In Dec. 2015, Garden Bio-chemical and DSM signed sales and purchase agreement of cholesterol. For Garden Bio-chemical, this move, on one hand, will be beneficial for increasing the company's profit; on other hand, will be favorable for improving brand awareness and expanding sales, according to CCM.
Source: Baidu
On 17 Dec., 2015, Zhejiang Garden Bio-chemical High-tech Stock Co., Ltd. (Garden Bio-chemical) announced that it signed sales and purchase agreement of cholesterol with DSM Nutritional Products AG (DSM). Accordingly:
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Selling and purchasing product: cholesterol
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Duration of cooperation: it will be valid from 1 Jan. 2016, lasting for 10 years. This agreement shall come into force upon it is signed and sealed by both parties.
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Purchase volume: during the validity, DSM purchases cholesterol from Garden Bio-chemical, annually purchasing volume is estimated to reach 30% of cholesterol capacity in Garden Bio-chemical.
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Except for special circumstances, both parties shall not be allowed to disclose any information concerned to the third party.
This agreement is a framework agreement based on two parties will. The exact selling time, quantity and price will be specified in line with formal contract.
Garden Bio-chemical said that this move will be conducive to the development of the company.
Financial performance will benefit greatly from this agreement during the validity
At present, the capacity of Garden Bio-chemical's cholesterol is 200 t/a (lanolin comprehensive utilization project (cholesterol included) is scheduled for production in Dec. 2015). Garden Bio-chemical uses self-made NF grade cholesterol to produce vitamin D3 (VD3), 100 tonnes of cholesterol is consumed. When the production line is working at full capacity, the remaining 100 tonnes will be used for sales.
Calculated by current USD78,158/t (RMB500/kg, sourcing from www.cnchemicals.com/), 100 tonnes of NF grade cholesterol can generate USD7.82 million (RMB50 million) sales for Garden Bio-chemical. This sales takes up 31.4% of 2014 full-year revenue of the company.
Brand awareness will be improved. Promotion and sales of this product in the international market will be facilitated, and then market share will be increased
DSM is one of two global vitamin giants. To cooperate with DSM will undoubtedly help to improve Garden Bio-chemical awareness in domestic vitamin industry or even global market. According to the agreement, DSM will annually purchase 30% of Garden Bio-chemical's cholesterol capacity, namely 60 tonnes. As a result, 40 tonnes of cholesterol can be used for external sales. As brand awareness is improving, new client development is likely to be guaranteed.
Actually, before 2008, Garden Bio-chemical mainly depended on imported NF grade cholesterol as raw material to produce VD3. This made high production cost, thus to weaken Garden Bio-chemical's competitiveness. In 2009, the company used self-innovated technology to construct a 80 t/a cholesterol project. VD3 raw materials are mainly supplied by self-made NF grade cholesterol and replenished by a small number of imported one. Its production cost decreased sharply. In 2010, the gross profit margin of its VD3 was as high as 81% and this product accounted for about 60% of market share. Garden Bio-chemical became the leading VD3 manufacturer in China.
In 2011, its self-made cholesterol can meet the demand for VD3 production. Then, Garden Bio-chemical sold the remaining one. From 2011 to 2013, the sales volume of NF grade cholesterol was 2 tonnes, 9.6 tonnes and 29.31 tonnes, respectively. In 2014, it upgraded cholesterol factory and expanded production, and suspended external sales.
It's investigated that global NF grade cholesterol market is dominated by NK Ingredients Pte Ltd (based in Singapore), Dishman Pharmaceuticals & Chemicals Ltd (based in India) and Nippon Fine Chemical Co., Ltd. (based in Japan), their total production capacity reaches 620 t/a.
If you would like to know more about the cholesterol market, you could have a look at: Vitamin China News.
About CCM:
CCM is the leading market intelligence provider for China's agriculture, chemicals, food & ingredients and life science markets. Founded in 2001, CCM offers a range of data and content solutions, from price and trade data to industry newsletters and customized market research reports. Our clients include Monsanto, DuPont, Shell, Bayer, and Syngenta. CCM is a brand of Kcomber Inc.
Tag: Garden Bio-chemical, DSM, cholesterol