(MISSOULA, Montana) August 20, 2007 – In 2005, TSI Health Sciences, a well-respected $50 million dietary supplement industry ingredients supplier based in Missoula, Montana, then known as Technical Sourcing International, was drawn into a wide-spread quality issue with the company’s primary Chinese manufacturers. One of their top selling ingredients, chondroitin (sulfate), a popular osteoarthritis ingredient used today by millions of Americans to treat joint pain and stiffness, was deliberately adulterated with a chemical that TSI chemists could not even identify.
“Our Chinese suppliers were profiting by tricking our testing techniques,” said Joe Zhou, president of TSI international operations responsible for corporate business development.
“Ingredient samples tested positive for chondroitin, but it wasn’t chondroitin,” said Larry Kolb, president of TSI US operations. “We caught several producers of our chondroitin ingredient red handed,” notes Kolb.
Nine years earlier in Michigan, Zhou, a research chemist at Amway Corp., and Kolb, vice president for Charles Bowman & Company, directing ingredient sales and marketing strategies for the company’s personal care, OTC and dietary supplement industries customers, pooled their resources and invested $2,000 to start an ingredient business that as Kolb recalls, “would bring the best ingredients to the US from China.”
They worked on their business model for seven years envisioning the opportunity to perform a service that would assure the overall quality and safety of Chinese ingredients for US supplement manufacturers. “We gave customers the best of all worlds, Chinese prices and US quality,” says Kolb.
Kolb remembers the product testing incident like it was yesterday. They had critical and extremely difficult decisions on their hands. How do they control production of their top selling product and more importantly, the survival of their business?
Kolb and Zhou zigzagged across the US faced with the tough task of meeting with their customers as well as nervous investors to advise them of the crisis. As a result of those meetings, they decided to change the direction of the company to personally ensure safe, quality ingredients for their customers. “Our customers told us to do the right thing, so we did,” Kolb said.
TSI moved forward with building a 60-acre complex near Shanghai that stands as an exemplary manufacturing model with Quality Control and Quality Assurance laboratories to produce premier ingredients including the highest potency chondroitin sulfate in the world. Moving from a stocking distributor to a fully integrated pharmaceutical manufacturer, the company now sells chondroitin to drug and quality oriented supplements companies, primarily in Japan and Europe as their customer base continues to grow in other markets including Australia.
The move ultimately didn’t play out well with the majority of TSI’s US customers. “What concerns me now is not all of our customers moved in the same direction to purchase quality ingredients,” added Kolb. Since then, TSI has lost more than 70% of its US revenues from the dietary supplement industry.
One company that did move in the right direction was Pharmavite, a manufacturer that sells $600 million of Nature Made brand supplements in the US alone. Pharmavite has worked on a project for the past three years that has involved a TSI shark chondroitin ingredient.
“We had to find a special type of chondroitin for our Nature Made Japan products that met our regulatory needs,” said Doug Roper, director of quality development for Pharmavite international group.
TSI, like Pharmavite, is part of a dietary ingredient verification program headed by the United States Pharmacopeia, the official public standards-setting authority for all prescription and over-the-counter medicines, dietary supplements, and other healthcare products manufactured and sold in over 130 countries, including the United States. “They audited and evaluated TSI’s materials to certify them in their program,” said Roper. “This gave us the assurance that TSI ingredients were not contaminated and met US requirements.” Roper also visited the TSI China facility and continues to do so to further ensure quality manufacturing.
“A recent recall of shark cartilage capsules at the retail level in the US found salmonella contamination,” says Roper. “The manufacturer was probably buying material from a Chinese supplier who didn’t test for salmonella. TSI tests for salmonella and provides Pharmavite with proper certification,” added Roper. “We know we selected the right supplier for our products.”
“Regrettably, companies within the US supplement market were not willing to move up the supply chain when the unhealthy manufacturing realities of many Chinese companies was first revealed,” stated Kolb. “TSI has remained steadfast to its commitment to providing safe ingredients to the marketplace and accepted the challenge to do things right,” says Kolb. Since 2005, the issues surrounding low quality products produced in China persist as a reflection of the recent melamine crisis involving pet food.
According to Loren Israelsen, executive director of the United Natural Products Alliance, a trade organization representing many of the world’s leading dietary supplement companies, the questions about Chinese products are probably the most important issues facing the supplement industry today. China is such a significant supplier of raw materials, partially finished and finished products to the US supplement industry. “But the uncertainty of quality materials is actually a global concern,” says Israelsen.
“There are many world-class, ethical companies in China such as TSI, as well as in other countries, it’s just there are more companies in China, both good and bad and the good aren’t often recognized for what they bring to the US consumer,” said Israelsen. “China will have to get tougher within its government system and business infrastructure.”
Kolb and Zhou aren’t throwing in the towel in the US marketplace. TSI expects 2007 to be a watershed year for new regulations in the food ingredient area. “It’s good the ingredient crisis is in the news. I’m sure this will force change that will benefit the dietary supplement industry and the good guys doing business in that industry,” notes Kolb.
“We think the day will come when the US government, particularly the Food and Drug Administration (FDA), has the means and measures to monitor and watch the quality of food ingredients coming into the US,” said Kolb.
‘I’ve worked with the FDA for over 30 years,” says Roper. “They’re under funded and lack sufficient staff. Other than increased surveillance I’m not sure what they’ll do. The US public demands safety, so it’s up to each manufacturer to ensure their products are safe, no matter what the cost,” adds Roper.
According to Kolb, TSI is following their new plan with the promise that they will continue to bring the best ingredients to all of their customers willing to step up to the plate by purchasing quality products. Over the past 11 years, TSI Health Sciences has emerged as one of the up-and-coming international ingredient manufacturers. The company was recently recognized by the Nutrition Business Journal, an industry watch dog, with the ‘Investment for the Future’ award and Nutraceuticals World, a leading nutraceutical industry trade magazine, selected TSI in June as a ‘company to watch’ in ingredient manufacturing, quality and innovations.
“As ingredient manufacturers we are the front line defense to protect the health and well being of the consumer. As serious doubts and concerns surrounding Chinese products continue in the US market, TSI stands ready as a reliable partner for companies seeking guaranteed safe ingredients for their product formulations,” says Kolb.
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