Manufacturing Profile 5: Nutraceuticals: Aspirational Project

ASPIRATIONAL PROJECT
ABSTRACT
The project being proposed considers the
development of manufacturing facilities for the
active pharmaceutical ingredients (API) derived
from plant based substances. The case of anti-
diabetes drugs is specifically considered, as a

MANUFACTURING
large proportion of the local plants with proven
PROFILE 5: medicinal properties, are used in treating diabetes.
NUTRACEUTICALS ENGINEERING INSTITUTE 2016
The Development of Project Profiles for the
Manufacturing Sector of T&T
The research contained within this document was commissioned by InvesTT Limited and conducted by the
UWI, St. Augustine Campus
Manufacturing Profile 5: Nutraceuticals
Table of Contents
List of Table ............................................................................................................................ iv
List of Figures .......................................................................................................................... v
1 Description of the Opportunity ............................................................................................. 1
1.1 Summary ........................................................................................................................ 1
1.2 Product Mix.................................................................................................................... 3
1.3 Description of Activities ................................................................................................ 3
2 Industry Overview ................................................................................................................ 6
2.1 Industry Description ....................................................................................................... 6
2.2 Industry Background ...................................................................................................... 7
2.3 Proposed Enterprises .................................................................................................... 10
2.4 Incentives ................................................................................................................ 11
3 Stakeholder Analysis .......................................................................................................... 13
4 Environmental Scan ............................................................................................................ 16
4.1 External Analysis ......................................................................................................... 16
4.2 Internal Analysis .......................................................................................................... 19
5 Sub-sector Assessment ....................................................................................................... 21
ii
6 Identification of Value Added Services .............................................................................. 23
6.1 Supply Chain Issues ..................................................................................................... 24
7 Financial Analysis .............................................................................................................. 26
7.1 Infrastructure ................................................................................................................ 26
7.2 Annual Utilities Usage ................................................................................................. 27
7.3 Salaries ......................................................................................................................... 27
7.4 Legal/ Statutory Fees ................................................................................................... 28
7.5 Operational Costs ......................................................................................................... 28
7.6 Equipment Cost ....................................................................................................... 29
7.7 Investment Summary ................................................................................................... 29
8 Human Resources ............................................................................................................... 33
8.1 Organisation Chart ....................................................................................................... 33
8.2 Job Descriptions for Key Positions .............................................................................. 33
8.3 Labour Availability ...................................................................................................... 35
9 Location .............................................................................................................................. 38
10 List of Potential Investors and Partners ............................................................................ 40
11 Concluding Remarks ........................................................................................................ 43
12 References......................................................................................................................... 45
iii
List of Table
Table 1: Analysis of Proposed Nutraceutical Facility Investment .......................................... 3
Table 2: Stakeholders' Analysis ............................................................................................. 14
Table 3: PESTLE Analysis for Nutraceuticals ...................................................................... 16
Table 4: Competitive Issues in the Nutraceuticals Industry .................................................. 18
Table 5: SWOT Analysis of Nutraceuticals Industry ............................................................ 19
Table 6: Sub-sector Assessment Table of Nutraceuticals...................................................... 21
Table 7: Summary of Annual Salaries ................................................................................... 27
Table 8: Operational Costs .................................................................................................... 28
Table 9: Description of Key Roles and Responsibilities within the Organisation ................ 34
Table 10: Potential labour pools for proposed positions ....................................................... 35
Table 11: Location decision assessment table for the proposed industry .............................. 38
Table 12: List of Potential Investors and Partners ................................................................. 40
iv
List of Figures
Figure 1: Product Mix .............................................................................................................. 3
Figure 2: Chain of activities for Nutraceuticals Products ........................................................ 5
Figure 3: Manufacturing processes in the pharmaceutical industry ........................................ 9
Figure 4: Key Stakeholder Groups within the Nutraceuticals Industry ................................. 13
Figure 5: Stakeholder Assessment in the Nutraceuticals Industry ........................................ 15
Figure 6: Value Stream Map for Nutraceuticals .................................................................... 23
Figure 7: Positive, Negative, Net and Discounted Net Cash Flows for Years 0 through 10 . 32
Figure 8: Organisational Chart .............................................................................................. 33
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1 Description of the Opportunity
1.1 Summary
The term “Nutraceutical” is a blended one; combining ‘nutrition’ and ‘pharmaceutical’. It
refers to foods or food products that can provide health and medical benefits, including the
prevention and treatment of disease. These products are known to provide health benefits
beyond the basic nutritional value of food. As a consequence of their origins, these products
are not subject to the same regulatory obligations as straight pharmaceuticals and there is
minimal regulation over which products can use the terminology on their labels. There are
two principle product types sitting under the broad umbrella of nutraceuticals; the first is
functional foods and the second is vitamins, minerals and supplements (VMS).
In many developing countries, such as India and China, the growing affluent middle class
population with its increasing disposable income is moving towards lifestyle changes. These
lifestyle changes often involve the inclusion of nutraceuticals or functional foods in the daily
diet of middle class consumers. At present, healthy gut system is a major concern among the
health conscious consumers to maintain a healthy lifestyle. Furthermore, it is observed that
functional foods have physiological benefits, and they reduce the risk of diabetes and
cardiovascular problems. However, the current trend among consumers is to take preventive
action to minimize the possibility of health issues. Therefore, consumers prefer to utilize
nutraceuticals rather than pharmaceutical drugs. All these factors have led to a growing
demand for nutraceuticals in the last few years.
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Dietary supplements are available in the form of capsules, tablets, and liquids. Nutraceutical
ingredients include probiotics and prebiotics, vitamins, proteins, minerals, omega 3 fatty
acids, fibers, amino acids, structured lipids, and various other ingredients. Nutraceutical
ingredients find applications from grains, cereals, nuts, fruits, vegetables, dairy products,
poultry products, seafood, and confectionery to non-alcoholic beverages like energy drinks,
juices, and sports drinks. A few examples of functional foods are drinks with herb blends,
yoghurts enriched with probiotics, and soy beverages that are rich in protein.
Trinidad and Tobago (T&T) is home to many naturally growing species of plants. It has
been proven that many of these species have significant medicinal properties. Accordingly,
these plants can be exploited in the development of various lines of nutraceutical products.
The potential range of products are wide, given the variety of local plants. As such, this
industry shows a lot of promise.
The project being proposed considers the development of manufacturing facilities for the
active pharmaceutical ingredients (API) derived from these plant based substances. The case
of anti-diabetes drugs is specifically considered, as a large proportion of the local plants with
proven medicinal properties, are used in treating diabetes. As a part of this case, a 15,000
square feet (sq. ft.) manufacturing facility, for the production of these API products is
proposed. This facility will have a production capacity of 37.5 million vials per annum, and
will be a current good manufacturing practice (CGMP) facility, allowing for the
development of products that are approved for export to the North American market. A
preliminary assessment of this opportunity is shown in Table 1.
2
Table 1: Analysis of Proposed Nutraceutical Facility Investment
INVESTMENT (IN PAYBACK 10 YEAR NPV (IN 10 YEAR IRR
BILLION USD) PERIOD BILLION USD)
1.02 2 yrs 3.78 74%
1.2 Product Mix
Figure 1 identifies some of the products offered under the nutraceuticals categorization.
PLANT-BASED/HERBAL DRUGS AND TREATMENTS
•Common cold and cough treatment and suppressants

•High blood pressure treatments
•Anti-diabetic drugs
•Fever treatments
•Treatments for kidney stones
•Treatments for asthma
HERBAL EXTRACTS
•The use of “bush teas” to help cleanse and detox the body and to help treat
ailments such as rashes and ringworms is a traditional local practice.
•Plant species such as shining bush, lemon grass (fever grass) and cat’s claw can
be locally sourced, processed, packaged and sold as blended tea bags or as stand-
alone herbal extracts.
•Although these plant species have traditionally been known to have medicinal
benefits, a significant amount of R&D is still necessary in order to formally and
precisely establish these benefits.
Figure 1: Product Mix
1.3 Description of Activities

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The generic chain of activities in this industry is represented in Figure 2. Invariably, the first
step in the process towards production is the identification of the active pharmaceutical
ingredients (APIs) via Research and Development. Though this is not a direct step in the
manufacturing process, it is extremely critical to the industry’s success. However, this
process is generally conducted by dedicated R&D institutions or universities. The next step
in the process is the collection of the requisite plant material. This must be harvested from
forest areas or provided by farmers. In the proposed industry, both sources are likely to play
a role in providing the raw material. Accordingly, farmers or farming cooperatives will be
key stakeholders in the process. In instances where the required crop grows in forested
areas, collection agencies/enterprises will either have to be engaged or established.
The next stage of the process involves the manufacture of nutraceutical products. This
would necessitate the establishment of a nutraceutical manufacturing facility. This facility
would require as inputs, the plant material that is provided by the farmers and/or collection
agencies. In addition to this, other chemicals would be required in the manufacturing
process. These will have to be sourced and acquired by the facilities management.
The final step in the process involves the packaging of the products. This process will vary
depending on the type of product produced, i.e., powder, liquid, etc. This would generally be
handled by the nutraceutical manufacturing facility directly, due to the stringent product
standards that usually apply. However, it is possible that separate packaging
entities/enterprises can be part of the chain, if a viable case can be made by the economics.
4
The packaged products will then be retailed via the usual channels for such products, i.e.,
pharmacies, health stores, etc.
Acquisition
Plant
Research and of other Primary Packaging
material
Development necessary processing and Retail
collection
chemicals
Figure 2: Chain of activities for Nutraceuticals Products
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2 Industry Overview
2.1 Industry Description
In terms of revenue, functional foods segment held the largest share in the global
nutraceuticals market, accounting for 31.0% market share in 2014 and is expected to grow at
a CAGR (compound annual growth rate) of 7.1% from 2015 to 2021. Functional beverages
held the second largest market share in the overall nutraceuticals market and is expected to
grow at a CAGR of 7.4% over the forecast period.
North America held the largest market share in the nutraceuticals market and acquired
39.6% in 2014. The market growth in this region is attributed to the growing consumer's
awareness regarding their health and food habits. Globally, North America generated the
highest revenue in the nutraceuticals market in 2014. In this region, consumers are conscious
about their health and food habits. Asia Pacific held the second largest market share in 2014,
witnessing a significant growth rate. Dietary supplements and functional food is an
emerging segment in the nutraceuticals market in this region. This market is anticipated to
witness a high growth rate in the herbal, vitamins, and minerals segment of the dietary
supplement market.
It should be noted that Jamaica is making a concerted effort to develop its local nutraceutical
industry. The Jamaican government touted the benefits of job creation, increased revenue
from exports and the promotion of medical tourism as major reasons for its support of the
industry. The government plans to promote use of indigenous plant species, since Jamaica
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possesses more than eighty (80) plants with proven medicinal properties. Significant
advances in R&D have already been conducted by Jamaican researchers, and the
government has pledged it commitment to supporting future R&D efforts.
2.2 Industry Background
The use of natural plant and animal sources for the treatment of human health conditions, is
a well-established practice. It is then no surprise that plant and animal materials with
medicinal characteristics, have formed the backbone of the modern pharmaceutical industry
(Veeresham 2012). These materials generally contain active ingredients or chemicals that
are inherent to their makeup, which once identified, can be extracted for medicinal purposes.
In particular, plant sources have been known to play a very critical role. Eleven percent
(11%) of the 252 drugs considered as basic and essential by the World Health Organization
(WHO) were derived exclusively from flowering plants (Veeresham 2012). The uses of
these plant-derived chemicals, have ranged from the development of pain relievers to
treatments for Parkinson’s disease. The development of plant-based drugs and treatments
continues to be a key part of the international pharmaceutical industry (Adams 2015).
Trinidad and Tobago is home to a number of differing varieties of plants, many of which
have been known to have medicinal characteristics. The use of natural herbs and other local
plants for medicinal purposes in Trinidad, dates back to over 7000 years ago (Barclay 2012).
There are approximately 338 plants growing naturally in Trinidad and Tobago that have
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been proven to have significant medicinal properties (Barclay 2012). More specifically,
there is a group of these plants that have known hypoglycaemic activity and in which key
active hypoglycaemic chemicals have been isolated. Some of the plants in this group include
caraili (Momordica charantia), aloe (Aloe vera), periwinkle (Catharanthus roseus), garlic
(Allium sativum), and ginseng (Panax ginseng) (Mahabir & Gulliford 1997). In keeping
with this, the proposed industry considers the development of active ingredients for
pharmaceutical products used in the treatment of diabetes.
The pharmaceutical manufacturing industry is generally divided into two key stages. The
first of these concerns the manufacture of the active pharmaceutical ingredient (API)
(primary processing), while the second involves the conversion of the APIs into products
suitable for administration (secondary processing) (World Bank Group 1998). Accordingly,
a key precursor to this industry is the research and development done into the identification
of the APIs and the development of the requisite processes for their manufacture. In keeping
with this, R&D institutions play a critical role in the manufacturing value chain. Figure 3
shows a diagrammatic representation of the value chain (adapted from Tait).
8
Figure 3: Manufacturing processes in the pharmaceutical industry

Source: Adapted from Tait
9
In the pharmaceutical manufacturing industry, primary processing deals exclusively with the
production of the APIs from their feedstock. Conversely, secondary processing involves the
use of other chemical raw materials, such as binders, fillers, flavourings, preservatives and
the like. Accordingly, the cost of these additional raw materials can significantly influence
the economics and profitability of the industry (Anderson 2009). However, most
nutraceutical products do not require a secondary processing stage and can be effectively
utilized directly after primary processing.
2.3 Proposed Enterprises
In keeping with this, the opportunity being considered in this profile is the development of
APIs from local plant material, for use in the treatment of diabetes. The industry would
utilize locally available plant material, as the raw material inputs to a manufacturing facility.
A 15,000 sqft primary manufacturing facility is proposed, with a production capacity of 37.5
million vials annually. This facility would incorporate a level of flexibility in its design, to
allow it to exploit the differing plant raw material sources available. Additionally, it would
adhere to current good manufacturing practice (CGMP) standards, which would allow for
products that are suitable and readily acceptable in the North American market. It must be
noted however, that the proposed opportunity is but one of the many opportunities that can
be considered for the local context. Given the diversity of local plants with medicinal
properties, and the range of properties inherent to these plants, there are several types of
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nutraceutical products that can be considered for further development. Accordingly, the
proposed case serves as an example of what can be considered for this potential industry.
2.4 Incentives
The government of T&T has a number of incentives in place to encourage investment in
manufacturing in T&T. A manufacturer may qualify for one or more of the following:
 The Fiscal Incentives Act offers a waiver of income tax on dividends or other
distributions, other than interest, out of profits derived from manufacture of approved
products.
 The Customs & Excise Act offers investors duty free importation of plant,
machinery, equipment, components and raw materials, as specified and raw
materials, as specified in the Third Schedule of the Customs Tariff.
 The Foreign Investment Act allows a foreign investor to purchase land up to one
acre for residential purposes and five acres for commercial use. In addition, foreign
investors are allowed to purchase up to 30% of the cumulative shareholding in a
public company.
 Free Trade Zones activities that qualify for approval include manufacturing for
export, international trading in products, services for export and development and
management of free zones. Benefits include exemptions from Corporation Tax,
import duties on capital goods, parts and raw materials for use in the construction
and equipping of premises and in connection with the approved activity; Value
11
Added Tax; withholding taxes; container examination fee; and work permit fees, and
land and building taxes.
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3 Stakeholder Analysis
The various stakeholders were analysed using Mitchell, Agle and Wood’s Power Legitimacy
Urgency model. The Power, Legitimacy, Urgency model results in eight different
stakeholder groups. These groups are defined by which of the three (3) attributes each
individual stakeholder group possesses. Each of the stakeholders in this study was rated on a
scale from 1 to 5 for degree of possession of each attribute where 1 was lowest and 5 was
highest. The stakeholder was deemed to possess the attribute of power, legitimacy or
urgency when given a ranking of 3 or higher. Definitive stakeholders consisted of Export
agents, Government agencies, Processors/manufacturers and R&D institutions. The results
of the stakeholders’ assessment are shown in Figures 4 and 5 and Table 2.
STATE SUPPORT
PRODUCERS CUSTOMERS
INSTITUTIONS ORGANIZATION
•Ministry of Trade •Food Processors •Agents •Equipment

suppliers
•Chemistry Food and •Health Drink •Wholesalers
Drugs Division Producers •Raw material
•Retailers suppliers
•CARIRI •Pharmaceutical
Companies •Consumers •Banks/ lending
•CARDI institutions
•Local farmers •Health Food Stores
•IICA •ADB
•Pharmacies
•R&D institutions •ExporTT
•UWI •InvesTT/ETeck
•UTT ECIAF •TTMA
Figure 4: Key Stakeholder Groups within the Nutraceuticals Industry

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Table 2: Stakeholders' Analysis

STAKEHOLDER POWER LEGITIMACY URGENCY TOTAL
Banks/lending institutions 5 3 2 10
Equipment suppliers 1 3 3 7
Export agents 3 3 3 9
Government agencies 3 3 3 9
Individual consumers 5 2 4 11
Processors/manufacturers 5 4 5 14
R&D institutions 4 4 4 12
Raw material suppliers 5 3 1 9
Research organisations 2 2 4 8
Retailers 4 2 3 9
Wholesalers 5 2 4 11
14
Power Legitimacy Urgency
16
14
12
10
8
6
4
2
0
Figure 5: Stakeholder Assessment in the Nutraceuticals Industry
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4 Environmental Scan
4.1 External Analysis
PESTLE
The environmental scan started with an evaluation of the external environment for
Nutraceuticals. This was done using the PESTLE tool where Political, Economic, Social,
Technological, Legal and Environmental (physical) benefits or concerns regarding the
venture were identified and their potential impact individually assessed. See Table 3.
Table 3: PESTLE Analysis for Nutraceuticals

CATEGORY SITUATION POTENTIAL IMPACT
Political Government An increased level of government support for the domestic
commitment nutraceutical industry is necessary. In particular, increased
funding for R&D on the medicinal properties of local plants
and herbs is needed.
Economic The unique nature of This provides the opportunity for domestically produced
nutraceuticals nutraceuticals to occupy a niche market and earn increased
manufactured using revenue. Nutraceutical products manufactured using
local plants indigenous plant extracts can be marketable on an
international level, if the health benefits from the use of these
indigenous plants are properly promoted.
Economic uncertainty Some consumers may choose not to purchase nutraceutical
continues in the products, which can be more expensive than traditional
domestic market, as versions of these same products.
well as in several
international markets
Social Increased health Consumers are increasingly being drawn towards health
16
consciousness conscious lifestyle changes, resulting in increased demand for

nutraceuticals. In particular, a current trend among
consumers is to take preventive action to minimize the
possibility of health issues. Many consumers therefore prefer
to utilize nutraceutical products rather than pharmaceutical
drugs.
Technological R&D facilities and Without significant government financial support, the
work can be expensive industry may not develop to its full potential. Private
companies may not be willing to invest in high levels of R&D
due to the high financial costs of engaging in such activities.
Legal Fair Trade Organic Local nutraceutical products can be made to satisfy these
Products are being standards. Fair Trade Organic Certification would allow the
widely featured in the country’s products to have a competitive edge in overseas
established markets markets.
Environmental Utilization of local This provides an opportunity for indigenous plants to be
plants/herbs utilized to their full potential.
Porter’s 5 Forces
The second part of the external analysis was an analysis of the competitive environment.
For this analysis Porter’s 5 Forces (P5F) was used. P5F looks at the rivalry among existing
competitors, the threat of new entrants, the threat of substitute products, the bargaining
power of suppliers and the bargaining power of customers. Using the P5F tool is superior to
simply identifying competitors in the marketplace and assessing their potential threat. This is
because this tool also allows for the analysis of threats that may not already exist and be
visible or threats from other products or ventures that may not be identical or even operate in
the same industry but which are threats, nonetheless. This analysis can be seen in Table 4.
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Table 4: Competitive Issues in the Nutraceuticals Industry

FORCE SITUATION THREAT
Existing Presently, there are a few companies operating in the local MEDIUM
rivalry nutraceuticals industry. However, due in part to the R&D required in
among order to bring high-quality nutraceutical products to the market, the
competitors products produced are fairly simple and the level of existing
competition is not high.
Threat of There is a growing demand for nutraceutical products, as consumers HIGH
new entrants become more health-conscious and seek to make lifestyle
changes. Hence, this may encourage local companies which already
produce food items and beverages to expand their product lines to
include items with enhanced nutritional content.
Threat of Domestic companies producing nutraceuticals face competition from HIGH
substitute traditional food and beverage products, as well as traditional
products pharmaceuticals. Although there is a growing trend towards healthy
lifestyle changes, a significant portion of domestic consumers still do
not purchase nutraceuticals.
Currently, nutraceutical products tend to be more expensive than
traditional products. This may deter some consumers from purchasing
them.
Bargaining Local nutraceutical products may rely quite heavily on local MEDIUM
power of agricultural products. Thus, suppliers do have some bargaining power
suppliers in the market.
Bargaining Consumers may be reluctant to trust the quality of domestically- HIGH
power of produced nutraceuticals. Instead, they may place more confidence in
buyers international brands which already have a reputation. This would lead
to a lack of consumer demand for locally produced products.
Furthermore, consumers who do choose to purchase the local items
may be reluctant to pay higher prices. These issues could compel
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local producers to lower their prices.
4.2 Internal Analysis
SWOT
The SWOT tool was used to conduct an Internal Analysis for the venture. The first phase of
the SWOT tool identified the Strengths and Weaknesses inherent to the proposed project;
and major Opportunities in and Threats to the industry (see Table 5). The second phase
recommends how strengths and opportunities can be exploited and threats can be mitigated
and weaknesses addressed respectively; this is addressed elsewhere in the report.
Table 5: SWOT Analysis of Nutraceuticals Industry

STRENGTHS WEAKNESSES
 Growing demand for nutraceuticals as  Stringent regulatory standards to
consumers become more health-conscious and be adhered to before products can
seek to make lifestyle changes. be marketed internationally.
 Availability of local medicinal plants from  High start-up costs for research
which unique local products can be developed and development facilities to be
and manufactured. established.
 Domestically-produced foods and beverages can  Reluctance of consumers to trust in
be modified to include nutraceutical ingredients. the quality of domestically-
produced nutraceuticals.
 Reluctance of consumers to pay
higher prices for domestically-
produced nutraceuticals.
OPPORTUNITIES THREATS
 Potential market penetration of regional and  Competition from international
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international markets, with domestically brands producing nutraceuticals.

produced products.
 Developed relationships with other Caribbean
islands as suppliers of plants with medicinal
properties, and collaboration on R&D efforts to
develop products.
 Enhanced FDI opportunities for TT, as foreign
investors can invest in the establishment of
domestic R&D facilities.
 Knowledge-transfer if foreign investors choose
to establish their own R&D and manufacturing
facilities in TT and employ domestic labour.
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5 Sub-sector Assessment
Nutraceuticals, as an investment opportunity was assessed on various criteria including
market demand, raw material cost and availability, energy use, investment value, finished
product value and availability of labour. This was based on a factor rating method developed
by subject-matter experts. On each of the criterion, the venture was given a rating from 1 to
10. These were weighted according to the relative importance of the criteria and a final score
calculated. The final score for Nutraceuticals was 6.871 out of a possible 10, which was
above average among the potential investment opportunities. See Table 6.
Table 6: Sub-sector Assessment Table of Nutraceuticals

CRITERIA ASSESSMENT WEIGHT RATING SCORE
1-10
Demand Large market size and high growth 19.6% 8 1.568
industry.
Finished product value Value varies but in general it is 17.4% 7 1.218
high, in comparison to inputs.
Raw material In certain instances, the raw 13.0% 6 0.78
(availability) materials may fluctuate in
availability. Most are available
within the region. An enterprise
specialising in oils for non-energy
purposes could be a useful source of
raw materials.
Raw material (cost) This cost is moderate with respect 13.0% 6 0.78
to finished product value.
Legislation/regulation/ Favourable legislation exists and 10.9% 7 0.763
government focus this is an area of focus for
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government.
Energy Relatively low utilisation of energy. 8.7% 7 0.609
Labour market Employees available; training 8.7% 5 0.435
and/or motivation may be required.
Investment value Relatively low investment in basic 6.5% 8 0.52
technology and manufacturing
space.
Technology Familiar technology as compared to 2.2% 9 0.198
local existing capability.
Job creation About 30 permanent jobs would be 0.0% 6 0
created from each opportunity
100% 69 6.871
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6 Identification of Value Added Services
Value Stream Mapping (VSM) has its genesis in the Toyota Production System of Lean
Manufacturing. It essentially shows, on a single page, how value is created along the
extended value chain from suppliers to customers for a single product type. When the value
stream is mapped and assessed, opportunities for improvement may only then be identified.
The value stream indicates other services that will be necessary for the successful realization
of the venture. See Figure 6.
Production Control
Local and
Regional Oil Producers Health Stores
Farmers
Primary
Processing
Facility Beauty Stores
Branding
Intervention Food and
Label and Beverage
Packaging Manufacturers
Branding Online and
Suppliers Global B&M Retailers
Intervention
Marketing
Intervention
Feasibility
Studies
Development of
Product Lines
Pre-processing Blending/Mixing Packaging
7days 2days 1day 10days
48hrs 4hrs 2hrs 54hrs
Figure 6: Value Stream Map for Nutraceuticals
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6.1 Supply Chain Issues
Proper harvesting techniques from farmers

Nutraceuticals, like any consumable product, requires great care during the growth and
harvesting of the crops that go into it. Many of the farms that grow the crops that go into
nutraceuticals are small scale, and thus, are less likely to follow best farming practices or use
the latest technology. Training for these farmers can be considered as an alternative.
Fake Health Claims

There are many claims made about nutritional supplements, many of which have proven to
be false (Federal Trade Commission 2017). Another problem is that some of these claims
may be true about the product, but only in relation to animal testing (Espín JC 2007).
Therefore, before the products are sold, much research is needed to ensure that the claims
being attributed to them are in fact true.
Stringent international standards

Despite not having as stringent requirements as other pharmaceuticals, international
organizations such as the FDA still focuses on the quality of the products being sold in their
countries (Gale 2006). As such, these standards need to be adhered to throughout the supply
chain, which represents a cost to the factory start-up.
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7 Financial Analysis
7.1 Infrastructure
The proposed facility for this project is a 15,000 sqft manufacturing facility for the
production of hypoglycaemic drugs. Such a facility represents an average size
manufacturing operation in many of the cases reviewed. The production capacity of the
facility is an estimated 37.5 million vials of drugs annually. The facility would be CGMP
compliant, as this allows for acceptance into the North American market.
Cost estimation of such pharmaceutical facilities is a somewhat non-exact exercise, as some
components of the cost associated with the facility is dependent on the exact processes used
in the manufacture of the product, and only become apparent when the details have been
confirmed. Accordingly, a commonly used approach for estimating facility cost and
equipment requirements are to use the cost associated with a plant of similar nature
(Anderson 2009). In addition, the cost estimation for manufacturing facilities is commonly
done on an area basis, i.e., cost per unit area. In keeping with this, the primary cost
associated with the proposed facility were derived from similar facilities erected in differing
Canadian provinces (Denault et al. 2008).
A proposed layout for the facility is as follows: clean rooms 30%, laboratories 15%, airlocks
5%, offices 25%, mechanical room 10%, and conditioning 10%. The facility should have a
dedicated 50% of its area that is CGMP compliant and the remaining 50% non-CGMP. With
26
an average rate of 270 $/sqft for non-CGMP areas and 462 $/sqft for CGMP areas, the
estimated cost of the facility is 3.66 million USD.
7.2 Annual Utilities Usage
The two main types of utilities of interest in this arrangement would be energy and water.
Energy consumption would consist of both gas for heating purposes and electricity for the
operation of equipment. Given the nature of the facility, the latter would be used in a greater
proportion. Water consumption is primarily driven by the requirements of the plant’s
processes. However, a small portion is allocated for the general usage needs of the plant’s
personnel. General cost estimation procedure indicates that the utility cost accounts for
approximately 2% of the total equipment and building costs. Accordingly, the approximate
cost amounts to $119400 USD.
7.3 Salaries
Table 7: Summary of Annual Salaries

POSITION NUMBER OF MONTLY SALARY
EMPLOYEES (TTD)
CEO 1 $50,000.00
Production Director 1 $40,000.00
Quality Assurance Director 1 $32,000.00
QC Supervisor 1 $32,000.00
HR Manager 1 $18,000.00
QC Technician 4 $16,400.00
Production Technicians 4 $16,400.00
Maintenance Operator 2 $10,000.00
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Assuming a conversion rate of USD1 = TTD 6.4, the annual total amounts to US$621,490.
7.4 Legal/ Statutory Fees
Legal/Statutory Fees were estimated at US$10,100.
7.5 Operational Costs
The estimates of yearly costs were estimated using a conservative base as shown in Table 8.
Table 8: Operational Costs

COST CENTRE COST (USD) DESCRIPTION
Marketing/Promotion/ Product $ 3,330,000 20% of expected annual turnover
Development
Maintenance $ 166,500 (On Call Service Company/ OEM
Representative)
Security $30,000
Telecommunication $47,000 (Phone and Internet Services)
Miscellaneous $333,000
Vehicle Rentals/Leases $144,000.00 (Cold Storage and Delivery Trucks,
Material Handling Vehicles e.g., Forklifts)
Insurance/ Export $2,497,500 15% of expected annual turnover
Raw Material $3,105,470 Base raw materials (local) and Other
materials necessary for execution of the
process (non-local)
Waste Removal $6,682,500 Based on amount of product produced
TOTAL $16,337,970
28
7.6 Equipment Cost
For the proposed facility, the following is a list of the main process equipment that would be
required:
 A purified water system
 An autoclave
 A de-pyrogenation oven
 An aseptic filling machine
 Other minor instruments
The average equipment and installation costs for the 15,000 sqft facility is 1.155 million
USD. In addition, there are associated engineering and validation costs for the outlined
equipment. The total costs amount to 2.31 million USD.
7.7 Investment Summary
The financial analysis of this opportunity is heavily influenced by the cost of the research
and development work associated with bringing the drug to market. Base annual operating
costs were estimated at $622,000 for labour, $119,000 for utilities, $3.98 million for raw
material, $6.68 million in waste removal and approximately $6.55 million accounts for the
other aspects of general operations as seen in Table 8. Additionally, there is an initial capital
outlay of $3.66 million and $2.23 million associated with construction and equipment costs,
respectively. Collectively, this represents a total investment value of approximately $23.9
million USD for the project.
29
Cash flows for the first 10 years of operation were estimated for this profile. Some
assumptions made included that the facilities would operate at 70% capacity in year 1, 80%
in year 2 and 100% rated capacity onwards. At this point, the cost of R & D is not included.
There are two potential products for consideration, i.e., patented and non-patented insulin.
The price range for non-patented is approximately $5 – $10 US per vial. However, the cost
of patented insulin ranges from $25 – $60 vial. Opting for the patented product, a
conservative estimate of $25 US per unit was used for the analysis. For a 100% operation,
the revenue associated with sales amounts to approximately $937.5 million USD annually.
Though there are variations in the expenditure associated with years 1 to 3 post investment,
the analysis and subsequent feasibility of this opportunity is not primarily predicated upon
this. Instead, it is the cost of R&D that plays the most critical role. The cost associated with
bringing a drug to the market has significantly increased in recent times. It has been stated as
being as high as 2.6 billion in the early 2010s (Pharmaceutical Research and Manufacturers
of America 2015). However, in this instance the true cost of R&D required to bring the
product to market is not easily quantified, as much of this work has already been done.
Accordingly, a more accurate evaluation of this opportunity would require a quantification
of this cost and an assessment of what remains to be accomplished. Notwithstanding this, a
crude assumption of a 1 billion USD required investment is used here. Positive, Negative,
Net and Discounted Net Cash Flows for Years 0 through 10 were determined and are shown
in Figure 7. The project was analysed based on stated assumptions and shown to be highly
profitable as an aspirational project. See Table 1.
30
31
1,500,000,000
1,000,000,000
500,000,000
-500,000,000
-1,000,000,000
-1,500,000,000
0 1 2 3 4 5 6 7 8 9 10
+ve cash flows 1,022,9712,170,813,909,517,386,917,386,917,386,917,386,917,386,917,386,917,386,917,386,9
-ve cash flows 656,250,750,000,937,500,937,500,937,500,937,500,937,500,937,500,937,500,937,500,
Net Cash Flows -1,022,9 644,079,736,090,920,113,920,113,920,113,920,113,920,113,920,113,920,113,920,113,
Discounted Net Cash Flows -1,022,9 575,070,586,806,654,918,584,748,522,096,466,157,416,212,371,618,331,801,296,251,
+ve cash flows -ve cash flows Net Cash Flows Discounted Net Cash Flows
Figure 7: Positive, Negative, Net and Discounted Net Cash Flows for Years 0 through 10
32
8 Human Resources
8.1 Organisation Chart
The organisation is lean and automated. There are approximately 15 permanent staff. The
Organisational Chart may be seen in Figure 8.
CEO
Human Quality
Production
Resources Assurance
Director
Manager Director
Production Maintenance
QC Supervisor
Technician Operators
QC Technician
Figure 8: Organisational Chart
8.2 Job Descriptions for Key Positions
This company would do the critical design and production functions in-house. Operations
such as raw material preparation could be sub-contracted especially when the demand for
33
the nutraceuticals increase. Brief descriptions for the key permanent positions in the
Nutraceuticals are in Table 9.
Table 9: Description of Key Roles and Responsibilities within the Organisation

POSITION RESPONSIBILITY
CEO The CEO is responsible for the overall management and strategic direction
of the organization in areas such as business development, product
development, operations, production, quality control and training of
employees.
Human Resource The Human Resource Manager will have primary responsibility for all
Manager matters concerning the recruitment, development and removal of personnel.
He/she ensures that key personnel are recruited and afforded appropriate
remuneration as well as the necessary support systems within the company.
The HR manager also ensures the maintenance of an effective working
environment that promotes a high level of productivity.
Production Director The Production Director has strategic oversight for all of the company’s
production processes, ensuring that the required quotas are met. The
director also makes decisions regarding product lines. In addition, the
director assumes responsibility for all aspects of the company’s operations,
inclusive of logistics and the development and execution of policies,
strategies and plans.
Production Production Technicians ensure smooth and efficient daily operations within
Technicians the facility, primarily via execution of the product specific processes within
the plant. For this facility, four (4) technicians are proposed.
Quality Control (QC) The QC Supervisor will have direct oversight for the compliance of all
Supervisor operational processes with the requisite quality standards. His/her
responsibilities will include quality control, for all production processes
within the organization. The QC supervisor will also have responsibility for
making recommendations regarding policies that will enhance quality
standards.
34
QC Technicians QC Technicians are responsible for ensuring that quality standards are
adhered to in the daily operations of the plant. Technicians will facilitate the
quality execution and operation of specific sets of processes during daily
operation of the plant. Their role is particularly significant given the high
requirement for aseptic operations and sterile conditions in the product
process. Four (4) technicians are also proposed here.
Quality assurance The QA Director will have direct responsibility for product quality. His/her
(QA) Director responsibilities will include quality control, quality assurance and all other
aspects of organizational quality. The quality director will also be
responsible for championing policies that will institutionalize quality
standards within the organization. The director has overall responsibility for
ensuring product quality.
Maintenance These Operators are responsible for preventative measures as well as
Operators troubleshooting processes and diagnosing mechanical, hydraulic and
pneumatic problems associated with process equipment. Two (2) operators
are proposed.
The total costs for the associated workforce of 15 employees is approximately $621,500
USD annually.
8.3 Labour Availability
Table 10: Potential labour pools for proposed positions

CATEGORY UNEMPLOYED EMPLOYED POTENTIAL
EMPLOYMENT POOL
Professionals 900 36700 Graduates from any of the
 Quality Supervisor sixteen (16) Universities of
 Executive Secretary the West Indies Open
 Food Quality & Safety Campus locations in the
Specialist Caribbean, and/or any of
35
 Accounting Assistant UTT campuses in Trinidad.
Legislators, senior officials, 400 61300 Sourced from the existing

managers pool of unemployed and
 CEO employed persons through
 Human Resource interviews and the
Manager subsequent process of
 Production Director filtering.
 Quality Assurance
Director
 Board of Directors
 Finance/Admin
Manager
 Marketing and
Business Development
Manager
 Operations Manager
Technicians 1500 69300 Can be sourced from
 Production Technicians several training centers in
 Quality Technicians Trinidad registered under
 Maintenance Operator the Accreditation Council
of Trinidad and Tobago
(ACTT)
E.g. Crane Safe Technical
Institute, Advanced
Solutions Technical
Institute and Technical
Institute for Learning just
to list a few.
36
37
9 Location
The assessment of the most suitable locations for the establishment of the proposed facility,
was determined using a factor rating method. Fourteen rating criteria were used in this
particular instance. These criteria can be found in the first column of Table 11.
Table 11: Location decision assessment table for the proposed industry
The locations considered were those that have previously been identified for national
economic development, i.e., key economic zones. These locations were considered as they
are well positioned for the establishment of new businesses. Accordingly, access to the
necessary infrastructure, services and other critical resources would be more readily
available, as compared to most other locations across the country.
38
As in other similar assessments, the results of the assessment indicate that the six locations
in Trinidad are all relatively well positioned to setup the proposed manufacturing facilities.
Of these six, Central areas such as Fredrick Settlement and Preysal have emerged as the
locations with the greatest comparative advantage. This is primarily a result of their relative
proximity to Port of Spain and/or Piarco, where the key ports and many of the critical
supporting services are located. As in previous assessments, Tobago has emerged as a
location that is least suitable. The primary reason for this is the lack of a container port in
Tobago. Port access is a critical requirement, if the exportation of the products is required.
Accordingly, the construction of a container port would be critical to improving the
suitability of Tobago as a location for the proposed industry.
39
10 List of Potential Investors and Partners
Table 12 gives a list of potential investors and partners together with a description justifying
their inclusion on the list. The list is not extensive, but could be used as a guide to contact
similar potential investors and partners.
Table 12: List of Potential Investors and Partners

CONTACT INFORMATION
The Ministry of Trade and Industry Website: tradeind.gov.tt
Email: mti-info@gov.tt
Contact no: (868) 623-2931
Chemistry, Food and Drugs Website: www.health.gov.tt

Division, Ministry of Health Email: cfdd@health.gov.tt
Contact no: (868) 624-5968 / 623-5242 / (toll free) 800-2333
Fax: (868) 623-2477
The Caribbean Industrial Research Website: www.cariri.com

Institute (CARIRI) Email: mail@cariri.com
Contact no: (868) 299-0210
Fax: (868) 662-7177
Caribbean Agricultural Research Website: www.cardi.org

and Development Institute (CARDI) Email: infocentre@cardi.org
Contact no: (868) 645-1205/6/7
Fax: (868) 645-1208
UTT’s Eastern Caribbean Institute Website: https://u.tt

of Agriculture and Forestry (UTT Email: callcentre@utt.edu.tt
40
ECIAF) Contact no: (868) 642-8888 / 223-4888
Inter-American Institute for Website: www.iica.int

Cooperation on Agriculture (IICA) Email: iicahq@iica.int
Contact no: (+506) 2216 0222
Fax: (+506) 2216 0233
Agricultural Development Bank Website: www.adbtt.com

(ADB) Email: adbpos@adbtt.com
Contact no: (868) 623-6261/5
Fax: (868) 627-7493 / 624-3087
Trinidad and Tobago Manufacturers Website: www.ttma.com

Association (TTMA) Email: research@ttma.com
Contact no: (868) 675-8862
National Entrepreneurship Website: www.nedco.gov.tt

Development Company (NEDCO) Email: contactus@nedco.gov.tt
Contact no: (868) 821-5800 / 625-7679 / 625-6154
Fax: (868) 623-1606
Asiamerica Group, Inc. 245 Old Hook Road Westwood,

New Jersey 07675 USA
Tel: (201) 497-5993
Fax: (201) 497-5994
Email: info@asiamericagroupinc.com
FutureCeuticals 2692 N. State Rt.

1-17 Momence, IL 60954
Telephone: 815-507-1400
Toll Free: 888-452-6853
41
Fax: 815-472-3529
Email: sales@futureceuticals.com
Shanghai Freemen Lifescience Co., 2500 Xiupu Road, Building 19 Pudong
Ltd. Shanghai 201315 China
Tel: +86-21-6118 3110
Email: sfls@freemen.sh.cn
42
11 Concluding Remarks
The nutraceutical industry is a growing industry with significant global potential. Trinidad
and Tobago, because of its naturally occurring, wide variety of plants and herbs with proven
medicinal properties, has the potential to be well positioned within this developing industry.
Critical to the development of the industry within the local context, is the need for robust R
& D facilities. These will play a vital role in identifying and categorizing the APIs that can
be found within the various plant sources. Although some of this work has already being
done by the local universities and research institutions, and current work is also ongoing, the
development of the industry would require even more robust efforts.
However, the potential number of products that can be developed is rather significant. The
product, type of facility and capacity of output proposed in this profile, are only
representative of the local industry’s potential. Facilities with differing production capacities
can also be considered and is limited only by the availability of the raw material; some of
which can also be imported from other countries within the region. Additionally, other
products can be considered. Often, more than one product can be manufactured from a
particular API. Further, some plants/herbs contain more than one API. Combining this with
the number of plants currently identified, leads to a large range of products that can be
considered. This is indicative of a landscape of vast possibilities.
Critical to these efforts would also be the construction of flexible manufacturing facilities,
i.e., facilities that have the potential to manufacture more than one product. In addition,
ensuring that facilities are CGMP compliant is also a crucial factor to the success of the
43
proposed industry. Though CGMP compliance requires greater capital investments, the
opportunities afforded easily offset this.
44
12 References
Adams, A. 2015. “Stanford scientists produce cancer drug from rare plant in lab to benefit
human health.” Stanford News.
Anderson, J. 229. “Dow Chemical. Determining Manufacturing Costs.” CEP 2009; 27-31.
Barclay, G. 2012. “Medicinal Plants of Trinidad and Tobago.” Available online at:
https://www.researchgate.net/publication/268222020.
Denault, J., Coquet, A., & Dodelet, V. 2008. “Construction and Start-Up Costs for
Biomanufacturing Plants.”
Mahabir, D & Gulliford, M.C. 1997. “Use of medicinal plants for diabetes in Trinidad and
Tobago.” Pan Am Journal of Public Health. 1997 (3): 174-179.
Pharmaceutical Research and Manufacturers of America. 2015. “Biopharmaceutical
research industry profile.” Washington, DC: PhRMA.
Tait, K.D. “Chapter 79: Pharmaceutical Industry. Encyclopaedia of Occupational Health and
Safety.”
Veeresham, C. 2012. “Natural products derived from plants as a source of drugs.” Journal of
Advanced Pharmaceutical Technology and Research. 2012 (4): 200-201.
World Bank Group. 1998. “Pharmaceuticals Manufacturing. Pollution Prevention and
Abatement Handbook.” 1998; 382-386.
45
Y. N. Clement, Y. N., Baksh-Comeau, Y. S., & Seaforth, C. E. 2015. “An ethnobotanical
survey of medicinal plants in Trinidad.” Journal of Ethnobiology and
Ethnomedicine. 2015; 11.
46

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ASPIRATIONAL PROJECT

The project being proposed considers the

development of manufacturing facilities for the

active pharmaceutical ingredients (API) derived

from plant based substances. The case of anti-

diabetes drugs is specifically considered, as a

NUTRACEUTICALS ENGINEERING INSTITUTE 2016

The Development of Project Profiles for the

Manufacturing Sector of T&T

List of Table ............................................................................................................................ iv

List of Figures .......................................................................................................................... v

1 Description of the Opportunity ............................................................................................. 1

1.1 Summary ........................................................................................................................ 1

1.2 Product Mix.................................................................................................................... 3

1.3 Description of Activities ................................................................................................ 3

2 Industry Overview ................................................................................................................ 6

2.1 Industry Description ....................................................................................................... 6

2.2 Industry Background ...................................................................................................... 7

2.3 Proposed Enterprises .................................................................................................... 10

2.4 Incentives ................................................................................................................ 11

3 Stakeholder Analysis .......................................................................................................... 13

4 Environmental Scan ............................................................................................................ 16

4.1 External Analysis ......................................................................................................... 16

4.2 Internal Analysis .......................................................................................................... 19

5 Sub-sector Assessment ....................................................................................................... 21

6 Identification of Value Added Services .............................................................................. 23

6.1 Supply Chain Issues ..................................................................................................... 24

7 Financial Analysis .............................................................................................................. 26

7.1 Infrastructure ................................................................................................................ 26

7.2 Annual Utilities Usage ................................................................................................. 27

7.3 Salaries ......................................................................................................................... 27

7.4 Legal/ Statutory Fees ................................................................................................... 28

7.5 Operational Costs ......................................................................................................... 28

7.6 Equipment Cost ....................................................................................................... 29

7.7 Investment Summary ................................................................................................... 29

8 Human Resources ............................................................................................................... 33

8.1 Organisation Chart ....................................................................................................... 33

8.2 Job Descriptions for Key Positions .............................................................................. 33

8.3 Labour Availability ...................................................................................................... 35

10 List of Potential Investors and Partners ............................................................................ 40

11 Concluding Remarks ........................................................................................................ 43

Table 1: Analysis of Proposed Nutraceutical Facility Investment .......................................... 3

Table 2: Stakeholders' Analysis ............................................................................................. 14

Table 3: PESTLE Analysis for Nutraceuticals ...................................................................... 16

Table 4: Competitive Issues in the Nutraceuticals Industry .................................................. 18

Table 5: SWOT Analysis of Nutraceuticals Industry ............................................................ 19

Table 6: Sub-sector Assessment Table of Nutraceuticals...................................................... 21

Table 7: Summary of Annual Salaries ................................................................................... 27

Table 8: Operational Costs .................................................................................................... 28

Table 10: Potential labour pools for proposed positions ....................................................... 35

Table 12: List of Potential Investors and Partners ................................................................. 40

Figure 1: Product Mix .............................................................................................................. 3

Figure 2: Chain of activities for Nutraceuticals Products ........................................................ 5

Figure 3: Manufacturing processes in the pharmaceutical industry ........................................ 9

Figure 4: Key Stakeholder Groups within the Nutraceuticals Industry ................................. 13

Figure 5: Stakeholder Assessment in the Nutraceuticals Industry ........................................ 15

Figure 6: Value Stream Map for Nutraceuticals .................................................................... 23