Certifications & Market Needs for Powder Products

Certifications & Market Needs for Powder Products

By Stephen Enloe, Hendrik Grobler, Ulli Lindauer and Will West | Advanced Powder Dynamics

Navigating spray drying partnerships requires understanding essential certifications like GMP, Halal, Kosher, and Organic as market entry tickets, and evaluating “nice-to-have” certifications like NSF for Sport for premium pricing. Successful collaborations hinge on defining clear project timelines and product objectives, with high yields being a critical customer expectation. Protecting your formulation secrets involves robust mutual NDAs and Material Transfer Agreements (MTAs) to clarify IP ownership.

Choosing the right spray drying partner is paramount for market success, impacting product quality, regulatory compliance, and brand reputation. Understanding specific industry requirements and consumer demands ensures your product meets stringent standards, whether for infant nutrition, nutraceuticals, or pharmaceuticals, thereby building consumer trust and brand loyalty.

This discussion will cover the critical “must-have” versus “nice-to-have” certifications, strategies for safeguarding intellectual property through NDAs and MTAs, and key performance indicators for evaluating spray drying partners. We will also address red flags to watch for in existing suppliers and the cost-benefit analysis of certifications.

Gain actionable insights to select qualified spray drying partners, protect your proprietary formulations, and ensure your powder products meet market demands and regulatory standards for accelerated commercialization.

TL;DR – Quick Summary

Navigating the complexities of spray drying partnerships requires understanding certifications, market needs, and protecting your intellectual property.

Certification Tiers: Certifications like GMP, Halal, Kosher, and Organic are crucial ‘must-haves’ for market entry, while others like NSF for Sport are ‘nice-to-haves’ that can justify premium pricing and target specific consumer segments.

Project Objectives: Successful spray drying partnerships hinge on clearly defining project timelines (development, scale-up, commercialization) and product objectives (moisture content, particle size, yield), with high yields being a critical customer expectation.

IP Protection: Protecting your formulation secrets when outsourcing involves robust mutual NDAs and Material Transfer Agreements (MTAs) to clarify ownership of existing and newly created intellectual property.

Partner Evaluation: Key performance indicators for evaluating a spray drying partner include achieving agreed-upon timeframes and product specifications, alongside transparency, access to technology, and relevant experience with similar products or volumes.

Supplier Red Flags: When assessing a current supplier, look for red flags like a lack of willingness to solve problems, resistance to audits, poor customer reviews, or a lack of updated online presence, which indicate they may not be meeting industry standards.

Pro tip: Carefully evaluate the cost-benefit of ‘nice-to-have’ certifications; don’t pay for them if your target market doesn’t demand them, and negotiate accordingly with your spray drying partner to avoid unnecessary expenses.

---

Navigating Industry Certifications: Must-Haves vs. Nice-to-Haves

Hendrik: It really depends on what is so what is baseline, what category are you in? What are the regulatory bodies that govern or do not govern your specific industry? And then what is the consumer appeal that you as a brand want to add on top of that? With Advanced Powder Dynamics, we are in a very lucky position because we have them all. So most of. Powders, the spray dryers out there will have equipment that can run GMP, that can run Halal, that can run Kosher. Many also have organic certifications. It really depends on what your objective is as a customer. But you have to make sure that whatever your final product needs to achieve in the marketplace,. In terms of what we’ll mention, differentiation. Who are you appealing to and what does that target market require from you to believe that your claims are true? Those are the certifications that you should be looking for. It’s critically important to understand what those certification requirements are and what the market segment is. There’s different requirements for infant formulations, for toddler formulations, for animal food or feed, for nutraceutical products, for pharmaceutical products. Each one of those have very specific regulatory requirements. Adding to that is label requirements. And if you don’t have the knowledge or you don’t have the certifications to comply with those, then obviously you’re not going to satisfy the requirements for the customer. So it’s important to understand what market is the customer targeting, what requirements or quality requirements is actually applicable to those segments, and then do you have that. And you need a partner that can advise you on what you would require. And again, that brings us back to the previous question.

Buying or bringing your own production in-house requires a lot more than just having an operator to run the dryer for you. You need to have the expertise to make sure or to ensure that you do have the proper certification for each one of those different market segments. And Ulli was correctly saying that GMP is the most common one, but also staying up to date to the standard. GMP requirements, our law, kosher and organic certifications are almost a standard for all of these market segments currently.

Will: And. There’s a great example that I like. But going back to Ulli’s summary and Hendrik’s comments, I think every client should keep in mind a general rule. There are must haves. Those are regulatory requirements. Those are things that are dictated to the market. Those are tickets to entry. You cannot or should not be selling. If you don’t have those things, you will not succeed in the market if you don’t have those things. Then there are nice to haves. Those are things that are commonly seen and appreciated by customer targets. Those are things that generally result in sales or failure to sell if a brand does not have them. And the example that comes to mind that I find very useful for a client to consider. Is I won’t mention the company that did it, but they actually had two versions of a product. And the certification was an NSF for Sport certification. So they maintained two versions of their product. It was a supplement product, one that had a label with NSF for Sport, one that did not. They sold the one with an NSF for Sport certification at a higher price. And the one that did not have the NSF for sports certification, obviously, at a lower price. The NSF for sport product required that each batch be tested. So there was a cost for the brand to maintain that certification. That’s natural. That’s good. NSF for sport provides a valuable service. And of course, they charge for that. Consumers, especially athletes, weekend warriors, et cetera, they value that. They’re willing to pay for it. So the brand obviously sold a lot of those. But I found it interesting that the brand carried two versions of that product.

And in particular, that they carried a version at a lower price that did not have the NSF for Sport logo and certification. They did that because they recognized that there were many consumers who wanted that product but did not want to pay for the NSF for Sport certification. Now, my point is that clients should consider. The value and the margin implication of these certifications. The ones that are nice to have are exactly that, they’re nice to have. They’re not must haves, they’re not requirements. The client needs to match those potential certifications to the market, to the value, to the finances of the business and evaluate whether or not they need them or they don’t and decide appropriately. And make sure that when they partner,. With their drawing partner, they’re either paying for those things if they’re advertised by the drawing partner or potentially negotiating a discount and not paying for them just because the partner has them. They don’t necessarily need them. Make sure that they’re not paying for them if they’re not going to use them.

Stephen: That’s a really, really great point. Because yeah, understanding your customer, I think is really where that ends up coming from, right? It’s understanding the needs of the end user and really serving them, which is a really, I think, great perspective to come from. So this is, I think, honestly, within even that perspective of that kind of point of view of… Directing the ship, so to speak, and really serving your end customer. And kind of the same perspective that, you were talking about earlier of you have the CFO conversation and then you have the CEO conversation. You have the, you know, what’s necessarily best for the operational side of things, but then what is best for the actual partnerships and the direction of the company overall. And… Assuming that we’ve kind of gone through all these things. We’ve we’ve developed all of this both internally and with a partner I think the question that seems obvious now is how can I protect my intellectual property and formulation secrets when I’m outsourcing to a spray-drying contract manufacturer, right?

Will: Absolutely. It’s important on both sides actually to have good documentation, good contracts, good paperwork in place to protect the intellectual property of both parties, both the entity that’s doing the drawing and the client. So for our part, we have robust mutual NDA, and that protects us and our intellectual property. Because we work aggressively on behalf of our clients to make our intellectual property available to them. And it protects the intellectual property of the client. Our goal is always to work with them to create products. And sometimes that means putting our intellectual property together. So we clarify at the very beginning where that stands, both in the contribution of existing intellectual property and. What happens if we create new intellectual property and who owns it and how it might be shared. And secondly, there’s what’s called an MTA, a material transfer agreement, because it requires that we’re putting forward and sharing material with each other so that we can work together in our work streams from the R&D phase going forward. And so that protects us for things like no reverse engineering of material from each company and so on. But the good legal agreement that each party can see, review, edit, discuss, and agree to at the beginning before the companies get started is usually a sound and friendly way to establish that upfront.

Stephen: And did you guys have any additional thoughts on that? All right.

Ulli: It’s very standard. You do a non-disclosure agreement, particularly when you work on the cost of technology and a material transfer agreement, and then everybody feels like they’re protected. Ultimately, I can make the case, and I know this is not reality in many situations, but a relationship like this, where you’re basically developing something together, you’re solving a problem together. The spray drying company on behalf of its customers. There is really no upside to not having these agreements. And there is really no upside to trying to steal someone else’s intellectual property. You know, because ultimately, and we’ll get to that in a second, when we talk about the question. What are key performance indicators, know, trust, transparency, open communication, that’s invaluable. Like that is something that you cannot even like express in monetary terms because that really sets the baseline and the ability to develop something that’s never been done before or help a customer solve a problem quickly and effectively.

Stephen: Yeah, no, it’s a, that is a great tie in. And I’m glad that you kind of brought up that, that perspective of this whole thing. Cause there’s again, I think you’ve brought it up on other questions in the past too. There’s all the technical side, but then there’s the human aspect of it, which is so important. so opening that question up to everyone now, how do I determine or excuse me? The, now. Opening that same question we were just talking about up to everyone, what are the key performance indicators that I should monitor when I’m evaluating the success of my contract spray drying partnership?

Hendrik: I would say there’s always two sides. The one is the project performance and then the other one is the product objectives. And you have to achieve both of those from the project perspective. is have you achieved the time frame requirements specifically? And that is with regards to initial development stages, the scale up stages, and then how long did it take to commercialization? From the product perspectives, is again referring back to what was originally agreed. What are the product requirements with regards to moisture content, particle size, flowability, density, but also very importantly is product yield. A customer with very high expectations for a high value product wants high yields. And that’s a. Very important objective is can you achieve the high yield time and time and again, the same with the powder or the property requirements. And you have to evaluate both sides to determine whether you were successful or not. So with regards to the key performance indicator, think Ulli mentioned something that I agree upon, and that is transparency. Obviously access to the technology, the application of the technology with regards to your product objectives and requirements. And then very importantly, experience. Experience with regards to, you know, similar products, similar volume requirements, similar campaign requirements and product requirements. And if you don’t have experience in that, then obviously you’re probably going to fail in that project.

The Value of Differentiated Certifications: A Case Study

Stephen: I really like that distinction too, of just putting it into those buckets of project versus product. It’s a really helpful mindset. Will, what are your thoughts on that?

Will: I think there’s, they are great buckets. think ultimately the question is whether or not the product can be a success in the market to some extent that falls back on the client to see whether or not they set the right expectations when they were defining what they needed. We talked about how the client needed to be clear what they were trying to achieve. And so whether we’re talking about the product or the project,. Meeting their respective goals, to a great extent, these targets are going to be set by the client when they come in to speak to their partner, their drawing partner. And so what the drawing partner is trying to do is help that client bring things full circle back to the objectives they set. If that works, then hopefully that client is successful in the market with their product and they’re rewarded with the clients they’re trying to achieve. And generally what we try to do as the best drawing partner is then take them to the next level. Once they hit the market, once we get that feedback, we look for opportunities to further differentiate that product and potentially other products in the market with them. You know, it’s a living breathing relationship that goes on over time. Once we start getting the market feedback, the question becomes, how can we do more? How can we grow this product? What do we learn from the market? Once we get more feedback from. You know, those first and additional clients. And then what can we do to branch out and do more, whether that’s additional segments of the same market or it’s totally different markets, potentially international markets.

And we see with a lot of our clients that when Hendrik and I sit down with them, they come to the factory and we have dinner with them, you know, the first night or so, and when they’re doing campaigns, the discussion we always have is how can we help you grow the business? What other opportunities are there given the markets you’re in? And I would say 75 to 80 % of them, they leave those dinners with lots of ideas. And so as long as we hit the product targets, we hit the project targets, and we launch successfully with those campaigns and getting those products into the market, generally what we do from there is we set the next round of targets. So success comes from staying on track with the product and the projects, but then getting that feedback from the market to make sure that as a corporation,. They are hitting their objectives with their markets so that they build their brand and then they can do more because they’re all stepping stones.

Stephen: That’s a really cool perspective on that question. Thank you for that. The last question that I have is a little bit of a shift. We’ve come at so many of these questions from the perspectives of when you’re looking for a spray drying partner or when you’re kind of in the market for it. Or what you should be looking for from a new partner or whether you should do it in-house. But this one actually comes from, I think, a perspective that a lot of the possible people listening are, which is when you already have a partner or you’re already using a current manufacturer, which is, I think, going to be really helpful. So the question is essentially, how do I determine if my current spray drying supplier is meeting industry standards? Industry best practices and when should I consider switching providers.

Will: Yeah, I think there’s two sides to this. I’ll let Hendrik and Ulli start. But the two sides of this really are based on one central premise. Industries and markets are always in motion. And that means that you always see businesses that are moving up and you see businesses that are moving down. That’s just the reality of competitive dynamics. And so I think we can talk to you about. What a client should keep their eyes open for if they’re worried that their partners might be moving down and losing traction, either because their platforms, their facilities, their production equipment, their people are on the decline, and that would be worrisome. Or there might be things that would motivate a client to move to a different firm if they see other partners that might be better, because those other partners are on the upswing. Either because of technologies or ideas or differentiation or intellectual property or adoption of capabilities that others in the other first category might be slow to adopt.

Ulli: Yeah, I think one of the things that, and it kind of goes back to the, something Will was talking about, and it’s more in the people area, which is willingness, capabilities of willingness. If you at any point in time get the sense that your spray-drying partner is no longer willing to help you solve a problem or advance a project or focus,. His her the company’s resources on achieving your objective. I think that’s that’s definitely a red flag. The other thing that I think is important. Any kind of manufacturing partner should always be open to have a customer come in and audit. You know,. Assuming that the relationship is built on collaboration and achieving mutual objectives, then it shouldn’t really ever feel like someone’s gonna try to like get you, you know, I saw something over there, I saw something over there, I’m gonna try to like, you know, get my price lowered. It really should be, there should be a welcoming atmosphere at the manufacturing partner. Or at the spray drying partner to have customers visit, see the facility, see the lab, see the machines in action if they’re interested in doing so. So if you work with a company that is not really open to any of that, I think that’s another red flag where transparency is super important. You know, they are one piece of the value chain in your product that eventually will get used by a consumer in one way, shape or form. And so I think that that’s that’s important. If you if you see increasingly bad customer reviews, I mean, everything is online right now if you see increasingly poor customer reviews, I think that’s worrisome. If there is a lack of documentation, a lack of.

Making particular documents available. think that’s another red flag. Hendrik, you probably have another 30 examples.

Hendrik: Yeah, I was just thinking, Ulli, you addressed most of the questions or the answers. One thing that I agree with you absolutely, and that is the level of transparency. If your contract manufacturer or your product development partner is not 100 % transparent, then something is off. So that is with regards to site visits. At APD, we always invite the customer to our site. We take them through the complete. Process from beginning till end. We walk the processes with them from the logistical side, from the receiving side, right through to the development side, the production side, the packaging side, the powder handling side and everything and then back to warehousing and logistics. It’s very important that the customer are comfortable with each one of these processes and how to handle them. And then one thing that is very important for me personally, I look at the website and I look at your LinkedIn profile. And if you don’t have an updated website that, you know, complies to the latest trends and latest technology, it shows activity on your website. Sorry for that. If you don’t have an updated website and there’s no customer interaction on your website, then that is questionable.

Protecting Your Secrets: IP and Outsourcing Agreements

Will: So I think what we’ve described here is sort of back to this concept of the must haves and the nice to haves. If a client must have something like a certain certification, and obviously one of the things a client must have, whether they know it or not, they must have an audit trail of certain documentation. They must have production records. They must have all of the paperwork that goes with. You know, the C of A of material coming in and so on for almost every campaign, unless they’re in an unusual circumstance, things like that, then it’s probably time for them to find another partner if their partner cannot provide those things or no longer provide those things. And then there’s the category of the nice to haves. If there are things that would be nice to have, but they’re not comfortable that they’re getting those things from their partner, then they have to evaluate, are they uncomfortable enough that they should consider moving on? And then it becomes a question. Are they enticed to go with one of the rising partners in the field? And then it’s just a matter of the competitive landscape providing alternatives that suddenly look pretty good to them compared to how things were when they evaluated them before. From our point of view, we make decisions like that with vendors and partners every day. And it’s not unusual for them to go through those evaluations. As a very competitive player in the drawing space,. We try to do things that are so differentiated that it makes it very easy for a client to make those decisions.

But most drying companies don’t have it so easy, and it can be very difficult, particularly for those clients who are drying a commodity product. There, think they’re just moving back and forth between players who, in many cases, often look the same. And if they’re making a decision just on a couple of cents per pound or per kilogram on a dry product, then. It’s a lot of work moving back and forth between clients and creating new relationships and accounts for uncertainty. And it’s not always easy to make that decision. For us, we choose to concentrate on things that we believe no one else is doing. We believe that things like the use of cyclodextrin inclusions makes a major difference in many ingredients where cyclodextrin inclusions can be deployed, particularly if you’re in food, beverage, or nutraceuticals. Where those things can make a considerable difference for neutralizing unfavorable taste or odor or creating dissolution in liquid where solubility is a great concern. And we know unequivocally that the dynamic atomization technology which we use and is not deployed in the rest of the marketplace is uniquely suited for that and spray drying in the rest of the market cannot do. Makes us the only dryer that should be chosen by clients in most cases. But that’s just us. mean, for the most part, clients have very different considerations that they’re going to be taking into account. And they really have to weigh whether or not the choice to move is going to be worth that move and whether or not it’s going to impact their margin. Whether it’s going to disrupt their supply chain, whether it’s going to change the timing of their material throughput time in their overall manufacturing model, and so on.

And whether or not they’re going to impact multiple SKUs, not just one or maybe two products for some that have very complex inventories and inventory systems, it can be a real headache. So it can be a major decision.

Stephen: Alright, well sweet, that’s a great last answer to our last question.

Will: That’s right.

Stephen: I think this has been… good.

Will: Sorry, have to let the puppy out. The only quick thing I have is we did not do any sort of introductions or anything at the beginning. I don’t know if that’s necessary or not. How do you want to deal with that in general now and in future recordings?

Stephen: I mean,. We can go about it however you guys want. We could even do introductions now and I can just put those at the beginning for this one. It can go again, kind of however you want it to go. If you’d like it to kind of be like that format of things where we introduce everyone and you say a little bit about yourself, I’m happy to just do that now and put that at the beginning. If not, then whatever you guys prefer.

Will: Yeah, and.

Ulli: I wonder, Stephen,. Because we’re going to do so many of these.

Will: Yeah, I’m not even. Arguing that we need to do one. I’m saying that you could even put just like, we can stick with names, you could stick name and title, you can do whatever you want to do. I’m not saying we need formal introduction. just curious how we want to handle it. like we’ve got Hendrik, I see Hendrik in his frame there, but somebody’s going to want to know who is this person talking in the video.

Ulli: Option.

Stephen: Yeah, yeah, yeah, yeah. Well, let’s, I think what I can do is within the captions, I can actually just title them, but let’s do really quick little introductions just here, and then I’ll just put this whole little clip from here at the very beginning of it. Does that work for you guys?

Ulli: But are you going to put. It at the very beginning of each of these recording things that we’re doing?

Stephen: No, no,. No. there’s, I’m going to see if I can have it just attached permanently to like name and title to each of the captions, which I believe I may be able to do. I haven’t done it before though. So it might only be at the beginning. But in the overall long format of it is where it would show up. So I think what we, we can do is I’ll just say, I’ll just say something like, like if, if you guys want to introduce yourselves and give, you know, what you do here at APD, I think that’d be helpful for just show the perspective. And then if you want to just do really brief, like a couple sentences, I run this point of view or I run, run this part of the program. And so, you know, so people understand where the perspectives are coming from. I think they show through, I think it would be useful. So I’ll just start that now. Is that cool with you guys? Cool.

Will: I think probably maybe just like name and title. I’ll just say it’s Will West, co-founder and CEO of Tesseract Life Sciences, which happens to be the owner of Advanced Powder Dynamics.

Stephen: Okay, cool. All right, so I’m gonna introduce that now.