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FOR INTERNAL USE ONLY
Dietary Supplements
doing business in Latin America
May, 2013
Jaime Piza
DSM Nutritional Products

Agenda

Setting the Scene
Global Consumer Health Category ~USD203 Bio
USA alone represents ~26% of this market
Global Consumer Health
US$ 203 bn
OTC
US$ 94 bn
Vitamins and Dietary
Supplements
US$ 87 bn
Weight
Management
US$ 13 bn
Sports
Nutrition
US$ 8 bn
• LAA with $18.1 Bi. 9%
of the global CH market
Dietary
Supplements
- Mineral Supplements,
combination with vitamins
- Herbal Supplements
- Omega 3, Calcium, etc
• ON this presentation, we
will exclude OTC , the
largest category
Vitamins
- Multi vitamins
- Single vitamins
Others
- Vitamins & supplements for
children
- Tonics & bottled nutritive
drinks
Source: Euromonitor International 2013

Latam V&DS, WM, Herbal and Sports nut.
$429
$1,691
$1,964
$4,263
V&DS
Herbal
Weight M.
Sports Nut.
$8,350 Milln
Size in perspective
• With 8.35 Bi on retail sales, Latin
America is ~1/4 the size of US
mkt. for these categories, but was
only 1/10 some years ago.
• Brazil and Mexico (#1 and 2)
account for 60% of total market.
Page 3

Latam has shown a very fast growth and will
continue growing above the global avg.
2007-12 growth
CAGR %
Per region future CAGR %
Expected to continue growing at
a ~4.3% CAGR with some markets
above 8% YoY
4

Largest segment: Vitamins
• Unlike other regions, vitamins dominate
the VDS category, however…
• Other ingredients categories like Herbal
and Omega 3 are growing much faster
Growth drivers
• Growing of aging population
• increasing health awareness
• higher disposable income
• Sports nutrition is still small ($430Mio)
but is also the fastest growing segment
Source: Euromonitor 2013
5

FOR INTERNAL USE ONLY
Regular use is also steadily growing
Mexico ‘take once a week” moved ~20% in 2005 to 30% in 2012
Use once a week or more in Mexico 2005 2008 2010 2012
Vitamin/mineral supplements for general health 25% 29% 22% 36%
Vitamin/mineral supplements for certain needs (ex:
high potency or antioxidant blends)
Other specialty supplements (ex: glucosamine, SAM-
E, CoQ-10)
29% 30% 22% 32%
21% 13% 12% 27%
Herbal supplements (ex: ginseng, St. John’s Wort) 16% 11% 16% -
• Mexican shoppers look to vitamin and mineral supplements for general health
• Women (at 30%) use specialty supplements at significantly higher rates than men, at
21%. In all cases, the usage rates of once a week or more are the highest since 2005.
Health Focus International 2012

Largest markets:4 Countries 85%!
Brazil (35%)
Mexico (24%)
Venezuela (18%)
Colombia (8%)
Geographies 2007 2008 2009 2010 2011 2012
But watch
Argentina 72.4 80.1 68.7 75.6 87.0 93.7
out for
Brazil 897.7 1,026.8 1,044.3 1,354.5 1,585.9 1,495.8
Argentina !
Chile 32.6 45.9 46.3 50.9 59.9 64.4
Colombia 178.7 203.7 198.9 244.1 260.8 349.2
Mexico 971.3 1,003.8 812.2 931.3 1,001.5 1,084.1
Venezuela 379.9 With >8% 516.9 CAGR growth, 700.7 Argentina 724.5 567.1 789.3
Latin America 2,770.1 is growing 3,144.4 fast 3,152.0 3,701.6 3,913.3 4,279.5
7
Source: Euromonitor (retail value)

The players : top 20 ~55% share 2012
• Multinational pharmaceutical
still lead in the market
• Direct selling and local players
are growing bigger, also
through mergers/acquisitions
(i.e. Hypermarcas in Brasil)
•
Source: Euromonitor retail value, include CH: Vits &DS, Herbal and Weight Management
Page 8

Channel
• Pharmacies and drugstores lead as distribution channel,
mainly due to its size and presence in Brazil
• Multilevel marketing/Direct and TV selling have
reshuffled the players and channels landscape
Page 9

Store base retailing deals with > 70% for V&DS and Herbal
• Large Health and Beauty pharmacy chains
dominate in Mexico and Brasil
• US players already there i.e. acquisitions of
a large player, Drogasil in Brasil by CVS
• Grocery Stores and are not permitted in
some countries and account only for ~13%
Page 10

Direct Selling is strong in new categories
i.e ~60% share on Weight Management
• Direct Selling is the main channel in Mexico
• Direct Selling have the highest penetration in
LAA, second only to Asia
• Internet sales has the lowest penetration
with only 0.2% of the sales
Page 11

Latin America: segments / positioning
• Beauty positioning
• Digestive health
• Omega 3, 6, 9 supplements
• Natural, Herbal like Ginko and
Echinacea
• Calcium and bone health
• Traditional & well known brands
supported by smart publicity
Bone health is No. 1 category followed
by digestive system health
• General health VS more specific
positioning
• Pediatric V&DS
• Traditional Tonics
Page 12

Major Trends affecting the Latin-American region
Expanding low-middle income classes
Even the slightest additional income
promotes consumption and certainly, L A
is adding consumers at a faster pace
Ageing Population
Pushing mostly bone and heart health
but also new categories as eye and
brain health, cognition, relaxation, etc
Health & Wellness
Higher income and education
promote healthier lifestyles but
also government campaigns prohealthier
lifestyles play a essential
role in the region
Obesity
Latam rates of obesity are higher
than ever. Sedentary lifestyles and
high fat and sugar diets promote
consumption of digestive support
remedies and supplements
Regulatory Environment
From totally heterogeneous approach where the
category was inexistent or embedded in the
pharmaceutical, L A is slowly moving into a better
defined rules with certain common patterns. Most
countries are on legislation review mode in this days
and the future looks positive.
Pro Natural
Pursue of more natural approach
to health promotes consumption of
new and traditional Herbal
supplements together with the use
of Phyto-therapeuticals. By 2012
Herbal/Traditional reached ~50%
the size of the V&DS category
Page 13

the regulatory puzzle
Suplementos
Alimenticios
Suplementos
Dietéticos
Suplementos
Dietarios
Suplementos
Nutricionales
Complemento
Alimenticios
Complementos
Nutricionales

Mexico’s rules are changing
Process
Time
barriers to
commercialization
Degree of
complexity
Special restrictions in the
absence of an RDIs
• In principle, NO need for
registering continue but now,
you have to notify to authorities
• ‘new classification rule =
composition and labeling
evaluation
• New ‘positive list ‘ and ‘negative list’
to regulate Herbal and
phytochemicals
3-5
months
NO health claims
on label or on the
advertising are
allowed
++
Herbs and phytochemicals may
have additional hurdle based on
the new “positive” and inclusion
limits list. -Draft available-
• No specific norm for Dietary Supplements
• Principle of by the Industry Regulated prevails but is changing
• Advertising must be submitted and will be closely reviwed
• Conclusion : not that easy as it was but still open and one of the
easiest markets to launch in L A provided safety and known
ingredients as actives.
• Herbs and phytochemicals may have additional hurdle based on the
positive list.
Recommendation: a good dossier to back up you product
Page 15

Brazil: rules are changing
Process
Time
BARRIERS to
commercialization
Degree of
complexity
Special restrictions
• Only notification for Vitamins and
minerals from 25% and up to 1 RDA.
• Positive list of 18 ingredients with
Claims Allowed for some
ingredients *
• New ingredients must be submitted
and this include lots of the Herbal
substances
1 day
NO health claims on
label or advertising
allowed
specific and difficult to
communicate / labels
and advertising closely
watched
2- 5 years Not allowed +++++
-
+
RDI’s are defined on a pretty low
intake basis…
Not much discussion and no visible
list of new upcoming ingredients
Clinical and toxicology data
required, for the single ingredient .
. . . and the combinations
• * include Carotenoids, Omega 3, dietary fiber, phytosterols, Beta
Glucan, pro-biotics , soy protein
• Conclusion : Brazil continues being one of the most complicated
markets for innovation but is moving on the right direction. The
notification for V&M + claims are real breakthroughs for Brazil.
• Herbs and phytochemicals + combinations will still present a long
time hurdle.
Recommendation: near pharmaceutical dossier focused on toxicology to
back up you product, persistence and patience
Page 16

Other relevant markets
Colombia
Venezuela
Process
• Specific category for DS –no
Food-
• Registration required –valid for
a 10 years period-
• DS category not well defined
• Registration required –valid for
a 5 years period-
Time
1-2
months
1-2
years
Chile • No registration required -
Argentina
• Registration required
6
months
to 1
year
BARRIERS to
commercialization
Pharma GMP approach is
required
Claims allowed under a well
defined structure
Claims very restricted .
Every product application
subject to political
judgment
Positive list of well
structured claims preapproved
Claims may be allowed but
need a complex and length
approval. New regulation
under review will ease
complexity
++
+++++
++
+++
Special restrictions
Higher levels (safety) for V& DS.
Some resistance to Herbs and
combinations.
Very difficult to get approval for
Botanicals. Combinations other than
Vitamins not allowed.
Food legislation for ingredients and
GMP define rules. Each product
must be pre-approved under this
scope
A positive list for Herbs exist and is
being updated.
Political environment restrict
product imports
Page 17

The puzzle
…is coming together
• Coming from a rather chaotic period, Latin American is pursuing
structure for the market and a reduced risk for consumers; thus,
a suitable legal frame for the supplement different categories.
• Although still debatable and moving slower than we wish, greater
regulation will boost legitimacy in the category and set the pace
for responsible players.
• Botanicals, Herbs and combinations continue to post challenges.
• Industry associations like new ALANUR will play a decisive role on
helping shaping a positive/responsible legislation
Page 18

Conclusions
Fast growing and more stable market with rather low penetration,
Latina America DS market proposes great opportunities for all
players.
Healthy diets are recommended but supplements are preferred over
foods for functional needs.
Some categories like Sports Nutrition or more specific positioning like
beauty, mental health or healthy aging are nothing but opportunities
Shoppers prefer well-backed brands when compared to generic or
store brands.
Presence of multinationals and international players will remain
strong but watch out local giants like Hypermarcas, Probiotica,
Integralmédica and Nutrilatina in Brazil; Dr. Simi, Genomma, Pronat
and Nutrisa in México
Health Focus International 2012

Common sense recommendations
• Study the regulatory frame before defining your product mix strategy
• Choose as possible already approved ingredients and levels
• A movement towards more natural ingredients might be considered.
• Prepare a good dossier for each product with solid scientific background,
toxicology assessment, efficacy and process/plant compliance.
• Get help:
•serious professional consultancy available in every country
•DSM can provide ready to use solutions and also regulatory support
• Carefully consider local partnerships for manufacturing and / or
commercialization.
• Joint the industry associations.
• Joint ALANUR and participate of the regulatory changing process.
• Consider the expanding trend of channels; known chains, TV, specialized or
own stores.

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Page 24
Thank You !

Back Up
information
Page 25

Latin America: top 20 Brands~45% Share in 2012
Brand Company name %
Herbalife Herbalife Ltd 9.9
Pharmaton Boehringer Ingelheim GmbH 4.6
Centrum Pfizer Inc 3.5
Redoxon Bayer AG 3.2
Cebion Merck KGaA 2.8
Dr Simi Farmacias Similares SA de CV 1.9
Supradyn Bayer AG 1.6
Caltrate Pfizer Inc 1.4
Calcibón Farma SA, Grupo 1.3
Cewin Sanofi 1.3
Herbalife
ShapeWorks
Herbalife Ltd 1.2
Scott's Emulsion GlaxoSmithKline Plc 1.1
Natele Bayer AG 1.1
Norbi Rúd Omnilife SA de CV, Grupo 1.0
Floratil Merck KGaA 0.9
Nutrilite Amway Corp 0.9
Flaxol Laboratorios Behrens CA 0.8
Stresstabs Pfizer Inc 0.8
Berocca Bayer AG 0.8
Materna Pfizer Inc 0.7
26
Source: Euromonitor (retail value, % breakdown)

2012 Top 20 players including Sports Nutrition
Source: Page Euromonitor 27 retail value, include CH: Vits &DS, Herbal and Weight Management and Sports Nutrition

ALANUR
• On May 2012, representatives from four global supplement
companies—DSM, Herbalife, Omnilife and Amway—met in Sao Paulo
for the launch of Latin America’s first regional supplement trade
association, the Latin American Responsible Nutrition Alliance
(ALANUR).
• The association aim to facilitate communication between industry
and regulators and ultimately promote a suitable regulatory
framework for responsible companies/products.
• Dr. Tatiana Pires, director of scientific and regulatory government
affairs at Herbalife is the 1 st chairman in ALANUR: “Our focus is to
work towards ensuring regulatory guidelines that are appropriate to
the specific characteristics of our products”
Page 28