LifeVantage, manufactures of herbal supplement Protandim, recently announced a product recall that reportedly could end up costing the company as much as $7 million before recovery from suppliers.
LifeVantage, based in Sandy, Utah, was founded on the marketing of a lone product, the herbal Protandim, which is a proprietary formula of five herbal extracts of milk thistle, bacopa, green tea ashwagandha and turmeric. The company, which sells its producuts via a network marketing model, is not vertically integrated; it purchases ingredients and outsources its manufacturing.
A manufacturing error on the raw material end was the subject of the recall, Brandon Butterfield, VP of marketing and communications told NutraIngredients-USA.
“We took a very aggressive voluntary approach,” Butterfield said. “We had a problem with turmeric which a raw good that goes into Protandim. There where some very small metal fragments in the turmeric. Those fragments made it into some of the Protandim tablets and some of those tablets reached an end customer.
“There was a single incident where we were notified that there was problem with a tablet,” he said.
Improving the system
Butterfield said the company was using the recall as an opportunity to improve its manufacturing and raw material supply safety procedures.
“We are working with our third party manufacturers to put more stringent measures in place. Same thing with our suppliers, to make sure they are also have added measures and redundancies in place,” he said.
"The company is offering to replace all bottles of the potentially affected product. We are confident that our network marketing distribution model will allow us to efficiently contact all those affected by this issue," said LifeVantage CEO Douglas C. Robinson.
LifeVantage, which recently launched its second product, a topical branded as TruScience Anti-Aging Cream, has had internal discussions about whether to bring production in house at some point. Protandim has been on the market since about 2003, at first in retail distribution.
“We are always looking at ways to improve our supply chain. As we explore ways to prevent this from taking place I’m sure that will be up for discussion again,” Butterfield said.
Stock drops on news; law firm investigates
Traders on the NASDAQ market reacted to the recall news by driving the stock price down 54 cents or, about 21%, to $1.96 per share; the shares rebounded slightly to close on Dec. 7 at $2.02 per share. LifeVantage has a 52-week high of $3.98 and a low of $1.32. On Nov. 9 LifeVantage reported a first quarter net revenue of $52.9 million, a year-over-year increase of 163%.
The stock drop has engendered a investigation filed by a shareholder rights law firm, New York-based Bronstein, Gewirtz & Grossman, LLC, which said it is investigating potential violations of securites laws. LifeVantage officials declined to comment on the investigation.