NEW YORK (Dow Jones)--Shares of nutritional supplement makers climbed Monday as Sen. John McCain (R., Ariz) withdrew his support for legislation to regulate dietary supplements.
"It looks like it will be an easier world to be in the dietary supplement business," said Avondale analyst Bret Jordan. "The bill would have significantly tightened regulatory requirements."
In February, McCain and Sen. Byron Dorgan (D., N.D.) introduced the Dietary Supplement Safety Act of 2010 to give the U.S. Food and Drug Administration more power to oversee the dietary supplement industry amid concerns the products contain harmful, hidden ingredients. The proposal would have given the FDA powers to recall dietary supplements from the marketplace and would require companies to list all ingredients in the products.
But McCain recently withdrew his support, with Sen. Orrin Hatch (R., Utah) thanking him in a letter for doing so. Utah is the largest producer of dietary supplements.
"I am pleased that you understand my serious concerns with your bill," Hatch said in a letter posted on McCain's Web site. "Also, I want to thank you for agreeing to withdraw your support for the provisions of S. 3002 that I believe would do great harm to the dietary supplement industry and work with me on solutions that will truly help dietary supplement consumers without injuring this important industry."
A representative from McCain's office wasn't immediately available to comment.
Utah-based Nu Skin Enterprises Inc. (NUS)--a maker of antiaging products--recently climbed 5.5% to $29.73, more than tripling over the past 12 months. A representative from the company wasn't immediately available to comment Monday.
Medifast Inc. (MED), which makes health and diet products, also gained, up 8.2% to $25.54.
While the news is positive for the industry, Wedbush Morgan analyst Rommel Dionisio downplayed the impact Monday, saying other stocks should have been getting a boost.
"It's not really affecting anybody else, and that's news that would lift them all," Dionisio said. "There are companies with much greater exposure to the U.S. business than Nu Skin."
One stock in the sector trading lower Monday was HerbaLife Ltd. (HLF), which slipped 29 cents to $42.55. Usana Health Sciences Inc. (USNA) also fell 22 cents to $30.45.
If the Dietary Supplement Safety legislation passed, it would represent a marked change for the industry.
The FDA currently doesn't have the power to recall dietary supplements. The agency also has limited information about the location of dietary supplement makers and the products available on the market. The Government Accountability Office has said the FDA needs to do more to understand dietary supplements.
