Nutriset (B)

©JH Angel 2010, ©Nutriset, 2010

Author(s): Bernard Leca

 CONTENTS

I. The growth of Nutriset..................................................................................2

A. F-100.................................................................................................................3
B. The Plumpy’Nut® revolution..............................................................................3
C. Competition.......................................................................................................6

II. The controversy............................................................................................7

A. The controversy................................................................................................8
B. PlumpyField®.....................................................................................................9
C. NGO scepticism...............................................................................................11
D. Nutriset's response.........................................................................................11

III. Challenges faced in 2012............................................................................12

A. The increase in raw material prices.................................................................12

B. Development of the product range..................................................................12
C. The Access approach.......................................................................................14

IV. Appendices..................................................................................................15

A. References......................................................................................................15
B. Some figures on malnutrition worldwide.........................................................15
C. Letter from MSF to Nutriset as part of the Access to Essential Medicines
Campaign (CAME)....................................................................................................16
D. Reaction from Terre des Hommes....................................................................17
E. Financial data 2010–2012...............................................................................20
F. Extract from the 2012 INPI Innovation Awards press kit................................20
G. The Nutriset product range.............................................................................21

REMINDER THAT NUTRISET IS NOW B CORP CERTIFIED

In just over 25 years, Nutriset has become a major force in the fight against malnutrition and the
world leader in the field of ready-to-use therapeutic foods aimed at combating malnutrition, one of
the most serious threats facing humanity. But it is not always easy to combine working with
humanitarian organisations the growth needs of a private company. How does one take a business
approach in an area such as the fight against malnutrition? To what extent might a business
approach be at odds with or complementary to the approach taken by humanitarian organisations?
The development of Nutriset highlights these difficulties.

I. The growth of Nutriset

Founded in 1986 in Malaunay, Normandy, and based on a highly innovative concept, Nutriset's
mission was to create and manufacture products to prevent and treat severe and moderate acute
malnutrition, mainly in children. Its core activity is thus the design, production and marketing of
nutritional products for humanitarian and societal purposes.

Nutriset – Bernard Leca 2

While food aid traditionally consists of sending production surpluses from rich countries, the
concept devised by Michel Lescanne, the engineer who founded Nutriset, consisted of starting from
the nutritional needs of affected populations, listening to NGOs, and calling on nutritionists to
develop suitable products.

In the 1990s, this approach led to the development of F-100 (100 kcal/100ml), a ready-to-dilute
therapeutic milk powder, enriched mainly with vitamins, minerals and fats, in accordance with
specifications established by researchers and NGOs. Nutriset, a Normandy-based small business,
has drawn on the expertise of the local dairy industry to enable the production of this product at a
reasonable cost. This product has proven to be effective during major humanitarian crises
(Rwanda, Mozambique, Liberia, etc.), due to its nutritional properties but also its ease of
preparation.

A. F-100
F-100 has proved a success. In 1999, the World Health Organization (WHO) recommended the
treatment of severe acute malnutrition using F-100 and F-75 therapeutic milks. But there are some
drawbacks to therapeutic milks. They have to be mixed with water before being administered,
which raises the problem of access to drinking water and compliance with the dilution rate. Other
problems: once prepared, milk must be consumed quickly only a limited number of children can be
treated with this solution. Consequently, professionals are required to prepare the solution. So
when, for security reasons, aid workers have to leave the refugee camps at nightfall, as was the
case in Rwanda in 1994, upon their return they are faced with the 'early morning deaths' of
children who died during the night because of a lack of care and food.

There is also the problem of access: treatment takes place in therapeutic centres and in many
cases mothers have to travel several kilometres to reach these centres and need to stay with their
child throughout the course of treatment. This raises a number of issues: Who takes care of the
other children who are left behind in the village in their absence? What is the impact on the social
and economic life of the village?

B. The Plumpy’Nut®1 revolution

What was needed is a way of providing a therapeutic food product in solid form that can be
administered directly by mothers without the need for any preparation in the home. Plumpy'Nut
was the first instance of such a “home treatment”.

To create such a product, Nutriset worked in collaboration with André Briend, a researcher at the
French Research Institute for Development (IRD), formerly known as “ORSTROM” (Overseas
Scientific and Technical Research Office). Numerous attempts were made to develop a waffle or
energy bar-type product, but these formats proved ill-suited to the conditions of use in the field
(storage requirements, palatability and ease of handling). The solution arrived at was a paste made
from peanuts, sugar, vegetable oil and skimmed milk powder, enriched with vitamins and minerals,
supplied in a 92-gram sachet, providing a total of 500 kilocalories. These sachets are delivered in
boxes weighing 13.8 kg (150 bags), which allows for easy handling. Plumpy’Nut (image 1) can be
ingested without adding water, so there are no dilution-related risks. Plumpy'Nut has the same
nutritional content as F-100. Once it is packaged, Plumpy‘Nut is safe to use for up to 24 months,
without refrigeration. Each sachet costs approximately 0.24 euros and the recommended daily dose
is 2 to 3 sachets per child for a period of 6 to 10 weeks.

In the absence of medical complications, the decision to administer Plumpy'Nut is taken by a

doctor, but is carried out by the mother, which allows her to take an active part in the treatment of
her child and not to be sidelined by the involvement of medical staff, as was the case with
therapeutic milks.

The procedure for manufacturing therapeutic foods such as Plumpy'Nut is covered by two patents
filed jointly by the IRD and Nutriset in 1997 and 2000.

Image 1
1
The Plumpy, Plumpy’Nut, PlumpyField, Enov and Nutributter brands are registered trademarks of the Nutriset
company.

Nutriset – Bernard Leca 3

 Plumpy’Nut

The development of Plumpy'Nut was carried out in consultation with NGOs working to combat
malnutrition, particularly Action Against Hunger (ACF). According to Michel Lescanne, this
cooperation was made possible by the fact that Nutriset is a small company with a strong
involvement in the aid sector, which meant that the NGOs were not as distrustful as they might
have been of traditional agribusiness companies.

Although it was created in 1996, it took several years for Plumpy‘Nut to be widely distributed. After
its initial use by ACF in 1997 in Chad, it was used by Médecins Sans Frontières (MSF) in 1998 in
Sudan, where NGOs did not have the time to set up treatment centres. But this ran counter to the
practice of hospitalising malnourished children, which is not necessary with products of this type,
and Plumpy'Nut was viewed merely as a temporary solution.

In 2001 and 2002, Steve Collins, a malnutrition specialist, published articles in The Lancet
suggesting that there should be a change in the way malnourished children were treated: instead
of hospitalisation, they should be kept in the community and given Ready to Use Therapeutic Foods
(RUTF).

It was only in 2005, during the famine in Niger, that MSF began to use Plumpy'Nut on a large scale
and that the media began to take notice. MSF had treated more than 60,000 children (with a
recovery rate of over 90%) by hospitalising only the most severely malnourished and keeping the
others in their communities using Plumpy'Nut.

According to Stephane Doyon, MSF Nutrition Team Leader, Plumpy’Nut means that smaller aid
teams are required:

“In 2002, 2,000 people were required to treat 10,000 children during the famine in Angola.
In Niger we only needed 150 people for the same number of patients. Plumpy’Nut has made
large-scale treatment possible”.

Sophie Laurence, Nutrition Coordinator at ACF:

“It has revolutionised our work […]. We were able to set up lighter outpatient programmes,
with at-home treatment and weekly medical supervision, and thus save many more children.
Today, Plumpy’Nut is used in 85% of our programmes”. (Nouvel Observateur, 29 July – 4
August 2010).

Nutriset – Bernard Leca 4

In 2007, the World Health Organization (WHO), the World Food Programme (WFP), the United
Nations Standing Committee on Nutrition (SCN) and Unicef recommended the adoption of ready-
to-use therapeutic foods for hunger relief. In an interview with the New York Times, Werner
Schultink, Chief of Nutrition at UNICEF, said: “This is an extraordinary step forward […] it makes it
possible to reach many more children with limited resources”.

Nutriset’s main customers today are UN agencies, which buy more than half of the Plumpy’Nut
produced (see Figure 1).

Figure 1: Nutriset sales 2011

3
%
9%
4%
Agences des NU
11%
ONGs internationales et
CICR
Fondations
Centrales d'achat
Autres (associations, centres
73% de recherche,…)

Source: ©Nutriset 2012 – all rights reserved

Nutriset has thus gone from a being small enterprise employing 4 people to a mid-sized company
with 121 employees and revenues of €101 million in 2011, whose products are used on several
continents (Figure 2).

Figure 2: Destinations of Nutriset products

Source: ©Nutriset 2012 – all rights reserved

Nutriset – Bernard Leca 5

In a situation where demand is growing both in terms of volume and in destination countries
(Figure 3).

Figure 3: Growing demand for RUTFs

Source: Kopcak and Komrska, 2012

The main production site is located in Malaunay, Normandy, 90 kilometres from Le Havre, from
where the products are mainly shipped. Nutriset has several production lines in order to be able to
respond to demand, as a large proportion of its products have to be manufactured and shipped on
short notice.

Nutriset generally produces 30% less than its maximum capacity, which is currently more than
68,000 tonnes, in order to be able to cope with any emergency demands.

C. Competition
With the success of Nutriset and the growth of the RUTF market, other producers are now
attempting to break through. This competition is likely to increase given the fact that, on the one
hand, USAID has announced its intention to start purchasing RUTFs in potentially larger amounts
than those currently procured by Unicef (currently the world's largest buyer); and that, on the
other, Unicef is seeking to diversify its suppliers (see 'concerns' below). UNICEF’s suppliers for
these products increased from 1 in 2005 (Nutriset) to 22 in 2012 (Table 1).

Table 1. Alphabetical list of UNICEF RUTF suppliers

1. Amwili, DR Congo 12. MFK, Haiti

Nutriset – Bernard Leca 6

 2. Challenge Dairy Product, USA 13. Nutriset, France
3. Compact, Norway 14. Nutrivita Foods Pvt. Ltd, India
4. Compact, India 15. Power Foods, Tanzania
5. Diva Nutritional Products, Republic of 16. PPB, Malawi
South Africa
6. Edesia, USA 17. PPB, Sierra Leone
7. Hilina, Ethiopia 18. STA, Niger
8. Insta, Kenya 19. Tabatchnick Fine Foods, USA
9. JAM, Mozambique 20. Valid Nutrition, Malawi
10. JB/Tanaka, Madagascar 21. Vitaset, Dominican Republic
11. Mana Nutritive Aid Products Inc., USA 22. Samil Industry, Sudan
Source: Kopcak and Komrska, 2012

Among the global suppliers, Nutriset's main competitors are:

GC Rieber Compact - formerly known as Compact for life (http://www.gcriebercompact.no/).

This Norwegian company, which had originally specialised in survival biscuits, came up with BP-100
in the 1990s, a RUTF in biscuit form that was a direct competitor to Plumpy'Nut, and was also
purchased by Unicef. Compact argued that BP-100 was a superior product to Plumpy'Nut, citing a
much longer shelf life, more robust packaging that could withstand transport and handling, and the
fact that it was in biscuit form, which was more appealing and readily acceptable than pastes.
An MSF study comparing BP-100 and Plumpy’Nut has demonstrated that both products provide
equivalent therapeutic and that both are appealing to children. However, it did demonstrate a
reputational difference. Almost all mothers are aware of Plumpy’Nut, while BP-100 was
considerably less well known.

Nutriset also emphasises that Plumpy’Nut is cheaper, and that its packaging is more convenient in
terms of logistics.

Compact has more recently developed a new RUTF, eeZeePaste, which has similar nutritional
properties to Plumpy’Nut. This product is made in India to capitalise on low local labour costs.
However, the fact that the product is being produced in India does not seem to have facilitated
access to the local market due to the Indian government’s refusal to acknowledge the existence of
domestic malnutrition, which clashes dramatically with the country's reputation as a global
economic powerhouse. As a result, GC Rieber Compact and Nutrivita Foods, Nutriset's local
franchisee in India, are obliged to export 100% of their output.

Diva (http://www.diva.co.za/) Founded in 1992, Diva has recently started producing RUTFs in the
form of a paste enriched with proteins, vitamins & minerals, as well as fatty acids. Behind Nutriset,
Diva is the second-largest supplier of RUTFs to both UNICEF and MSF.

Mana (http://mananutrition.org/) A more recent entrant, Mana (Mother Administered Nutritive

Aid) was founded as a social entrepreneurship initiative at a time when RUTFs were already
growing in popularity. Based in Georgia, the heartland of peanut production in the United States,
Mana has developed a paste similar to Plumpy'Nut. Its RUTFs are distributed in Africa but also in
Latin America (Guatemala) and Asia (North Korea). In 2011, Mana set up operations in Rwanda in
order to start production for the region. Mana also operates as a subcontractor by producing RUTFs
for Tabatchnick Fine Foods.

Despite this competition, Nutriset remains the dominant player in the industry (Figure 5). But the
global success of this small SME from Normandy has not been entirely free of controversy.

II. The controversy

The issue involves the production and distribution of Plumpy’Nut.

Nutriset's near-monopoly situation has raised a number of concerns.

On the one hand, UN agencies are concerned that the company’s production capacity will not be
sufficient to meet demand in the long term. On the other hand, the same agencies highlight the

Nutriset – Bernard Leca 7

logistical problems that this poses. RUTFs are frequently used in emergency situations where it is
vital to be able to guarantee immediate supply.

These concerns are heightened by the scale of the problem to be tackled and its evolution. The
issue of malnutrition, which Nutriset hopes to help solve, is a growing one. According to the World
Health Organisation, there are currently 178 million children suffering from malnutrition, and this
figure is increasing despite the simultaneous increase in global food production. Although Nutriset
is growing rapidly and increased its production capacity from 13,000 to 68,000 tonnes between
2007 and 2012, this remains modest when compared with current and projected demand.

Agencies such as UNICEF are thus working to encourage other producers to enter the RUTF
market. And the organisation is diversifying its suppliers (Figure 5)

Figure 5: Growth in the number of UNICEF RUTF suppliers

Source: Komrska, 2012b

UNICEF (Komrska, 2012b) contends that increased competition has increased production capacity,
improved choice and delivery times, and lowered RUTF prices. However, Nutriset emphasises that
the company has lowered the selling price of Plumpy'Nut by almost 10% over the last five years,
and insists that it wants to make the product even cheaper, irrespective of the existence of such
competition.

A. The controversy
It is against this backdrop that concerns have been raised about a possible contradiction between
the humanitarian purpose of these products and the fact that they are being used to generate
profits thanks to patent protection.

In November 2009, in an open letter to Nutriset, the director of the Campaign for Access to
Essential Medicines (CAME) requested a softening of the company’s intellectual property policy,
arguing that, in the field of humanitarian nutrition, patents should only be filed in exceptional
circumstances and that licensing agreements should be made on flexible terms to ensure the
widest possible availability of these products.

In December 2009, two American NGOs (Mama Cares in California and Breedlove in Texas) took
legal action to challenge the validity of one of the patents that Nutriset and IRD hold on Plumpy’Nut
in the US in US federal court. In the view of Mike Mellace of Mama Cares, such a simple product
should not be patented. “Anyone could have produced it. Just know a little bit about peanuts.
However, Nutriset is doing everything it can to prevent competition”. Intending to develop similar
products, the two NGOs were attempting to protect themselves against the risk of prosecution.
However, in its decision of 18 November 2011, the Federal Court ruled in favour of Nutriset and
IRD, and dismissed Mama Cares and Breedlove's complaint in its entirety. In fact, the details of the
complaint were not heard, but dismissed as baseless by the court.

Nutriset – Bernard Leca 8

NGOs are not the only ones interested in this issue.

According to some sources, Pepsi Co. is considering entering the RUTF market. In 2010, company
managers published an article (Yach D, Feldman Z, Bradley D, Khan M., Can the food industry help
tackle the growing global burden of undernutrition? American Journal of Public Health 2010, 100:
974-980.) suggesting that large food groups could play a larger role. With significant capacities
they could cover needs that are not currently met. A response to this article was published in the
same publication (Carlos A. Monteiro, Fabio S. Gomes, Geoffrey Cannon, The Snack Attack.
American Journal of Public Health 2010, 100: 975-981), in which the authors warned of the risk of
such products (with their Nestlé or Pepsi Co. label) being used to persuade parents to trust these
brands, thereby encouraging them to buy the products distributed by these same companies,
which are contributing to dietary imbalances and the spread of obesity.

Mama Cares is also linked to Mellace Family Brands, a company that makes chocolate and nut-
based snacks. An article in the New York Times suggested that American peanut producers lobby
was also interested in this new market.

B. PlumpyField®
In the face of these criticisms, Nutriset has pointed out that in ten years the price of Plumpy'Nut
has fallen by 28% and currently costs €2.70/kg, more than half of which is accounted for by the
cost of raw materials – it is difficult to reduce this figure further, although the company is working
on doing so.

Furthermore, the company has set up a network of local partners (the PlumpyField network) which
has been granted the right to produce and market Plumpy products, in particular Plumpy’Nut,
under a franchise agreement.

Created in 2005 by Nutriset, PlumpyField is a logical extension of the company’s policy of

promoting nutritional autonomy. As early as 1998, Nutriset had been supporting small-scale
attempts in Mauritania, Burkina Faso, Niger, Malawi and Sudan to produce Plumpy'Nut locally.
Nutriset finally formalised this policy by establishing the PlumpyField network.

The PlumpyField network is a technology-sharing program that by 2012 included 11 partners

located in countries in Southern Africa (Niger, Tanzania, Ethiopia, Madagascar, Burkina Faso,
Uganda, Sudan) in the Americas (Dominican Republic, Haiti) and in Asia (India), as well as a non-
profit organisation in the United States (Edesia). Nutriset contributes its patents, trademarks,
expertise and ongoing technical support. The only requirement is that these organisations purchase
the “specific technological ingredients” from Nutriset, i.e. mixtures of vitamins, minerals, additives,
etc. – i.e., a total of approximately 4.5% of these companies’ revenues, which result directly from
the purchase of these very ingredients.

The introduction of local production by franchisees makes it possible to provide a local solution to
recurrent needs, to improve responsiveness in the event of an emergency, to boost local
manufacturing, and to promote the introduction of RUTFs and RUSFs (ready-to-use supplementary
foods) as part of local nutrition strategies. The members of the PlumpyField network also cooperate
with local food producers. In the words of Michel Lescanne: “It's about producing locally, not in
order to be cheaper, but to be nearer to the end-user, with the twofold aim of feeding the child and
feeding the worker who makes the product.”

Establishing a presence in the United States by means of Edesia also allows us to reach out to
American decision-makers and to enter into a dialogue with them, as well as to be included in the
USAID orders. USAID is restricted to ordering only products manufactured in the United States.
USAID thus granted funding to Edesia in February 2010 for the production of 300 tonnes of
supplies.

From a baseline of 125 tonnes in 2005, the network’s cumulative production has grown steadily.
PlumpyField's share of this output is growing (Figure 6), with the producers in the network
increasing their production capacity by an average of 30% per year. The PlumpyField network has
created over 500 jobs directly and re-launched local agricultural schemes.

Nutriset – Bernard Leca 9

 Figure 6: Nutriset and PlumpyField production

Source: Nutriset 2011 report (©Nutriset 2012 – all rights reserved)

This strategy has also paid off for buyers since many of the 11 suppliers from which UNICEF buys
for local needs are members of the PlumpyField network (Table 2).

Table 2: UNICEF RUTF suppliers for local purchases (1)

Local UNICEF suppliers PlumpyField member

Hilina, Ethiopia Yes
STA, Niger Yes
Project Peanut Butter, Malawi No
Valid Nutrition, Malawi No
Amwili, DRC No
JAM, Mozambique No
JB, Madagascar Yes
Power Foods, Tanzania Yes
Project Peanut Butter, Sierra Leone No
MFK, Haiti Yes
Samil Industrial Co., Sudan Yes
Source: Komrska, 2012b and Nutriset website

In addition to local suppliers, increased competition and the development of PlumpyField network
mean that, in 2012, UNICEF had 14 suppliers with export capacities, which could thus be is
classified as “global”. Half of these global suppliers are members of the network made up of
Nutriset and its franchisees; the other half consists of a variety of other producers (Table 3). This
situation is thus very different from that which prevailed in 2008, when Nutriset was the only
company with export capacity.

Nutriset – Bernard Leca 10

 Table 3: Global RUTF suppliers registered with UNICEF

Source: Komrska, 2012b

C. NGO scepticism
However, some NGOs are critical of the PlumpyField network. They accuse Nutriset of trying to
protect its patent on the Plumpy'Nut manufacturing process, a patent that has been registered in
38 countries and that the company actively enforces.

Médecins sans Frontières (MSF) is sceptical and suggests that the countries in which the production
centres are located have been chosen in order to keep production capacity low. In an interview
with France 24, Marie-Pierre Allié, the president of MSF, said, “Instead of promoting competition by
waiving their patent, Nutriset has developed a distribution network with local partners in the
countries of the Global South”. According to her, this network would make it even more difficult for
competition to emerge. While MSF acknowledges that PlumpyField is a move in the right direction,
they seem uncomfortable at the idea of a private company being in such a dominant position in
such a sensitive market.

Similarly, Terre des Hommes would like independent producers to be able to develop in the
countries of the Global South and also emphasises that the use of Plumpy'Nut needs to be reined in
and that severe acute malnutrition is a disease whose treatment requires grassroots work that
cannot be reduced simply to the dispensing of RUTFs like Plumpy'Nut.

There is also criticism from those who oppose the patenting of such products. These opponents use
traditional arguments against intellectual property rights. They argue that patents stifle
competition, prevent cheaper prices and retard innovation. In addition, there are critics of RUTFs,
who argue that these foods combat the effects, not the root causes, and that, due to their
widespread use, these products tend to distract authorities from the real problem, which is the
need to develop local food production and the increasing dependency of countries in the Global
South.

D. Nutriset's response
Nutriset has spoken at some length about its intellectual property policy and the protection of its
patents.

In interviews and in its corporate communications, the company emphasises its policy of providing
nutritional autonomy. This nutritional autonomy is defined by Nutriset as “the capacity of a country

Nutriset – Bernard Leca 11

or a community to set up a sustainable system to identify and make accessible the nutrients
necessary for the development and overall health of its population. The development of the
PlumpyField network is part of this policy aimed at helping countries in which it operates to become
self-sufficient.

Nutriset also highlights the risk of large companies entering the market and destabilising partners
that belong to the PlumpyField network. Consequently, Nutriset uses the patent as a 'shield' to
protect its PlumpyField network partners. Nutriset’s strategy is thus to use intellectual property
rights as a means of facilitating the transfer of technology to the Global South and of protecting
companies in developing countries from competition from the Global North. In particular, the
company points out that World Intellectual Property Organization (WIPO) statistics show that
people in developing countries have very limited access to innovation. Nutriset's intellectual
property policy is hence presented as being aimed specifically at improving this access and thus at
promoting local and sustainable development through the development of local RUTF production
facilities.

Furthermore, Nutriset now offers use agreements enabling a company or organisation to design,
manufacture, market and distribute products covered by Nutriset/IRD patents provided that their
production facilities, activities, head office and main shareholders (at least 51% of the share
capital) are based in one of the 28 developing countries in which Nutriset/IRD patents are
registered (except Niger). These use agreements have been made available since 2007, and in
October 2010, Nutriset and IRD set up a system allowing these entities to obtain an online use
licence to produce and market their own products. In exchange, these companies are required to
pay 1% of their revenue to IRD, while Nutriset receives no remuneration. There are currently
companies in Kenya, Malawi, Mali, Senegal, Sierra Leone and Chad that are benefiting from this
type of simplified licensing agreement.

The developing countries not included among the aforementioned 28 are those in which Nutriset
and IRD do not have a registered patent, and companies/organisations in these countries are thus
not subject to any type of restriction.

III. Challenges faced in 2012

A. The increase in raw material prices

The very nature of the products offered by Nutriset, as well as the intended users and
beneficiaries, whether international organisations or individuals facing malnutrition, means that the
price of these products is low.

However, Nutriset is now facing an increase in the price of raw materials caused by the increase in
global demand. The price of rice and of whey powder has doubled in five years, that of crude palm
oil has doubled in ten years; the price of refined white sugar has doubled in three years, and that
of peanut has doubled in two years, all of which may ultimately affect Nutriset's pricing policy.
Meanwhile, the price of Plumpy’Nut fell by 9% between 2008 and 2011.

B. Development of the product range

Apart from the criticism, the danger of Plumpy'Nut's worldwide success was that Nutriset might
turn into a one-product company. Innovation thus became even more of a priority.

After therapeutic milks, such as F-100, and the Plumpy‘Nut revolution (i.e. The creation of the first
RUTF), expanded its range of products aimed at combating malnutrition.

In 2000, Nutriset joined forces with Rodael Laboratories to create ZinCfant ®, a dispersible zinc
sulphate tablet, to combat acute diarrhoea, which in 2011 was the third leading cause of death
among children under five. In order to distribute this product, the ZincField network was set up in
2009 based on the PlumpyField model, thus enabling the local production and distribution of these

Nutriset – Bernard Leca 12

products, whose technical aspects require finding local partners in the pharmaceutical industry. The
ZincField network already includes a partner in Tanzania.

A range of “ ready-to-use supplementary food/Lipid-based Nutrient Supplements” (RUSF/LNS)

nutritional supplements aimed at treating and preventing various forms of moderate or chronic
acute malnutrition (Plumpy’Sup™, Plumpy’Doz™ , Plumpy’Soy™, Nutributter®, Grandibien®, QB mix®)
has been developed. The range is aimed at children no longer being exclusively breastfed (beyond
6 months of age) and covers a wide range of needs.

Nutributter, developed in 2004 in collaboration with UC Davis in California, contains fewer calories
than a RUTF and is not intended to replace food but rather to supplement local food so as to
provide infants with the necessary micronutrients and essential fatty acids. A nutritional aid
designed to be used as part of a supplementary diet, Nutributter also highlights the fact that
Nutriset is not seeking to develop products to replace local foods, but rather to supplement them.
Nutriset is currently involved in a research programme co-led by Dr Kathryn G. Dewey (University
of California, Davis) and Dr Per Ashorn (University of Tampere Medical School, Finland) aimed at
developing new formulations of Nutributter. Under the name of Enov’Nutributter ®, these new
formulations aim to make the product more nutritious, more effective, and to make it available at a
cost of less than 5 euro cents per day. The development of this product also involves consumer
input. Focus groups were conducted in Tanzania with 50 participants, combined with 10 in-depth
interviews, ethnographic field research and the involvement of 315 respondents in a research study
that led to recommendations on product packaging, pricing, distribution methods, communication
and awareness-raising strategies.

Consequently, Nutriset a range of products for the prevention and treatment of acute and
moderate malnutrition. Among these products, Plumpy'Nut accounted for 52% of sales (Figure 7)
in 2011, with an increase in production volume of 14%, partly due to the humanitarian situation in
the Horn of Africa and the building of stocks in anticipation of a possible food crisis in the Sahel
region; RUSF/LNS, on the other hand, have had more difficulty in gaining a foothold, and
experienced a 6% decline in sales in the same year. The use of F-75 and F-100 therapeutic milks
fell by 25% in 2011, the latter development being partly explained by the optimisation of the
sachet size in order to reduce wastage.

Figure 7: Breakdown of 2011 revenue by product type

Source: 2011 Nutriset Report (©Nutriset 2012 – all rights reserved)

Nutriset currently has 60 research partnerships with universities, laboratories, NGOs, UN agencies
and foundations. In addition to these partnerships, in-house product development initiatives
accounted for a total of €3 million in investment in 2011, and involved 22% of the workforce.

New products require new methods of distribution. For example, the distribution system for
Enov'Nutributter is unusual in that, in addition to NGOs and government agencies, it also involves
private distribution channels to ensure that it reaches populations outside areas served by NGOs
and government agencies. The pricing of the product is based on data from preliminary studies
aimed at ensuring the product would be affordable for the target populations. Due to scandals
surrounding powdered milk sold in Africa in the 1970s, Tanzanian regulations prohibit direct
advertising of food products for children under five; as a result, Nutriset is also required to promote
the product in a compliance with the law.

Nutriset – Bernard Leca 13

C. The Access approach
Nutriset has also developed an Access department whose task is to facilitate access to products for
the prevention of malnutrition for vulnerable populations. The aim is to develop a comprehensive
approach that allows access to preventive products for populations at risk of malnutrition, the
improvement of the nutritional status of children, the economic development of target countries
and, ultimately, an improvement in the nutritional autonomy of everyone concerned. This includes
an analysis of the changing nutritional needs of communities, targeting operations to ensure that
the products on offer reach the target populations, social marketing operations aimed at creating
the conditions that will enable these populations to access the products in a sustainable manner,
and the identification of the most appropriate distribution networks for making the products
available to these populations.

The first step in the Access approach, understanding local needs, involves not only an analysis of
nutritional deficiencies but also an understanding of local tastes, possible food taboos, the
identification of people who can make the final decision to purchase these products, as well as local
perceptions of malnutrition, which is sometimes an object of denial. These quasi-ethnographic
methods involve the participation of local stakeholders, including NGOs, local institutions, village
communities, community groups, Plumpy Field network partners, and even specialists.

Distribution involves the establishment of networks that did not previously exist. These networks,
which are designed to distribute food supplements rather than RUTFs, involve local businesses
(pharmacists, shopkeepers), social workers, women's associations and micro-enterprises. This
distribution is accompanied by public awareness campaigns conducted in collaboration with local
partners. The aim is to explain the product, its characteristics, its effects and the needs it meets. It
also involves changing eating habits and behaviours in terms of hygiene.

The Access approach has led to the development of new products. Grandibien ® was launched in
Niger in 2007 following an initiative to identify the expectations and needs of mothers in Niamey
with a view to investigating how best to distribute nutritional supplements to these vulnerable
populations. The research made it possible to determine the type of product needed, as well as its
taste, packaging (which had to contain all the necessary instructions for its use), and price (to
make it affordable for the target communities). The product's name, Grandibien, was chosen after
consultation with 78 individuals as part of a campaign involving mothers. The launch of Grandibien
was accompanied by a communication campaign that included television, billboards and street
theatre to present the product, raise awareness about nutritional issues and help change habits.

Since then, Nutriset has succeeded in becoming the world leader in its field and a key actor in the
fight against acute malnutrition. In 2012, Nutriset was awarded an award for innovation by the
French National Industrial Property Institute (INPI) (see Appendix D) for its pioneering work in the
humanitarian and commercial sectors over the past 20 years. Nevertheless, the sector is constantly
evolving. Nutriset is going to have to contend with an agri-food industry that sees the fight against
malnutrition as both an opportunity for new profits and an opportunity to improve its image,
specialised competitors eager to expand, and NGOs that remain hostile to the principle of patents
on products aimed at combating the scourge of malnutrition. Furthermore, diversification in the
fight against moderate acute malnutrition is pushing Nutriset to expand its own local distribution
network, something the company has never done before. Consequently, many challenges lie ahead
for Nutriset.

Nutriset – Bernard Leca 14

IV. Appendices

A. References

Komrska, J. (2012a) Increasing Access to Ready-to-use Therapeutic Foods (RUTF), Field Exchange,
n°42
http://www.nutriset.fr/Downloads/PFE-RUTF-Increasing-access.pdf

Komrska, J. (2012b) Evaluation of Procurement Objectives (RUTF bid 2010) , presentation at the
RUTF Preconference. Accessible at:
http://www.unicef.org/supply/files/
3._Evaluation_of_Procurement_Objectives_RUTF_bid_2010_Komrska.pdf

Kopcak, L.R. and Komrska, J. (2012) RUTF Supply Chain Workshop. Opening Remarks,
presentation at the Health and Humanitarian Logistics Conference, Hamburg Germany

Nutriset: http://www.nutriset.fr/fr/accueil.html

Troubé, C. 2010 Nutriset. L’autonomie nutritionnelle pour tous (Nutritional Autonomy for All),
Editions Nutriset S.A.S.

Rice, E. The Peanut Solution. New York Times.

http://www.nytimes.com/2010/09/05/magazine/05Plumpy-t.html?pagewanted=1

UNICEF, 2009. Supplying Ready To Use Therapeutic Foods in the Horn of Africa
http://www.unicef.org/supply/files/8._RUTF_supply_chain_evaluation_and_forecasting_1.pdf

B. Some figures on malnutrition worldwide

870 million human beings worldwide suffer from undernutrition, half of whom are in Asia and a
quarter in Africa. Nearly 100 million children under five were underweight in 2010. Moderate acute
malnutrition affects 41 million children, and 26 million children are affected by severe acute
malnutrition, which is the most serious form. One third of deaths among children under five in
developing countries are linked to malnutrition. 2.5 million boys and girls under five die each year
from malnutrition or related diseases. Hunger is killing more people than people in the world today
than AIDS, malaria and tuberculosis combined.

7.5% of people suffering from malnutrition are in Southeast Asia, 19.2% in East Asia and 5.6% in
Latin America. But with economic development, these figures are declining. In contrast, the
proportion of malnourished people in Southern Asia (35%), sub-Saharan Africa (27%) and West
and Northern Asia (2.9%) has increased.

Sources: World Food Programme, FAO

Nutriset – Bernard Leca 15

C. Letter from MSF to Nutriset as part of the Access to Essential Medicines
Campaign (CAME)

MSF letter to Nutriset on intellectual property

Mr. Lescanne
Director General
Nutriset
BP 35 – Le Bois Ricard
76,770 Malaunay
France

Geneva, March 24, 2009

Dear Mr Lescanne,

I am writing to you to reaffirm the position of MSF’s Campaign for Access to Essential
Medicines with respect to Nutriset’s policy on intellectual property pertaining to nutritional
pastes and issues concerning the production and export of such nutritional products.

Nutriset has played, and continues to play, a major role in the development and production
of products used in the battle against malnutrition, which has made a large contribution to
recent developments in the handling of this pathology. A growing number of international
agencies and donor countries recognize the important role of ready-to-use foods. This results
in an exponential increase in the consumption of these products, which can create serious
stresses in the supply chain, as was the case in the second quarter of 2008. It is becoming
urgent to increase and diversify the capacity to produce nutritional pastes.

In fact, the success of treatment of malnutrition with ready-to-use foods is arousing

increasing interest among producers. This is good news and offers an opportunity to
support the emergence of capacity to produce these nutritional products, especially in
the countries of the South. Such a development would also create the conditions for
better availability and a possible reduction in their prices, which would facilitate their
supply in regions of the countries affected.

Currently, Nutriset allows NGO s, as well as several manufacturers under Nutriset

franchise, to produce ready-to-use foods. However, agreements of this type include
restrictions and limitations that can discourage other producers. At a meeting held in
Rome in March 2007 that brought together a number of international agencies working
in the field of nutrition, Nutriset made a proposal addressing this problem. Nutriset
contemplated granting licenses to producers in the South for the manufacture and
export of ready-to-use foods in return for the payment of a fair royalty in the countries
where patents are in force, in parallel to its franchise system. This proposal could indeed
stimulate production on a larger scale and help to lower prices. We regret that this offer
was not effectively followed up on a large scale and asked that you make it public and
post it on your website so that any interested producer might benefit from it.

For reasons that are obvious, the intellectual property pertaining to nutritional products
of a humanitarian nature must be handled differently from that pertaining to commercial
products. As you know, we believe that, in the humanitarian field of nutrition, patents
should be filed only on an exceptional basis, and when they exist, licensing agreements
should be offered to third parties on flexible terms and conditions, so as to ensure the

Nutriset – Bernard Leca 16

widest possible availability of nutritional products of a humanitarian nature.

This is also important with respect to supplements of ready-to-use products, such as

Plumpy’doz®, which was developed with the participation of Médecins Sans Frontières.
If such a product was recommended for young children by providers of food aid, the
needs could be exponential. The supplies required for the delivery of such nutritional
products adapted to young children would only be possible in the long term through
diversification of supply.

MSF, as well as other agencies working in the battle against malnutrition, can no longer
continues to depend on a single source of supply for ready-to-use products. The current
position of Nutriset in this regard is a source of concern to some of these agencies, as it
is to MSF. We therefore encourage Nutriset to play a key and innovative role in the
management of its intellectual property by offering humanitarian licensing agreements
for the production and export of ready-to-use products.

I look forward to your reply.

Yours sincerely,
Tido v. Schön-Angerer
Executive Director

D. Reaction from Terre des Hommes

HTTPS://WWW.TDH.CH/FR/NODE/16753
Why the battle against the market-driven treatment of moderate malnutrition is a
battle not to lose…
The arrival of the ready-to-use therapeutic foods for extreme cases of
malnutrition has been a great step forward. Unfortunately, the food-processing
sector, in search of new opportunities, seeks to impose its products for less
serious cases. Written by Jean-Pierre Papart and Michel Roulet, resource persons
for nutrition and health at Tdh.

Up to 6 months, exclusive breastfeeding is undeniably the best option for the child.
After more than 30 years of massive effort by health professionals and civil society, this
victory is fragile. The food processing sector, which are struggling to promote powdered
baby milk, are now in search of new opportunities.

If babies under 6 months are momentarily less of a target for the food industry, in contrast,
those over 6 months will now be more and more so because the desire to subjugate
children’s food to market power persists. And that is where ready-to-use therapeutic food
(RUTF) comes in. Currently written in the singular, there is however a risk that tomorrow it
will take more varied forms – and consequently further indications for use.

Nutriset – Bernard Leca 17

The concept of this product – created originally to treat severe acute malnutrition (SAM) in
cases where the child still has appetite – represents a major advance in public health
because it enables out-patient treatment (at home with weekly consultations at a health
centre) of children who would otherwise have to be hospitalized for periods of 3 or 4 weeks
on average. This is an unarguable improvement, because hospitals, although they may be
places for treatment and recovery, are unfortunately also places where one can be
contaminated with microbes likely to cause so-called “nosocomial” infections. The other
major advantage of this new therapeutic approach is that it enables the treatment of
children who, because of poverty, distance from healthcare infrastructure… would quite
simply not have been treated. This new form of treatment for severe acute malnutrition
(SAM) ensures a vast increase in the therapeutic coverage of this very serious health
problem.

Up to this point everything is fine. The problem begins when the concept of RUTF (with T for
Therapeutic) is substituted with RUF (ready-to-use food without the objective of treating an
illness such as is the case for SAM). Because today a new market is trying to emerge,
“customized food” for young children, a product presented as having the dual function of
feeding and ensuring well-being. From nowhere to large scale consumption of industrial
products that would respond to a whole series of indications, such as improving intellectual
or physical development (for example, better growth). What is really at stake is the
dispossession of families of their ability to nourish their children using the possibilities
available to them through their nutritional culture and local agriculture. This point has
already been the subject of numerous debates and analyses.

It is with this perspective that we should interpret what happened during the two meetings
of experts convened by the WHO in order to produce recommendations for the treatment of
moderate acute malnutrition (MAM).

The first meeting took place between 30th September and 3rd October 2008 and the second
from 23rd February and 26th February 2010. Two strategic issues were at stake during the
first meeting. To begin with, a new and very broad definition of moderate acute malnutrition
was proposed where the word acute was dropped. By exchanging the concept of MAM for
the more general one of moderate malnutrition (MM) the potential market goes from 60
million children to 200 million children. In reality, this new concept of MM brings together
two very different problems with different causes: MAM on one hand and stunting (small
height-for-age) on the other. This new definition suggested at the beginning of the
consultation was not really discussed; it was basically suggested by the organizers of the
meeting as a good idea not open for discussion. Next, certain experts attempted to impose
RUTF (Plumpy’nut from Nutriset® in reality) not only for the treatment of SAM, but also for
the treatment of MM and even for the prevention of acute malnutrition. There was no
consensus on this point. However, the idea that children with MM need some kind of specific
product that falls between what is needed to treat a child with SAM and what is needed for a

Nutriset – Bernard Leca 18

child without malnutrition, was definitely approved. This idea is not wrong in itself but is
open to unfortunate interpretation.

During this first meeting (2008), the proponents of educational approaches based on the use
of local products available at prices acceptable to the families, felt clearly that they were not
entitled to their opinion. At the second meeting (2010), they were not even invited.

This last meeting exclusively targeted questions related to food supplementation in the
treatment of MM, putting aside off-hand other factors that are, in our opinion, more
fundamental. During this second meeting of experts, the Terre des hommes (Tdh)
representative circulated the therapeutic results obtained in Guinea when treating children
with MAM. They are treated through weekly check-ups until they return to normal weight.
The therapeutic approach consists of educational and psychosocial support for the mothers
and children concerned. They participate at least once a week throughout the treatment
(between 3 and 8 weeks) in cooking demonstrations about preparing cereals . Sometimes,
depending on the possibilities available through the World Food Programme (WFP), food
portions are distributed once a week to the mothers of the children concerned. The “dry”
portions (they need to be diluted in water for cooking and consumption) contain a premix of
flour, sugar and oil, in reality ingredients totally compatible with the culinary habits of the
families. This so-called “educational” approach promoted by Tdh and many other players –
but especially recommended in the protocol for treatment of malnutrition by the Ministry of
Health in Guinea – has been closely monitored since 2008. The rate of success is excellent:
95% of children treated normalize their weight-gain.

Food industry lobbies are very active in trying to impose a therapeutic solution which would
use an industrial ready-to-use product. Certain “experts” claim that it is impossible to obtain
a success rate higher than 70% in the treatment of moderate malnutrition without using
commercial products. The results obtained by the Tdh team and their partners in Guinea
disprove this opinion.

The ethical challenge which hunger in the world represents – and more precisely
malnutrition in children – is becoming a commercial issue. The appetite of businessmen is
sharper than ever since the World Bank announced that 11.8 billion dollars a year should be
spent on fighting malnutrition over the next few years, compared to 350 million dollars on
average between 2004 and 2007. The use of ready-to-use therapeutic food (RUTF) for
severe acute malnutrition is – as we have already explained above – undeniable progress in
public health. However, if this good idea were to become a panacea for all nutritional
problems, we would see a dispossession – or even forced disempowerment – of families and
communities with regard to their right to protect the health of their children and to ensure
their development, both physical and psychosocial.

“Press contacts”:/en/contact-us

Nutriset – Bernard Leca 19

E. Financial data 2010–2012

Source: 2011 Nutriset Report (©Nutriset 2012 – all rights reserved)

F. Extract from the 2012 INPI Innovation Awards press kit

The jury praised the Nutriset's strong track record as a small company operating in a complex
market, where most of the customers are NGOs. Furthermore, its vigorous industrial property
policy is distinctive in terms of its sector of activity. In 20 years, NUTRISET has succeeded in
combining a humanitarian approach with an innovative business strategy that harnesses industrial
property rights. This approach simultaneously fosters the economic development of its region of
and the development of its target countries. NUTRISET also helps
cultivate this industrial property approach among its partners and pursues a sustainable
development strategy that is at once socially, economically and environmentally oriented.

Innovation is in the company's DNA

Whether it be from a technical, organisational or societal point of view, NUTRISET has developed a unique
culture of innovation, which is consistent with its mission of providing nutritional autonomy for all.

NUTRISET is guided by a number of strict priorities:

 in terms of its products, their nutritional and therapeutic properties, their packaging, the different ways in
which they are used, etc.,

 in terms of their users, their cultures and customs,

 in terms of the entire production and logistics chain, competition (a policy of developing local production
through investment and the transfer of technology), and the ability to adapt to highly variable production
cycles.
Intellectual property, a powerful distribution tool
While many stakeholders raise questions about the compatibility between protecting products through the
use of industrial property rights and addressing serious health crises, NUTRISET has arrived at an original
concept: thanks to an extensive distribution network (the Plumpyfield network), NUTRISET makes its
products available to everyone within a controlled contractual framework. In addition to developing a

Nutriset – Bernard Leca 20

network of franchised local producers (the PlumpyField network currently has 11 producers in Africa, Asia
and the Americas), NUTRISET also makes a major contribution to the development of a culture of industrial
property within its partner companies.

The jury praised the Nutriset's strong track record as a small company operating in a complex market,
where most of the customers are NGOs. Furthermore, its vigorous industrial property policy is distinctive in
terms of its sector of activity. In 20 years, NUTRISET has succeeded in combining a humanitarian approach
with an innovative business strategy that harnesses industrial property rights. This approach simultaneously
fosters the economic development of its region of and the development of its target countries. NUTRISET
also helps cultivate this industrial property approach among its partners and pursues a sustainable
development strategy that is at once socially, economically and environmentally oriented.

Collaborative and multidisciplinary innovation: a sustainable development strategy

Thanks to significant investment in research and development, in addition to its production partnerships,
NUTRISET is also developing partnerships with universities and research organisations in a variety of
fields, ranging from nutrition to treatments, as well as in the form of sociological and anthropological studies.
This broad-based strategy allows the company to gain a better understanding of the socio-economic and
cultural issues affecting users, the distribution of its products, as well as the various challenges relating to
the prevention of malnutrition and the emergency response to food crises; all in pursuit of its steadfast
commitment to nutritional autonomy for all.

G. The Nutriset product range

See attached PDF file

Nutriset – Bernard Leca 21