FOR INTERNAL USE ONLY

Dietary Supplementsdoing business in Latin America

May, 2013

Jaime PizaDSM Nutritional Products

Agenda

Setting the SceneGlobal Consumer Health Category ~USD203 Bio

USA alone represents ~26% of this market

Source: Euromonitor International 2013

Global Consumer HealthUS$ 203 bn

OTCUS$ 94 bn

Vitamins and Dietary Supplements

US$ 87 bn

Weight Management

US$ 13 bn

Sports NutritionUS$ 8 bn

Dietary Supplements

Vitamins

- Mineral Supplements,combination with vitamins

- Herbal Supplements - Omega 3, Calcium, etc

Others- Vitamins & supplements for

children - Tonics & bottled nutritive

drinks

- Multi vitamins - Single vitamins

• LAA with $18.1 Bi. 9% of the global CH market

• ON this presentation, we will exclude OTC , the largest category

Page 3

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.

Latam V&DS, WM, Herbal and Sports nut.

$4,263

$1,964

$1,691

$429

V&DSHerbalWeight M.Sports Nut.

$8,350 Milln

4

Latam has shown a very fast growth and will continue growing above the global avg.

CAGR %

Expected to continue growing at a ~4.3% CAGR with some markets above 8% YoY

Per region future CAGR %

2007-12 growth

5

Largest segment: Vitamins

• Unlike other regions, vitamins dominatethe VDS category, however…

• Other ingredients categories like Herbal and Omega 3 are growing much faster

• Sports nutrition is still small ($430Mio) but is also the fastest growing segment

Source: Euromonitor 2013

Growth drivers

• Growing of aging population• increasing health awareness • higher disposable income

FOR INTERNAL USE ONLY

• 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.

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) 29% 30% 22% 32%

Other specialty supplements (ex: glucosamine, SAM-E, CoQ-10) 21% 13% 12% 27%

Herbal supplements (ex: ginseng, St. John’s Wort) 16% 11% 16% -

Health Focus International 2012

Regular use is also steadily growingMexico ‘take once a week” moved ~20% in 2005 to 30% in 2012

Largest markets:4 Countries 85%!

Geographies 2007 2008 2009 2010 2011 2012Argentina 72.4 80.1 68.7 75.6 87.0 93.7Brazil 897.7 1,026.8 1,044.3 1,354.5 1,585.9 1,495.8Chile 32.6 45.9 46.3 50.9 59.9 64.4Colombia 178.7 203.7 198.9 244.1 260.8 349.2Mexico 971.3 1,003.8 812.2 931.3 1,001.5 1,084.1Venezuela 379.9 516.9 700.7 724.5 567.1 789.3Latin America 2,770.1 3,144.4 3,152.0 3,701.6 3,913.3 4,279.5

Source: Euromonitor (retail value)

Brazil (35%)Mexico (24%)Venezuela (18%)Colombia (8%)

7

But watch out for Argentina !

With >8% CAGR growth, Argentina is growing fast

Page 8

The players : top 20 ~55% share 2012

Source: Euromonitor retail value, include CH: Vits &DS, Herbal and Weight Management

• Multinational pharmaceutical still lead in the market

• Direct selling and local players are growing bigger, also through mergers/acquisitions (i.e. Hypermarcas in Brasil)

•

Channel

Page 9

• 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 10

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 11

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 12

Latin America: segments / positioning

Bone health is No. 1 category followed by digestive system health

• 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

• General health VS more specific positioning

• Pediatric V&DS

• Traditional Tonics

Page 13

Ageing Population

Pushing mostly bone and heart healthbut also new categories as eye and brain health, cognition, relaxation, etc

Health & Wellness

Higher income and education promote healthier lifestyles but also government campaigns pro-healthier 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

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

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.

Expanding low-middle income classes

Even the slightest additional income promotes consumption and certainly, L A is adding consumers at a faster pace

Major Trends affecting the Latin-American region

the regulatory puzzle

Suplementos Alimenticios

Suplementos

Dietéticos

SuplementosDietarios

Suplementos

Nutricionales

ComplementoAlimenticios

Complementos

Nutricionales

Mexico’s rules are changing

Page 15

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

Brazil: rules are changing

Page 16

Process Time BARRIERS to commercialization

Degree of complexity Special restrictions

• Only notification for Vitamins and minerals from 25% and up to 1 RDA. 1 day

NO health claims on label or advertising allowed

-RDI’s are defined on a pretty low intake basis…

• Positive list of 18 ingredients with Claims Allowed for some ingredients *

specific and difficult to communicate / labels and advertising closely watched

+ Not much discussion and no visible list of new upcoming ingredients

• New ingredients must be submitted and this include lots of the Herbal substances

2- 5 years Not allowed +++++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

Other relevant markets

Page 17

Process Time BARRIERS to commercialization complexity Special restrictions

Colombia

• Specific category for DS –no Food-

• Registration required –valid for a 10 years period-

1-2months

Pharma GMP approach is required Claims allowed under a well defined structure

++Higher levels (safety) for V& DS. Some resistance to Herbs and combinations.

Venezuela• DS category not well defined• Registration required –valid for

a 5 years period-

1-2years

Claims very restricted . Every product applicationsubject to political judgment

+++++Very difficult to get approval for Botanicals. Combinations other than Vitamins not allowed.

Chile • No registration required -Positive list of well structured claims pre-approved

++Food legislation for ingredients and GMP define rules. Each product must be pre-approved under this scope

Argentina • Registration required

6 months

to 1 year

Claims may be allowed but need a complex and length approval. New regulation under review will ease

+++A positive list for Herbs exist and is being updated. Political environment restrict product imports

• 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

The puzzle…is coming together

Health Focus International 2012

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, Pronatand Nutrisa in México

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.

FOR INTERNAL USE ONLYFOR INTERNAL USE ONLY

DSM acquired Fortitech for USD 634 million

DSM can Help

Health Benefit

Solutions

Science Advocacy

Global Network

Customer Business

Development

Innovation

Quality for Life

Integrated NutritionalSoluction Provider

FOR INTERNAL USE ONLY

Vitamins Minerals Nutraceuticals Botanicals ColorsFlavors

Liquid and Dry / customized to meet your requirements

DSM premix solutions

Reduced complexity- One lane = many ingredients = fewer suppliers, negotiations, audits and QC- One lane = one pre-weighed bag addition per batch in the plants

all over the world at your service

Unique Global and Regional approach = one conversation while protecting Regional Priorities

One unique quality system = standardized around quality = one approach for your brands protection

DSM premix solutions

Thank You !

Page 24

Back Up information

Page 25

26Source: Euromonitor (retail value, % breakdown)

Brand Company name %Herbalife Herbalife Ltd 9.9Pharmaton Boehringer Ingelheim GmbH 4.6Centrum Pfizer Inc 3.5Redoxon Bayer AG 3.2Cebion Merck KGaA 2.8Dr Simi Farmacias Similares SA de CV 1.9Supradyn Bayer AG 1.6Caltrate Pfizer Inc 1.4Calcibón Farma SA, Grupo 1.3Cewin Sanofi 1.3HerbalifeShapeWorks Herbalife Ltd 1.2

Scott's Emulsion GlaxoSmithKline Plc 1.1Natele Bayer AG 1.1Norbi Rúd Omnilife SA de CV, Grupo 1.0Floratil Merck KGaA 0.9Nutrilite Amway Corp 0.9Flaxol Laboratorios Behrens CA 0.8Stresstabs Pfizer Inc 0.8Berocca Bayer AG 0.8Materna Pfizer Inc 0.7

Latin America: top 20 Brands~45% Share in 2012

2012 Top 20 players including Sports Nutrition

Page 27Source: Euromonitor 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 1st chairman in ALANUR: “Our focus is to work towards ensuring regulatory guidelines that are appropriate to the specific characteristics of our products”

Page 28