TOKYO -- Kyowa Hakko Bio will invest 10 billion yen ($91.1 million) by 2020 to double the capacity of Chinese and Thai plants that make amino acids for medical care, a response to growing demand worldwide.
Intravenous amino acids are widely used to provide nutrition to patients who are unable to eat well as they recover from surgery. Emerging economies such as Thailand have worked to improve health care in recent years, looking to draw tourism.
Such advancement of medical care spurs demand for amino acids, with the global market growing by around 6% a year and likely to reach about 17,000 tons in 2020.
The Thai plant of the Kyowa Hakko Kirin subsidiary cultures the ingredients used to make amino acids, and the Chinese facility crystallizes the acids. The company intends to double the Thai factory's annual capacity, which stands at 2,200 tons, and raise the Chinese plant's capacity accordingly. The output will be supplied to pharmaceutical companies making bagged intravenous products.
In Japan, the company plans to consolidate two Yamaguchi Prefecture plants into one by 2021. The Japanese operations will focus on devising and producing high-performance items for advanced health care, supplying them to hospitals in developed countries and elsewhere.
Other applications for amino acids include human food and livestock feed. Production of amino acids for medical purposes requires regulatory approval, raising the barrier for newcomers to the market.
Kyowa Hakko Bio appears to hold a global market share of around 30% in amino acids for health care, among the three big suppliers including Ajinomoto and Evonik Industries of Germany. Medical amino acids are priced 10 to 20 times higher than those used in livestock feeds.
Kyowa Hakko Bio's predecessor had jettisoned the business of amino acids for livestock feed back in 2004, before the 2008 merger of two companies that created Kyowa Hakko Kirin.
Having shifted focus to the high-value varieties ahead of others, Kyowa Hakko Bio will revamp production in Japan and abroad as the unit looks to raise its global market share in health care amino acids to 40% in 2020.