China’s taurine market boosts profit of Yongnan Pharmaceutical by over 250 percent 04-28-2017

The growing taurine market in China and worldwide has elevated the net profit of China’s largest taurine supplier Yongan Pharmaceutical by more than 250% in 2016, compared to 2015. Increasing prices and surging demand for taurine are the main drivers for the huge success of the company.


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The demand for taurine is growing worldwide. China has established itself as one of the major players in the amino acid market, and therefore also for nutrient additions like taurine. Many manufacturers are outsourcing their taurine production to China and search cheap suppliers in this country.


The key manufacturers in China’s taurine business are Taisho Pharmaceutical, Honjo Chemical, and Yongnan Pharmaceutical. Especially the latter company has finished the fiscal year 2016 with a remarkable boost in net profit, thanks to the booming taurine market.


Yongnan Pharmaceutical is China’s largest producer of taurine and ethylene oxide, a raw material used in the production of taurine. The performance in 2015 was pretty bad, due to the low market price of ethylene oxide and oversupply in the market.


According to market intelligence firm CCM, Yongnan Pharmaceutical has revealed the financial results of 2016 at the end of March 2017, showing a net profit surge of more than 250%, surpassing USD 9 million. The net profit in 2015 has been USD2.61 million, which was less than in 2914. On the other hand, the revenue was falling slightly in the last year, by about USD0.96 million. This can still be seen as a recovery, considering the huge fall of revenue by USD14.8 million from 2014 to 2015.


According to the company, the huge surge in net profit was due to the increasing prices of taurine, the main product of Yongnan Pharmaceutical. Taurine was making up for 84.35% of product revenue in 2016, followed by the second largest product, Ethylene oxide, which only accounted for 6.14%. Looking at the product revenue structure in 2015, taurine was only accounting for 73% and Ethylene had a larger share with 17%.

The trend shows clearly the importance of taurine for Yongnan Pharmaceutical and the growing trend of it.


The revenue of taurine went up by 14.25% compared to last year, while the production of ethylene oxide is mainly produced for the own taurine production. The price on the market is very low, due to overcapacity.


Yangnong Pharmaceutical is not only China’s largest taurine producer but also worldwide, accounting for over 50% of global sales, according to CCM. Notably, around 80% of the company’s production is used for export.


The company also was expanding its product scale recently, merging into the food and health care sector. In this case, the company ensured the supply of one of the biggest players in the world’s vitamin and mineral supplement, Jamieson Laboratories from Canada.


The price of taurine has increased significantly to USD4.2/kg in March 2017, after hitting the bottom in late 2015. The largest increase was hereby shown in the second half of 2016, where the price increased by USD1.6/kg.


CCM sees two main reasons for the huge price rise. Firstly, the strengthened environmental protection policy of China’s government has caused the withdraw of several small manufactures of taurine and production suspensions of bigger companies, which resulted in a shorter supply of taurine in the market. Secondly, an increasing demand allows manufacturers to increase the prices of taurine in the market. Besides in the beverage industry, taurine is witnessing more application in the feed, healthcare, and pharmaceutics industries. Especially in the feed sector taurine has become a highly-demanded addition, since the use of antibiotics was restrained by the government and taurine is showing itself as a good substitute for immunity enhancement.


However, the main reason for the growing demand of taurine is still the boosting market for energy drinks. According to Mintel, the worldwide consumption of energy drinks has reached 8.8 billion litres in 2015. The countries with the largest consumption are hereby the USA with 3.3 billion litres, China with 1.4 billion litres, Great Britain with 561 million litres, and Germany with 328 million litres.


The most famous energy drink is arguably Red Bull, sold in the typical red and silver can with the red bull icon. This energy drink made its way to China at the end of 2013, but still, is facing several problems like a trade mark issue.


About CCM

CCM is the leading market intelligence provider for China’s agriculture, chemicals, food & ingredients and life science markets.


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