NATIONAL AGENCY FOR FOODS &DRUG ADMINISTRATION AND CONTROL
A TWO-DAY WORKSHOP FOR COSMETICS AND MEDICAL DEVICES MANUFACTURERS IN NIGERIA
TOPIC
CHALLENGES IN THE COSMETICS & MEDICAL DEVICES INDUSTRIES
BY
IKPONG OKON UMOH
CHAIRMAN, TOILETRIES & COSMETICS MANUFACTURERS GROUP OF M.A.N
PROTOCOLS
First, on behalf of Toiletries & Cosmetics Manufacturing Group of MAN(T&C-MAN),I wish to thank the National Agency for Foods and Drug Administration and Control (NAFDAC) for organizing this forum and willingly giving us (T&C) an invite to speak our minds on the challenges facing our industry in the course of exercising their mandate.
For some of you who have been active in this industry for the past 15 years,you will agree with me that we are dealing here with a “New NAFDAC”. In the past NAFDAC operated like an overlord reeling out regulations on a take it or leave it manner.
The regulated, (i.e. cosmetics and medical devices manufacturers and vendors) were likened to the criminals and treated on the basis of always “guilty while manufacturing”.
In those days, there was a slogan among the cosmetics SMEs that the “Fear of NAFDAC was the beginning of Good Manufacturing Practice”
Over the years, a few things have happened which some succor and a more conducive atmosphere for the regulated and the regulator to discuss openly and sincerely on issues of regulation. A typical example is this forum, thanks to the new DG, Dr. Paul Orhi, and we hope that some of the reforms he brought would be sustained long after he has stepped aside.
Let’s begin this discuss with some definitions of key terminologies:
What is cosmetics?
US FDA/NAFDAC define cosmetics as
“articles intended to be rubbed, poured, sprinkled, or sprayed on, introduced into, or otherwise applied to the human body…for cleansing, beautifying, promoting attractiveness, or altering the appearance” [FD&C Act, sec. 201(i)]. Among the products included in this definition are skin moisturizers, perfumes, lipsticks, fingernail polishes, eye and facial makeup preparations, cleansing shampoos, permanent waves, hair colors, and deodorants, as well as any substance intended for use as a component of a cosmetic product.
What are medical devices?
The American FDA/NAFDAC defines a Medical Device as “an instrument, apparatus, implement, machine, contrivance, implant, in vitro reagent, or other similar or related article, including a component part, or accessory which is:
- intended for use in the diagnosis of disease or other conditions, or in the cure, mitigation, treatment, or prevention of disease, in man or other animals, or
- intended to affect the structure or any function of the body of man or other animals, and which does not achieve its primary intended purposes through chemical action within or on the body of man or other animals and which is not dependent upon being metabolized for the achievement of any of its primary intended purposes.”
In this lecture I am going to limit my focus to the cosmetics industry where majority of participants here operate. Most Medical devices are imported into this country with very few being manufactured here if any and therefore may have a regulatory framework that applies to all imports.
Generally speaking, industries in Nigeria are faced with very big challenges which have been documented by the Manufacturers Association of Nigeria (MAN), and may be listed as follows:-
- Poor and deteriorating infrastructural services, compounded by collapsed electricity supply which impacted negatively on capacity utilization;
- Deepening weak domestic demand arising from lack of consumer purchasing power;
- High and unplanned inventories caused by lack of patronage and distress in aggregate domestic demand;
- Smuggling and Unbridled influx of cheap imports of sub-standard, fake and substandard products, including dumping of all manner of finished goods-all in the name of trade liberalization;
- High costs of funds arising from depreciation of the Naira against major currencies coupled with high lending rates and extreme difficulties in accessing credit for working capital, particularly by small and medium-scale industries;
- Policy inconsistency and anomalies in customs duty while imported finished goods witnessed a corresponding reduction in duty payments.
- Continuing harassment of companies by some state and local governments over unauthorized multiple levies,taxes and charges in spite of the clear position of the law on the matter;
- Problems of supply of petroleum products, particularly AGO (diesel) LPFO (black oil)
- Non completion of the development of core industries particularly the Petro-chemical as well as Iron & Steel Industries;
- Dearth of qualified skilled middle level manpower worsened by the decaying educational system;
- Slow rate of technology acquisition stemming from low investments in Research and Development and absence of the needed collaboration between the various government research institutes and the Universities on the one hand, and the manufacturing sector on the other;
- Cumbersome port administration that hinders the attainment of the 48-hour cargo clearing at the ports; etc. (MAN, 2008, MAN,2010,and Jamodu,2010:47)
A close look at this list of challenges shows a clear omission of regulatory challenges as if they did not exist and this lecture/presentation will try to fit this missing link and suggestions on the way out, through the eyes of cosmetic practitioners and bench-mark practices all over the world.
What are the regulatory challenges faced by the Cosmetics industries in Nigeria?
As key players in this subsector of the economy, we have identified six main challenges due to the regulatory framework we are subjected to and we shall x-ray each of them in turn as follows:-
- MULTIPLE REGULATION:
The Toiletries & Cosmetics industry all over the world wide is under the purview of designated Government Agencies, like The Foods &Drug Administration (FDA in the USA); The National Agency for Foods and Drug Administration and Control (NAFDAC in Nigeria)
It’s been observed that in the past 4-5 years, the number of Government Agencies regulating our industry is now on the rise.
We now have in addition to NAFDAC,
Standards organization of Nigeria (SON),
National Environmental Standards and Regulations Enforcement Agency (NESREA),
Lagos state Environmental Protection Agency (LASEPA),
Weights and Measures,
Consumer Protection Council (CPC), etc.
The regulatory framework crafted and used by these agencies are more or less very similar to the regulatory framework of NAFDAC even though they may be called different baptismal names e.g. SON –Mandatory Conformity Assessment Program (MANCAP) and LASEPA -Chemical Storage Permit, to mention a few.
All these overlapping regulations end up in payments of money to these various agencies for the certifications and permits that do not necessarily add value to the product or the company. The process of compliance for each of these agencies process gulps man-hour, management time and un-receipted sums of money, all of which constitute a big drain on the meager resources of the T&C MAN members who are mainly SMES.
SUGGESTED SOLUTION:
NAFDAC already has superior expertise and well trained personnel than any of these agencies and should be allowed to do the job, other agencies can liaise with NAFDAC to use their data base if there is absolutely need for such information without subjecting industries to “double jeopardy”
- PRE-MARKET REGISTRATION:
NAFDAC requires that a prospective manufacturer of cosmetics registers their products before offering same to the market. There are other countries that used to enforce this requirement e.g Japan, china, Brazil and Ghana. But some of these countries have found out that this practice is quite out of touch with cosmetics business reasoning, as the market is the ultimate determinant of the success or failure of any cosmetic product.
In April 2001, Japan revised and relaxed its regulatory law to allow companies to sell most cosmetics in Japan without prior approval or licensing. In 2014, China streamlined its regulatory bodies and also relaxed premarket registration laws.
Brazil is applying it selectively for imported cosmetic products, possibly to protect its local industries. Nigeria and Ghana are the only “Twin brothers” still engaged in pre-market regulatory for locally made and imported Cosmetics.
QUESTION: Why is pre-market registration a bad omen for cosmetics?
In today’s markets, the speed of product introduction can spell the difference between success and failure. It is important to acquire market share and establish industry leadership. The company with the first product to the market can usually capture premium segments, build strong name recognition, and control a large market share (Duffy & Kelly, 1989). This share can lead to significant economies that are useful in keeping rivals from entering the market.
NAFDAC’s regulatory framework for cosmetics derives from the US-FDA but the FDA’s legal authority over cosmetics is different from authority over other products such as drugs, biologics, and medical devices. “Under the law, cosmetic products and ingredients do not need FDA premarket approval, with the exception of color additives. However, FDA can pursue enforcement action against products on the markets that are not in compliance with the law or against firms or individuals who violate the law.”
The FDA position is in realization that cosmetics have been found to cause minimal harm on contact, which reverses to normal when use is discontinued.
This is not the case in Nigeria, as all cosmetic products are subjected to the same regulatory requirements as Food and Drugs.
This pre-Market requirement put the local player in a disadvantage as the lead-time before product launch is overly prolonged to the advantage of an importer. Some people assume that the period between submitting letter for new product registration and when you are given the number to hit the market is 16 weeks, this time lag is very rare, registration can take as long as two years .Worst still if you intend to run adverts.
CASE STUDY:
In a typical situation, three cosmetics manufacturers from South Africa, Cote D’voire and Nigeria are interested in using the concept made possible by a multifunctional Raw material just developed by DSM, Switzerland. The material is said to offer even skin tone, good sun protection, prolonged moisturizing effect and is safe for use on all skin types. The material has been approved for use in skin care products in the US, Europe and Japan.
The three companies work independently and each aims to reach the market first with this new product that may be the toast of consumers within the shortest possible time.
The companies want to rely on their expertise and good interpretation of its in-house accelerated storage testing and they all start about the same time and determined to hit the market within one month. The company in South Africa succeeds in making it to their market within the first month.Three months later two more product variants are added in response to market demand.
The company in Cote D’voire arrives the market within three months. Due to customer demand, another product variant is added after two months of initial launch.
The company in Nigeria arrives the market two years later after undergoing NAFDAC regulations and given number. No other variant was added throughout the entire life cycle of the product
As cosmetics manufacturer facing stiff competition, which country would you like to sight your factory and why?
Speedy new product development (SNPD) and timely introduction have other crucial implications for successful competition in today’s markets. Successive, quick new product or technology introductions help a company sustain its lead in a new market. This strategy enables the company to learn about its markets, make changes, and then position the revised products (Hamel &Prahalad, 1991).
Our local T&C companies are restricted by regulation from embarking on Speedy New Product Development (SNPD) and therefore cannot benefit from a first mover advantage. In a business context, “first mover advantage” refers to the benefit enjoyed by a firm as the consequence of its early entry into a new market. The cosmetic industry the world over thrives on innovation and variety of products offerings in response to the changing demands of the consumer. How fast this response is accomplished gives a competitive advantage and encourages research and development.
SUGGESTED SOLUTIONS:
- NAFDAC should enhance the value of GMP certified premises/facilities so that new products development can start and progress to market testing with initial submission of raw materials to be incorporated in the new product for the purpose of screening.
- The industry can assist NAFDAC by embarking of self-regulation and engaging the agency in regular discussions on safety and usage of restricted/ controlled Raw materials.
- REQUIREMENT FOR A STAND ALONE BUILDING
Beside pre-market registration, there are other requirements for startups which appear very cumbersome and discourages new entrants into the business.
Such guideline include, having a stand-alone factory building, which must have facilities such as laboratories, cloakrooms, air-conditioned storage facilities for raw materials, finished goods and packaging materials, water supply and treatment facilities, high caliber personnel to man production, quality control e.t.c.
This requirement is strictly a requirement for Drugs, Foods and Food supplements, and should not be applied to cosmetics
In today’s Nigeria where unemployment is on the increase and our tertiary institutions are churning out youths in their thousands, this regulatory requirement is too cumbersome and constitutes a disincentive for our fresh Science Graduates who would like to venture into cosmetics manufacturing and therefore needs to be reviewed in line with the realities on the ground, to encourage new entrants.
In T&C Manufacturers Group, we believe that it is possible to manufacture quality cosmetic products under adequate sanitary standards to avoid contamination without necessarily insisting on stand-alone factory building which may gulp the meagre start-up capitals.
Our position is corroborated by the fact that the history of many cosmetics companies around the world including the big multinationals of today indicates very modest beginnings, often times from the garages or backyards of their founders, e.g George Johnson the founder of Ultra sheen, Charles Revson of Revlon, ESTEE LUDER,Z SKIN COSMETICS,TIFFANY, William &James Lever (UNILEVER)
One of our member companies who we interviewed recently for our current edition of “T&C NEWS SPLASH” is said to have started manufacturing a petroleum jelly based product in his kitchen with less than Three Thousand Naira (N3,000) start-up capital about 13 years ago. Today the industry now has over 25 different products and employs over 3,000 workers.
This is a talent and a dream which would have been dead on arrival if the Stand alone requirement was in force.
SUGGESTED SOLUTIONS:
NAFDAC should simplify this requirement to enable new start –ups to use a section of their residence for a period of 3-5 years. This will also encourage some retired NAFDAC staff and civil servants who would like to venture into cosmetics manufacture.
- REGISTRATION OF DIFFERENT PACK SIZES:
The cost elements associated with the registration of a cosmetic product in Nigeria ranks among the highest in the world.
It is noteworthy that Cosmetics business everywhere including Nigeria is driven and spiced by variety especially different pack sizes.
Offering the same product in different pack sizes is a market strategy to reach out to try to satisfy all spectrum of consumers with varying purchasing powers. For example, you can put into the market a Hair& Scalp conditioner product in 500g pack, 250g, 150g and even 100g to target Professional salons, home users, students in the campus and secondary school pupils with low cuts. The more variants you have spread along demographic lines the bigger your market is likely to become.
In recent times NAFDAC has introduced charges for different pack sizes of the same product filled from the same vessel and packed in similar plastics materials.
What obtains in other clime is worth mentioning here.
Unilever (Uk, Europe& America) has close to 50 variants of impulse spray fragrance. These variants of impulse are being sold everywhere all over the world. The purpose is to satisfy customers’ choice preferences in selecting which variant suits their passion.
Why is Unilever not offering these products in Nigeria? Is there any company in Nigeria that can offer such a broad band of single product selection?
The answer is NO. To manufacture and sell 50 variants of Impulse in Nigeria, Unilever, would pay so much in time and cash to register each variant and would rather concentrate effort and funds on areas of comparative advantage.
It is also common knowledge that any local manufacturer of cosmetics that attempts to adopt this robust brand strategy cannot survive the rigour of registration and its financial implications. If any company tries it, that company may have to file for Bankruptcy protection after paying all prescribed NAFDAC fees? It is as bad as that!
The T&C Group of M.A.N has made several representations on the negative impact of this exercise to NAFDAC, we have gotten some verbal promises of “better days” but the reality on the ground is that nothing has changed.
SUGGESTED SOLUTIONS:
We want to renew our appeal to NAFDAC to remove this requirement for different pack size registration and payments so that manufacturers can satisfy the different yearning in our market without being straddled in multiple registration and charges.
- ADULTURATION &FAKING:
This used to be a nightmare for many local manufacturers of cosmetics. We can say here that this has reduced drastically in the past three years. This may be attributed to the improved corporation between the NAFDAC, the industry and the law enforcement agents. There is need to keep the flag flying and watch and pray that this crime does not return in full force.
- FREQUENT CHANGES IN REGULATORY REQUIREMENTS AND CHARGES:
While fully aware that change is the only thing that is constant, the cosmetic industry is constantly facing the challenge of frequent changes in regulatory requirements.
The list of requirements for inspection, registration and renewals gets longer every year and so are the charges in geometrical ratios.
With our NAFDAC, Every time there is breaking news and the manufacturer is caught by surprise on some of these changes.
As stakeholders, we deserve to be carried along and our opinions sought on very sensitive changes especially those that can affect our lead time and budgetary allocations
SUGGESTED SOLUTIONS:
There is need for improved collaboration and communication between the NAFDAC and the Toiletries &Cosmetics industry on one hand and the various sections of the agency on the other. This can streamline the requirements, and foster understanding and easy of compliance.
CONCLUSION:
Personal Care Products is one of the fastest growing businesses in the world. It is estimated that by the year 2017,the Global personal care market would have grown to about USD 630 (Eur 487) billion (N126 trillion) in value (Lucintel,2012)
In Africa, countries like South Africa and Nigeria, the two biggest economies, have shown very strong growth in the last 10 years and each holds out a promise to achieve stable and continuous growth in the years to come.
In South Africa, the indigenous cosmetic companies have made significant contribution to this growth. In Nigeria, the major beneficiaries of this growth are the foreign- made cosmetics. These products occupy almost all the major shelves in the open markets and supermarkets and are estimated to have a market dominance of about 90%.
If the local cosmetics products in Nigeria must partake in the current and future boom, things have to change for the better. The speed of reaching the market with new products will continue dictate and define competition and success in the market place.
Between the local cosmetics manufacturers and the Market, NAFDAC holds the Ace. The Agency has already initiated that change by willingly inviting us to make known the challenges the manufacturers face
By so doing they have demonstrated that they are ready to “walk the talk” and leverage its long term performance indices on collaboration and cooperation with the stakeholders.
We, in the cosmetics industry request that NAFDAC should embrace and adopt international best practices in the exercise of its mandate for the cosmetics and Medical Devices industries. Make deliberate effort to simplify the requirements and adopt Post Market Surveillances (PMS) instead of Pre-Market registration so that our products can be competitive and every stakeholder can achieve a win –win situation for our industry and for our country Nigeria.
THANK YOU.