Forbes signs sterol agreement
secured a sterols sales agreement for $24.4 million over a
three-year period beginning in January 2005.
The new customer agreement is between Forbes' manufacturing joint venture, Phyto-Source LP, and a leading multinational ingredient company, but for contractual reasons, Forbes will not disclose further information.
"Our cholesterol-lowering ingredient business is growing substantially and our core group of customers continues to expand," said Charles Butt, president and CEO of Forbes Medi-Tech. "The addition of this supply agreement in combination with the pending EU approval will provide new opportunities to expand the company's phytosterol business and allow us to look at further increasing production capabilities."
Forbes expects that approximately 54 percent of the company's total revenue over the next three years will come from these supply agreements.
The phytosterols will be manufactured in the US in Pasadena, Texas, as a joint venture between Forbes and Chusei.
Back in March, Forbes signed a new four-year licensing deal with the New York-based supplier Marco Hi-Tech in an effort to further expand its presence on the US, health-food market. Before the sigining of this contract Reducol - made from plant sterols extracted from by-products of the forestry industry - was available in NatureMade brand dietary supplements, manufactured by Pharmavite for mass market channels.
Expanded marketing and distribution of the cholesterol-lowering ingredient has been further boosted by recent research showing the benefit to heart health of lowering cholesterol beyond levels previously recommended by most physicians.
Phytosterols have been notoriously difficult to bring to market, both in the US and in Europe. But the increasing body of evidence to support their effects on LDL cholesterol reduction was recognized in a FDA health claim last year. Since then, a handful of functional foods, including Hain Celestial's rice-based drink and a Minute Maid orange juice, have been launched and new products have also been introduced in the supplement category.
Anticipating increased demand, Forbes last year said it would increase sterol production from 1000 to 1500 metric tones. The US remains the biggest market for Reducol, but Forbes is pinning much of its hopes for future growth on the European market.
A Frost & Sullivan report on plant sterols forecasts growth between now and 2010 at 15 percent annually in Europe, partly boosted by faster regulatory approval. (New applications can be cleared faster based on their similarity to previous approvals).
Indeed, in July, the company received a positive opinion from European authorities for the approval of Reducol, and following publication of the decision by the EU Standing Committee on the Food Chain and Animal Health, the plant sterol ingredient will be permitted for use in milk-based drinks.
The news followed the recent approval as novel foods of a series of new plant sterol ingredients and applications from US-based Archer Daniels Midland (ADM), food giant Unilever and the smaller Finnish firms Teriaka and Pharmaconsult.
"Clearance of this regulatory hurdle secures a significant milestone for the Company, leaving only the completion of administrative steps before pursuing Reducol sales in Europe," said Charles Butt, president and CEO of Forbes Medi-Tech. "Europe represents a bourgeoning market for our cholesterol-lowering food ingredients. With the inclusion of ten new member states into the European Union, there is a substantial opportunity to further build our revenue base."
