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Editorial: From Chinese Ingredients to Supplement GMPs- Spotlight on Supplier - Manufacturer Relationships

By Len Monheit

GMPs and China – the two dominant themes of the last few weeks.

More correctly stated, GMPs and managing a global supply chain are the two current and connected issues that bring together the practical realities of global trade, and some of the implications of the US FDA’s brand new rule for dietary supplements.

I’ve just returned from a trip to Hong Kong, and part of my personal objective was to determine how important international concerns really are to those providing ingredients out of Asia. Part of this information was to come from personal interactions, the rest by observation including exhibitors at Natural Products Asia and the accompanying Nutracon Asia and Healthy Foods Asia presentations.

As one would expect, I found a dichotomy. Part of the dichotomy had to do with the two way trade issue and escalating news and rhetoric in what is becoming a US-China trade war. At Expo Asia, Chinese officials described their controls on incoming product purity specifically as it relates to Health Foods and the various government departments including those involved in the mandatory, ‘in-China’ testing that all new products must undergo. At the very same time, international headlines resounded with emerging incidences of questionable product quality originating in China, particularly related to food and supplement ingredients. This coverage, and the reality of an ingredient crisis, appears to be totally disconnected, at least publicly, from the push to persuade the world and domestic consumers that the national agencies have matters well in hand and that domestic consumer safety is assured.

This duality of perspective highlights the global geopolitical process of which food is an essential piece. We must face the fact that we do deal with a global supply chain with different economic and political motivators. In that environment, we must make buying decisions and engage with international partners who share and will support our core values. Frequently at odds with this are the realities of commerce, and here is where regulations and political process enter the dialogue. It is also this international reality which leads to the development and use of words such as ‘harmonization’, ‘standards’, ‘equality’ and ‘fair’ – words which tend to either enrage or resonate.

On the consumer side, various goods producers have now reported that their customers are asking for assurances, not only that the goods are safe, but that they’re not sourced from China. Supplement consumers are reported to be asking the same thing, and of course, our fragmented, confusing, shadowy and convoluted supply chains allow them various answers to that question – misleading and otherwise. Fundamentally though, and most problematically, this is not, at its roots, a China issue, but a responsibility issue. And it’s an issue that, unless business practices change, is not resolved by the promulgation of a rule or even the implementation of US Good Manufacturing Practices for dietary supplements. Certainly, additional enforcement resources for the FDA would be a huge step in dealing with this as a testing and enforcement issue. Quite possibly, supply chain transparency (better tracking of materials) would help. Higher manufacturer and distributor expectations, and better supplier/manufacturer relationships (more long term) would also assist in enabling longer term business decisions to be made – at several places in the value chain, including investment.

Going back to my observations this past week - One of my conversations involved a discussion of testing and certification practices for consumer goods destined for the UK. My contact described to me the ‘Lucky Money’ in red envelopes that was quietly slipped into shirt pockets so that certification and testing companies would pass third party audits and inspections and their clients’ product would be allowed to carry national seals and stamps. Current economic reality dictates that the immediate profit potential is so large that a huge one time payment makes economic sense for the company trying to get its product certified. (and the profit formula ensures this payment is attractive).

While all this is going on, some companies are trying to act responsibly. Consider China’s evolving and emerging organic sector and some of the ingredient companies who are ‘in it’ for the long run supplying supplements and other food ingredients, building and maintaining operations and plants at the highest international standards.

The challenge is really knowing and differentiating these companies from those taking advantage of immediate economic incentives. To reiterate, while the current focus is on China, this issue is really one of global proportion. Certainly, some Chinese ingredient companies are currently taking advantage of market (and profit) opportunities, but the problem is not localized to China and in fact, is not only regionalized to offshore sources.

A key aspect of the new supplement GMP rule is that the responsibility for product quality, including incoming ingredient quality, lies with the manufacturers of finished goods. I truly have mixed feeling about this part of the rule and how it will eventually play out. At one point I would have unequivocally stated a belief that this is a mistake and that ingredients and ingredient companies should have responsibility specifically under the rule. Now, I’m not so sure. Ultimately it’s the manufacturer who puts a label on a product and a product into the marketplace. The rule says they’re responsible for the identity of all materials going into their goods and the quality of the resultant product. Fundamentally, this means that they have responsibility for qualifying and engaging their suppliers responsibly. Presumably, this means that they must invest wisely in their choice of supply partners and (one would hope) lengthy relationships with these suppliers. The petition for less than 100 percent identity testing makes companies invest in the suppliers for whom they are going to write this exemption petition. One can only hope that there are other measures, (enforcement, certification, trade association memberships etc.) that also cause manufacturers to strengthen and invest in these relationships.

Whether we’re talking about supplements, natural health products, functional foods or cosmeceuticals, the industry is measured in terms of inputs and outputs and the strength of the connection between the two. Over the past few years, it’s been very interesting to watch the evolution of successful supplier/manufacturer relationships and I think that both the current ingredient ‘crisis’ and the US final cGMP rule will have ongoing implications for the supplier/manufacturer dialogue.

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