Special edition: Outsourcing

Why do many brand owners in the market interpret GMPs as stopping at the manufacturer’s door?

By Stephen Daniells

- Last updated on GMT

Brand owners have many options in outsourcing the manufacturing of their products, but regulatory responsibility cannot be outsourced
Brand owners have many options in outsourcing the manufacturing of their products, but regulatory responsibility cannot be outsourced

Related tags Dietary supplement Manufacturing Good manufacturing practice

Many brand owners, particularly first time entry brand owners, remain ignorant about their responsibilities under good manufacturing practice (GMPs) when using contract manufacturers, say industry experts.

“While brand owners certainly want their products made in a clean facility, they aren’t all aware of their own responsibility to have GMPs in place,”​ said Shaheen Majeed, Marketing Director, Sabinsa Corp. “However, they truly believe much, if not the entire burden of the acronym ‘GMP’, falls on the shoulders of the contract manufacturer.”

Some companies do go that extra step and have a contract manufacturers fill out questionnaires prior to setting up an audit, said Majeed, and he sees that as a good sign that the brand owner knows they are at liability too and is doing their due diligence.

Ed Wyszumiala, president of Wysz Consulting Solutions, added that, while some brand owners have very strong and robust quality agreements and oversight plans in place with their outside manufactures, many brand owners in the market are interpreting the GMPs as stopping at the manufacturer’s door.

“That is not how the regulation works,” ​he said. “If their contract manufacturer fails, then so does all of the products they produce. We have not seen FDA issuing recalls or public notices yet from the majority of the GMP warning letters, for specific products produced in a non-compliant GMP facility, but I would expect to see those days coming.”

Warning letters

Several warning letters from the US Food and Drug Administration (FDA) illustrate the agency’s stance on the obligations of private label distributors to ensure that all phases of the production of a product are in compliance with dietary supplement CGMP requirements.

FDA inspector
Many brand owners are interpreting GMPs as stopping at the manufacturer’s door, but that is not how the regulation works.

One such letter, dated April 26, 2013 and sent to Pristine Bay, L.L.C. d.b.a. Vianda​, stated: “As a distributor that contracts with other manufacturers to manufacture, package or label dietary supplements that your firm releases for distribution under your firm’s name […] your firm has an overarching and ultimate responsibility to ensure that all phases of the production of that product are in compliance with dietary supplement CGMP requirements.”

With an increase in agency attention on this area, and warning letters to remind the brand owners of their responsibility, you could expect there to be an increase in customers auditing contract manufacturers.

“This is an area on the rise, and is well needed,” ​said Wyszumiala. “Brand owners are starting to build this into their business plans and have been increasingly active over the past few years. Audits help in strengthening their relationships with their contract manufacturers by increasing their understanding of how their products are produced and under what conditions.”


Sabinsa welcomes customers (and encourages them) to tour its facilities, said Majeed, but they haven’t seen as much auditing as they thought they would see.

“The message that the FDA sent clearly reached contract manufacturers, but not first time entry brand owners,” ​he said. “I suppose that explains the growing number of FDA warning letters to brand owners using contract manufacturers who do not have their own GMP paper trail in place.”


Steve Holtby, President & CEO, Soft Gel Technologies, Inc, also said that contract manufacturers should encourage and welcome audits from customers. “Not only can you learn from them, it also allows customers to directly see what is and isn’t being done properly.

“A company should perform regular audits on a timetable that is consistent with their buying habits—i.e. at least annually, if not more often,” ​he said. “Look at the batch records, raw material certificates of analysis, and most importantly, make sure they are doing all the testing required by the GMPs.  A lot of money can be saved if a manufacturer is not doing all the required testing…if a quotation looks too good to be true, there is probably is a reason.

“It is critically important to pay close attention to the Quality Unit and to monitor how decision-making is implemented throughout the production process—from procurement of raw ingredients to the final release of finished products.  This is the most essential part of a contract manufacturer.  If a weak QA/QC presence is observed, the rest of the processes will have the likelihood of being incomplete, not in compliance and just downright bad.

“In addition to receiving the final Certificate of Analysis, which shows the test results and methods, customers should review batch records when they conduct audits of the contract manufacturing facility.  The batch records should also include the test results and history for a particular product,” ​addedHoltby.

Smart business

Getting brand owners to get their own regulatory compliance program in place is one of the biggest challenges in the space, said Majeed. “While we [the contract manufacturer] may have all the procedures and SOPs in place for manufacturing, brand owners need to not rely on a contract manufacturer to insure their regulatory compliance.

“Depending upon a contract manufacturer to do regulatory review on their labels just is not smart business.”

Supply chain management is also a huge challenge, said Wyszumiala. “That is why when dealing with a contract manufacturer a brand owner should look at what is the supplier qualification program that is in place with their contract manufacturer. If qualification program doesn’t meet the needs of the brand owner, the brand owner should write in any changes into their quality agreement with their contract manufacturer, as it relates to the suppliers they wish to use in their products.”

Brand owners shopping around for services to multiple contract manufacturers based solely on price is also a major challenge, he said, since this affects product consistency, as each manufacturer may use different materials and processing to produce a finished formula.

“It is essential that brand owners and contract manufacturers look to establish a long term partnerships in their business focused on trust and quality, not only price,” ​said Wyszumiala. “If relationships are fostered in this manner, it will alleviate many of the problems and challenges experienced in working with contract manufacturers.”

fish and krill
Since softgels are a specialty delivery form, many customers do not possess the knowledge of formulation challenges, said Steve Holtby

Soft Gel’s Holtby added that there tends to be a misconception about the amount of time it takes to manufacture a product from the time an order is placed, as well as underestimating the costs involved. 

“As a softgel manufacturer, we encounter some customers who are not familiar with the softgel manufacturing process, and associate softgel production being as a simple process, like two-piece capsules or tablets. Since softgels are a specialty delivery form, many customers do not possess the knowledge of formulation challenges. It is important to consider both the physical and chemical properties of a formula.”

Market sizing

Sabinsa and Soft Gel Technologies are just two of many contract manufacturers in the US, but figuring out the size of the overall market is “one of the greatest questions out there”​, said Wyszumiala.

“The number of small companies in the market, I feel, has been greatly underestimated, and many of the warning letters show this, as many of these companies I have never heard of, and fly low beyond the industry’s radar.”

The situation is exacerbated by a growing number food and beverage manufacturers making supplements, and contract manufacturers producing products outside of the US, for sale and distribution here, as they are also governed by the GMP regulations.

How do you differentiate your capabilities versus the competition?

So with so many options to choose from, how does a company like Soft Gel Technologies or Sabinsa differentiate themselves in a crowded marketplace?

Sabinsa Bi-layers
Sabinsa is finding some unique and rather interesting formulation opportunities in the dietary supplement marketplace for its bi-layer tablet technology

“In the US dietary supplement contract manufacturing side, we started our business small, doing some light blending, milling and some low volume granulation,”​ explained Majeed. “We encouraged a lot of feedback from our customers and the number one request was for more granulation. From there we realized an opportunity to enter with encapsulation and tableting technology as well.

“We have customers that come to us only for the granulation work, because it’s an intermediate step that they cannot do at their facility or at the current contract manufacturer they are using. We made a point of offering intermediate steps for our customers so they would not have to incur the additional cost and delay by going elsewhere, so our intermediate steps capabilities are very much tailored to meeting our customer’s needs.”  

The company is also finding some unique and rather interesting formulation opportunities in the dietary supplement marketplace for its bi-layer tablet technology​. Its Integrated Nutritional Composites (INC) offers ready-made formulations that customers could quickly get into the marketplace, and they have since developed another series of formulations that are bi-layer and chewable.


Soft Gel offers two types of products, said Holtby:  stock formulations of popular ingredients and dosages, and custom formulations based on a customer’s label claim. 

“As an experienced manufacturer, dedicated to providing our customers with the best supplements possible, we feel it is our responsibility to inform the customer if we see possible issues with a formula,”​ he said.

“We often give suggestions or advice on improving a formulation, should the customer request our opinion.  For instance, there are situations in which soft gels are not an optimal format.  In some cases, there may be space limitations for the formula (getting ample quantities of protein, for example) or interactions between raw materials (such as the effect of very low pH on a gelatin shell).  Thus, it is important to consider both the physical and chemical properties of a formula.

“Since we have extensive experience in developing formulations, we always try to work with our customers to help them understand the importance of choosing the appropriate delivery system; a product should always be manufactured to maximize its potential in a manner that fits within the end-user’s usage, lifestyle, and economic parameters. 

“However, we do have to keep in mind that a custom formulation is the customer’s own, and they have often performed their own research in creating the formulation.”

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