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Musings on The PAN Recall Five Years Down the Track

Trevor Bamford
A Health Food Retailer Perspective

Issue 76: October 2008
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My how time flies when you are having fun - the last time I wrote for I2P was back in October 2002.
At that time and from 1999 I was heavily involved with the Complementary Healthcare Council (the CHC) heading up CHeG – the Complementary Healthcare e-Commerce Group.
As a retailer faced with supply chain fragmentation, lack of product coding standards which were causing serious inefficiency burdens to my family business I was advocating at the CHC level for a coordinated, industry wide project that would see the adoption of global standards for CHP’s in the supply chain and an “Efficient Consumer Response” (or ECR) style e-commerce model for the complementary healthcare sector.
My vision was that not only were there major economic efficiencies to be gained but that there existed significant potential for this electronic infrastructure to add-value.
Such as for the coordinated delivery of improved service standards, the provision / collection / management of information (e.g ad-cleared ad content, product recalls etc), the adoption of / compliance with industry e-learning initiatives (e.g. diplomas, advanced diplomas) along with many other possible marketing ‘win-wins’.

Things were travelling along respectably with CHeG until 29 April 2003 – that is when V for Vitamins V-Day hit.

This was the date of the PAN recall and well the last 5 years since are for me at least somewhat of a blur.

This unprecedented action by the TGA wiped out huge value overnight.
It destroyed PAN and king-hit all those in any way reliant on the goods this company produced.
To this day no reason apart from the ‘Travacalm’ incident was ever given to justify the extent of the recall and no evidence has ever been identified that supports the breadth of the recall (i.e. to include CHP’s) that was actioned.
It fanned a massive public fear of ‘natural’ that in some ignorant circles continues to be played to this day.
At that time PAN was the largest manufacturer of CHP’s in Australia and from my knowledge was headed into the international market (i.e. the US market) in a big way.

My family business (a health food shop) was hit for a six.
Figures travelled ‘south’ literally overnight to the tune of 40% and the whole of May 2003 was effectively the “Ash Wednesday” for the complementary healthcare industry.
This nuclear bomb and its after-effect continued until at least September 2003 but the ramifications in terms of market and sales strategy have been immense.
As of 29 April 2003 the damage was done, the industry was changed forever and the “shake out” that has since occurred dramatic: realignments, M&A’s, private equity investors as new entrants, vertical integrations and in the retail sector an explosion of mass price discounters counterbalanced by premium niche, well branded marketing programs.

At that time I personally wrote to my local federal member, the Minister for the Dept of Health and the PM asking for a ‘please explain’.
I never received a reply.
At the time and I continue to hold this opinion today the extent of this recall and the speed at which it was actioned was a scandal.
Anyone not ignorant of facts (and there is no shortage of media agencies that love to perpetuate fear and sell magazines and membership based on myth) knows that both the production and subsequent marketing of CHP’s in Australia have been subject to the TGA’s own stringent “low- risk to benefit” auditing and GMP procedures since 1990.
While I am not naïve enough to assume that some procedural requirement may have been flouted at PAN in the case of the Travacalm incident (a registered drug with a ‘high-risk to benefit’ profile) the fact that the TGA extrapolated from this and took the decision to immediately revoke PAN’s complete manufacturing license was incredulous.
The fact that a recall was issued for the many thousands of CHP’s (listed drugs with a ‘low-risk to benefit’ profile), in my opinion, at worst stunk of ‘vendetta’ and at best was a negligent over-reaction by a governmental agency seemingly light on respect for a heavily respected and regulated industry.
The recall did untold damage and immediately tarnished the good reputation of an industry already miles ahead of 98% of the developed world in terms of safety, standard and regulations. One could almost be excused for wondering if the TGA in fact had a sideline business selling magazines and / or memberships.

Fast forward to 14 August 2008 and Jim Selim (ex PAN Chief) is awarded $55m in damages, down $150m from the $200m sought, for the financial impact of the recall.
I listened with interest to the Solicitor for Selim flagging this ‘win’ as “only the start”. I think this is great news and I would have to say I look forward with much interest to hearing about any coordinated action that could see some fragment of compensation being awarded to those that along with PAN bore the sales and customer service brunt of this inexcusable and extremely poorly handled bureaucratic bungle.

In looking back I only wish the national supply chain reform process (i.e. CHeG) that I was advocating had of ‘got up’.
If it had it may very well have saved many of us from the many headaches the PAN recall caused. In its absence and fortunately, for many (health food / pharmacy) retailers including myself, some market leading CHP suppliers / sponsors at the time chose to provide a full ‘refund or replacement’ policy which in turn gave retailers out there with a marketing brain an angle with which to turn a negative into a positive (I would like to go on record here and say that this decision taken by these supplier / sponsors was very significant and was one never officially commended by industry – but in my opinion these suppliers / sponsors took the heat caused by the TGA and this was “industry saving” in its worth – I would hope to see or hear of some these companies talking with Selim’s Solicitor).
This industry saving position taken by these sponsors combined with a “what doesn’t kill you makes you stronger’ approach has underpinned the recovery path for many (health food / pharmacy) retailers over the last 5 years.
Indeed for some, a much clearer market perspective (“know thy customer and brand niche your market”) and business model has been achieved.

I look forward to contributing again to I2P.



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