Herb and Supplement Industry: Loves Marketing but not so Crazy about Research

One of the standard clichés alternative medicine proponents like to employ is the David and Goliath Myth: pharmaceutical companies and the mainstream medicine are profit-driven behemoths and alternative medicine is the plucky little guy, small practitioners and innovators fighting against the machine to bring inexpensive natural remedies to those in need. This is quite clearly belied by that inconvenient thing called reality.

I have written before about the large and growing for-profit and corporate element of the alternative medicine movement, the underhanded and deceptive marketing practices of herb and supplement manufacturers, and the financial ties between the supplement industry and alternative veterinary practitioners and politicians. Now, Canadian Erik Davis at Skeptic North has provided a detailed and insightful article comparing the finances of several leading herbal remedy and supplement manufacturers and the largest pharmaceutical companies.

Bankers, Buyouts & Billionaires: Why Big Herba’s Research Deficit Isn’t About The Money

In this article, Davis shows quite clearly that while herbal remedy and supplement companies are truly much smaller in financial terms than the leading pharmaceutical companies, they spend proportionally at least as much of their money of marketing and far less on research.

I am certainly not one to deny the myriad sins of the pharmaceutical industry, and I am a strong supporter of vigorous and strict regulation of this industry. Profit is seldom an optimal motive to most effectively meet the medical needs of ordinary people, or veterinary patients. However, the herb, supplement, and homeopathy industries are far less closely regulated, and the numbers show quite clearly that they engage in exactly the same kind of venal behavior Big Pharma is so often accused of. And without the pressure of regulation, these companies make far less of an effort to investigate or demonstrate the safety and effectiveness of their products.

Here’s just one of many examples Davis provides

 

French giant Boiron (EPA:BOI) is by far the largest distributor of natural health products in Canada – they’re responsible for nearly 4000 (15%) of the 26,000 products approved by Health Canada’s Natural Health Products Directorate. They’re also one of largest natural health products companies globally, with 2010 revenues of €520M ($700M CAD)…

“Since 2005, we have devoted a growing level of resources to develop research,” they proclaim in the opening pages of their latest annual report, citing 70 in-progress research projects. Yet the numbers tell a different story – €4.2M in R&D expenditures in 2009, just 0.8% of revenues.

To put that in perspective, consider that in the same year, GlaxoSmithKline spent 14% of its revenues on R&D, Pfizer spent 15%, and Merck spent a whopping 21%….

But if Boiron’s not spending like pharma on research, there’s one line item where they do go toe to toe: Marketing. The company spent €114M – a full 21% of revenues on marketing in 2009. By contrast, GSK, Pfizer and Merck reported 33%, 29%, and 30% of revenues respectively on their “Selling, General, and Administrative” (SG&A) line – which includes not just sales & marketing expenses, but also executive salaries, support staff, legal, rent, utilities, and other overhead costs. Once those are subtracted out, it’s likely that Boiron spends at least as much of its revenues on marketing as Big Pharma.

I can think of nothing to add to Davis’ conclusion, which is an eloquent argument against the faux altruistic PR of Big CAM and for real, effective regulation of the supplement and herbal remedy industry.

Big Herba is clearly big business, and on a purely financial level, it’s hard not to be impressed by what they’ve achieved.  But that success — $2.5B in revenues concentrated in the seven companies above — makes it equally difficult to give them a pass on their research deficit.  Simply put, the leading natural health products companies have the coin for research, they just choose to spend it on marketing products and buying their competitors instead.  The result: while pharma typically spends upwards of 15-20% of revenues on research, Big Herba contributes less than a tenth of that.

To the question of why, I’d like to propose simply that they don’t need to.  The products are clearly selling well already, and without the regulatory approvals pharmaceuticals require, spending money on research presents more risk than reward.  After all, if you don’t conduct research, you can’t find out that your product doesn’t work.

In other words, Big Herba is behaving exactly as Big Pharma might if it had no government oversight.  And if that doesn’t give you reason for pause before you pop that next Ginko tablet, I don’t know what will.

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4 Responses to Herb and Supplement Industry: Loves Marketing but not so Crazy about Research

  1. Rita says:

    Talking to “alternatively” convinced colleagues, I’m beginning to wonder if the alarm about folk using these whacky methods is so well-founded as it might be. Apart from a few cases where people have latched on solely to “alternative” cures and ended up in appalling conditions, or dead sooner than they might have been, it seems to me that many – perhaps the majority? – inhabit two mental worlds in these matters: they affirm the effectiveness of e.g. homeopathy, their doctor sent them to a homeopath etc etc etc, but when the chips are down, they take “real” doctors’ advice, “real” medicine, therapies and so forth, all the while able to retain the idea that they have their special knowledge. One set of beliefs does not seem to impinge on the other at all, hence the faith in “alternatives” can go on untroubled in its parallel universe. Once again it’s a case of humans being several people at once, with no unifying core “self”.

  2. skeptvet says:

    I suspect such doublethink is in fact the rule. It is not at all unusual for people to employ conventional and alternative therapies and then give the credit to the alternatives. Shawn Messonier, an aggressive critic of conventional medicine and vociferous advocate for alternative therapies, is currently writing a series of blog posts about his wife’s breast cancer therapy. He argues for the cancer prevention value of alternative diets and suplements all the time, while glossing over the fact that these things did not prevent his wife’s cancer. He denigrates conventional cancer therapy as “cutting, burning, and poisoning” yet his wife has had conventional therapy. And even though this therapy alone is proven to be highly effective, he claims that it is very dangerous not to add to it all manner of random and unproven “immune boosting” supplements. If his wife’s cancer is, hopefully, cured by conventional therapy, he will undoubtedly conclude that the only reason it doesn’t recur is because of the additional altenative methods he uses. Here’s an example of someone with an extreme ideological position, very critical of conventional medicine and always claiming far better results from alternative therapies despite the lack of evidence for this, and when push comes to shove he takes advantage of what science has made possible while simultaneously denigrating the scientific method and claiming a superior result from employing alternative therapies.

    The question, I guess, is whether there is any harm to such a two-faced approach. I tend to think there is in that 1) more people are likely to make the mistake of substituting ineffective therapies for real medicine if they believe these alternative really make sense and work, 2) faith-based reasoning in medicine does not lead to effective understanding of reality or development of the best interventions so the encroachment of such reasoning into clinical practice and academia weakens conventional medicine, 3) resources for developing therapies and for providing care are limited, and the infiltration of ineffective methods into medicine siphons resources away from more promising and effective approaches and 4) ultimately a respect for truth and rationality has value in itself andd is “better” in some sense that blind faith and irrationality.

    I certainly don’t think CAM represents a crisis in medicine. It is, ultimately, still a marginal, niche approach that can’t compete with the proven benefits of scientific medicine in serious, acute condtions. Still, I do see actual harm done by it, directly and indirectly, so I think it worthwhile to continue to try and present the facts and evidence for and against competing approaches to medicine.

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