Contract Manufacturing & Packaging: January / February 2009
What are the biggest trends in the supplements segment right now?
Many trends are emerging in the dietary supplements segment, but I’ll point to two that are center stage today.
First, consumer demand for dietary supplements is stronger than ever—and only continues to grow. A recent study revealed that consumer use of dietary supplements is now mainstream and more popular than ever. This increased consumer demand crosses demographic lines, expanding the market opportunity for brand owners across a wide range of products.
The other leading trend is related to the actual manufacture of dietary supplements. Over the last year, all supplement manufacturers have been required to follow current Good Manufacturing Practices, the federal regulations typically associated with the manufacture of drug products. While this is a major shift, all manufacturers specializing in the development, manufacture and commercialization of drug products will be well positioned to meet these requirements.
What industry challenges are affecting this segment?
The regulatory framework for manufacturing dietary supplements continues to evolve over time. As a contract manufacturer, CPC must regularly monitor FDA regulations to ensure our strict compliance with current Good Manufacturing Practices.
One relatively new regulation requires dietary supplement manufacturers to conduct full testing on all active ingredients in multi-active products. In the past, supplement manufacturers only were required to test certain ingredients, or “markers,” in such products.
Full testing on all active ingredients is a more thorough procedure that, in the end, ensures the highest quality product for the consumer. When you consider that some dietary supplements have as many as 30 or 40 active ingredients, this requirement does present certain challenges for the industry overall. But manufacturers with experience performing full stability testing and process validation on prescription drugs will be well positioned to meet these requirements.
What are the latest product trends? What is new and/or what are consumers looking to accomplish with supplements?
From what we’ve seen at CPC, fish-oil products have been in great demand for heart health—and glucosamine and chondroitin have been very popular among consumers for joint health.
But there’s a broader trend contributing to the explosive growth of dietary supplement use. Overall, consumers are increasingly concerned about their health and their weight. They want to look and feel younger, live longer and prevent disease. They want healthy hearts and healthy joints—and many are turning to more natural solutions for common ailments.
Whether we’re talking about the 30 million Americans who will turn 65 over the next decade—or the increasing number of parents wanting to help their children prevent disease later on—it’s clear that the audience for dietary supplements is expanding and the market opportunities are tremendous.
With so much economic strain on consumers, how is the supplement segment faring?
We haven’t seen a slowdown in consumer demand for dietary supplements. In fact, dietary supplement sales in the United States have increased over the last decade.
The use of dietary supplements often is seen as a preventive measure, helping consumers maintain good health while avoiding the need for costly doctor visits and hospital stays— making dietary supplements well worth the investment.
Is the high cost of medical services generating attention to things like supplements that allow consumers to self-medicate? Why or why not?
Self-medication is on the rise around the world. Increasing healthcare costs may play a role in that to some extent. But I believe doctors themselves and other medical practitioners have played an even larger role.
Increasingly, doctors have been encouraging their patients to use dietary supplements in conjunction with a healthy diet and regular exercise. A recent Healthcare Professionals Impact Study revealed that orthopedic specialists, cardiologists and dermatologists not only recommend dietary supplements to their patients – but they take dietary supplements themselves for overall wellness.
Please explain a little about the approval process for supplements entering the market. What type of governmental hurdles do you face in the supplements segment?
The three real hurdles for contract manufacturers bringing supplements to market are:
• developing robust product formulations with quality-tested ingredients
• running stability testing to justify expiration dating
• ensuring that we can reproduce our results consistently
At CPC, we clear these hurdles in a number of ways. We conduct formulation optimization testing to ensure that our product formulas are robust—and we make sure our analytical procedures and production processes meet current Good Manufacturing Practices as stipulated by the FDA. The FDA, in turn, regularly inspects our facilities to guarantee compliance.
What types of consumers are brand owners targeting today? Why?
CPC is strictly a contract manufacturer, so we don’t market brands. However, we do work with large marketing organizations such as Bayer and GSK. From what we see, brand owners are marketing to anyone and everyone. Consumers from age 9 to 90. Baby Boomers, Gen-Xers, Gen-Yers. As long as you want to stay healthy, you’re fair game.
And there’s tremendous market opportunity across all demographics. Baby Boomers increasingly seek natural products for heart and joint health, as well as weight management and anti-aging solutions. There are 72 million Gen-Yers in the United States—and they are extremely health-minded. In fact, they are the most common consumers of energy products, making them a prime target for brand owners. Even the little ones are on the list, giving brand owners opportunities to bring to market new natural remedies for children.
How are the fluctuating costs of raw ingredients impacting this segment?
Over the last year, we have seen fluctuations in raw material costs that we haven’t seen in more than 15 years. The costs have tripled, and in some cases, quadrupled.
Many factors have contributed to the recent cost surges, including new environmental regulations imposed on raw material manufacturers in China, factory closings to accommodate the Olympics in China and natural disasters, such as earthquakes. Another factor is simply supply and demand; certain starting materials are in short supply today.
CPC maintains a strong network of high-quality raw material suppliers around the world, and we often speculate in order to carry the inventory we need to cover our requirements. While it’s been a challenging year for all manufacturers, we find ourselves in somewhat familiar territory. Our industry is commodity-based, so managing cost fluctuations has always been part of the process. We always work closely with customers to help manage the impact of these cost fluctuations, giving them advance notice when possible of any price increases driven by higher raw material costs.
How are transportation costs affecting this segment?
Skyrocketing oil prices over the last year have driven transportation costs across all industries, though we are starting to see some relief due to the recent drop in oil prices.
CPC delivers dietary supplements to customers all over the world, so shipping has been more expensive for us as well. While these costs have fluctuated, we have maintained clear, consistent communications with all our customers about the impact of oil prices on shipping costs, so they always know what to expect and can plan accordingly.
What are the main issues contract manufacturers and brand owners are tackling together—or should be?
Contract manufacturers and brand owners need to collaborate closely to develop and manufacture high-quality products that meet consumer demand while maximizing profits. As a rule, we should establish a mutual understanding of the timelines around the development and commercialization of products to meet the brand owner’s overall objectives.
We also need to keep a trained eye on consumer trends together. Going forward, it will become increasingly critical to anticipate consumer demand in order to identify new market opportunities. And we need to stay on the lookout for novel ingredients and unique packaging concepts.
Ann Costanza
Senior Director, Account Services