Once upon a time, someone with a bright idea and a reserve of chutzpah could formulate a dietary supplement in his garage (so to speak) and get it to market without too much hassle. He might even make a million bucks and become a big player in the industry. Some definitely did.
If those days are not completely gone, at minimum the hurdles you will face if you want to create a startup today are much higher. Between the government’s instituting of policies for good manufacturing practices (GMPs) in 2009, and its guidelines for proving that any new dietary ingredient (NDI) introduced since 1994 is reasonably safe, bringing a supplement to market today can be prohibitively expensive. Couple this with the rash of official Warning Letters being sent out by the FDA and the FTC in recent months, and the path to profits can be seen as being littered with land mines.
So what’s a company to do? We turned to some of the better-known contract manufacturers serving the dietary supplement industry for their advice about how to identify a good contract manufacturer (CM), one that will be proactive in helping you get a quality supplement into the marketplace.
Shaheen Majeed, Sabinsa Corporation’s marketing director, notes that the contract manufacturing industry is something of a small world. “Reputation is everything in this business. Therefore, you should not be afraid to call around, or to ask questions [of a contract manufacturer you are considering using]. For instance, you should establish that a CM is not allowed to substitute products in the manufacture of your supplement. Such substitution could easily lead to a substandard product.
“It’s a good idea, too, to ask about excipients,” he says. “Make it clear that you don’t want substitution with cheap excipients, and whether you want them to be non-GMO or organic. And ask if you can visit their operation at any time you wish. If they say ‘no,’ you know they have something to hide, and steer clear of that company.”
Andrew Goldman, director of web marketing at Nutricap Labs, also points to reputation. “Do your research, get references. We never advertise who our customers are on our website, our social media or press releases. However, we do provide this information either over the phone or during an in-person meeting, should the prospective client ask us. Even if the manufacturer is unwilling or unable to furnish references, you can always search for their company name on Google to see what comes up. You’ll typically find BBB ratings, comments made about the company in industry blogs and forums or reviews posted by former customers.”
Goldman also makes the point that when a CM is recognized with awards by trade and business organizations, it speaks to its reputation. Nutricap’s website offers further tips about how to choose a CM, including finding out how long that company has been in business, and its financial stability. There are myriad stories out there, especially of small startups, paying up front for work only to have the CM close mid-process and abscond with their investment.
Some trade groups have suggested that a key indicator is the company’s investment in the latest equipment and technology.
Most everyone we spoke with agreed with the old saw, “You get what you pay for.”
“If we are charging $4 per unit and someone tells us they can get it for $2.50,” Majeed says, “you can be certain that the manufacturer is cheating in some way, either by using cheap ingredients that won’t hold up to testing, or by skimping on the amount of the ingredients.”
Which leads us to the matter of testing. “Proficiency in testing is essential. The old certificates of analysis (C of As) are worthless,” says Majeed. “In times past, people had an ingredient come in, and the C of A said it was white, when clearly the substance they were looking at was brown. No kidding! So when you’re looking into a CM, find out who is doing their testing. These tests require some deep knowledge and experience, so testing must be being done by someone who is qualified and has been doing it for a good while. And as a safeguard the marketing company should have the product tested when it comes back from the CM.”
Steve Holtby, president and CEO of Soft Gel Technologies, Inc., says, “A company should perform regular audits of a contract manufacturer with whom they do business. Look at the batch records, raw-material certificates of analysis, and most importantly, make sure they are doing all the testing required by the GMPs. A manufacturer can save a lot of money if it is not doing all the required testing. … If a quotation looks too good to be true, there is probably is a reason.”
No one wants to become subject to a recall. They are extremely expensive and damaging to a company’s reputation. But if a company should be faced with such a calamity, precise paperwork becomes essential. Therefore, Majeed says, acontract manufacturer should not only be GMP compliant, but should make sure the customer has GMP programs in place as well.
“Today a company that launches an innovative product has to have safety data, which isn't likely to happen with an old-school garage startup,” he says. “Companies can work with contract manufacturers who assist with formulation to develop innovative products, but the bar to entry is a little higher.”
Holtby says to ask a key question of a CM: Is your company FDA cGMP compliant, and if so, who has certified you? “[Softgel Technologies has] obtained (GMP) registration through NSF’s Dietary Supplement Certification program and the Natural Products Association (NPA). … We have also gone an extra step and are certified through NSF’s Athletic Banned Substances program, also known as GMP for Sport™, which means our products will not contain any ingredients that might be of concern to professional athletes with regard to drug testing.
“A CM should be paying attention to details, keeping up with changing regulations and enforcement,” Majeed says. “We read all the FDA’s warning letters and catch a lot of nuances that way, and help our clients steer clear of such problems.”
Holtby agrees. “In order to anticipate the future needs of customers, contractors need to be proactive. New technologies are always evolving, which provide new opportunities to diversify product offerings. However, they also require staff education and training and possible investment in new equipment. With the advent of the new FDA GMPs for dietary supplements, contract manufacturers must advise customers of the implications of the new regulations.”
CMs can also be proactive by offering suggestions and advice about market trends and ease of manufacture. “Although we require the basic formulation details from the customer for custom formulations,” Holtby says, “there is wide potential for variation within those formulas. … We feel it is our responsibility to inform the customer if we see possible issues with a formula.
“We always try to work with customers to help them understand the importance of choosing the appropriate delivery system; a product should always be manufactured to maximize its potential in a manner that fits within the end-user’s usage, lifestyle, and economic parameters.”
One of the proactive ways in which Nutricap tries to serve its clients is by making sure nothing gets lost in translation. “What we have found to be effective is individualized account management. Clients are assigned to a product advisor throughout the whole process, so there is never any confusion.”
Higher cost of innovation
Doubtless the higher standards imposed by the FDA, FTC and California’s Proposition 65 is having an effect on product innovation.
Vice President of Sales for Nutricap, Blayney McEneaney, says, “This is absolutely happening. We noticed the first wave a couple of years ago when the FDA began cracking down on smaller companies that could not meet the GMP requirements. There’s been a bit of a lull over the past year or so but we expect the second wave to hit sooner than later.”
Because of this, brand managers may be tempted to outsource to companies overseas, but McEneaney warns against it. “It’s a very risky proposition … if done legitimately, there’s a great deal of expense, paperwork and certifications that go along with this. As a brand owner, the last thing you want to hear after spending thousands upon thousands of dollars is that your product is either being held or destroyed at customs because it lacked the correct documentation. For these reasons, a US-based brand owner should partner with a domestic manufacturer.”
Experienced CMs report that the most common things they encounter with brand managers seeking to introduce new products are lack of knowledge of GMP requirements, and misconceptions about the amount of time it takes to manufacture a product.
So, partnering with a reputable, proactive CM is essential for success. That’s knowledge you can take to the bank.