about the advantages of its proprietary products.
As you can tell, I'm quite excited about the company. Importantly, Nutrition 21 relies on large-scale, double-blind, placebo-controlled, clinical trials as a key element to its marketing strategy.
This is critical to its future success, as healthcare providers are most likely to rely on FDA-approved drugs as the first choice of therapy for patients -- particularly those suffering from high-risk chronic diseases.
Today, Nutrition 21 is in the beginning stages of transforming from an ingredient supplier to a seller of branded, therapeutic products for a wide range of diseases including obesity, pre-diabetes, diabetes, cardiovascular health, and arthritis and joint health.
Its business strategy is already making an impact.
Revenues for the most recent quarter (fiscal Q3) soared more than 500% to $16.1 million, of which $13.6 million were from sales of innovative branded products like Diachrome for people with Type 2 diabetes.
Based on the above trends in retail medicine, and on sharply improving corporate fundamentals, Nutrition 21 looks well situated for a very profitable future.
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