‘Staying ahead of the curve’: Probiotics firm Beijing Scitop Bio-tech outlines expansion plans amid IPO

By Tingmin Koe contact

- Last updated on GMT

Beijing Scitop Bio-tech counts MNCs DuPont and Chr Hansen as its biggest rivals in terms of R&D of probiotics. ©Getty Images
Beijing Scitop Bio-tech counts MNCs DuPont and Chr Hansen as its biggest rivals in terms of R&D of probiotics. ©Getty Images

Related tags: China, Probiotics, IPO

Major China probiotics firm Beijing Scitop Bio-Tech is to list publicly on the Shenzhen Stock Exchange, with the bulk of the investment received set to be channelled to the construction of a R&D centre.

The company is one of the largest domestic probiotics players in China, with R&D and commercialisation functions across ingredients and finished products. 

Founded in 2003, it has commercialised 68 probiotic strains and works closely with the Inner Mongolia Agricultural University, China Agricultural University etc as part of its probiotics R&D process.

Its key probiotic strains include lactobacillus casei Zhang (LC-Zhang) – isolated from naturally fermented horse milk in Inner Mongolia. Some of the its benefits include improving the body’s immune system​, modulating blood lipids metabolism and protecting the liver.

Other core strains include bifidobacterium lactis V9 – isolated from the gut of healthy Mongolian kids and lactobacillus plantarum P-8 – isolated from naturally fermented cow’s milk. 

The firm said that it was seeking a capital of RMB$554m (US$79.2m) as part of its IPO process.

Divided for use in five key areas, they include the construction of a R&D centre, used for manufacturing lactic acid bacteria in the form of powder, RTD formats, powdered drink, and production of food additives, as well as animal feed.

Of which, the construction of the R&D centre will cost the most, requiring an investment of RMB$152m (US$21m).

“The selection, review, and manufacturing of probiotic strains, as well as the storage techniques are the frontiers of modern science and are also the most studied segment in the country,” ​the company said, adding that its level of competitiveness would be diminished if it could not stay ahead of the curve.

It has also set aside RMB$94.8m (US$13.5m) for manufacturing 30 tonnes of lactic acid bacteria powder, 45 tonnes of powdered beverage, 45 tonnes of pressed-candy, and 10 tonnes of RTE lactic acid bacteria products within a year.

At present, it is seeing good growth in the probiotic health food and is expanding its expertise in the area of plant-based protein beverages and bakery products.

Last year, it sold over 13,083 kg of probiotic products, nearly a 1.5-fold increase from 2018, and about 7 times greater than 2017.

Its revenue from the probiotics segment was RMB$19m (US$2.8m) last year.

International competition

The company counts MNCs DuPont and Chr Hansen as its biggest international competitors when it comes to the R&D, manufacturing, and commercialisation of proprietary probiotics strains. 

It mainly supplies probiotic ingredients to dairy and functional food companies.  

Aside from a probiotic ingredient supplier, it has also entered the finished product space, and has identified Biostime from H&H and Yakult as its competitors.

Its finished product brand is known as Probio-Fit and consists of nine products catering to consumers across all age groups.

At the same time, it also acknowledged that it has a lower brand recognition as compared to the global probiotic suppliers, which would increase the challenges its faced when expanding its market presence.

Moreover, being a relatively late entrant to the finished product market, it is still experimenting its product marketing and retail channels.

“The (probiotics) consumer market in the country has witnessed a fast-growing trend as consumption upgrade continues.

“Consumption upgrade and the diversification of consumption habits meant that companies would need to continuously launch new products to satisfy consumers’ preference,”​ the company said. 

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