APPENDIX 4.3 (referred to in paragraphs 2.29, 4.21, 4.22, 4.23, 4.37 and 4.94)
The production of vitamin B2 Chemical structure 1. The official chemical designation for vitamin B2 is riboflavin.1 It was discovered in 1920 and first isolated in egg albumen in 1933. Its chemical structure, which was determined in 1935, has two distinct parts: a ribose sugar unit and a three-ring flavin structure, known as lumichrome. The chemical structure of vitamin B2 is shown below.
O HN O
N
N
CH3
N
CH3
CH2 HCOH HCOH HCOH CH2OH 2. Vitamin B2 has been produced commercially by chemical synthesis, by fermentation and by mixed fermentation/chemical synthesis methods. Fermentation is the most recent and most cost-effective method. 3. Figure 1 shows the current alternative production methods schematically.
Fermentation/chemical synthesis process 4. A number of chemical synthesis production routes have been used commercially.2 Currently, producers including Takeda and Shanghai Yongxing use a mixed fermentation/chemical synthesis process. (For brevity, we describe vitamin B2 produced by this route as chemically synthesized.) In this process, a four-step reaction sequence is used, starting from glucose. First, ribose is produced from glucose by fermentation. A reaction with xylidine is next used to convert ribose into a riboside, which is then hydrogenated to produce ribamine. This intermediate product is next purified by crystallization. 5. The following stage involves a reaction between ribamine and a phenyl diazonium salt derived from aniline, which produces phenylazoribitylamine. This compound is then crystallized, dried, and converted into vitamin B2 by cyclocondensation with barbituric acid. An overall product yield of over 60 per cent can be obtained. 6. Several of the chemical stages in this process involve the use of toxic reagents. The waste products therefore require stringent environmental control and may need special forms of effluent treatment. 7. Chemical synthesis produces approximately 96 per cent pure vitamin B2.
1
The Commission of the Nomenclature of Biological Chemistry, 1960. For a more detailed account see Ullmann’s Encyclopedia of Industrial Chemistry, VCH Verlagsgesellschaft mbH, 1996.
2
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FIGURE 1
Methods of producing vitamin B2 Fermentation/chemical process
Fermentation process
Glucose
Glucose, molasses or soya bean oil
Fermentation
Ribose
Xylidine
Fermentation
Ribamine
Aniline Phenylazoribitylamine Barbituric acid Riboflavin (in fermentation broth)
Raw riboflavin
Riboflavin (about 96% pure)
Riboflavin (about 80% pure)
Source: BASF.
Fermentation 8. The more recent single-stage fermentation route is used by a number of producers, including BASF, Roche, and Hubei Guangji. As it has a single main stage, there are substantial cost savings compared with the multi-stage chemical process. Each producer uses its own variant of the process with different strains of micro-organism and different raw materials.
9. The fermentation plant itself is relatively straightforward as it typically uses simple mixing/ stirring vessels and conventional purification technologies. After separating the biomass, and evaporating and drying the concentrate, an enriched product with a vitamin B2 content of up to 80 per cent can be obtained.
Raw materials 10. The producers use different basic raw materials. Vegetable oil, glucose or molasses may act as the source of carbon (the significant ‘building block’ for producing vitamin B2). They vary greatly in price and carbon content.
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Strains of micro-organism used 11. Establishing a fermentation plant requires an effective production strain of micro-organism. As numerous strains of bacterium, fungus or yeast can be used, each manufacturer uses a different organism to convert raw material into vitamin B2. At present, the bacterium bacillus subtilis, the funguses eremothecium ashybyii and ashbya gossypii, and the yeasts candida flareri and saccharomyces cerevisiae are all used for the fermentation of vitamin B2. 12. BASF told us that it considered the protection of its production strains of micro-organism to be particularly important. Access to a strain may be achieved through in-house research and development (as in the case of Roche), contracted-out research and development or acquired from another source (Chinese producers are said to use a Russian strain). BASF told us that an investment of £2 million to £3.5 million would be likely to deliver a vitamin B2 fermentation strain capable of being used in production within three years. It considered that Chinese producers or outside laboratories could carry out research and development at a much lower cost than the Western manufacturers.
Productivity of micro-organisms 13. The productivity of biochemical processes is normally described in terms of their conversion rate and their space-time yield. The conversion rate is the proportion of the carbon-source raw material that is converted into the finished product. It dictates the amount of raw material required. The space-time yield is the amount of product made per unit volume per unit time. It determines the length of time required for the fermentation and the size of vessels needed. Both measures vary greatly with the micro-organism and the raw material used. 14. The micro-organisms used by different producers have a wide range of conversion rates and space-time yields. A slow organism may take many days to complete the vitamin B2 fermentation. In this case, the manufacturer will need numerous fermenting vessels, resulting in additional capital costs compared with producers using faster organisms. Producers’ organisms also convert different amounts of the raw material into vitamin B2 before the fermentation stops. 15. Producers devote considerable effort to improving the productivity of their organisms, either by natural mutation or by GM. GM may result in more productive organisms; the savings resulting from this increased productivity can offset the extra containment costs involved in working with GMOs (see paragraph 17).
Effluent disposal 16. By contrast with the fermentation/chemical synthesis process, the fermentation method makes little use of toxic solvents or reagents. The main waste products are edible residues of the production micro-organism and its growth medium which (subject to containment requirements) can either be used as animal feed or dealt with by a conventional sewage treatment plant. This significantly reduces the waste disposal costs, particularly for producers using non-GM micro-organisms.
Containment 17. All producers need to have a plant containment system that prevents stray organisms or chemicals from entering the process and contaminating the fermentation. Those using safe wild-type or self-cloned micro-organisms need to minimize releases of the organisms into the environment. On the other hand, producers using GMOs need to design their plants and procedures to achieve high containment: that is the prevention of any escape of the GMO into the environment. This adds significantly to plant complexity and effluent disposal costs. 172
Intellectual property rights 18. A number of stages in the vitamin B2 fermentation process are covered by patents. These stages include: the isolation of vitamin B2 from the fermentation broth; improving yields from the microbial culture by using autolysis; the purification of vitamin B2; and the spray granulation of vitamin B2.
Feed-grade vitamin B2 19. The 80 per cent pure vitamin B2 produced by fermentation is suitable for use in animal feed without further refining. (The balance of the material consists of the edible residue of the production micro-organisms.) A higher proportion of vitamin B2 produced by fermentation is therefore used in animal feeds than is the case for the chemically-synthesized product (see Chapter 4).
Food-grade product 20. Either fermented feed-grade vitamin B2 or chemically-produced raw vitamin B2 may act as the base material for making the purer product required for human food or pharmaceutical use. The same technology is used to refine either the 96 per cent pure chemically-synthesized product or the 80 per cent pure fermented product. In outline, the procedure involves the use of a simple vessel in which the unpurified product is dissolved in sodium hydroxide, crystallized with hydrochloric acid and then cleansed with a solvent.
21. Starting from fermented vitamin B2, the purification step needs to remove about 20 per cent of the material, which is of microbial or vegetal origin. BASF told us that the cost of purification could exceed 40 per cent of total operating costs.
22. By contrast, starting from chemically-produced vitamin B2, only about 2 per cent of the material needs to be removed. The purification plant can consequently be smaller. Manufacturers using the chemical production route to produce vitamin B2 are therefore at less of a disadvantage if they produce the food-grade product rather than feed-grade vitamin B2. Some chemical-based producers occasionally sell this higher-grade product for feed use.
Main manufacturers of vitamin B2 23. Table 1 summarizes the production methods used by the various manufacturers.
24. BASF estimated the producers’ cash operating costs for feed-grade vitamin B2 in an internal benchmarking exercise. Figure 2 illustrates our analysis of the pre-merger cost ranking that results from combining these with our estimates of plant capacities. No allowance was made for depreciation or any return on investment. BASF’s analysis clearly demonstrates the wide range of cash production costs.
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TABLE 1 Production methods used by vitamin B2 manufacturers
Supplier
Process
Capacity tonnes per year
Micro-organism used
Main raw material (carbon source)
Productivity (space-time yield)
BASF existing
BASF proposed
Roche
ADM/Aventis joint venture
Figures omitted. See note on page iv.
Takeda
Shanghai Yongxing
Hubei Guangji
Source: CC analysis of information from BASF and other suppliers.
Note: N/A = not applicable.
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Fermentation yield (kg B2/kg carbon source) %
Comments
FIGURE 2
Ranking of feed-grade vitamin B2 production costs against capacity before merger
Details omitted. See note on page iv.
25. Figure 3 shows the corresponding estimates of comparative cash operating costs for feed-grade vitamin B2 after the merger and BASF’s planned investment. It demonstrates a substantial improvement in BASF’s cost competitiveness. FIGURE 3
Ranking of feed-grade vitamin B2 production costs against capacity after merger and investment
Details omitted. See note on page iv.
26. Figure 4 illustrates the ranking of the producers’ cash operating costs for food-grade vitamin B2 before the merger, as estimated in the same internal BASF benchmarking exercise. No cost is shown for the ADM/Aventis joint venture, as it does not produce food-grade vitamin B2 (see paragraph 37).
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FIGURE 4
Ranking of food-grade vitamin B2 production costs against capacity before merger
Details omitted. See note on page iv.
27. Figure 5 shows the corresponding estimates of comparative cash operating costs for food-grade vitamin B2 after the merger and BASF’s planned investment. It again demonstrates a substantial improvement in BASF’s cost competitiveness before allowing for depreciation and a return on investment. FIGURE 5
Ranking of food-grade vitamin B2 production costs against capacity after merger and investment
Details omitted. See note on page iv.
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BASF 28. BASF’s fermentation plant at Ludwigshafen has a capacity of [!] tonnes a year and [Details omitted. See note on page iv.]. BASF has fermented vitamin B2 for 13 years—longer than the other producers. 29. BASF has purification capacity to produce [!] tonnes a year of food-grade vitamin B2. 30. BASF carries out R&D into new strains and processes with a view to increasing output and reducing costs. This includes cooperative projects with university research institutes. Its annual R&D budget is around £1.3 million a year, or about [!] per cent of total sales. It has been able to enhance its process over time through strain improvement (predominantly mutation) and media development. Over the last ten years, this has resulted in a [!] per cent increase in its plant’s effective capacity and a [!] per cent saving in raw material costs. 31. BASF considers that the resulting process has a comparatively high yield and a potential cost advantage if used on a sufficient scale; it attributes this to using the most ‘efficient’ organism. The fermentation process is, however, slow and BASF considers that the present plant’s low capacity leads to high unit fixed costs. Its main raw material, soya oil, is much more expensive than the glucose or molasses used by other producers. 32. [ Details omitted. See note on page iv. ]
Takeda 33. Takeda manufactures 96 per cent pure vitamin B2 by chemical synthesis. Its plant at Hikari in Japan has a capacity of [!] tonnes a year. The main raw material is [ Details omitted. See note on page iv. ]. Takeda’s production costs are high compared with those of producers using the vitamin B2 fermentation process. 34. Takeda has purification capacity to produce [!] tonnes a year of food-grade vitamin B2.
Roche 35. Roche has recently started trial production of vitamin B2 by fermentation in a new plant at Grenzach, in Germany. This plant is due to come fully on stream during the summer of 2001 and its ultimate capacity is expected to be about [!] tonnes a year. [ Details omitted. See note on page iv. ] 36. Roche has purification capacity to produce 900 tonnes a year of food-grade vitamin B2.
Archer-Daniels-Midland Company/Aventis SA joint venture 37. A joint venture of ADM and Aventis also produces vitamin B2 by fermentation in the USA. Its plant has a capacity of [!] tonnes a year and exclusively produces feed-grade product. BASF considered that the organism used by ADM/Aventis was relatively inefficient. This disadvantage was offset by ADM’s access to an advantageous in-house source of the main raw material (glucose). The effect of the intended sale of the Aventis vitamins business on this joint venture is unclear.
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Chinese producers 38. As we have only been able to obtain limited information from the Chinese producers, we are largely reliant on information supplied by the British Embassy in Beijing, BASF and Roche and on published sources. BASF told us it estimated that the current total capacity of vitamin B2 plants in China was about 1,300 tonnes a year. Roche estimated their total capacity to be 1,850 tonnes a year. Until recently, all the Chinese producers had used a chemical synthesis process similar to that used by Takeda. However, BASF believed that about one-third of Chinese vitamin B2 capacity was now based on the fermentation process. 39. Within the last two years, Hubei Guangji has commenced production of vitamin B2 by fermentation. Its plant’s capacity is 600 tonnes a year and is expected to increase to 1,000 tonnes a year before the end of 2001. Shanghai Yongxing also has a vitamin B2 plant with a capacity of 400 tonnes a year. Although BASF thought that this company would also start using fermentation technology soon, it informed us that it had no such plans. BASF added that, while there had been two other smaller producers, Tianjin Hebei and Shannaxi Xi, that each had a capacity of about 200 tonnes a year, it thought that these were not now in operation. 40. Chinese producers previously concentrated their exports on the food-grade vitamin B2 market, in which their chemically-manufactured product was most competitive. The introduction of a fermentation plant has recently enabled them to expand their production of feed-grade vitamin B2. 41. BASF told us that Chinese producers enjoyed considerable cost advantages. They had the advantage of using the cheapest raw material (molasses being cheaper than glucose or soya oil). Chinese producers also had lower labour and financing costs and less demanding environmental standards.
Potential for market entry 42. BASF estimated that the minimum capacity for an efficient new plant in the West would be 2,000 to 3,000 tonnes a year for feed-grade vitamin B2. It added that a new vitamin B2 fermentation plant with a capacity of 3,000 tonnes a year would have a capital cost of between €[!] million and €[!] million (between £[!] million and £[!] million) in Western Europe. This included approximately €[!] million (£[!] million) for refining facilities to produce a food-grade product. A chemical production plant of similar capacity would cost slightly less but have significantly higher operating costs.
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