Making the most of outsourcing

Image by gwendolyn salas / MJH Life Sciences using AI

Outsourcing can be an important way for manufacturers to grow and adapt. While many manufacturers may take pride in their manufacturing capabilities, processes, and qualities, everyone has their limitations, and contract manufacturers can help fill these gaps.

According to a 2023 survey conducted by Contract Pharma, in partnership with Nutraceuticals World, 28% of respondents cited a lack of resources and expertise, and 26% cited the ability to focus on other business priorities as reasons for outsourcing.¹ This is echoed by Mike Young, chief commercial officer of Vitaquest International (West Caldwell, NJ), who says that the full turnkey outsourcing the company provides, “allows [brands] to focus on their marketing, selling, artwork, and distribution strategies.”

According to a survey from the U.S. Department of Health and Human Services (DHHS), published in April of 2023 (based on data from 2017-March 2020), 34.4% of children and adolescents and 58.5% of adults take dietary supplements.² A separate survey from The Council for Responsible Nutrition (CRN; Washington, D.C.) found that 74% of U.S. adults take dietary supplements, of which 55% consider themselves regular users.³ The CRN survey also found that 92% of respondents agreed with the statement that “Dietary supplements are essential for maintaining health.” Clearly, there’s a high interest in dietary supplements for their various health benefits, and therefore an appetite to manufacture and market products to what amounts to a majority of adult consumers. This means competition.

“One out of every three products that Vitaquest produces is new to the world,” says Young, highlighting just how much growth and innovation the industry is seeing. These new products may come from emerging brands who are not equipped to manufacture finished products or well-established brands who want to explore new dosage formats they may not have experience making, or simply don’t have the capacity to produce. Sometimes well-established brands need to outsource just so they can meet demand for popular product SKUs.

“Many key brands, even if they manufacture for themselves, they will strategically outsource,” explains Young. “They could do that for a multitude of reasons. It could be they need an expedited launch for a new SKU, could be that they’re just scaling so fast, they need some extra capacity or bandwidth by request.”

Strategic outsourcing. like all outsourcing, requires a great deal of communication between the contract manufacturer and the client. “The more information they can share with us if we’re going to strategically outsource an existing SKU; down to the vendor and raw material, it’s all very critical,” says Young.

A good example of the importance of working closely with a contract manufacturer is flavoring. “To match flavor, for example, on a powder product or a chewable tablet, it’s critical to work very closely with the customer to get as much information as possible to match that flavor.”

Outsourcing is very common, and a great way to do business, however, it’s important actively monitor product quality and consistency. For example, NOW recently issued a voluntary recall⁴ following testing performed by Consumer Labs found that its phosphatidyl serine 300 mg softgels did not meet label claims. According to the brand, its specifications demand an 8% overage for its products to ensure label claims over shelf life. NOW eventually determined that a contract manufacturer it was using had difficulty blending lecithin and achieving uniformity in the products. This situation posed no health risk, but demonstrated how despite certain safeguards, things can still go awry. As a result, NOW has added more safeguards to its QA protocols, particularly for products made by third party manufacturers.

Good contract manufacturers will also have their own protocols in place that ensure quality and consistency.

For example, Vitaquest’s Young explains that, “Each formula that we put through our system goes through a rigorous quality process. We certify each supplier and certify each ingredient, through our in-house lab.”

Reputable companies that offer turnkey solutions have a reliable supply of vetted ingredients, which is invaluable to brands just entering the space. Each contract manufacturer may offer expertise in particular areas of manufacturing. Gummy manufacturing, for example, is very difficult and without the right expertise, results in a subpar, ineffective products. Vitaquest, for its part, is highly capable in powders, recently acquiring a facility that allows them to do fluid bed agglomeration in-house. This process makes powders easier to work with, such as improving dispersion in liquids.

At the end of the day, contract manufacturers are helping to drive innovation and product development in the dietary supplement space.

References

1. Moloughney, S. 2023 Contract Manufacturing Survey. Contract Pharma. March 10, 2023. https://www.contractpharma.com/issues/2023-03-01/view_features/2023-contract-manufacturing-survey/ (accessed 2024-09-26).
2. Mishra, S.; Gahche, J.J.; Ogden, C.L.; Dimeler, M.; Potischman, N.; Ahluwalia, N. Dietary Supplement Use in the United States: National Health and Nutrition Examination Survey, 2017–March 2020. National Health Statistics Reports. 2023, 183.
3. Three-quarters of Americans Take Dietary Supplements; Most Users Agree They are Essential to Maintaining Health, CRN Consumer Survey Finds. The Council for Responsible Nutrition. October 5, 2023. https://www.crnusa.org/newsroom/three-quarters-americans-take-dietary-supplements-most-users-agree-they-are-essential (accessed 2024-09-26).
4. Krawiec, S. NOW Health Group issues voluntary recall on phosphatidyl serine products for not meeting label claims. Nutritional Outlook. January 11, 2024. https://www.nutritionaloutlook.com/view/now-health-group-issues-voluntary-recall-on-phosphatidyl-serine-products-for-not-meeting-label-claims (accessed 2024-09-30).