Co-Q10: conquering the world

With sales surging up to 200 per cent per annum in some countries, suppliers are racing to keep up with demand, and manufacturers are struggling to ensure quality control. Shane Starling explores the landscape

It is rare that demand for an ingredient outstrips supply, but that has been the case with coenzyme Q10 in recent years, as interest in the antioxidant has surged, particularly in Japan and the US. Analyst Euromonitor reports the worldwide market was worth $510 million in 2004 — a market that has been buoyed by research indicating its ability to benefit heart health, reduce blood pressure, care for ageing skin and curtail Parkinson?s disease.

It?s a market that has also been boosted by evidence showing increasingly popular statin drugs — taken to combat heart disease — reduce the body?s natural co-Q10 levels and thus should be supplemented with coQ10. It has lead some medical practitioners and nutrition scientists to question why statin/co-Q10 combination supplements have yet to enter the market.

"I would say the statin connection has been the largest driver of co-Q10 growth in the US," says Kenn Israel, director of marketing at California-based sister companies Soft Gel Technologies (supplements manufacturer) and OptiPure Ingredients, which first introduced co-Q10 into the US market and now sells in Europe.

Further research has noted co-Q10?s immune-system boosting properties that can benefit those with conditions such as HIV/AIDS, as well as general health.

In Japan, co-Q10 sales in supplements have rocketed by 200 per cent per annum after the nutrient was reclassified from a pharmaceutical to an over-the-counter food supplement in 2001, according to Paul Yamaguchi, president of New York-based Japanese market analyst and researcher Paul Yamaguchi and Associates. He estimates the Japanese market at $250 million in 2005 with co-Q10-bearing foods and beverages on the rise. Japan?s Health Business Magazine puts the figure closer to $350 million. Yamaguchi predicts the market will level off in the next couple of years and settle at 5-8 per cent annual growth.

Co-Q10, discovered in 1957, is poised for further growth in Europe as awareness builds and supply expands and stabilises. According to Euromonitor, Norway is by far the biggest market followed by Russia, Belgium, the Netherlands and Denmark.

Some ambiguity remains in Europe as the detail of pan-European supplements legislation is negotiated, but it is legally on sale in most markets and is expected to remain that way despite a ban in France on what can only be called highly conservative grounds. (France has banned co-Q10 in supplement form for the moment not because it is deemed a threat to public health but because the French government has determined it is nutritionally unnecessary by the bulk of the population.)

Oceania, China, Korea and other parts of Asia are also marked for growth by various market analysts.

Co-Q10?s saleability is being further enhanced by its development as a food ingredient, which is pushing it beyond the supplements and cosmetics aisles. These categories continue to dominate (see Table 1), but co-Q10 is already appearing in beverages like functional waters; soft drinks; yoghurts; cheeses; candies; and other products like toothpaste, chewing gum and mouthwash. There is even a coQ10 mouth guard in Japan.

And if Big Food interest is a sign a nas-cent ingredient has hit the big time, then one need look no further than Coke Japan?s recent launch of Coca-Cola Coenzyme Q10 for proof of the antioxidant?s mainstream momentum.

Mintel recorded more than 250 co-Q10-containing product launches in all categories in the first 10 months of 2005 from companies as diverse as Parmalat, Shiseido, Pharmavite, Tesco, Beiersdorf, Nivea and Seven Seas.

SUPPLY PROBLEMS
All this activity has meant demand for coQ10 — sometimes known as ubiquinone or more optimistically,?the fountain of youth? — has outstripped its unto-now unlimited supply. Some supplements makers have even withdrawn co-Q10 products from their portfolios because they could not attain a guaranteed supply.

The supply problem has been compounded by the concentrated expertise and costly technology required to manufacture co-Q10 and this fact has restricted output. It has also led to extreme price fluctuations with raw kg prices ranging from $1,000-$5,000 in the past two to three years.

"Some of those ridiculously high prices that were coming out of the Japanese grey market have toned down and we don?t hear about these epic high prices any more," observes Israel.

But the bottleneck remains in part and has been accentuated by the narrowness of the co-Q10 supply channel. Four Japanese companies — Kaneka, Mitsubishi, Nisshin and Asahi — produce almost all of the world?s raw co-Q10. This material is purchased by supplements manufacturers, cosmetics firms and functional foods companies, as well as ingredients suppliers such as DSM, Triarco, GCI Nutrients, Kaden Biochemicals, NHK Labs and others who resell the ingredient, often reformulating and rebranding it in the process.

Many of these resellers have exclusive agreements with one or another of the Japanese suppliers, and partly because of the high price of co-Q10, blends with ingredients such as vitamin E, alpha-linoleic acid and magnesium are common.

These can come in capsule, softgel, liquid, syrup and powder form and are often marketed with increased solubility and bioavailability claims — very important for a highly priced ingredient with known ?bioavailability issues.?

"The fact is co-Q10 requires robust dosage to provide clinical effects and, while I would never criticise another company?s products, there are many that don?t have data backing up their efficaciousness claims," says Israel. "Our ingredients have that clinical backing."

Although still in the development stage an Israeli company, Nutralease, has high hopes for a nanotechnology-based solution to boost bioavailability, while DSM has launched a branded ingredient aimed at the tablet market that utilises a starch-based powder as a carrier.

The co-Q10 shortage has led to a problem with counterfeit co-Q10, much of it stemming from China but also from within Japan and other countries. Given the high price co-Q10 fetches, there is little wonder counterfeiters have stepped in to fill the supply gap as many supplements manufacturers have been caught having co-Q10 re-sellers.

Kaneka, the market leader since it pioneered mass-produced yeast-fermented coQ10 in 1977, has attempted to counter the situation by urging end-product sellers not to employ a reselling middleman. It only sells its branded ingredient, Q10, to end-product manufacturers, bar one agreement with New York-based nutraceuticals multi-tasker Tishcon. Kaneka says it is also developing technology to detect fraudulent coQ10 batches and will take legal action against traced counterfeiters.

"Kaneka maintains its commitment to providing up-to-date and reliable testing to the marketplace in an effort to assist all manufacturers to ensure the consumer will receive reliable co-Q10. In addition, Kaneka has introduced its branded ingredient KanekaQ10 to provide an even greater degree of security to the consumer," a spokesperson told FF&N.

"We haven?t encountered it ourselves, but we?ve heard a lot about it," says Israel. "But we stringently test, as do most companies, everything that comes in here and so if we did get a counterfeit batch, it would be highly likely to be detected."

A spokesperson for New Jersey-based ingredients supplier Pharmachem says his company had encountered counterfeit material, but it had been detected on arrival and quarantined.

It?s a worrying situation but one that may not be too out of hand, if a survey by independent US product tester, Consumerlab.com is anything to go by. It tested 32 products in 2004 and found only one that did not meet its on-label co-Q10 content promise. Brands such as Nature Made, Enzymatic Therapy and Sundown passed and even the failed brand had other batches retested that met its label claims. "Maybe they were unwittingly sold some counterfeit co-Q10," Tod Cooperman, MD, president of ConsumerLab, says.

BOOSTING CAPACITY
But legitimate additional capacity is coming on-stream. Kaneka is in the process of building an $80 million production facility in Texas and has expanded its Japanese plant to boost output to 180 tonnes. Texas is expected to add 100 tonnes to Kaneka?s potential output when it becomes operational later this year, and it has set up a US subsidiary to better service the North American market. It already has an operation in Europe.

"After the completion of this facility, Kaneka will offer the only redundant manufacturing capability in the world further ensuring a stable and reliable supply of KanekaQ10 to the marketplace," its spokesperson says.

A Utah-based biotech firm, Frontier Science, has established a joint venture with Taiwanese start-up PharmaEssentiA to be the fifth member to join the world?s exclusive multi-tonne co-Q10 supplier club in 2006.

Mitsubishi and Nisshin have also expanded or are in the process of expanding output. Other small-scale suppliers exist or are being established in China as well as Italy, Korea, India and Israel that may expand production in synthetic co-Q10, although many US supplements makers prefer the more popular natural versions derived from fermented bacteria or yeast.

"Who knows what will happen when all this new supply comes on board?" ventures Israel. "It may have a destabilising effect as there may be quality issues that have not been settled with some of these new players but we use both synthetic and natural co-Q10."

As does fellow Californian supplements maker Pharmavite-owned Nature Made, which is similarly wary about new suppliers."Because of our participation in the US Pharmacopeia programme, any supplier that we bring on has to meet those USPs. We also meet relevant standards in Japan which is a large market for us. We wouldn?t discount new suppliers, but they have to be able to supply product to the standards we set," says Nature Made?s director of marketing, Bob Ziehl.

If quality can be maintained, all of this is obviously pleasing to supplements, cosmetics and functional foods manufacturers, not to mention consumers who are likely to see lower retail prices for co-Q10 items.

So who is buying co-Q10 products? "The demographic is over 40s, specifically in the 55-70 age bracket," says Israel. "Women buy but men have the greatest need, although it is apparent that heart disease is a very significant health risk for women as well."

Companies like Soft Gel/OptiPure and Nature Made are engaging in education campaigns to broaden sales beyond the traditional health channels.

"We are sponsoring industry and public awareness campaigns," Israel notes. "We sponsor online web education and lectures at trade shows as well as promoting co-Q10 in the trade and consumer press. There is a growing awareness. The future looks bright."

Table 1: New product launches containing co-Q10

Category

Q1 - 2005
Number of new products

Q2 - 2005
Number of new products

Q3 - 2005
Number of new products

Q4 - 2005
Number of new products (Oct 1- Nov 2)

Total Sample
Number of new products

Beverages

0

4

4

0

8

Confectionery

0

1

2

0

3

Cosmetics

0

0

0

0

0

Dairy

1

8

1

0

10

Desserts and ice cream

0

1

0

0

1

Haircare

0

0

1

2

3

Healthcare

14

36

8

11

69

Oral hygiene

3

0

0

0

3

Pet food

0

3

2

1

6

Pet products

0

0

0

0

0

Skincare

45

51

48

10

154

Total sample

63

104

66

24

257

Note: Products with a launch count of 0 may indicate the launches were repackagings or reformulations that did not get attributed as a new product count by GNPD.


Japan vs the US

US launches:

2005 (until November) = 185 SKUs 2004 = 84 SKUs
2003 = 98 SKUs
2002 = 116 SKUs
2001 = 115 SKUs
2000 = 107 SKUs

Japanese launches:

2005 (until November) = 34 SKUs
2004 = 37 SKUs
2003 = 16 SKUs
2002 = 12 SKUs

Tom Vierhile, executive editor of New York-based market analyst Productscan Online, compares the US and Japanese markets:

"We have seen co-Q10 move into a broader range of products in Japan such as candies; chewing gum; energy drinks; and milk, nondairy milk and yoghurt drinks. The top three categories are vitamins and supplements, health drinks and dieting aids. Skincare is number four.

"We are seeing a broader range of items in the US, although product introductions are tracking the gains we have seen in the Japanese market. For example, since 2000, we have had co-Q10-added products in snack bars, sweet toppings, oil, shortening and cooking sprays, soft drinks, bath products, toothpaste, medications, and even dog food."


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