The firm blamed the increases for vitamin-B3 (niacin) and niacinamide on rising costs of raw material, energy and transportation. The main raw material for vitamin B3 and niacinamide, a substance derived from niacin, are petrochemicals. This week's price rises were predicted by the firm at the end of last year, when the company announced it was on track to meet earning expectation for the full year by passing on the high costs of raw material and energy. Lonza is not alone in having to raise prices as last year DSM and US-based Reilly Industries both raised prices for B vitamins, particularly for niacin. The latest available strategic analysis of the European Vitamin B Market by Frost & Sullivan reports that the market was worth €415m (£280m) in 2005. This is anticipated to grow to €901m (£607m) by 2012, equivalent to a compound annual growth (CAGR) of 11.7 per cent for the sector. The Basel-based company reported sales of CHF 2.91 bn (€1.76bn) in 2006 and said the price increase will come into effect on October 1, 2007. The firm's nutrition activities fall within its Organic and Fine Chemicals division, which reported a stable year with operating income of CHF130m (€0.78), similar to last year's level. While sales were up 10.5 per cent on 2005 to CHF1.075 bn (€0.65), operating margin slipped over one per cent to 12.1 per cent. This was explained by a "time lag between the increases in raw material and sales prices". Lonza has made attempts to decrease its reliance on niacin, or vitamin B3, and the vitamin-like substance L-carnitine to food and supplement makers, through acquiring Nutrinova's DHA business and larch arabinogalactan (LAG) assets of US firm Larex. Earlier this year the firm also signaled a move to become a leading force in vitamin K production by buying Canada's SAM Electron Technologies.