According to research analyst V. Arthi, author of the new report European Amino Acids Markets, European companies that are finding it difficult to compete on price "will benefit from entering into joint venture agreements that will enable them to distribute products manufactured in low-cost environments."
For example, the average Chinese price of Arginine (considered important for muscle growth and tissue repair, as well as other uses) is €8 to €10 per kilo, compared to €12 to €13 per kilo from European manufacturers, Arthi told NutraIngredients.com.
"More Chinese manufacturers are able to match the quality of their products to those thatare manufactured in Europe," she said.
Teaming up with China is a strategy that has already emerged for certain vitamins; DSM entered into a joint venture with China's North East Pharmaceutical Group last year in a bid to improve earnings from its nutrition business, and opened a laboratory in Shanghai's Fudan University to develop new methods for production of vitamins, carotenoids and food ingredients.
BASF, meanwhile, announced the closure of its vitamin C plant in Denmark - a decision precipitated by price pressure from China and which marked the end of its European production of the vitamin.
Ajinomoto, Kyowa Hakko, Degussa, ADM, BASF and Adessio are all said to have "significant market share" in the European amino acids market.
Of these, Degussa has already taken action to overcome competition with entered a joint venture agreement with Shandong Cathay Lineng Biotechnology Co for the production of feed grade L-Lysine and expects to triple capacity to 120,000 tonnes by 2007.
In addition to cost efficiency, acquisitions and joint ventures will help companies to increase their market share and build a presence in other markets, says the Frost and Sullivan report.
Animal feed accounts for 60 per cent of the European amino acid market, which is estimated by the global growth consultant to be worth US$1357.7m (c €1063.8m) overall in 2005.
Food and beverages make up around 30 per cent of the value, and other uses, such as dietary supplements and pharma, make up the remaining 10 per cent.
By 2012 the market is expected to be worth $1944.3m (€1523.4m), and health uses will play a major part in this expansion. The development amino acid dimers (two units of amino acids linked by a peptide bond) makes them more suitable for use in foods since they are more stable in aqueous solutions and have superior solubility to than single amino acids. These are "critical parameters in applications such as parenteral and enteral nutrition," said Arthi.
Microencapsulation technology is also important for the development of the market, since it can prevent the degradation of the nutrients. "This has led to a significant increase in the use of amino acids in ruminant feed," said Arthi.
But although there have been a number of positive scientific studies pointing to the health benefits of amino acids, their use in foods is somewhat stymied by safety concerns.
For instance, impure L-tryptophan has been linked to Eosinophilia-myalgia Syndrome. Tryptophan, a natural relaxant, was banned in Europe in 1990, but the ban was lifted in 2005 by The Tryptophan in Food (England) Regulation 2005, provided it meets purity criteria set out in the European Pharmacopoeia (EP).