Law on nutritional supplements helps Champaign firm grow
CHAMPAIGN – Looking for a business resistant to recession?
Charlie Li thinks he has one.
Li's company, American Analytical Chemical Laboratories, does independent testing of nutritional supplements and other substances.
Six years ago, the company had 13 full-time employees and two part-timers. Today it has 20 full-time employees and three part-timers.
"We increase our employee counts each year and will add employees again this year," said Li, who formed the company in 1994. "Our business seems not to be affected by the economic downturn."
One reason for increasing demand: the Dietary Supplement Health and Education Act, signed into law in 2006.
The law requires every supplement be tested to ensure its identity, potency and safety.
"As a result of this new law, there are substantial requirements in laboratory testing now and going forward," Li said.
Businesses with more than 500 employees had to comply with the law by June 25, 2008, and companies with 20 to 500 employees had until June 25, 2009, to be in compliance. By June 25 of this year, all companies will have to comply.
American Analytical Chemistry Laboratories, at 711 Parkland Court, C, does testing for about 500 customers, most of them in the United States, Li said. But the lab has also done testing for clients in Turkey, Malaysia, China, France and Canada.
The lab has also set up a subsidiary in China, with a lab in Beijing and a cooperative agreement with a lab in Nanning, he added.
Li said he saw growth potential in China, which he felt had a great need for quality control and quality assurance, particularly in the areas of food and environmental safety.
But the company's Chinese venture has not developed "to the speed we want to see," Li said.
Schools and cities in China have their own lab systems, and Li said the marketplace for testing is "very competitive." As a result, most testing his business has done in China has been for manufacturers who are exporting goods.
Most business done by the Champaign lab is testing of nutritional supplements and "nutraceuticals" – the term given to food products that have health and medical benefits.
Some tests involve "functional foods" – foods enriched with specific vitamins or minerals. The company also tests functional cosmetics and does clinical sample testing from nutrition supplement trials.
Through the tests, the lab seeks to confirm – or contradict – claims that certain ingredients are present in products. The company also tests for substances that shouldn't be in the products.
Li said he would like to do more business with food-processing companies in Illinois. But so far, he has had better luck with out-of-state companies.
Major clients – which he did not identify by name – include a nutritional supplement company in New York and two sizable customers in Salt Lake City.
Most of the customers are privately owned firms, Li said, estimating that only 12 to 15 of the clients are publicly traded companies.
Li said American Analytical Chemistry Laboratories has increased its revenue every year since 1994, when it was established in Savoy. Last year, during the economic downturn, revenue grew by 11 percent.
Last year, the company had "slightly under $3 million" in gross revenue, Li said. This year, he expects it will grow to more than $3.2 million.
When the lab moved in 2004 to its current space in Champaign's Mattis Commercial Park, the company occupied only 6,000 square feet of the 11,500-square-foot JMT Technology Center.
Li initially thought he might rent out part of the building to a business, "but we didn't have the right tenants."
He ended up adding lab space. Li said he expects to fill the entire building "in a couple years," figuring it can accommodate 35 employees. He's planning to hire two more for lab work this year.
Eleven of the current employees have doctorates, he added.
As for the future, Li said he expects the business to grow at a 10 percent rate for several years.
He plans to concentrate on the same market, but "put more focus on expanding in (the testing of) pharmaceuticals."
"We'll continue to try to grow our Chinese subsidiary," he said. "We have a foundation there, and it should grow faster in three to five years."
Li, 56, said he will also consider possible acquisitions or mergers.
"That doesn't exclude being acquired by suitors," he said. "It's a two-way street."
But Li said if he accepts an offer from a prospective buyer, it will be conditioned on keeping the Champaign lab as a major base.
"My principal condition would be not to move this lab," he said.
About American Analytical Chemistry Laboratories Corp.
Business: Chemical testing of nutritional supplements and foods. Focuses include:
– Identity analysis (testing for compounds in herbs and supplements).
– Potency and strength (confirming that amount specified on label is what's actually in the product).
– Safety (checking for pesticides, pathogens, heavy metals and natural toxins).
Location: 711 Parkland Court in Champaign's Mattis Commercial Park.
Employees: 20 full-time and three part-time.
President: Charlie Li.
Web site: http://www.aaclabs.com