Amerilab Technologies Inc.

Bubbling its way to the top of the effervescent market

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T H E M A G A Z I N E F O R L E A D I N G B U S I N E S S E X E C U T I V E S

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BUBBLING ITS WAY TO THE TOP OF THE EFFERVESCENT MARKET

Produced by Forrest Lancaster and Written by Matt Dodge

Founded by Fred Wehling in 1995, Amerilab Technologies Inc. is the country’s largest contract manufacturer of effervescent tablets. Based in Plymouth, Minnesota, Amerilab serves food distributors, health and nutrition experts and pharmaceutical companies, leading the domestic market in the research, manufacturing and packaging of effervescent products.

Working to develop effervescent tablets and powders for contract clients, Amerilab specializes in creating alternate delivery systems that allow for more efficient absorption of ingredients into the bloodstream, sometimes at twice the speed of the standard tablet. Amerilab’s products are used to deliver a wide range of medicines and supplements, including cough and cold remedies, analgesics, vitamins, minerals, amino acids and herbal extracts.

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Amerilab handles contract manufacturing jobs from start to finish. With 15 manufacturing lines, development support, packaging capabilities and package design services, the company helps clients turn their formulas into mass-produced tablets or powders. “My passion always has been developing something new for the market that makes it easier for people to take their desired dosage form,” says Fred Wehling, founder and CEO of Amerilab.

While the public has been using effervescent antacid tablets since the 1930s, Fred found the market initially resistant to the idea. “It’s taken some effort to get people to recognize that effervescents matter in terms of effect and usage,” he says.

A STAR IS BORNE

A forerunner in the research and development of effervescent technology in the U.S., Fred started the country’s first such manufacturing company, CIMA Laboratories, in 1986. CIMA specialized in fast dissolving tablets or “fast melts” that could be absorbed quickly and Fred secured his first patent, for orally disintegrating tablets (ODT), in 1993. Fred sold CIMA Laboratories before returning to the effervescent market in 1995 with the launch of Amerilab, where one of the first projects was revamping a decades-old brand of children’s sparkling drink tablets.

Launched nationally in 1962, FIZZIES were originally produced by the Emerson Drug Company. When the Food and Drug Administration banned the tablet’s key sweetener in the late ‘60s, the product began to disappear from the market and the brand lay dormant until 1995 when the new trademark holder showed up on the doorstep of the nascent Amerilab.

The company took on the contract and reformulated the tablet using aspartame as a sweetener, but the FIZZIES trademark holder went bankrupt just a year later, leaving Amerilab with unpaid bills totaling $1.5 million and forcing it to downsize from 65 employees to seven.

Following the FIZZIES debacle, Amerilab landed itself some steady contract customers over the next few years, allowing it to edge back into solvency. While the drink tablet had almost sunk the company, it had also laid the groundwork for its biggest breakthrough.

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In 2000, a schoolteacher and her husband approached the company about manufacturing their new immune support dietary supplement after hearing about Fred’s proficiency within the effervescent industry and Amerilab’s experience with FIZZIES. “They had seen FIZZIES on the market and they thought it was kind of a cool delivery system,” says Terry Wehling, president of Amerilab.

After contracting with Amerilab to produce the tablet, the schoolteacher appeared on Oprah in 2004 and Airborne became a household name overnight, with sales growing eightfold in just two months. “It launched the effervescent delivery system in the U.S. for supplements. We’re basically the originators of effervescent nutritional supplements in the U.S.,” says Terry.

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The success of Airborne was a huge boon for Amerilab, which was suddenly tasked with producing one of the most talked-about items on the health supplement market. The company leased additional space and started running their manufacturing line 24 hours a day to accommodate the demand. The growth allowed Amerilab to move into a new facility, hire a full complement of staff, and settle an old score; in 2005, Amerilab bought the FIZZIES trademark, added vitamin C and a new sweetener, and brought the product back to market.

GROWING AS A PREMIER CONTRACT MANUFACTURER

Today, Amerilab’s 110 full-time employees continue to drive the U.S. effervescent market from the company’s 120,000-square-foot campus in Plymouth. Thanks largely to the runaway success of Airborne, Amerilab has not had any trouble maintaining its hold on the effervescent health supplement market, which represents $150 to $200 million of the overall nutritional supplement market, valued at $10 to $12 billion.

“It ’s still a relatively small part of the market, but it plays to our advantage because it prevents people from getting into the business, since it does take quite a bit of startup money and capital investment

to develop and design manufacturing suites and the environmental controls that you need to make effervescent products to a high level of quality,” says Terry.

The management team at Amerilab says that the rising cost of health care has helped to drive growth in their industry, with consumers willing to spend a little more on prevention if it means avoiding a big doctor’s bill down the line, but it’s difficult to battle against the public perception of supplements as a second-tier solution to traditional medicine. “Nutritional supplements are a growing business and people in the U.S. are finally embracing it. The pharmaceutical industry doesn’t like supplements because pharmaceuticals mostly focus on fixing things after you’re already sick,” Fred says.

Rising notoriety within the industry and volume purchasing have also allowed Amerilab to command better prices for its ingredients, a cost savings that it passes on to the customer. “The goal of Amerilab is to be delivering technique and experience that nobody else has,” says Terry. “We leverage internal experience to leverage competitive prices.”

As a contract manufacturer, Amerilab must be able to consistently meet the strict specifications of its customers. The company’s facility is FDA-inspected,

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and in-house quality control measures include a laboratory where staff perform raw material and product testing, lot traceability, digital inventory control and oversee a Good Manufacturing Practices (GMP) oversight program that performs audits and handles complaints. “We have an unparalleled history with product quality,” says Fred.

The non-GMO, all-natural and organic trends in the industry over the last few years have presented some challenges for Amerilab and for the supplement industry overall. “When our clients come to us, they’re responsible for all their regulatory and label claims,” says Mary Lolich, senior business development manager at Amerilab. “We do our best to source ingredients that meet their needs, but sometimes those ingredients just aren’t on the market yet. Vitamins are a good example — people might not realize it but oftentimes, vitamins are synthetically manufactured.”

The company credits its stellar quality and safety record to its experienced staff. “We’ve done a careful job recruiting middle management to develop a great work culture, with good personalities and work ethic. We also adhere to the highest levels of GMP standards, which our employees take pride in,” says Terry. The company’s FDA-inspected manufacturing facility operates under strict GMP guidelines for over-the-counter products and is independently audited by NSF International.

Thanks to training and incentive programs, above-market health benefits and scheduling flexibility, Amerilab has been able to maintain a high retention rate. “Out of 110 people, turnover is maybe three a year or less,” says Terry. Amerilab was named one of “The Best Companies to Work For” by Minnesota Business Magazine twice in the past five years.

The company’s core business has shifted subtly over the years. Whereas tablets used to make up 85 percent of overall production, noneffervescent powder and stick products have become increasingly popular among clients. Amerilab recently added a third machine to its noneffervescent production line and is looking to expand into packaging a wider range of powders.

As Amerilab continues to expand its reach, the company has its sights set on maintaining 5 to 6 percent growth with existing clients while developing deeper relationships with larger clients. The company displays at several annual expos, including SupplySide West and Natural Products Expo, and is looking to make its entrée into the Latin American market this year. As consumers increasingly turn to preventative measures to ward off disease and increase overall health, Amerilab Technologies Inc. has emerged as a leader in the contract manufacturing of effervescent tablets and powders. •

AMERILAB TECHNOLOGIES INC.2765 Niagara Lane NPlymouth, MN 55447

United States

WWW.AMERILABTECH.COM