The Shanghai-based company is in the midst of a strategic shift from business-to-consumer to business-to-business. Since its foundation in 1999, activities have centred on the Shining Essence brand of dietary supplements, which have become a recognisable consumer brand in the 1000 pharmacies and supermarkets in China through which they are sold.
China-Biotics already holds three patents relating to its Shining Essence brand, as well as trademark protection on the brand name through to the end of 2011.
The new applications have been filed by the subsidiary Growing Bioengineering to China’s State Bureau of Intellectual Property. They relate to:
- A new probiotics supplement and preparation for babies’ immune and digestive health, specifically intended to reduce incidence of diarrhea.
- A micro-encapsulation technique for using probiotics in beauty products.
- A preparation of probiotics for adding to soy milk.
- Probiotics for use in feminine hygiene products.
- A manufacturing method for heat-resistant microencapsulated probiotics.
The company says that products to which these patents relate will, when launched, mark the entry into new markets with high growth potential. Chairman and CEO Jinan Song said growing awareness of probiotics amongst Chinese consumers is informing the company’s R&D activities.
China-Biotics first entered bulk probiotics supply in 2007 and last year started producing bulk probiotics at its new Qingpu facility in Shanghai.
In the recent Q3 results communication Song also signalled that probiotics are growing on the back of greater consumption of dairy products in China.
“As dairy producers introduce greater quantities and varieties of value-added
products to the market, our core probiotics cultures are gaining greater acceptance due to reliable product safety, good technical service, and competitive pricing…. "We are also seeing more yogurt producers embracing functional probiotics additives in their products as dairy consumers in major cities are looking for better nutritional benefits.”
The company reported a 39 per cent increase in sales year-on-year in its Q3, to $32.4 million. Bulk product sales were up 133 per cent to $14.3m.
Song said that the switch to a business-to-business model allows China-Biotics to increase operating leverage and lower overall operating expenses.