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    Features

    Nutraceutical Manufacturing: Meeting the Challenges of Today, Planning for Tomorrow

    Companies continue balancing high demand, supply disruption, and worker safety during the pandemic.

    Nutraceutical Manufacturing: Meeting the Challenges of Today, Planning for Tomorrow
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    By Sean Moloughney, Editor, Nutraceuticals World03.03.21
    The arrival of COVID-19 in the U.S. last spring led to significant disruption of raw material supplies, which coincided with spikes in demand for health products, particularly dietary supplements positioned for immune support. As the virus spread around the world throughout the last year, demand continued as well.

    For the 52-week period ending Jan. 24, 2021, U.S. sales in the Natural, Enhanced and Conventional Multi Outlet channels for dietary supplements marketed for immune health jumped 31.1% to about $199.1 million, according to SPINS data, which excludes Whole Foods. Noteworthy immune health ingredient sales for the same period in the same channels, including those without immune health claims are:

    • Vitamin C (not Ester-C) grew 69.9% to $656.2 million;
    • Vitamin D jumped 49.5% to $649.9 million;
    • Elderberry jumped 113.2% to $331.5 million;
    • Vitamin C (Ester-C) rose 46% to $233.3 million
    • Zinc jumped 143.1% to $83.6 million;
    • Vitamin A rose 41% to $13.2 million;
    • Quercetin grew 93.9% to $7.8 million.

    The impact of consistent and still-growing product demand on manufacturing has been considerable. The beginning of the COVID-19 pandemic presented some major disruptions for the dietary supplement industry, especially during the first 6 months, experts said.

    “Many of the raw material producers in China, where a majority of the industry raw materials are produced, experienced mandatory shut downs ordered by the Chinese government,” noted Joe Zhou, founder and CEO of TSI Group LTD. “Then there was a huge demand for immune-related ingredients, such as vitamin C, which caused severe shortages of these materials for several months.”

    The pandemic disrupted transportation as well, as availability was reduced over the entire year and shipment times were longer and less reliable, Zhou said. “At the same time, the transportation costs were much higher. The transportation situation is still ongoing and it will take some time to recover depending on how effective the pandemic is controlled globally.”

    Overall, the raw material supply chain was extremely stressed, particularly during the late-spring through the late-fall of 2020, said Terry Keller, vice president of sales, CAPTEK Softgel International. “Most of that impact has somewhat softened over the past 3-6 months but there are still lingering effects being felt.”

    For example, Scott Steinford, CEO of Health Wright Products, said that alongside ingredient supply chain issues, “the unmet challenge that emerged became packaging components.”

    “The shift from bulk packaging going to restaurants transformed into individual packaging for families,” Steinford said. “The increase in plastic packaging requirements, due to the closures of restaurants, was exponential. Additionally, the rapid increase in the need for plastic used for the production of personal protective equipment (PPE) created incomprehensible strains on packaging components such as bottles, lids, and capsules. Materials required to manufacture the finished products, such as gloves and masks, readily available at a moment’s notice before the pandemic, became at times, impossible to find. The plastic shortage continues to impact the manufacturing environment.”

    Mark Potocnjak, CFO of Herbally Yours, Inc. noted that in late March and early April of last year, nearly all production of plastic bottles switched to manufacturing for hand sanitizers, causing significant delays for open or future orders. “Isopropyl alcohol, often used as 70% solution for cleaning was harder to find than toilet paper. Now the situation is slowly stabilizing but we always have to keep in mind that every single supplier is just one positive case away from temporarily suspending their production.”

    Short and Long Term Tips
    Contract manufacturing organizations interviewed for this article called for patience among brand owners given the unprecedented nature of the public health emergency.

    “With the supply chain severely affected by this global pandemic, and work force limited due to COVID-19 infection rates in the U.S., usual lead times often increase, mostly due to factors that are outside the contract manufacturer’s control,” Potocnjak said. “Brand owners often forget the CM is situated in the middle of the supply chain.”

    Zhou indicated it’s important to partner with a CM “that has a strong handle on all the key elements of the entire supply chain, from the procurement of all the raw materials, production, quality control, to transportation and delivery.”

    The better control the CM has on all these key elements, the more likely it will be that products get delivered on time and meet quality standards, he said. “Also, it is important the contract manufacturer provide you great visibility on the orders you placed with them resulting in better control of your business.” 

    Looking long-term, Nate Cox, chief business officer at Lief Labs advised companies to look for a contract manufacturer “who is constantly innovating and presents itself more as a consumer facing brand. The days of traditional manufacturing are soon to be no longer, as the industry needs to stay in pace with the digital era. Brands need to be with a CMO that understands their needs of speed to market, flexibility, and constantly providing innovative product solutions so the brand can be successful.”

    He also recommended creating strategic partnerships with CMOs, “understanding the visions and goals of both companies, and aligning those goals. When that happens, both parties win, and win big together.”

    Looking for the right contract manufacturing partner has never been more important to help with a brand’s success, according to Michael Sedlak, business development, CPC Nutrition. “This should be a two-waymutually beneficial relationship. Manufacturers are not just another company that can make your product.”

    He suggested brands look for companies with long-term industry experts, “who act as a valuable source of industry knowledge and to help you determine the right ingredients, delivery format, flavors, etc. Your manufacture should be able meet your product requirements as well as future line extensions. The last thing you want to do is need to source another manufacture as you want to switch a capsule to tablet.”

    Manufacturers should also be able to assist at every stage of the product lifecycle, Sedlak added. “From assisting with product formulations and brand development, through to manufacturing, packaging, and regulatory.”

    Steinford shared a checklist of 10 questions to ask a contract manufacturer to ensure they can deliver in critical areas:

    • Do you test every lot of raw material for impurities and adulterants using validated testing methods?
    • What does your quality department look like and what is your quality process?
    • Can you scale with me as I grow?
    • Can you help me develop a product that meets my marketing and consumers’ needs?
    • Will you help me ensure my products are formulated to meet label claim?
    • Will you provide me the documentation I need to ensure I can fulfill my GMP requirements?
    • Do you have optimized environmental controls in place and do you offer cold storage?
    • May I tour and /or audit your facility?
    • Do you understand allergens and can you help my products meet special requirements?
    • Will you disclose the country of origin of your raw materials?

    “It’s essential to find a contract manufacturer who will be a true partner and who specializes in what the company needs,” Steinford said. “At Health Wright Products we specialize in two piece capsules and we pride ourselves on encapsulating excellence.”

    The Amazon Effect: Quality Validation Matters
    High quality standards in the dietary supplement industry are important to retaining consumers and appealing to new users.

    Toward the end of 2020, Amazon rolled out new requirements for dietary supplement sellers, including documentation that products sold on the platform meet U.S. FDA’s regulatory requirements for accurate labeling and current Good Manufacturing Practices (cGMP) compliance.

    Alongside product images and a letter of guarantee assuring that products are manufactured under cGMPs as listed in 21 CFR Part 111, according to Amazon, sellers must submit a “Certificate of Analysis (CoA) from an ISO/IEC 17025 accredited laboratory (in-house or third party) for each dietary supplement you are applying to list OR product enrollment in an Independent Quality Certification Program.”

    Amazon’s guidance says it accepts certifications for review from the following independent organizations: NSF International, Banned Substances Control Group (BSCG), Informed-Choice/Informed-Sport, or active participants of USP Dietary Supplement Verification Program.

    “As Amazon, CVS, and other retailers become more stringent on the requirements to sell on their respective platforms, so does the importance of finding suppliers who have third-party certifications,” said Cox. “The next step will be to standardize these third-party auditors and qualify a select few that meet the standards that the industry is looking to achieve.”

    In a recent Trust Transparency Center survey, Steinford noted supplement consumers ranked quality seals as highest among transparency signals, “which reinforces that they are something consumers are demanding.”

    Third-party quality certifications “provide a safety net for brands,” said Sedlak. “They help to ensure safer, accurately manufactured and labeled products, helping to instill confidence and trust in a product. Certifications show that a comprehensive quality system is maintained and managed by a trained quality team.”

    Brand owners need to ensure that the manufacturer follows GMPs and operates under written up-to-date Standard Operating Procedures (SOPs). “These cover every area of the operations associated with manufacturing including equipment functioning, sanitation, maintenance, and personnel requirements. Everyday SOPs are being re-written as the demand for personal protective equipment and keeping employees safe is paramount.”

    It’s important to note, Steinford said, that price is not always a determinant of quality. Recent investigations by Trust Transparency Center found several comparably priced, or higher products tested, demonstrated insufficient, or non-existent, active ingredients.

    “It is strong advice to not believe in unbelievable low priced ingestible items of any kind,” he said. “But it is important to go further than price to determine the quality of the dietary supplements you ingest. Quality is important in every aspect of the supply chain and being fully knowledgeable of how it’s made is equally important to what goes into the product.”

    Given all the concerns around supply chain stability, Sedlak said companies need to ensure they are getting the quality they’re likely paying for. “Correct documentation and testing of raw materials is ever so critical to ensure that the quality of products is maintained.”

    Especially today, many brand owners are likely reliant upon those third-party certifications more than ever, said Keller. “With the travel/visitation limitations, most companies are having to supplement their normal on-site audit processes, so I suspect that all valid certifications are a differentiator.”

    Ultimately, brand owners are looking for a reliable supplier they can trust to protect their brand, at a reasonable value. “If anything, I would think that this past year’s events would only strengthen that commitment.”

    While third-party quality certifications are valuable, companies still need to build a strong relationship with their contract manufacturers to ensure products are produced under strict cGMP conditions, said Zhou.

    “For brand owners, they expect their contract manufacturer to deliver the product on time, in full as ordered, to have a competitive price, to have the ability to deliver the product with a short lead time, and to provide them great services. For more and more brand owners, they also expect their contract manufacturer to deliver new and innovative product concepts, to provide market intelligence, and to be active in helping shorten their new product launch time.

    Product Development Trends
    In terms of innovation and new product development, Cox said he’s also noticing more brands looking to their manufacturer to understand what trends are up and coming.

    “A good CMO should have their finger on the pulse of early trend identification and market reports, and have relationships with new suppliers of innovative ingredients that they can share with their customers. These conversations about concepts and trends lead to discussions about new product ideation that fit the specific brand’s target market.”

    Lief Labs is working with an increasing number of marketing companies that can create a compelling story on how a supplement provides a solution to a problem, he added. “These marketers want to constantly be pitched product ideas that they can quickly take to market and build out their story on how the product will help the end user. This synergy leads to the brand being a trend setter in the respective space, allowing for rapid scale that both the brand and manufacturer benefit from.”

    The realization that dietary supplements are beneficial for both proactive and reactive health issues has opened doors and eyes to the benefits of what the industry produces, Steinford said. “The awareness of the interdependency of the human body’s various functions has created a greater respect for not only the known immune health products but also tangential, but equally important, products. Gut health and the microbiome effect on many aspects of human health are becoming more known. Product development for cognitive health now routinely includes discussions supporting prebiotics, probiotics, and enzymes with the understanding that gut health affects brain health.”

    While filled with challenges, 2020 was a learning experience, said Potocnjak, and the post-COVID world will be a different environment. “There is a slight trend of brick-and-mortar store comeback, after months of online shopping. Consumers are aching to go back to normal life. The COVID-19 pandemic did not only affect our physical health, but also the psychological part of our life. Stress and sleep supplements sales reflect that, from CBD to melatonin.” 

    Sedlak said the buy-in from consumers for immune support products is here to stay. “Accompanying this appears to be the growth of probiotics, which are tightly associated with immunity and gut health. Vitamin D is another ingredient which will continue to grow. Aside from its increased popularity, there was always the question of whether we were getting enough.”

    He also pointed to mental health and stress as areas ripe for new product development. “One must not also forget about the prolonged effects of the continual shut-down of gyms, organized sports, stores and restaurants. Weight management/loss is a trend that is slowly growing once again in popularity. People are becoming more health conscious, physically and mentally, and once again looking for assistance from their dietary supplements.”

    Tim Chiprich, vice president of product development, CAPTEK Softgel International noted that consumers are looking for dietary supplement products that offer benefits they can actually feel. “This creates huge brand loyalty and a greater level of confidence that they are reaping a benefit in taking the product. CAPTEK Softgel International’s brand partners are seeking greater bioavailability, and efficacy that can support structure function claims. In addition, clean label, organic, vegan, and pesticide-free tested products continue an upward trend.”

    Ultimately, Zhou said the dietary supplement industry is ever changing to meet the needs of consumers. “Customers want products to have strong science and clinical data to support any claims. They want products that are easy, convenient, and enjoyable to take.” 


    Sean Moloughney has been the Editor of Nutraceuticals World since 2012. He can be reached at SMoloughney@RodmanMedia.com.
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