Second Lonza vitamin B price hike

By Alex McNally

- Last updated on GMT

Related tags: B vitamins, Lonza, Niacin

Lonza has said it will put up the price of vitamin B3 by as much as
17 per cent to fend off rising raw material costs.

The Swiss biotech company blamed the increases for vitamin B3 (niacin) and niacinamide on a "continued​" increase of raw materials, energy and transportation costs. Yesterday, it said a worldwide increase of between 15 and 17 per cent will be made for niacin and niacinamide for food and dietary supplement applications. This is not the first time Lonza has had to up prices. In July the firm said it will put up vitamin B3 prices by up as much as 12 per cent to pass on increasing production costs. The main raw material for niacin and niacinamide, a substance derived from niacin, are petrochemicals. The price of oil has this year rocketed to nearly $100 a barrel. A spokesperson said the increase will affect all non-contract customers and other customers as their contracts permit. The new prices will come into effect on 1 January 2008. Lonza was not available for comment prior to publication. This summer's price rise was predicted 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. The firm is not alone in having to up prices to cover costs. DSM and US based Reilly Industries (now known as Vertellus) have both raised the price of the vitamin. Indeed, the spiralling cost of oil has been a major contributor to price hikes in food ingredients across the board throughout this year. Despite the hurdle of rising costs, a strategic analysis of the European Vitamin B Market by Frost & Sullivan said 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. Analysts at the firm said the growth of B-complex vitamins was being driven by a consumer interest towards self-medication. The B vitamins act as coenzymes in numerous biochemical reactions in the body. They are essential for proper growth and maintenance of cells, tissue and organs. The Basel-based company reported sales of CHF 2.91bn (€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 (€0.65bn), operating margin slipped by more than 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 and the vitamin-like substance L-carnitine to food and supplement makers, through acquiring Nutrinova's DHA business and larch arabinogalactan (LAG), an asset of US firm Larex.

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