Pros and cons of outsourcing cosmetic manufacture outside of the EU and how to overcome the most common obstacles
While Europe has a mature cosmetic industry serving proprietary and retail own brands, the percentage of cosmetic imports from outside of the region is rapidly rising.
Imports of cosmetic products from Asia and Oceania to the UK, for example, have increased by more than 300% during the period 2005-15, £122m-£378m, respectively, according to the UK Cosmetic, Toiletry & Perfumery Association.
This growth has been driven predominantly by lower cost of goods, as well as smaller minimum order quantities.
Benefits accrued to brand owners include test marketing of new products and formats without the associated commercial risks of large stock holdings.
Although the commercial benefits are attractive, the development and manufacture of cosmetics outside of the EU is not without issues.
This article offers some reflections on the obstacles EU-based companies may encounter when importing cosmetic products, and the practices both importer and OEM cosmetic manufacturer can adopt to help overcome these.
The development and production of cosmetic products by manufacturers is rarely just ‘brief and receive’.
Very often, it is a complex and time-consuming process, even without the added complication of the geographical location of the manufacturers and potential language barriers.
For example, overseas manufacturers may not be accustomed to working within the restraints dictated by the European cosmetic regulatory framework.
Complexity in the supply chain, from ingredient sourcing to shipping of finished goods to the destination market, is also a critical hurdle that European importers have to consider when deciding to manufacture their products externally.
Commodity ingredients, such as aqueous surfactants and emulsifiers were, in the past, imported from chemical manufacturers in Europe and the US, but increasingly cosmetic manufacturers in Asia, for example, are now able to source these raw materials from regional chemical manufacturers.
Excipients, such as antimicrobial preservatives and antioxidants, may be added to materials to maintain their integrity.
However, although the excipients used are generally EU-approved cosmetic ingredients, in some cases these might not be declared on the material’s accompanying technical information data sheet.
Consequently, usage of these ingredients could compromise both the regulatory compliance and consumer safety of the finished product in which they are used if attention is not given to ascertaining their presence prior to usage of the ingredient.
Article 19 of Regulation (EC) No 1223/2009 requires that a list of ingredients is declared for all cosmetic products marketed in Europe.
Therefore, if any regulated materials are present in the finished product but not declared, it could be argued that the product’s ingredient list does not comply with EU cosmetic legislation.
Furthermore, if the same chemical is also present in the finished product in its own right, as a primary antimicrobial preservative, for example, the formula could be ‘illegal’ if the combined concentration of the two substances exceeds EU regulatory limits.
More importantly though, is the safety risk to consumers from them not knowing that undeclared, potentially hazardous chemicals are present in their consumer products.
Failure to ingredient label regulated substances essentially infringes the hazard management principles upon which ingredient listing is based.
Therefore, it is critical that regulatory and safety compliance checking of prototype formulations takes account of the presence (or absence) of any regulated materials, irrespective of their source.
This article now turns to the general purity and safety of the ingredients used in cosmetic products for the EU market, as dictated by Annex I (Cosmetic Product Safety Report) of Regulation (EC) 1223/2009.
As more specialised chemicals lose their patent protection, they are being manufactured by fine chemical manufacturers.
Although this may seem attractive, particularly from the cost of goods perspective, usage of these materials does not come without its pitfalls.
Notwithstanding that these chemicals are generally manufactured according to published methods, the precise methodology and feedstock chemicals may often differ slightly from the process used to manufacture the proprietary format.
For example, solvents may be changed to suit the local manufacturing process, or process intermediates substituted to overcome supply issues.
Although the end-product would be equivalent, chemically, to the proprietary version, it is highly likely that the generic material will be subtly different to the proprietary version.
For example, changes in the impurity profile of the generic material could have a marked effect on its safety profile.
The impurity profile of the surfactant cocoamidopropylbetaine, for example, can have a marked effect on the skin-sensitising potential of the surfactant when it is used as a cosmetic ingredient.
Therefore, if a surfactant produced by a non-standard method is employed, the safety of consumers could be compromised by the presence of high levels of sensitising impurity.
Similarly, the presence in generic materials of unknown or unquantified impurities through the usage of a non-standard synthesis route would disqualify the usage of the toxicity data generated for the proprietary material in the safety assessment of the former.
This would be critical in the case of substances regulated according to prevailing cosmetic legislation, for example antimicrobial preservatives and UV filters where the impurity profile is a major consideration during the approval risk assessment process.
Although not widely reported, there have been isolated anecdotal reports of cosmetics being produced inadvertently using counterfeit ingredients.
Many cosmetic ingredients are supplied in distinctive packs or drums; for example, many fragrance companies use containers decorated in distinctive colours.
Knowing how ingredient suppliers mark their respective ingredient containers can be a useful aid in the prevention of the inadvertent usage of non-genuine substances.
Cosmetic manufacturers can also play an active role in this strategy by ensuring that empty drums and containers are recycled by genuine waste contractors.
Because many finished products are produced in small quantities, 100s or 1,000s of units, cosmetic manufacturers can often find themselves in a position of having to purchase ingredients in quantities which far exceed the actual amounts required to fulfil customer orders.
Consequently, unused ingredients may accumulate in company warehouses and dispensaries for prolonged periods of time, often in unfavourable storage conditions of temperature and humidity.
This is of particular importance for raw materials which are labile or ‘sensitive’, for example fragrance oils or other materials subject to oxidative breakdown.
If procedures are not already in place, cosmetic manufacturers should be encouraged to adopt best practice measures to protect labile ingredients from chemical breakdown.
Bulk fragrance oils can often contain essential oils, which can be susceptible to oxidative decomposition.
Citronellol, limonene and linalool are among those fragrance constituents, which on exposure to air, auto-oxidise to produce potent skin allergens.
Although fragrance oil manufacturers operate their own procedures to mitigate this phenomenon during shipping of compounded oils to customers (minimising head-space in transport containers, for example), subsequent partial usage of fragrances results in an ever-increasing head-space.
This provides enhanced opportunity for auto-oxidation of the remaining fragrance.
Mitigation of this chemical decomposition can be readily achieved via the purging of the partially-full containers by a chemically-inert gas, such as nitrogen.
Manufacturers should ensure that empty drums and containers are recycled by genuine waste contractors
Brand owners should also be aware of the potential usage of obsolete ingredients for manufacture of cosmetic products.
It is not uncommon for the supply chain to contain cosmetic raw materials that have since been superseded in the ingredient suppliers’ principal markets.
Materials may have been replaced for reasons of improved quality and purity, or changes in solvents used during the manufacturing process.
If such a case were to arise, consumers could be exposed inadvertently to hazardous or illegal substances, or substances which contravene brand owners’ policies and guidelines.
Therefore, brand owners should develop an active and regular monitoring programme of ingredients, particularly those large-volume materials that could be described as commodity items to ensure compliance with both company and regulatory requirements.
Once manufactured, finished products need to be shipped from the country of origin to the country of sale, which can very often subject the formulations to extremes of temperature and humidity.
Ship-borne containers are the usual method of transporting the finished goods to European markets, very often entailing passage through high-temperature areas.
Such climatic conditions can subject the finished goods to extremes of temperatures, which often may not have been considered during routine product stability testing.
Similarly, the finished goods may also have been subjected to similar conditions at the site of manufacture while awaiting shipping to their final destination.
Conversely, finished products transported by air freight could be subjected to extremes of low temperature during the transit time in an aircraft cargo hold.
Therefore, it is important that brand owners have an awareness of the conditions to which finished products may be subjected during shipping to the intended market.
Having this knowledge to hand will allow for the design of appropriate stability testing programmes to mimic the extreme conditions to which products may be exposed during the shipping process.
Alternatively, other more cost-effective methods to overcome these extreme conditions could be adopted, to mitigate the potential for physical and chemical damage to products during shipping.
These could include shipping in controlled-environment containers or aircraft cargo holds.
Lower cost of goods is often the principal reason given by European brand owners for the decision to source cosmetics from manufacturers from outside of the EU, particularly for products where only low unit numbers are required.
However, there are important regulatory and safety aspects that must also be considered in parallel with the lower cost benefits of manufacturing.
Nevertheless, it can be relatively straightforward to overcome these critical technical issues by the fostering of collaborative working relationships between brand owners and their contract manufacturers, thereby ensuring that only legal and safe cosmetics are offered for sale.
Stephen Kirk, SK-CRS Ltd
Full references for this article can be found at www.cosmeticsbusiness.com.
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