There continues to be speculation as to whether current growth of the coenzyme Q10 market will be maintained. The North American market has grown by 60% since 2005 and is now at over 210 Metric Tons and there is belief that this category expansion will continue. As a leading supplier, ZMC is confident and well-positioned to support this ongoing growth.
Last week, CoQ10 supplier Kaneka sent a letter to the marketplace in advance of a press release scheduled to be posted this week. In this letter a 10% across the board price increase for Kaneka product was announced with the following statement provided:
“CoQ10 pricing is now at an all-time low, due to increased supply from China and downward pressure from those manufacturers to gain market share. Current price levels are artificially low and unsustainable based upon full manufacturing costs for the long term. Kaneka has always been, and will continue to be, the stabilizing force in the global CoQ10 market, providing the highest quality CoQ10 industry (sic) and fair and equitable pricing.”
“ZMC would like to comment that while this statement may or may not be leveled accurately at some Chinese CoQ10 manufacturers; it cannot be applied to ZMC specifically”, advises Scott Steinford, President, ZMC-USA. “ZMC was the first non-Japanese CoQ10 manufacturer to enter the marketplace and provide responsible cost based pricing. ZMC has also worked to provide more third party certifications of quality and safety than any other ingredient manufacturer in the world. Since 2005 the North American CoQ10 market has increased by 60% to over 210 Metric Tons and we feel this is partially a result of making CoQ10 considerably more affordable than pre 2006 levels.“
It is perhaps understandable that Kaneka would be challenged to understand or realize the affordability of today’s CoQ10 pricing based upon the following:
Based upon Kaneka press releases found at http://www.kaneka.co.jp/kaneka-e/news/index.html Kaneka has spent over $110M since 2004 to increase its CoQ10 production capacity to 280MTs. Additionally, Kaneka has suffered tremendous market share decline in this product and as a result the economies of scale derived by such over capacity are a negative factor.
The Kaneka Financial Statements provided for the year ending March 31, 2006 indicated the Life Science Products Division (CoQ10 making the largest contributor to this segment) accounted for 36% of its total Operating Income. From this report: “…growth in the sales volume of coenzyme Q10 contributed to significant increases in both sales and profits…”. The Life Science Products Division was the single most profitable sector of the seven sectors comprising the entire Kaneka Corporation.
The Kaneka Financial Statements provided for the year ending March 31, 2010 indicated the Life Science Products Division accounted for only 19% of its total Operating Income and ranking fourth among it seven divisions.
Because ZMC provides a very broad line of high quality dietary supplement ingredients in addition to CoQ10 including Natural and Synthetic Vitamin E, Vitamin A, Biotin, Lutein, Beta-Carotene and other carotenoids; we are able to achieve a greater distribution of land, accounting, management, labor costs and manufacturer efficiency over many products offered to this industry.
“ZMC is in agreement with Kaneka’s statement regarding the challenge resulting from higher raw material costs but to say that Kaneka is the stabilizing force in the global CoQ10 market is, in our opinion, undeserved and untrue”, concludes Steinford.
Zhejiang Medicine Company (ZMC) is an active ingredient manufacturer offering high quality pharmaceutical and nutraceutical ingredients improving the lives of the world's consumers since 1954. ZMC is staffed with over 4,000 employees globally and is an important production base of pharmaceutical drugs, Biotin, Vitamin A, Astaxanthin, Natural and Synthetic Vitamin E, Patented Lutein, Phytosterol, B-Carotene, Zeaxanthin, Patented Lycopene, and Coenzyme Q10. ZMC operates in North America as ZMC-USA from its office in The Woodlands, Texas. www.zmc-usa.com.