Leading Japanese CoQ10 supplier to exit market

31-May-2009 - Last updated on 02-Jun-2009 at 15:40 GMT

One of the leading global suppliers of CoQ10 – Japan’s Asahi Kasei Pharma – has said it is exiting the market by the end of the year, citing “continuing unprofitability”.

Asahi has traditionally been one of the top four Japanese suppliers dominating the CoQ10 market. The other three are Kaneka, Mitsubishi and Nisshin.

However, Asahi said the market has been driven to a situation of overcapacity, due to recent plant expansions and new Chinese producers. Unable to maintain profitability, Asahi said it will cease production of CoQ10 by the end of July 2009. It will discontinue sales at the end of December 2009.

“Despite every effort toward enabling the continuation of this business, the situation is one which offers no foreseeable prospect for the recovery of profitability,” said Asahi in a statement.

Overcapacity

The current state of CoQ10 supplies marks a complete turnaround from several years ago, when demand was outstripping supply.

Around five years ago, the market was dominated by the four large Japanese players, who had the expertise and technology to manufacture the ingredient. This resulted in restricted supplies, product withdrawals due to the lack of supply guarantees, high prices and volatile price fluctuations.

“The global market for coenzyme Q10 reached a crest in 2004 and 2005, with demand outstripping supply worldwide. This was followed by successive plant expansions by competitors in Japan and the new market entry of Chinese producers, resulting in a situation of severe overcapacity,” said Asahi.

According to Asahi, the situation is particularly pronounced in the US, which is the main market for CoQ10, and where prices have been under most pressure since competition increased.

Asahi Kasei Pharma set up a subsidiary in Shiraoi in 1975 to produce antiobiotics for use as animal feed additives. Since 2005, this plant has focused on the production of CoQ10 as part of Asahi Kasei N&P, Asahi Kasei Pharma’s subsidiary for the production of fine chemicals.

Last year, the firm’s fine chemicals business reported sales of ¥2.5bn.

Market

The global market for CoQ10 was valued last year at $835m, compared to $380m in 2003, according to Euromonitor International.

When broken down into geographical regions, North America holds the largest slice of the market, valued at $459m in 2008. This is followed by Asia Pacific at $287m, Western Europe at $48m and Eastern Europe at $30m.

“Overall the Q10 market globally accounted for just a bit over one percent of the global VDS [vitamins and dietary supplements] market,” said Euromonitor analyst Daniel Latev.

“As a single ingredient Q10 is still a very small niche product with Japan and US accounting for 85 percent of the global market. However sales growth has recovered after the sales slump and in 2008 the global market increased with 9 percent,” he told NutraIngredients-USA.com.

CoQ10 benefits

CoQ10 – or coenzyme Q10 – is a powerful antioxidant, which plays a vital role in the production of chemical energy in mitochondria – the 'power plants' of the cell – by participating in the production of adenosince triphosphate (ATP), the body's co-called 'energy currency'.

It has been studied for its role in cognitive health, heart health, and anti-ageing (in oral and topical formulations). It has also been shown to benefit those suffering from angina, heart attack and hypertension.

Its use in supplements, particularly in the US, has been boosted by the rise in popularity of statin drugs which deplete the body's natural stores of CoQ10.