From Wikipedia 2010

Nutraceutical, a term combining the words "nutrition" and "pharmaceutical", is a food or food product that provides health and medical benefits, including the prevention and treatment of disease. Such products may range from isolated nutrients, dietary supplements and specific diets to genetically engineered foods, herbal products, and processed foods such as cereals, soups, and beverages. With recent breakthroughs in cellular-level nutraceuticals agents, researchers, and medical practitioners are developing templates for integrating assessing and assessing information from clinical studies on complimentary and alternative therapies into responsible medical practice. The term nutraceutical was originally defined by Dr. Stephen L. DeFelice, founder and chairman of the Foundation of Innovation Medicine (FIM), Crawford, New Jersey. Since the term was coined by Dr. DeFelice, its meaning has been modified by Health Canada which defines nutraceutical as: a product isolated or purified from foods, and generally sold in medicinal forms not usually associated with food and demonstrated to have a physiological benefit or provide protection against chronic disease. Examples: beta-carotene, lycopene. The definition of nutraceutical that appears in the latest edition of the Merriam-Webster Dictionary is as follows: A food stuff (as a fortified food or a dietary supplement) that provides health benefits. Nutraceutical foods are not subject to the same testing and regulations as pharmaceutical drugs. The American Nutraceutical Association works with the Food & Drug Administration in consumer education, developing industry and scientific standards for products and manufacturers, and other related consumer protection roles. The FDA provides a list of dietary supplement companies receiving warning letters about their products.

Market and Demand
Nearly two-thirds of the American population takes at least one type of nutraceutical health product. The use of nutraceuticals, as an attempt to accomplish desirable therapeutic outcomes with reduced side effects, as compared with other therapeutic agents has met with great monetary success. The preference for the discovery and production of nutraceuticals over pharmaceuticals is well seen in pharmaceutical and biotech companies. Some of the pharmaceutical and biotech companies, which commit major resources to the discovery of nutraceuticals include Monsanto (St. Louis, MO), American Home Product's (Madison, NJ), Dupont (Wilmington,DE), Abbott Laboratories(Abbott Park, IL), Warner-Lambert (Morris Plains,NJ), Johnson & Johnson (New Brunswick, NJ), Novartis (Basel, Switzerland), Metabolex (Hayward,CA), Genzyme Transgenic,PPL Therapeutics, and Interneuron (Lexington,KY). The nutraceutical industry in the US is about $86 billion. This figure is slightly higher in Europe and, in Japan, represents approximately a quarter of their $6 billion total annual food sales- 47% of the Japanese population consume nutraceuticals. Even without specific financial figures, business reports continually suggest that the market is consistently growing.
One possible explanation for the growth of nutraceuticals in the United States is the aging baby-boomer population. As the average age of the citizens continues to rise, the population increases its focus on health and wellness. By halfway through the 21st century, there could be almost 142 million Americans over the age of 50, based on a projected population of nearly 400 million citizens.
Although the price of some nutraceuticals may drop as generic products make their way into the market, people's dependence on these products and their increasing availability suggests that the growth of the market shall remain stable.

Classification of Nutraceuticals
Nutraceuticals is a broad umbrella term used to describe any product derived from food sources that provides extra health benefits in addition to the basic nutritional value found in foods. Products typically claim to prevent chronic diseases, improve health, delay the aging process, and increase life expectancy.

There is minimal regulation over which products are allowed to display the nutraceutical term on their labels. Because of this, the term is often used to market products with varying uses and effectiveness. The definition of nutraceuticals and related products often depend on the source. Members of the medical community desire that the nutraceutical term be more clearly established in order to distinguish between the wide varieties of products out there. There are multiple different types of products that fall under the category of nutraceuticals.

Regulation
Unlike pharmaceutical drugs, within the United States, nutraceutical products are widely available and monitored with the same level of scrutiny as "dietary supplements". Within the oversight of the Federal Food & Drug Administration, unlike many other countries such as Canada, the use of broad-based definitions creates inconsistent credibility distinguishing the standards, function, and effectiveness between "nutraceuticals" and "dietary supplements". Within this loose regulatory oversight, legitimate companies producing nutraceuticals provide credible scientific research to substantiate their manufacturing standards, products, and consumer benefits and differentiate their products from "dietary supplements".
Despite the international movement within the industry, professional organizations, academia, and health regulatory agencies to add specific legal and scientific criterion to the definition and standards for nutraceuticals, within the United States the term is not regulated by FDA. The FDA still uses a blanket term of "dietary supplement" for all substances without distinguishing their efficacy, manufacturing process, supporting scientific research, and increased health benefits.
In 2005, the National Academies Institute of Medicine and National Research Council created a blue-ribbon committee to create an improved framework for the Federal Food & Drug Administration to evaluate dietary supplements. Though the improved framework fails to distinguish between "nutraceuticals" and "dietary supplements". With the continued use of a broad definition and lacking greater distinction, a cost-effective and scientifically based framework was needed to evaluate the safety of "dietary supplements" including those consumer products recognized internationally as "nutraceuticals".