Focus on Contract Manufacturing

The new year presents anopportunity for the natural products industry to re-evaluate manufacturingoperations for compliance with GMPs (good manufacturing practices) andregulations set by the federal government.

Coupled with the desire to increase quality for consumerswhile delivering innovative products in new delivery forms, this is drivingmajor change in the contract manufacturing portion of the industry. INSIDERconducted a question and answer session with a panel ofdiverse contract manufacturers to find out how they are raising the bar andwhere supplement manufacturing is headed.

What are the most common reasons your customers choose to work with acontract manufacturer?

Sharmin Karim, executive director with Santa Fe Springs, Calif.-based NHKLaboratories Inc.: As in any business, economicfactors drive a firm to outsource to a subcontractor. In the dietary supplementindustry, it is simply more cost effective for marketers to focus their effortsand capital on marketing and selling supplements. This leaves the contractmanufacturer to deal with issues such as rising labor and insurance costs; increasing government scrutiny; impending GMPs; capitalexpenditures on equipment and facilities; and the ongoing expense of attracting,retaining and training qualified personnel.

Bob White, executive vice president of Sunrise, Fla.-based NaturesProducts Inc.:

One of the main reasons is that the people with marketingbackgrounds or even other manufacturers may not have the expertise to formulateand produce difficult products, whereas we do. People trust that contractmanufacturers are familiar with the ingredients in this industry and haveextensive knowledge on quality, legal and GMP compliance. Also, in the case ofmarketing companies, sometimes it is more cost effective to use an outsidecontract manufacturer rather than set up an internal manufacturing operation. Agreat deal of ancillary equipment is required to manufacture these products.

Robin Koon, vice president sales & marketing with City of Industry,Calif.-based Best Formulations Inc.: By outsourcing,one gains expertise and experience. There are many reasons why a customer mayoutsource manufacturing: 1) The customer may not manufacture any products at all(e.g., the customer is a marketing company); 2) A contract manufacturer providesexpertise and R&D to the customer; 3) The customer may be anothermanufacturer in need of a specialty service or area of expertise (e.g.,softgels, teabags, packaging) or help with additional overflow capacity; 4) Thecustomer can avoid the financial cost and issues of operating their own plant.

Jerry Rayman, vice president of sales and marketing, Miami, Fla.-based PALLaboratories Inc.: One of the most common reasons ourcustomers choose to work with us is the ingredient, formulation andmanufacturing expertise that we share with them. Our job is to seek out thenewest ingredients that are backed by science and incorporate them intomarketable formulas.

Suhail Ishaq, vice president of Anaheim, Calif.-based GMP Laboratories ofAmerica Inc.: Our customers turn to contractmanufacturing because it is the most convenient and cost-effective method ofmanufacturing quality products. The next best option is manufacturing your ownproducts, which in most cases becomes cost prohibitive. Working with an experienced and competent contractmanufacturer usually results in reduced labor costs, increased productionturnaround and better product quality. It allows our customers to focus on whatthey do best, which is to sell their products, and relieves them from worryingabout manufacturing issues.

Wm.David Palmer, J.D., M.B.A., president and chief operating officer withIrving, Texas-based Progressive Laboratories Inc.:

In terms of why customers choose a specific manufacturer, Ibelieve their decision ultimately revolves around the quality and responsivenessof the manufacturer. That is, any number of suppliers can provide a blend ofmaterials in a given delivery system, but reliability and consistently meetinglabel claims and superior customer service are attributes that customerscherish. Competitive pricing is obviously critical to the customer. Quality,responsiveness/service and pricing each form key elements of the valueproposition to the customer.

Michael Schaeffer, president of Vancouver, Wash.-based Pacific NutritionalInc.: The primary reason for awholesale/distribution/marketing company to use a contract manufacturer toproduce dietary supplements is to attain a fixed inventory cost/price. Contractmanufacturers absorb all variable costs in the product related to materialsampling, formulation overages, production loss and laboratory tests. Forstart-up companies, the reason may also include utilizing the expertise of thecontract manufacturer for product development and packaging design. For other companies, the reason may also include refiningformulations.

What are the primary issues involved in working with a contract manufacturer?

Karim: There are three important issues to considerwhen choosing or working with a contract manufacturer. The first is complianceor the ability to comply with current and impending GMP regulations for theindustry. In addition, as with any business environment, the price must becompetitive. With the current trend of consolidation giving larger players inthe industry the benefits of economies of scale, smaller firms must beinnovative with product quality while maintaining low prices. Finally, thecontract manufacturers lead times must be taken into account when themarketer is managing their supply chain. More often than not, marketers expectto jump on the bandwagon for a product and expect their manufacturer to turn outproduct within a couple of days.This is not possible when working within a GMPframework.

Koon: Trust, integrity and a great workingrelationship with that manufacturer; great quality and consistency; knowing themanufacturer has the experience, capacity and ability to produce; lead-times (delivering products on schedule); and confidentiality (so that only the client knows where theproduct is made, not their competitors).

Kenn Israel, director of marketing with Los Angeles-based Soft GelTechnologies Inc.: Key issues that need to beunderstood include having a clear vision of who the end consumer is and how toserve them. A contract manufacturer will be able to help customers achieve theirgoals by applying knowledge of ingredients and processes. Contract manufacturersideally have an advantage of scale in equipment, personnel and experience thatcan be leveraged to create a solution to the customers needs.

Palmer: The integrity and credibility of themanufacturer are the foundation of the relationship with the customer. Customersmust feel they can rely on the manufacturer to timely deliver quality productsand service, and the parties must gain an understanding of each othersbusiness in order to achieve long-term growth together.

Schaeffer: Communication. To get the most benefitfrom a contract manufacturer, we recommended that all staff resources be pooledto determine the product to be introduced into the market. Coordination betweenthe contract manufacturers technical sales and regulatory affairs departmentsand the companys technical, marketing and sales departments can prove to bebeneficial in determining the feasibility of a product in the marketplace.

Ned Becker, vice president of sales, marketing & business development,with Missoula, Mont.-based Nutritional Laboratories International: Themost important issues revolve around the ability to effectively design,implement and manage a multi-faceted, quality process that involves interactionwith many departments to insure a customers specifications are met in atimely manner.

Jon Weisgal, vice president of nutritional marketing, with West Caldwell,N.J.-based Garden State Nutritionals (a division of Vitaquest): Qualityis the most important aspect of contract manufacturing. As industry standardsmove closer to a unified set of GMPs, it is extremely important to have amanufacturer that can provide quality product. Also, having an understanding ofthe market is important. For example, the most frequent question I get is, Whatproducts are hot right now? Of course, that requires more than a simpleanswer; but if you dont understand where the market is now and where themarket is heading, you may be providing your client with a quality product, butone that will soon be obsolete or just not in demand. Finally, there are so manydifferent types of ingredients and it is the job of a good contract manufacturerto make sure that the customer is getting the right brand for their needs. Forexample, unless they are going to market a specific brand-name ingredient intheir product, you can often find as good or even better quality ingredients forless money, saving your client money.

What are the primary misconceptions you encounter regarding the capabilitiesof contract manufacturers?

Karim: The most common misconception marketers haveis that it takes a few days to manufacture a product. For the majority ofproducts, this is simply not the case. In a GMP operation, materials must beprocured and tested from qualified suppliers. After materials have beenreleased, the batch must be compounded and unit-dosed. Throughout themanufacturing process, the QC/QA unit is actively involved in ensuring that thebatch is uniform and the product meets all specifications. Finally, the productis packaged for consumer sale. At NHK, our lead times average four to six weeksfor capsules and powders, and six to eight weeks for tablets.

White: One misconception is that all contractmanufacturers are GMP-certified. Others misconceptions are that all contract manufacturers areusing the highest-quality materials available; have their own in-house labs; andwork on higher profit margins, like branded companies or marketing companies.

Koon: A major misconception surrounds quality. Ourindustry has a range of quality regarding production. The quality offered bysome is excellent and others not so. As such, some people think that we (as agroup) generally have poor quality, a lack of capacity, and a lack of expertise.None of these points are true for most of us. It is unfortunate that some in ourindustry tend to bad-mouth each other. Sometimes their utterances may be true and many times notallin an effort to gain business.

Rayman: The biggest misconception is that youalways get what you pay for. Unless a client is working with a current goodmanufacturing practice (cGMP) facility with all of the proper QA/QC procedures,there are no guarantees.

Israel: A common misconception is that all contractmanufacturers will accept toll work (process client-provided ingredients). Thisis not always the case as certain contract manufacturing companies havedeveloped efficiencies and/or methods using specific materials. Othermisconceptions often encountered involve the limitations of the specificproduction processes or dosage delivery systems. Soft gelatin capsules requirespecific raw material characteristics and have limitations on active-to-carrierratios that most tablet and hard capsule manufacturers are not familiar with.

Palmer: The primary misconception we encounterconcerns lead-times. Many customers tend to underestimate the time involved informula development, material sourcing and production. Particularly on firsttimeorders, customers have unrealistic expectations that this can all occur in atwo- to four-week period.We try to handle this situation as part of ourphilosophy of learning more about the customers business and educating themon our business so that realistic expectations are set from the beginning.

Gary Callahan, plant manager with Chino, Calif.-based NutraMed Inc.: The customers primary misconception is that we are here tofulfill his wants, not his needs. A good contract manufacturer will look out forhis customer and alert him when encountering trouble. For instance, labels arechecked to ensure that they meet all of the current regulations. This means thatwe may have to let the customer know that his labels are inaccurate or makingillegal claims.The same is done for the customers formulas. These are checkedto ensure that they meet the label claim and that they only include approvedmaterials.

Schaeffer: The most common misconception surroundsthe amount of time required to produce a product. It is often overlooked thatcontract manufacturers need time to acquire components, process quality controlanalytical data and inspect the product. Other misconceptions include that if one facility can producethe product, all facilities can produce the product; and that the marketingcompanys technical department can always produce formula specifications thatcan be manufactured and/or taste to their satisfaction.

Becker: I believe most people think all contractmanufacturers operate the same way and that price is the only way todifferentiate between them.This is the farthest thing from the truth. Due tolimited GMPs required by the Food and Drug Administration (FDA) in the past,there is a wide range of quality processes being employed by different contractmanufacturers. It is important that any marketing company considering use of acontract manufacturer visit that company and conduct a formal audit of itsprocesses, manufacturing and testing capabilities, in addition to the sanitationpractices it employs.There is much more behind the scenes of a manufacturer thanan effective sales pitch.

Weisgal: Many people think the larger the companyis, the higher the minimum is and there will be a lack of interest on smallruns.The fact is, small runs are what build big business; we have minimums that are as small as 1,000 bottles ofproduct, which for a typical small business may be doable.Two hundred bottles amonth would have the client reordering in less than five months. Even our largepharmaceutical companies often require pilot runs of 1,000.We take small runsvery seriously because you never know where the next great client will comefrom.

How have you addressed the incoming federal GMPs?

White: Weve always looked at GMPs even beforethey were proposed by the FDA as something we needed to follow;we have routineGMP training sessions with all our employees. We have National Nutritional Foods Association (NNFA) GMPcertification. We discuss the results of audits performed by our customersquality assurance teams. And all employees even temporary employeesgothrough initial GMP training.

Koon: For us, this is not an issue. We are alreadya pharmaceutical FDA drug-licensed facility.We also make a few prescriptiondrugs in addition to nutritional products. We have also made pilot investigationdrugs for the NIH (National Institutes of Health). Because of making drugs, weare already required to have a higher GMP level than most of the incomingnutritional GMPs and that of other nutritional manufacturers.

Ishaq: We have long adopted over-thecounter (OTC)drug GMPs in anticipation of forthcoming GMPs for the dietary supplementindustry. We feel well prepared since the changes arent too drastic from whatwe are currently accustomed to doing. In addition, we are also in the process ofobtaining GMP certification from NNFA.

Palmer: We began months ago by comparing ourpractices with the proposed regulations and by sending management personnel fromproduction, distribution and quality control to seminars discussing the newregulations. Because of our intense focus on quality, we certainly meet orexceed the food GMPs we currently operate under, and our record-keeping andtesting are extensive. We have begun expounding our written SOPs (standardoperating procedures) and expanding our microbiological testing to comply withthe GMPs in the proposed form.

Callahan: Most companies who are here for the longhaul have been improving their systems for years. NutraMed follows the FDAsGMP for Drug Products as outlined in CFR21 Parts 210 and 211.We are continuingto change and improve our systems to even greater standards to meet and exceedthe upcoming GMPs for dietary supplements.

What certifications do you hold (i.e., kosher, organic, NSF/USP GMP) and howhave they helped you position your company with current and potential clients?

Koon: Certifications and licenses are veryimportant; they certainly show current and potential customers onescommitment to quality and meeting or exceeding regulatory requirements.We holdseveral certifications and licenses: FDA Drug License, FDA Cosmetic License,California Drug Manufacturing License, DEA License, California FoodManufacturing License, NNFA cGMP certificate, TGA License, and various Koshercertifications.

Rayman: PAL Labs holds the followingcertifications: Shuster Certified Facility, FDA Packaging for OTC, and cGMPCertification (Florida Dept. Consumer Services).

Israel:We are currently in compliance with NNFAGMPs and Australian Therapeutic Goods Administration (TGA) GMPs. We have alsopassed numerous customer and client audits. We feel that involvement with third-party certifications hashelped validate and verify our credibility and quality.

Palmer: Ourcompany and facility are registered with the FDA, and we are licensed as a FoodManufacturer, Wholesale Medical Device Distributor, and Wholesale DrugDistributor with the Texas Department of Health (TDH). We undergo regular andrigorous inspection by the TDH. These facts are comforting to current andpotential clients.

Callahan: We are licensed by the State ofCalifornia as a Food Processor and as a Processor of Organic Materials. Inaddition to being certified organic by the USDA and the CCOF, NutraMed is alsocertified as ISO 9001 and is certified GMP by the NNFA. This allows us toservice a larger customer base than many of our competitors.

Schaeffer:We have GMP Certification from the Stateof Washington and we have Kosher Certification. We expect to have TGA, HealthCanada and ISO 9001 Certification in the coming months. Taking the necessarysteps to be a drug establishment has positioned us as a global company.

Weisgal: We maintain certifications from the NNFA,NSF and the Australian TGA. The TGA is a very telling certification, because therequirements are stricter than the proposed GMPS for dietary supplements alone,including a wider class of therapeutic goods.

What are your current QA/QC initiatives, and how important is it to haveestablished quality parameters?

White: Quality parameters are critical. Weve had our own in-house labs for years. For example, inour microbiological lab, we test all incoming products for microbes. Ourinitiatives are always ongoing.We try to stay a step ahead of industry norms;but, on the other hand, we have to balance that with being realistic. There arevery few in-house labs capable of testing every active ingredient. Some of themare so sophisticated that it doesnt justify purchasing the equipment. Inthose cases, we work with outside, independent, FDA-approved laboratories todevelop different methodology and standardization within our own labs, or we usethem to do the testing for us.

Lee Covert, director of sales with Grand Rapids, Mich.-based Elan Nutrition: Ourcurrent QA/QC initiatives are based on improving yield and productivity andreducing costs. Specifically, our quality department is in the process ofimplementing production quality control. This means that the productionpersonnel are trained in the principles of quality control and takeresponsibility for the necessary activities to control production quality. Thequality department will audit and support the production department in thisendeavor. It is extremely important to establish quality measures for withoutthem performance cannot be evaluated.

Rayman: Our current QA/QC initiatives include theimplementation of complete OTC cGMPs for our new facility. This means allproducts will be manufactured under cGMP conditions for OTCs in our facility. Weare also implementing Oracle as our main operating system for operations andquality control. It is being validated for FDA approval to improve efficiencyand quality of operations. These initiatives are critical as the FDA willshortly become very involved in the manufacture of nutraceuticals, and ourbelief based on current information is that the cGMPs required will be verysimilar to OTC requirements.

Israel: We continue to develop product standardsand maintain extensive production records.We have also reached out beyond ourcompany to contribute to industry initiatives undertaken by AOAC and AHPA.Wehave also supported an expanded program of clinical trials and animal trials toensure basic efficacy and learn more about what we should be measuring inproducts.

Schaeffer: Our QA/QC initiative is to consistentlyreview and monitor all of our SOPs, raw material specifications, productspecifications and laboratory analytical data. Without established quality parameters, product integrity canbe compromised.

Do you offer comprehensive manufacturing services (i.e., formulation,sourcing, processing, tableting/ encapsulation, bottling, labeling), or do youfocus on one or more areas? Is there a benefit to outsourcing part of thatprocess?

Covert: We provide a full array of nutrition barformulations and nutrition bar products for our customers including sheeted,extruded and co-extruded forms.We can provide a complete turnkey program fornutrition bars with tremendous flexibility to meet varying volume requirements.

Rayman: Weoffer complete development of customers products from concept, deliverysystem development, identification of actives, packaging, labeling andregistration. We also review all new nutraceutical compounds for efficacy andcosting for clients as a line extension.

Ishaq: We offer turnkey solutions to our clientswith a wide array of services ranging from tableting, encapsulation, bottlepackaging, blister packaging and powder filling. All of these services areavailable in-house, allowing us to offer quick turnarounds at high productionquantities.

Israel: We make soft gelatin capsules.We do notaccept tablet, chewable, liquid or twopiece hard capsule projects. We outsourcebottling and labeling. We try to do one thing really well and add as much valuein that area as possible.We offer a full range of services in productdevelopment, sourcing, production and marketing support for our soft gelatincapsule customers.

Palmer: We offer comprehensive services involvingencapsulation and powders. We do periodically outsource some packeting projectsto local companies that specialize in these functions and are able to producethe jobs more economically than we are presently equipped to do.

Callahan: We are committed to growth. Therefore, we provide what our customer is looking for intablet, capsule, powder and softgel capsules.We also package in a variety offorms.

Schaeffer: In addition to our manufacturingservices of encapsulation, tablet compression, powder fill and bottle packaging,we do offer assistance in product formulation and packaging design.Occasionally, our clients will ask us to outsource blister packaging, packetfilling, and liquid filling, which benefits the client by having our QA/QC staffto evaluate the product prior to shipment.

Becker:We do offer a fully integrated set ofservices to support our finished product output of capsule and tablet products.Our formulation support is focused primarily on the technical side offormulation, what we call Product Design. This incorporates all of thematerial specifications, testing needs and finished product requirements by ourcustomer. We believe that more services offered under one system from beginningto end will result in a more consistent and cost-effective product for ourclients.

Weisgal: Our clients recognize us as experts in allaspects of manufacturing. Of course, we encourage custom packaging (labels,boxes, etc.) to be directly purchased by our clients; this way they candetermine their long-range plans on print buying which can have significantprice breaks at higher volumes, without committing to larger supplementproduction.

How do you determine the best delivery form for a particular product?

White: Sometimes the ingredient dictates what thedelivery form will be. For example, an oil should be delivered either as aliquid in a bottle, or it should go into a soft-shell capsule. A heat-sensitiveactive ingredient may work better in a two-piece hard shell than a tablet.Another factor is consumer preference; tests show that consumers prefersoft-shell capsules. Cost is also a factor. For example, soft-shell capsules aremore expensive than tablets.Size is another factor; large amounts of activematerials are less suitable for a capsule, which has space constraints; tabletsare more tightly compacted and hold more active raw material.

Covert: Consumer demand is our best guide. As themarket and subsegments evolve, we assist our customers in creating the rightproduct for their targeted consumer.

Koon: It really depends upon the ingredients neededand our customers dosage preference. Generally, oils are best for softgels. Powders are best for either tablets or capsule form.

Rayman: We normally will work with each formulationwith the client to determine the best delivery system for the product.This isbased on the dose of the active, the patient population targeted by the client,stability issues, and cost constraints. This information is evaluated and rankedto determine the best dosage and physical form of the product.

Ishaq: Many considerations go into determining thecorrect form for a given product. An experienced company will be able to determine whether aproduct is best suited for a tablet, hard-shell capsule, liquid or softgel. Welook at different parameters such as bulk density, hygroscopicity,compressibility and physical characteristics of the ingredients in each formulato determine the appropriate delivery form.

Israel: Due to the nature of our capabilities, weonly accept projects that areamenable to our delivery system. Not all materialswork well in soft gelatin capsules; the best are oils or lipid-solublematerials.We have a strong capability in creating suspensions and paste fillproducts; however, we are careful to focus our efforts on products that benefitfrom softgel delivery.

Callahan: Generally, our customer provides us withthe desired delivery form of his product. However, we do give advice as to what form may be better fordifferent products.

Becker: We work very closely with our clients todetermine this together. Our clients may specify a particular form based ontheir customers preferences or knowledge about a given ingredient orcombination of ingredients. We perform our own analysis and provide recommendations basedon our past experiences and internal results.

Weisgal: Its all about marketing; the deliveryform should be what is the most convenient and accepted form of nutrientdelivery. For example, you will probably not be putting any herbal extracts oflarge quantity into a drink, because of taste considerations.

How closely do you work with your customers to develop new products or newdelivery forms?

Covert: By working together with our customers(marketers), we establish the criteria for the targeted consumer.Then, wedevelop the highest quality nutrition bar in taste, texture and nutrition tomeet the particular consumer segment.

Koon: Constantly and closely. Because wemanufacture such a diverse array of products (softgels, tablets, capsules,powders, teabags and some liquids), we see a large variety of materials andformulations.We are often one of the first to see new delivery systems or uniqueraw materials.Whenever possible, we share this information with our customers.We are often asked to help R&D or offer new concepts on our customersproducts or ideas.

Ishaq: We provide our customers with differentoptions and allow them to make their own decision. We take particular pride inour ability to be both innovative and flexible in solving our clients productdevelopment and manufacturing problems.

Israel: We specialize in new delivery technologiesand custom formulations. Our business is built around thedifficult-toencapsulate material or the difficult-toassimilate material that isenhanced through our systems.

Callahan: It is difficult to handle full productdevelopment for customers who dont have at least some partial work done inthat area. Too many times the work is performed and no order comes from it. Thisends up being very costly. We perform product development such as this for a charge tocover expenses.

Becker: This can really vary by client. Everyclient has a different level of support internally depending on their emphasisand organization. We try to customize our support to assist our clients in whatthey need.

What are the hottest market trends in dietary supplements?

Karim: Diet and weight-loss products remain strongafter the post-ephedrine era, especially products dealing with carbohydrate blocking and blood glucose management. Inaddition, joint formula sales remain solid with glucosamine and hyaluronic acidformulas dominating the marketplace.

White: One of the strongest categories is omega-3essential fatty acids (EFAs). Were seeing very strong growth in that area,driven in part by new research, positive press and impending changes in the foodpyramid.Were also seeing very nice growth in the multivitamin andmulti-mineral category, particularly in the enhanced category, with CoQ10,herbs or other additives, which seems to be having a rejuvenating effect in themulti market.

Covert: As low carb slows, we are experiencingheightened interest in the balance approach with 40/30/30 and low glycemicindex. The nutrition bar is a very flexible vehicle for our customersto deliver the appropriate nutrition balance. As nutrition science evolves, weare in a great position to adopt new formulas to meet those nutritional needs.

Koon: The hottest trends include diseasespecificproducts (e.g., anti-aging, high cholesterol, joint health and prostate health)and diet (weight-loss) products.

Rayman: The trend we see currently in the industryis for more ethical formulations of nutraceuticals based on clinicallysupportable claims. This trend is mainly coming from manufacturers of the activecomponents and is then used by the marketers for claims. The emergence of thistrend means much more manufacturing control for quality and more deliberateselection of actives. Also, nutraceuticals should be focusing on key niches,such as cardiovascular health, urinary tract infections and osteoporosis, wherepotential for products with supportable claims is available.

Ishaq: Weve noticed that the hottest trend inthe marketplace right now is collagen and hyaluronic acid ingredients. Sincethese are multifaceted ingredients, we have customers that use them in a varietyof different formulations ranging from joint to skin health applications.Another noteworthy trend is a general shift towards blister cards sinceportability and a pharmaceutical appeal has become a recent demand.

Israel: Any product that can offer strongsubstantiation and clinical evidence of efficacy does well. However, we areseeing increasing interest in products for blood glucose control and glycemicmanagement. Cardiovascular support products are also quite strong. The consumeris looking for easier-to-use products that do not require complex protocols toachieve results.

Callahan: As a contract manufacturer, we exercisecaution when it comes to the hottest new trend. As we all know, many fad supplements have hit the market, done well, and then fellflat, leaving many companies holding thousands of dollars of materials thatcannot be sold.

Schaeffer: As an established contract manufacturer,we have seen many trends come and go, but multivitamin-mineral supplements seemto always be in demand.

Becker: I think several of the functional productcategories will continue to grow, including the weight control, joint health andwomens health product areas. Functional products for the future includecholesterol control and glucose control products.

Weisgal: Anti-aging is the hottest category in dietarysupplements. This category includes all aspects of the baby boomer market comingto grips with the fact that they are getting old. It is easier for a consumer toaccept a unique, exclusive natural product for aching joints, instead of goingto the doctor for antiinflammatories, which can often have harsh side effects.

What capabilities do you have to assist companies looking to expand theirsales into international markets?

Rayman: We have a complete documentation departmentthat specializes in foreign registration and all changes in foreign laws as theyimpact our product formulations.

Israel: Our company sells directly to a number ofmarketers in Europe, the Middle and Far East, and Australia. We can leverage ourprevious success and market experience to help our domestic partners. Ourregulatory support staff has been a real asset to a number of our customers thathave minimal experience registering products for overseas sale.

Schaeffer: International companies are looking forinnovative products that are manufactured in the United States and can beregistered into their country. We have the personnel to assist in productregistration.

Becker: Our primary assistance for our clientsgrowth internationally involves providing the extensive amount of documentationrequired to register a product.This can be a very time-intensive process initself.

What are the major considerations in softgel encapsulation?

White: The major consideration is consumerpreference; market studies have shown that consumers prefer softgels as adelivery method. However, certain ingredients must be treated to work in softgelform; for example, powders must be ground finely enough to be injected into thecapsule and mixed with an oil carrier. Also, materials with a high moisturecontent will eat away the gelatin. Potassium has the tendency to separate from other ingredientsand eat a hole in the gelatin wall. You need to have the experience andexpertise to know the limits of the active components. Some ingredients do notwork well in a softgel.

Koon: Softgels are an oil-based product. We can use pure oils (such as Vitamin E) or we can add powdersinto an oil base (such as with multivitamins). They are considered to be apremium dosage form. There are very few items that cannot be encapsulated withsoftgels.

Israel: The first and most important considerationwe make is if a soft gelatin delivery system will make the ingredient performbetter. Softgels are unique in that they are a lipid-based system and can offerunique capabilities at protecting and masking difficult to manage ingredients.Softgels work best with non-hygroscopic ingredients that have small particlesize and are preferably liposoluble. Another consideration is quantity of dosage. If a customer hasa goal of delivering many grams of actives then softgels may not be ideal; softgels require a large amount of carrier oils and thislimits the amount of actives per gel. Softgels have a higher perceived value to end customers andcan lend a degree of elegance to a product.

Callahan: Highminimums is the largest concern when it comes to softgel manufacturing, as thereis always a large amount of time spent on changeover and a large amount of wastethat goes with every job.

How extensive is your in-house laboratory testing operation? To what degreedo you make use of third-party laboratories?

Karim: As per NNFA and NSF GMP regulations, allingredients undergo qualitative testing. In addition, quantitative testing isdone on raw materials, in-process blends and postproduction samples using HPLC,GC and AA instrumentation. Third-party laboratories are used only formicrobiological assays.

Covert: We have the capability to test formicrobiological indicators, except pathogens, and to conduct macro nutritionalanalysis on finished product. In addition, we have the capability to conduct awide range of tests in ingredients that enable the quality department to verifythat all ingredients meet predefined requirements prior to use. We rely onoutside laboratories to conduct pathogen and micro-nutritional testing.

Koon: Our laboratorys services are quiteextensive. We have the necessary personnel (chemists and Ph.D.s) and therequired equipment to perform most of our own testing in-house. We areconstantly performing and developing various analytical tests, ranging fromassays to full microbiological checks. We generally outsource when a test is avery specific one that requires a unique piece of equipment to perform the test,or if we need verification (validation) of our own test method or equipment. Wealso perform stability tests when needed for expiration dating.

Rayman: Our in-house lab testing includes allphysical parameters such as tablet hardness, friability, disintegration,dissolution (specific actives) and stability. Assay capabilities include wetchemistry as well as HPLC capability on vitamins. Outsource testing is also doneas validation for the internal testing per cGMP standards, as well as fortesting that is beyond our in-house capabilities. We use only FDAcertifiedlaboratories.

Ishaq: Our in-house laboratory is fully equipped tohandle microbiological and analytical chemistry. Before any product is shippedfrom our facility, it is scrutinized in the laboratory to ensure it meetsspecification. Dissolution, disintegration, friability, HPLC and stabilitytests are just a few of the many tests of which we are capable.

Palmer: We currently use FTIR (Fourier Trans InfraRed) to qualitatively test all incoming raw materials. We plan on incorporatingin-house HPLC for quantitative testing during the first quarter of 2005.We dosurface and finished good microbiological testing. We utilize outside laboratorytesting for both finished goods and raw materials on a rotating schedule as acrosscheck against our own testing and the Certificates of Analysis from oursuppliers.

Schaeffer: We have a full-service in-houselaboratory and perform testing using HPLC, AA, IR and UV-vis spectrophotometryequipment as well as performing microbiological and inprocess control testing.We use third-party laboratories based upon client requests, availability ofreference standards, or lack of a validated method. Due to the fact that manybotanicals do not have scientifically validated methods, third-partylaboratories are an essential component of validating an in-house method.

Becker: We have made major investments in ourin-house laboratories. We have four different laboratories that support ourproduct and material testing requirements, including analytical, microbial,R&D and physical laboratories. Our analytical lab is used as a QC labtesting raw materials and finished products against each productsspecifications prior to being released for production or for shipment to ourcustomer.We have extensive methodology development expertise in-house and wehave refined methods for many of the top-selling botanicals, in addition tovitamins, minerals and other specialty ingredients. Our microbial lab conductsall primary testing for pathogens, yeast and molds, plate counts and otherselect tests. Our R&D labs primary function is developing new testingmethods requested by our clients, but also used to qualify different materialsfrom various suppliers around the world. We rarely use third-party laboratories,unless there are specialized test requirements we do not conduct.We do usethird-party labs on occasion to verify testing results of our inhouse labs.