Brian Smith, CEO of MeriCal, spoke with NutraIngredients-USA about what the deal means for the industry. MeriCal announced the cash deal, whose specifics were not disclosed, last week at the SupplySide West trade show. Under the terms of the deal, MeriCal, which is based in Anaheim, CA, acquired all the assets of GHI, which is based in Ogden, UT. Smith said the deal will increase MeriCal’s overall size and capacity by about 50%.
“Among other benefits, Global Health Industries will gain access to our industry leading R&D capabilities, which we are confident will lead to expanded demand for our innovative products," said Smith. "GHI's unique spore manufacturing and packaging operation will add to MeriCal's existing capabilities. Together, we will continue to strive to become the clear leader in probiotic and supplement contract manufacturing."
With size comes more likelihood of quality
Smith said the probiotics market, like the overall dietary supplement industry, is a patchwork quilt of a few large firms with extensive capabilities, some smaller quality players, and a fringe of companies of lesser quality and expertise. Having a company that is large enough to provide all of the regulatory and quality assurances is the key to providing a quality product, in his view.
“The probiotics market is still a fairly fragmented market, hence our strategy,” he said.
“There are a lot of companies that have the infrastructure to make a probiotic product. That’s a good thing if you are a buyer of probiotics, but across the VMS space there are a lot of what the industry could call charlatans who offer sub standard products and who cut corners. This is not the highest margin industry, and in providing quality there is a tangible cost,” Smith said.
Smith said that along with continued enforcement by FDA, the probiotics industry could be improved by more intra-industry emphasis on quality and by enhanced global cooperation.
“The industry has got to put companies on notice that are not meeting standards, whether that’s through the IPA (International Probiotics Association) or other bodies. And there needs to be action with the various international bodies to get a more globalized standard of approval for probiotics,” Smith said.
The addition of GHI’s Utah assets to MeriCal’s existing facilities in Southern California means the company will now have four plants devoted to the manufacture of probiotics. That diversity will allow the company to keep up with demand, Smith said. And it will enable MeriCal to seamlessly upgrade overall manufacturing capabilities without interrupting production, he said.
GHI already has approval from Australia’s Therapuetic Goods Administration for its operations, which Smith said fits in with MeriCal’s overseas ambitions.
“This is fundamental to our international strategy. In the past year we opened up offices in Singapore and in Guangzhou, China, We think this will be an opportunity to grow our international footprint,” he said.