Nutrition 21 cuts losses with higher ingredient prices
supplements, almost halved losses in the three months to December
as it shed costs associated with its discontinued Lite-Bites
business and achieved higher pricing for its core product.
Net sales rose a modest 2.6 per cent over a year earlier in the company's fiscal second quarter, thanks to a sharp rebound in the pricing of chromium picolinate, of which Nutrition 21 is the sole producer in the nutrition market.
The expiry of key patents on chromium picolinate had led to a halving in prices, from a peak of $4200 a kilo to a low of $2100 per kilo. However, new patents have since increased protection, allowing the company to increase prices sharply from August 2003 to a current level of $3100 per kg.
Second quarter results were also aided by a 40 per cent fall in direct costs following the closure of the now discontinued Lite Bites health bars division.
The resulting quarterly operational losses of $1.25 million for the second quarter were down from $2.27 million in the equivalent three-month period a year earlier. The company expects little further improvement in profitability until the launch of its first branded chromium therapeutic product, Diachrome, later this year, it said.
"There may be a small price increase later this year but there should not be any great impetus for more," a company spokesman told NutraIngredientsUSA.com.
The Lite Bites closure and repositioning of the core chromium picolinate business have been principally a ground-clearing exercise ahead of Nutrition 21's move into the branded therapeutic goods market.
Earlier this year Nutrition 21 requested that the FDA allow the use of eight health claims associating its supplements with a reduced risk of insulin resistance, type 2 diabetes and related disease conditions.
The company is now aggressively working to promote consumer awareness of the health benefits of its supplements - with seminars in co-operation with bodies such as the American Heart Association planned into the summer - and expects this to start adding to sales volumes and pricing from August 2004.
The brand launch has meanwhile fuelled a surge in R&D spending, up 24 per cent in the first half of the fiscal year, at $1.04 million. Nutrition 21 CEO Gail Montgomery cautioned that business development expenses might climb further in the build-up to its 2004 product launches.
