| By Liu Yuanyuan, Asia Manufacturing |
| Tuesday, 11 March 2008 |
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Hubei Guangji Pharmaceutical Co., Ltd., a leading Chinese riboflavin manufacturer, has been brought to its knees by the sagging prices of riboflavin, after achieving an impressive 14-fold increase in sales during 2007.
Given that riboflavin saw robust increases in price from the third quarter of 2006 to October 2007, Guangji Pharmaceutical, once an unknown bio-pharmaceutical company, became a high-flying riboflavin producer in the spotlight of the pharmaceutical sector worldwide |
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and was identified by research organizations as an unmatched industry leader across the globe. However, the company has taken a big hit from the significantly decreased prices of riboflavin, with its share price witnessing a nearly 60 per cent drop to date. On 5 March, the company announced that its riboflavin products were selling from 220 yuan to 270 yuan |
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(approximately US$31 to US$38) per kilogram in February, a decline of 30-35 per cent from a month ago.
Guangji Pharmaceutical has become the world’s largest riboflavin supplier in terms of production capacity, with its riboflavin products taking a 90 per cent share of China’s domestic market, which, in and of itself represents a third of the global market.
The company has outperformed its major competitors at home and abroad, including DSM, BASF and Desano, with an annual production capacity of up to 2,300 tons of riboflavin. In addition, the drug maker holds a 51 per cent interest in a capacity expansion project, which is scheduled to be put into operation in the second quarter of this year and is expected to have an annual output of 2,500 tons of riboflavin upon completion.
In 2007, Guangji Pharmaceutical experienced dramatic growth along with the continually soaring prices of |
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riboflavin. But the good days came to an end as prices of riboflavin began to fall at the beginning of November last year. The downtrend continued to date with the average price plummeting 70 per cent from its historical peak.
The slump in prices of riboflavin can be attributable to BASF’s resumption of regular production of the product in the third quarter of 2007, greatly impacting the global market.
The prospects for Guangji Pharmaceutical will be conditional on the price trend of riboflavin, which is still difficult to estimate for the time being, said an industry analyst.
Statistics show that riboflavin is mainly used for feed and food additives. Market demand is quite small, and main riboflavin manufacturers worldwide including Guangji Pharmaceutical have a combined annual production capacity of 6,500 tons of riboflavin currently, leaving the pharmaceutical giant under dark clouds. |
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