Source: LOHAS Weekly Newsletter
Published: Wednesday, December 01, 1999

BOSTON—According to an article in Adams, Harkness & Hill’s (AH&H) Oct. 1 Healthy Living newsletter, Rexall Sundown (RXSD), NBTY (NBTY), Weider Nutrition (WNI), Twinlab (TWLB), Natrol (NTOL), Natural Alternatives (NAII), and other nutritional supplements companies have opted out of the current U.S. Justice Dept. class-action lawsuit against bulk vitamins manufacturers and are pursuing separate litigation.

Bulk manufacturers Hoffmann-LaRoche of Switzerland, BASF of Germany, Rhone-Poulenc of France, DuCoa of the U.S., and Chinook Group of Canada, as well as three Japanese firms, have settled for about $1.1 billion the Justice Dept.’s class-action lawsuit alleging massive price fixing on vitamins. Hoffman La Roche alone paid a $500 million fine, the largest fine imposed by the Justice Dept. in U.S. history.

The reasoning behind the natural vitamins and supplements makers’ decision to pursue individual litigation “is the obvious belief that they’ll be able to do better independently,” says Matthew Patsky, a managing director at AH&H.

AH&H was able to verify that each of the companies it listed opted out of the suit,

Patsky says.

However, when NTOL was contacted, a spokesperson confirmed that the company had opted out of the class-action suit but says NTOL is not pursuing separate litigation. RXSD and NBTY declined to comment, and TWLB and NAII did not return calls.

Potential gains from the lawsuits could benefit natural products companies in a number of ways. “You’ve already seen lower ingredients costs,” Patsky says, “and you’re likely to see one-time payments to these [companies] that strengthen their balance sheets.”

For example, Patsky says, TWLB could get a payment large enough to wipe out a substantial portion of its long-term debt; RXSD, which has very little debt, could establish itself in a strong cash position for acquisitions; and Leiner, another natural vitamins and supplements

player that opted out of the class-action suit, could get enough cash to buy back all its bonds.

It is Patsky’s opinion that any plaintiffs would want to settle quickly.