Calling in the silent specialists

How do supplements brands work with contract manufacturers, and what services can these companies supply? Shane Starling speaks to some of the leading international contract manufacturers to find out more

Gone are the days when contract manufacturers were expected to simply manufacture products for the big supplements brands. Today, leading players offer their customers such a broad range of products and services, covering product development, legal expertise, packaging and even marketing, that the term ?contract manufacturer? is almost misleading. As Cultech?s Nigel Plummer says in his article, perhaps the term ?product developer and manufacturer? would be more appropriate.

As the nature of contract manufacturing changes, so does the relationship between the makers and marketers of dietary supplements. A flexible, open and constructive relationship is essential.

Relationships between the brands and the supplements manufacturers can take many forms and can be of varying complexities, but good communication is always essential.

Communication is equally vital between contract manufacturers and their suppliers in order to provide the big brands with top-quality products. For example, developing the right tooling for tablet machines can make the difference between an average product and one that stands out from the competition, as Dale Natoli of Natoli Engineering explains in his article.

Developing and maintaining a good relationship with the brands also relies on trust. And one of the best ways of building trust is by adhering to rigorous and transparent good manufacturing practices. Mike Schmidt, of NSF, argues that this can be achieved only with third-party audits and registration. He also claims that GMP registration can actually save the contract manufacturer money in the long term.

Finally, the international supplements industry would not be in the position it is today without contract manufacturers? innovation. Todd Runestad looks at a good example of this by investigating the growth of vegetarian capsules and the companies behind their development.

In the supplements business, the employment of contract manufacturers is the norm rather than the exception. From the biggest multinational players like Nature?s Plus, through supermarkets? own brands and single-market retail leaders like Blackmores Australia, to niche brands in markets all over the world — it is silent specialists who do the bulk of the manufacturing work.

There are some, for example multinational Solgar, that choose to keep production in-house, but the majority of supplements companies are content to restrict their activities to marketing existing products and devising new formulations, leaving the manufacturing to those who are specialists in the field, the contract manufacturers.

Solgar swears by the quality control it gains by making its own supplements, and there are others who take a similar position. But not many supplements companies can afford the capital investment made by Solgar in its production facilities. At any rate, this is not to suggest that quality is automatically compromised if production is outsourced; a fact evidenced by the relative scarcity of complaints against contract manufacturers by supplements companies.

More than manufacturing
Contract manufacturers live and die by their reputation to deliver the highest-quality supplements. If they fail to do this, it is a sure thing that their business will also fail. So most contract manufacturers work at a high level of competency, often bolstered by voluntary or government-enforced good manufacturing practices (GMPs). This means supplements companies have a wide selection of highly competent contract manufacturers from which to entrust their precious and often patented formulations.

While most contract manufacturers work to similar high standards, they differ in the services they offer. Some specialise in tablets, hard capsules, softgel capsules, vegetarian capsules or liquid tinctures. Others develop extensive ingredients portfolios; specialise in extraction techniques; work in botanicals; develop state-of-the-art blister-pack technologies; archive ingredients science; or offer health claim, patent and legislative advice.

Contract manufacturers can deliver products to your exact specifications, but they often do a lot more: giving advice on aspects of your products you might not have thought of; sharing insight into shelf-life, top-up levels and use-by dates; offering cheaper ingredient costs because of bulk-buying arrangements; and making available third-party ingredients and supplements analysis. It depends on how much input a supplements company wants. As Wim Jennen, pharmacist director at Dutch contract manufacturer Microz Production Food Supplements, notes, contract manufacturer input can be zero or it can be 100 per cent. It?s up to the client.

Netherlands-based contract manufacturer Sanvert is prepared to offer as much or as little advice as is required. ?We have in our organisation know-how for development, research, testing and production,? says sales manager Rinjo Israels. ?Some clients want us to develop a formulation, some just want us to improve a formulation and some bring formulations we have to produce without advice. If we develop a formulation, we select the health claims and give support in backing up the claims. We even offer marketing guidance if required.?

Deciding whether or not to use contract manufacturers is not always an all-or-nothing situation. Even those supplements companies that produce some of their wares in-house may also engage the services of a contract manufacturer.

?Some supplements companies have in-house manufacturing facilities to manufacture or part-manufacture some or all of their products,? says Pablo Abrahams, business manager at UK-based contract manufacturer Cultech. ?However, very few will carry out all of the manufacturing processes required for their entire range of products.? Like his Dutch peers, Abrahams says that contract manufacturers specialising purely in manufacturing are being forced to reassess their business model.

New Zealand-based contract manufacturer Alaron explains its services this way. ?Our customers select from a menu of manufacturing services. For some this involves the complete manufacturing and packaging process, from sourcing raw materials to drying, milling, encapsulating, tabletting, bottling, labelling design/printing/application, shrink wrapping, cartoning, packaging and delivering with any necessary export documentation. Other customers may source their own raw materials for us to dry and mill, some simply supply powders for us to encapsulate or tablet.?

A multinational?s approach
Multinational Herbalife employs many contract manufacturers in the countries where its products are sold. Being a larger player and a former manufacturer of its own supplements (it now produces its own products only in China), contract manufacturer input is kept to a minimum. Herbalife is heavily involved in product formulation and has vast experience with ingredients, so its requirements from the contract manufacturers it employs are less than many other companies.

?We do most of the formulation work, but the contract manufacturer will give input from a manufacturing perspective,? says Ric Hobby, Herbalife Europe managing director and chairman of the UK Council for Responsible Nutrition. ?The contract manufacturer will say, ?You?ve specified this ingredient from this source, but we can get it from this source and it may be better quality or it might be cheaper,? and we may agree to that.

?For example, many of our formulations originate in the US, and they have been produced using ingredients from American suppliers. When we make the same product in Europe, we ?Europeanise? it and the contract manufacturer will recommend different suppliers. But as far as development goes, that is actually done without contract manufacturers on the whole.?

Hobby says Herbalife devotes a lot of energy to the selection of contract manufacturers and pays careful attention to the fine detail of its contracts. ?We used to employ only one contract manufacturer, but as our business grew, we found that it was better to split the business. There are benefits because different contract manufacturers have different specialities and there is also the matter of spreading risk. It usually takes about a year from the start of negotiations before we will ever commission a contract manufacturer to produce the first product.

?Contracts between wholesalers, retailers, distributors and contract manufacturers are now very detailed. In addition to a detailed legal agreement, there are also detailed specifications set up for every single product and every single ingredient. It has become very complex as the food standards have increased over the years.?

Standardising GMPs
Although GMPs were not written into the recently passed Food Supplements Directive, voluntary GMP schemes, such as the one run by the Council for Responsible Nutrition (CRN), set standards that can inform contracts between supplements companies and contract manufacturers.

?Members of the CRN submit evidence to the organisation that all of their products are manufactured according to GMPs,? Hobby notes. ?Annually they certify that this is being done and this includes all the work of their contract manufacturers. Each company having contract work done for it will go to the contract manufacturer and say this is the GMP standard that we are required to abide by.?

In the US, the FDA is in the process of establishing a mandatory GMP scheme to replace the current potpourri of voluntary schemes and inappropriate food laws. ?Currently, dietary supplements have to comply with food GMPs,? says Siva P Hari, PhD, president and CEO of California-based contract manufacturer Jarrow Industries. ?The FDA is finalising the supplements GMPs, and Jarrow is ahead of the curve and is in the process of implementing GMPs to the level as over-the-counter products.?

Such GMPs are vital, according to Hobby, to meet the needs of an industry developing ever more sophisticated food and botanical supplements. ?Because there are so many ingredients in such small quantities, testing becomes a complex issue — so strict GMPs need to be in place. Even so, we allow some variation batch by batch. Much as we would like to think otherwise, it is not an exact science.?

That point is concurred by other contract manufacturers. ?At times, there may not be a reliable analytical method available for certain ingredients or for a certain matrix of ingredients in a mix of many different ingredients,? says Jay Kaufman, CEO of California-based Paragon Labs, which was certified GMP by NNFA in 2001 and by NSF in August 2004. ?Because of the lack of analytical tests, marketers need to be sure they are working with a high-quality as well as ethical contract manufacturer.?

New frontiers
Hobby says that, unlike many other supplements companies, Herbalife hasn?t sought manufacturing options in potentially cheaper developing markets. ?The reason Herbalife has done this is quality standards. Our standards are very high and to meet those standards we routinely go through a long process of establishing a relationship with a contract manufacturer. We have been uncomfortable about going into developing markets such as Eastern Europe. Having said that, a variety of different companies are still approaching this in different ways and many of the major companies are working in central and Eastern Europe — often putting up their own plants there.?

According to Jarrow Industries? Hari, there has been a shift away from tablets toward capsules and blister packs. ?The supplements industry has steered toward hard gel capsules due to the ease of making them compared to tablets. However, tablets are cost-effective and compact and still continue to be a challenging art.?

Back at Cultech in the UK, Abrahams agrees: ?We find capsules are much more desirable than tablets in the practitioner or professional marketplace. This doesn?t quite hold true in the retail or mass marketplace.?

With ever-improving machinery capable of delivering mass or niche products quickly, the case for contract manufacturers becomes particularly compelling.

?It?s the same reason why anyone would take any part of their business and contract it out,? notes Hobby. ?A company has to decide whether it is going to be able to maintain a standard of excellence in every field in which it operates, or is it best to focus on its core competences and then contract out some of the work? Those with a standard of excellence in manufacturing are contract manufacturers. We create products, and we are very good at marketing those products, but manufacturing is not a skill we are so good at.?

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