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Acting Globally


The natural products’ supply chain has a global footprint unlike any other. Following quality standards and guidelines help manage it.

Non-GMO Project

From procurement of materials to the hands of end users, the natural product industry’s supply chain for ingredients used in the manufacture of dietary supplements that are sold in the U.S. is certainly global.

“Dietary supplements and their ingredients cover a wide range of materials many of which originate not only from Asia, but also from all the other continents, including the krill oil from Antarctica krill,” said Dr. Nandukumara Sarma, director, Dietary Supplements, U.S. Pharmacopeial Convention. “A large portion of dietary supplement ingredients (particularly botanical products) is sourced overseas. Today, even a majority of the global supply of vitamin C comes from China.”

Dr. John Atwater, senior director, Verification Program, with the U.S. Pharmacopeial Convention, pointed out that the U.S. has responded in part to the global nature of the dietary supplement supply chain by enacting the Food Safety Modernization Act (FSMA), which was signed into law in 2011. “FSMA is expected to have a significant impact on how the dietary supplement industry manages its supply chain,” he said. “The law is intended to help ensure the safety of the food supply in a proactive manner by trying to prevent contamination rather than reacting to it. However, regulatory expectations of how companies will meet the provisions of FSMA are still in the early stages of development, and immediate impacts are yet to be seen. For example, FSMA has a proposed rule for foreign supplier verification programs for importers of foods, which includes dietary supplements. The extent of verification activities will likely be centered on risk-based approaches rather than end-product testing, which for some manufacturers will represent a paradigm shift.”

Trends in commerce will also play a role in the global supply chain for dietary ingredients and dietary supplements. For example, Atwater continued, “unbeknownst to consumers, chondroitin sulfate products can vary tremendously in quality. Although there are reputable ingredient manufacturers that produce chondroitin sulfate sodium of high quality, meeting USP (United States Pharmacopeia) standard of content of not less than 90 percent and a limit of nonspecific disaccharides of not more than 10 percent, there are several others that manufacture chondroitin sulfate sodium of lower quality and at lower cost. When ingredients such as chondroitin sulfate sodium become more commoditized, the cost of the ingredient decreases. Often times this is accompanied by greater variations in quality and a decrease in quality overall. This is especially true for botanicals. Thus, a possible result of commoditization could be the appearance of lower-quality products in the market, especially in cases in which products are not required to follow a quality standard.”

Sarma added that a positive development in the global supply chain has been the emergence of major dietary ingredient manufacturers who specialize in ingredients that are commonly used in several dosage forms from multiple manufacturers (beta-carotene) or specific botanical extracts, thus enabling quality testing in a consistent and technically appropriate manner for products containing the ingredients. “Because the supply chain in this situation is consolidated and more contained, problems that emerge throughout the manufacturing chain can be identified and addressed more effectively,” he said.

Tom Kiningham, technical manager of NSF International’s Dietary Supplement Programs, noted that increasing economic prosperity in developing regions such as Brazil, Russia, India and China have opened up new and enticing dietary ingredient sourcing opportunities for European and American-based dietary supplement manufacturers. In fact, he pointed out that China is expected to surpass Western Europe and the U.S. as the largest global producer and consumer of nutraceutical ingredients by 2020.

“Abundant natural resources and competitive pricing have made foreign ingredient suppliers very attractive for dietary supplement manufacturers looking for an edge over their competition,” Kiningham said. “The reasons for sourcing ingredients from these countries are certainly based on low price, but there is also the issue of availability. Some ingredients are just not available anywhere else. For example, ascorbic acid, many of the B vitamins and certain botanicals are most readily available from China and little elsewhere. Even as labor costs in China are rising, there may not be an alternative for sourcing certain ingredients. Competitive pricing and availability are among the many factors that have contributed to the globalization of the supply chain for dietary supplements.”

Bangalore, India-based Indfrag’s Chairman and Founder Philip Samuel, pointed to popular ingredients and the global chain required for obtaining them. “Green coffee extract for weight loss from coffee beans come from Vietnam, are processed in India by us, and made into capsules by contract manufacturers in the U.S. and sold all over the world to consumers,” he said. “Garcinia fruits come from Sri Lanka, Indonesia and India, get extracted in India by us and are sold as ingredients to contract manufacturers and brand owners in the U.S., E.U., Japan, Korea, Australia, etc. Valerian root, used for sleep management, is sourced from Poland and Bulgaria, extracted by us in India and is used as an ingredient in products sold in the U.S., E.U. and Australia. There are many other examples like this.”

Oversight at the very first link in the supply chain is beneficial. “Due to this extensive supply chain, sourcing is the most complex function of the industry,” said George Pontiakos, president and CEO, California-based BI Nutraceuticals. “There is a significant increase in the interest of sourcing surveillance at the farm level, as well as chain of custody control from the farm to BI’s receiving dock. We have had this process in place for a number of years and it is highly beneficial to our customers with respect to peace of mind in eliminating identity issues, adulteration, as well as ensuring organic and non-GMO (genetically modified organism) compliance.

Risks And Liabilities

Those following the natural products industry know that adulteration of sexual enhancement, weight-loss and sports performance products with active pharmaceutical ingredients (or substances with similar molecular structure) is currently a major problem, and one USP is addressing. “Throughout the industry,” noted Sarma, “manufacturers and regulators are struggling to find the best methods for detecting and identifying adulterants. Heightened concern about this issue has motivated USP to form an Expert Panel charged with proposing analytical test procedures for identifying adulterants.” The information will be published as a general chapter in the U.S. Pharmacopeia—National Formulary (USP–NF), USP’s compendia of standards for medicines and dietary supplements, Sarma added. The chapter will also be published in the USP Dietary Supplements Compendium, a publication of USP standards intended primarily for use by dietary supplement manufacturers. Currently, adulteration of sexual enhancement products is the initial focus of USP’s Expert Panel, which hopes to draft a document for public review and comment by mid-2015.

Low-ball pricing from global sources isn’t necessarily the answer to achieving trailblazing status in a competitive market. “Marketers and manufacturers of dietary supplement products are constantly seeking an economic, technological or product breakthrough that will give them an edge in a crowded international marketplace,” Kiningham explained. “Some dietary supplement advertisements dance the line of improbable health benefits and claims that border on being a cure for a disease condition.”

In this type of competitive environment and level playing field, it is important for brand owners to leverage any advantage to their cause and international sourcing can be part of that effort, he said, adding that global sourcing can give the marketer an edge on controlling costs and having access to a wider variety of dietary ingredients and cutting edge nutritional products. However, international sourcing is not always the best choice, even if domestic supplies are more expensive up front. There are several reasons for this: • Lead Times and Unpredictable Availability: Not only can lead times be longer, but there is always the very real possibility of additional delays at the port of entry caused by regulatory agencies. In this frustrating situation, essential raw materials can be a few minutes away and not be released for shipment for weeks.

• Economic or Other Types of Adulteration: Recent episodes of economic adulteration by companies outside of the U.S. (melamine and cyanuric acid) and enzymes from India (through a U.S. distributor) that were contaminated with chloramphenicol, a powerful antibiotic, illustrate the risk of lower standards in some parts of the world which may have an impact on products manufactured in the U.S.

• Distributor Reliability: Even when distributors are used to hold supplies of key imported raw materials, it could be that when the shipment of a critical, foreign-sourced raw material arrives that there are several manufacturer’s lots in the truck. This can add additional time and expense as each lot must be separately tested and released. Also, lot-to-lot variability can affect the quality of production batches and key characteristics of the finished product.

• Supplier Quality Management: Whether a company is managing the quality of an overseas supplier through a distributor or directly, there can be serious challenges to assuring that the materials are appropriate for use in the products to be manufactured. Language and cultural barriers can hinder accurate descriptions of what the manufacturer actually needs, which can adversely affect the performance quality of the goods. For example, if key specifications are not thoroughly communicated and in the quality contract, material variability, such as density, particle size and color variations can adversely affect the finished product quality.

• Economic Unpredictability: Even if pricing and transportation are considered and planned for, there is always the chance for unusual circumstances to drive up costs and affect the eventual sales of the company’s product. These circumstances can include everything from unfavorable exchange rates and rising oil prices, which can affect transportation costs and, as mentioned above, unpredictable and intrusive governmental activities.

Safety and Security

Having a robust supplier qualification program is essential for any manufacturer and means for companies to be proactive in mitigating the risks associated with a global supply chain. Kingham said, implementing an ironclad supplier qualification program is a challenge for companies in every sector. As supply chains spread across multiple countries and vendors, the challenge of maintaining control over product quality and safety increases.

“The U.S. Food and Drug Administration (FDA) requires that manufacturers, packagers, labelers, and warehousers and distributors of nutritional supplements to ‘qualify’ each of their vendors but do not provide guidance on how a company is to perform this qualification,” Kingham explained. “Supplier qualification principles also apply to subcontracted services affecting cGMP (current good manufacturing practices)—manufacturing steps, packaging and labeling, testing and/or calibration services, storage and distribution, etc.” He noted that any supplier qualification program must include two critical components: clearly defined specifications or requirements for all goods or services being purchased, and; objective evidence to show that your requirements are being consistently fulfilled.

“In other words, you must have a system in place that can demonstrate to an FDA auditor that the ingredients you source meet the certificate of analysis and are free of unacceptable levels of contaminants—for example, heavy metals, pesticides, PCPs and dioxins,” Kingham added. “The best way to achieve this is to implement a robust supplier qualification program, which generally consists of two components. First, an auditing program that provides proof (and peace of mind) that your supplier complies with GMPs and is able to consistently produce quality ingredients to your specifications; and second, an ingredient testing program that verifies the quality and purity of the ingredients you source.”

Incoming Testing

According to USP’s Sarma, the most important trait of a good protocol is that the test methods used be scientifically validated with respect to analytical parameters such as specificity, accuracy, precision and robustness. “GMPs require that the manufacturer establish product specifications for identity, purity, strength, composition, as well as limits for contaminants,” he said. “In the U.S., FDA has established GMP requirements (21 Code of Federal Regulations 111.70) and that the product conform to the specifications (21 Code of Federal Regulations 111.75). In order to ensure that quality ingredients are sourced through the supply chain, manufacturers need to ensure that the test methods used by their suppliers are scientifically validated.”

Sarma added that the FDA GMP rules, by nature, are generic in their expectations; it provides manufacturers with the flexibility to use any scientifically valid method. Consequently, the common language between the buyer and the seller can be compromised if each is using a different test method that yields different results. “In this context, USP’s public standards for dietary supplements (known as monographs) provide quality standards for the most commonly used ingredients which can be used to help ensure the quality of ingredients in the supply chain by providing common language for both the buyer and seller,” he noted. “Quality standards from USP provide, not only the necessary tests, test procedures and acceptance criteria for the results of the tests, but also highly characterized and pure chemical reference standards needed to obtain accurate results. Without a common standard, determining what passes or fails as a good quality ingredient or supplement becomes the manufacturer’s responsibility. Thus, it would be difficult to determine if two ingredients or supplements that are supposed to be comparable do indeed share the same basic characteristics. If two different manufacturers of a similar product follow the same USP monograph, then the two products can be compared for adherence to monograph specifications. In the end, a public quality standard for a dietary ingredient establishes common expectations about product quality between an ingredient seller and a buyer, and ultimately, further down the supply chain, between the dietary supplement seller and the consumer.” Atwater argued that despite the availability of USP quality standards, unless all manufacturers use USP standards, it becomes difficult for the consumer to expect that their products will be of consistent high quality. “Different analytical test methods and acceptance criteria—when independently defined—can yield different results regarding product quality,” he explained. “Use of public quality standards throughout the supply chain provides consumers with assurance that a particular product is of known compendial identity and good quality, since it has been manufactured against a known scientifically based quality standard.”

At Indfrag, incoming materials are tested by HPLC high-performance liquid chromatography or other internationally recognized techniques to measure the content of the active ingredient. “We insist on pre-shipment samples of the bulk to make sure that we buy the best quality,” said Samuel. “HP-TLC (high performance thin layer chromatography) is used to identify any adulteration or mix up of different plants. With 25 years of experience, Indfrag can be sure of the raw botanical. Another important aspect is that Indfrag never buys powdered raw botanicals, where other plant can be mixed easily. We only buy whole leaves, roots, seeds, so that inspection is easy.”

In addition, Pontiakos said BI tests for (but is not limited to):

• Cleanliness – extraneous matter
• Identity – BI has a proprietary species genus testing and authentication testing technology known as Identilok
• Pesticides
• Heavy metals
• Residual solvents
• Aflatoxins
• Microbial

“However, before testing even begins, you have to take a few things into consideration,” he noted. “First, do you have an appropriate test method? Every method has its advantages and limitations. It is important for suppliers and their customers to agree on test methodologies prior to accepting C of A results. Second, do you have the correct reference material or are you comparing apples to oranges? For instance, the materials should have the same country of origin, harvesting method and plant part.”

Ensuring Stability, Purity and Quality for Storage and Shipping

Several systems or programs are needed to ensure the stability, purity and quality of dietary ingredients and supplements. “First, suppliers and manufacturers need a scientifically based quality standard to properly characterize the article; the standard would include validated, stability-indicating test procedures,” Atwater explained. “Secondly, suppliers and manufacturers would need to have a good packaging and labeling systems to ensure that the article is packaged and labeled properly, along with a stability study program for assessing the stability of the article under proper packaging and controlled storage conditions. The stability study program would be used not only to establish the expiry date of the article, but would also evaluate the stability of the product when placed under extreme conditions of temperature and humidity outside of its labeled storage conditions. Thirdly, the supplier and manufacturer need a good means of tracking the chain of custody of the article, including who handled it and under what storage or transportation conditions. Material transported under improper storage or transport conditions can cause the material to degrade.” However, he added, with the proper quality standard, the supplier or manufacturer would be able to determine whether or not the article conforms to its specification, and thus, whether or not an article’s quality has been negatively impacted by improper handling.

For Samuel, the most important aspect of shipping is the moisture content. “If moisture exceeds 12 percent, there is a chance of fungal growth and degradation,” he said. “Our suppliers are strictly instructed to dry the material before packing and shipping. It is better to pack in bags that are breathable and not air-tight. It is better to buy full container loads to avoid our material being in close proximity to other material, which may contaminate our goods.”
BI uses double-wall cardboard boxes with an inner liner closed with a color-coded security zip tie. These boxes are sealed with food grade security tape to insure product integrity. Storage and self-life studies are conducted and results monitored. Outgoing lots are tested using BI’s GMPs and SOPs (standard operating procedures).

Weather Conditions

Climate change, weatherissues, sudden increase in demand, etc., can impede acquiring certain raw materials, and suppliers are taking measures to address those challenges. “Sudden demand or the loss of crop due to environmental factors could lead to adulterated or counterfeit raw materials in the supply chain,” noted Sarma. “Adulteration of hoodia is a classic example due to demand exceeding the supply. Many botanicals are complex mixtures, and as such, their quality can be affected by region where they are cultivated, seasonal changes, etc., which could result in adulterated ingredients in the supply chain due to high demand.” A recent example was the adulteration of ginkgo extract with rutin and quercetin. USP revised the Powdered Ginkgo Extract monograph to provide analytical methods to detect the adulteration.

“This is a huge problem with botanicals,” Samuel agreed. “Price variations can be as much as five times, due to sudden demand and failure of crops due to unexpected rains, poor weather, etc.” He also noted the problem with garcinia, which cost about $1 U.S. per kg about five years ago, went up to $4 per kg last year, and is now down to $3 per kg. “The only way to overcome this is to keep large inventories and buy when prices are down,” he said. “This needs a lot of experience and Indfrag has 25 years. Indfrag keeps two years of stock and has large warehouses, well ventilated and maintained with GMP standards to ensure that the goods are in good shape.”

Best Practices for Global Growth

Dynamic, high-growth companies are considered trailblazers, shapers and innovators that are committed to improving the bottom line and even the state of the world. But expanding quality operations globally would require consideration of limited technical capabilities and resources of the labs in less developed countries, said Sarma. “For example, if the seller is unable to test the materials for meeting specifications from the buyer before they are shipped, the buyer would have a hard time to return the shipment to the country of origin,” he noted. “For these reasons, when USP develops standards, we take into account input from manufacturers and regulators around the world regarding the feasibility and suitability of tests, and whether or not they can be performed by manufacturers around the world. Thus, manufacturers who expand globally can benefit greatly from the use of USP’s public quality standards.”

“If a company is expanding globally,” added Atwater, “it is most important that the firm operate under the same GMPs with the same quality management system in place at all of its sites in order to ensure consistent product quality,” he said. “While vertical expansion (single-manufacturer control over the entire product supply chain starting from the raw material source all the way to final product) is the best way for a company to control the quality of its product, it is typically not economically feasible for companies to do so. Thus, having robust GMPs that includes consistent monitoring of the quality of supplier’s ingredients plays a large role in the production of consistently good quality products.” NIE


1 Global Sales for Nutraceutical Ingredients to Reach $24 Billion by 2015.” Nutraceuticals World. 2 Jan. 2012. Web. 27 Mar. 2012. < www.nutraceuticalsworld.com/issues/2012-01/view_industry-news/global-sales-for-nutraceutical-ingredients-to-reac/>.

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