Zila eyes Pacific Rim with Japan deal

By Jess Halliday

- Last updated on GMT

Related tags European union Vitamin

Zila Nutritional's agreement with Asahi Godo to distribute Ester-C
in Japan marks a milestone in its international strategy and could
be the US company's key to other countries in the Pacific Rim.

The two companies are currently working together to gain regulatory approval under the food additives law, which involves the submission of a dossier setting out what the ingredient is, why it is done and scientific studies indicating its efficacy.

Chief financial officer Andrew Stevens told NutraIngredients-USA.com that the process is expected to take between 12 and 18 months, but the company is already six or seven months in.

Sales of nutritional products in Japan were almost US$30 billion in 2004, according to consulting firm Global Nutrition Group, said to be the world's second biggest market after the United States.

"We believe there is an untapped opportunity in Japan that we need to get involved in,"​ said Stevens. "A successful introduction could take Ester-C into other places in the Pacific Rim. Japan is the 800lb gorilla."

Ester-C is produced by mixing ascorbic acid and calcium carbonate to create a pH neutral form of vitamin C, which helps prevent the stomach disruption that can occur when consumers take large doses of the vitamin in its natural form to help ward off colds.

The ingredient has been available in Europe for some time, but since the vitamin C is modified from its natural state the company has had to submit a dossier to the European Union in accordance with the 2002 Food Supplements Directive, which came into effect in August.

Manager of international operations Steve Hanson said that Zila has been granted derogation to continue selling the ingredient in certain European markets until December 31, 2009. The EU is expected to review the dossier prior to that date and make a formal decision.

In the meantime, Austria, Cyprus, Denmark, Estonia, Finland, Germany, Ireland, Lithuania, the Netherlands, Poland, Portugal, Slovenia, Sweden and the UK have responded positively to the dossier. A number of other countries have yet to respond.

Hanson also said that the company has come up with a plan to commit more marketing dollars to certain markets, which had not previously been part of a promotional push. In particular, it is stepping up both its consumer and trade marketing in the UK.

The technology behind Ester-C is owned by Zila, which means it has free reign to pursue global roll-out.

Zila's also licenses some rights to the technology behind another ingredient, Ester-E, from Australian company Vital Health Sciences.

Ester-E is designed to protect the antioxidant potential of vitamin E during absorption, transport and storage in the body.

At present Zila's rights cover the United States, Canada and Indonesia, but Stevens said that discussions are underway to expand those rights to allow Zila to market Ester-E globally.

The original agreement, signed in 2003 and running until the expiration of the underlying patents, gives Zila first refusal for other international markets.

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