One of Japan’s leading health supplements original equipment manufacturers (OEMs), API’s fully integrated production system covers every process, from the procurement of high-quality ingredients to the manufacturing of the finished products. In this interview, president, Takahiko Nonogaki, discusses the company’s history, gives his insight into the health supplements industry and explains how API plans to leverage on new technologies like AI to develop better products as it looks to expand in the international market.
As a company that has over 100 years of history and produces top quality products, could you please share what is the essence of Japanese monozukuri? How do you implement it within your company?
The foundation of Monozukuri, either in B2B or B2C approaches, is listening to what the final customer desires. Monozukuri starts from the idea of knowing which products the client needs, fitting the customers' quality expectations and getting the job done. We, here at API, have been listening carefully to the expectations of customers. For example, currently, there is a trend/necessity of preventative medicine, healthy foods and lifestyle. Therefore, we have created procurement route of health products such as honey, royal jelly, propolis, and pollen, which eventually became the foundation of our activity.
We went into the health supplement industry because we were already involved in manufacturing and importing dietary ingredients, such as propolis and honey. About 30 years ago the Honey & Lemon drink was introduced in the Japanese market, which is very good and healthy. Because of that, our sales went from 5 to 10 billion. The finished product is not our product, but we supplied honey used for that honey lemon drink. The demand for honey was rapidly escalating, and we made new plants for that with the capacity of one hundred tons per day. However, after two years, the demand decreased. We learned that we can't continue our business by only having one product. From that point, we have diversified to also propose and manufacture nutrition functional products, such as supplements.
We are equipped with a factory that can produce various shape of nutrition functional supplement food. Not limited to pharmaceutical products or nutrition functional food, we are rather a company which can create products speedily, and with high flexibility to accommodate to the needs of the customers, while always assuring the highest quality.
The quality of the health supplements lies in gradually adopting best practices to accommodate the expectations of customers. While our quality is determined according to the request by our customers, in API we always manufacture the product to reach the national Japanese quality. In fact, API has first introduced GMP of health supplements in Japan, and has been operating its quality management system. Therefore, periodical factory audits are conducted by a third-party organization to check the status of all manufacturing and quality control, and we have passed the strict inspections.
As an example, in our factory management, strict contamination control is a crucial factor; in order to obtain the GMP, Halal certification and the anti-doping certifications it is essential to isolate the production area and segregate operation flows. Furthermore, changing rooms are available for employees who change areas, and measures are taken to prevent cross contamination by humans from both hardware and software aspects
Hence, API’s manufacturing functions cover every process from the procurement of both domestic and overseas ingredients to the manufacturing of the finished products.
With such a consistent manufacturing management system, we have the trust of major companies who choose API as a manufacturing contractor.
The global dietary supplement is expected to grow 8.2% CAGR as people getting more conscious of living healthy lifestyle. Could you talk about us about this trend and how do you plan to take advantage of this?
Japanese are becoming health supplements. This is in part because the Government created preventative measures towards a healthier lifestyle, and it has been successfully injected into the medical sphere too. Of course, it opens an immense window of opportunities to us, but the criteria, quality, as well as diversification of shapes and forms of pharmaceutical products has become incredibly competitive.
Japan is slowly, but steadily, catching up with the U.S. standardized rules and requirements. For example, everybody in Japan currently knows about the products such as food fiber, vitamin, and calcium made in the U.S.A., and Japanese companies have to be one step ahead.
Optimistically, we have been very successful in capturing the niche market and adapting our best practices in food manufacturing, while also implementing our new ideas for health supplements.
I was looking at your R&D Department in your website and saw your partnership with Gifu University. Are you always looking for a partner when it comes to cooperating, and is it only in Japan or in China as well?
Currently, we are not doing R&D operations overseas. We are currently working with various Japanese universities and manufacturing companies through joint research not only in the regional areas of Gifu but all areas in Japan.
In 2010 you went overseas and opened your business office in China and last year you had turnover of 36 billion yen, so what is your midterm and international strategy?
The sales and procurement departments are trying to create a bridge with the overseas markets. In fact, we have already had several inquiries from many parts of the globe including China, U.S.A, and South East Asia.
How do you plan to go overseas? Are you looking for international partners who could allow you to understand the local markets?
First of all, as the numbers of international inquiries are increasing, we are confident that through our quality, formulations and ideas, we will be successful in the overseas market. We already have the know-how and solutions for health supplements, and are approaching new overseas customers.
Furthermore, currently we are looking for technical cooperation to enhance our product line-up. At present, we are undergoing some negotiations with certain companies, but nothing is set in stone yet.
What would you like the API brand to stand for?
Previously, there was a national standard to omit the ingredients manufacturer on the product's label. However, later on, the laws changed and now it is obligatory to put the company name of not only the sales company but the manufacturing company. Ever since that time, our brand has been getting more recognition as a manufacturer of health supplements.
If we were going to come back in 10 years to interview you all over again, what would you like to tell us? What are your dreams and aspirations for this company?
Firstly, we want all of our employees to be happy, but most importantly, to be motivated to constantly think of new ways to improve our product line-up, the customer base, and the company processes.
Furthermore, we would like to start having custom-made orders. This will require constant communication with the customer, and of course, understanding their needs, but we are looking to further capture a new set of customers, and we believe it will be extremely successful.
Lastly, we would like to start implementing AI, as currently, accumulating data is a crucial factor in manufacturing supplements. It would allow us to have a clear understanding of the products that are being utilized by each client, and it will, therefore, allow us to understand the best-selling product line-up as well as the needs of the customers.