[By Wang Li, Edited by Zhou Yuanfang]
On April 25, 2025, the FDA's new regulation sent shockwaves through the global food industry: infant formula and pet food must contain taurine. Overnight, this previously obscure amino acid became the focus of the global supply chain.
In China, on the other side of the Pacific, Yong'an Pharmaceutical (002365.SZ) stock price skyrocketed from 9 yuan to 28 yuan within two months, with a cumulative increase exceeding 200%.
The capital frenzy was fueled by the shocking reality of a 75% month-over-month price spike in taurine and the monopolistic position of Chinese manufacturers, which account for over 90% of global production capacity. Moreover, as the only company globally to have received both U.S. FDA pharmaceutical-grade certification and EU EFSA safety certification, Yong'an Pharmaceutical has become the sole choice for ingredient sourcing by pharmaceutical giants like Pfizer and Merck.
As market enthusiasm wanes, another deeper industrial issue emerges: how does a supply chain controlled by a few Chinese enterprises exert such a significant influence on the global industry?
Small Molecules Drive Big Markets: Taurine Supply-Demand Imbalance Sparks Price Surge
In late April 2025, an industry quote went viral in chemical circles: the food-grade taurine price quoted by a Shanghai-based enterprise reached 25,000 yuan per ton. What does this number signify? Compared longitudinally, the factory price of food-grade taurine in March 2025 was 13,000 yuan per ton; compared horizontally, the quotes from enterprises in Shandong and Hubei remained within the range of 14,000 to 16,000 yuan per ton.
In just twenty days, some channel prices surged by 75%, and panic quickly spread to downstream industries.
Screenshot from Buk Chemical Network
Taurine is not a sudden "newcomer." This sulfur-containing amino acid, chemically known as 2-aminoethanesulfonic acid, has served in human health for nearly two centuries since its discovery in bile from cows in 1827. As a conditionally essential amino acid, taurine plays an irreplaceable role in neurological development, cardiovascular protection, and antioxidant anti-inflammatory effects.
The core trigger for this market surge was the mandatory addition rule implemented by the FDA in April 2025. According to IBISWorld (2023), the U.S. infant formula industry generated approximately $2 billion in revenue and supplied about 524,000 tons of product. If calculated at a minimum content of 0.16 mg of taurine per 100 mL of infant formula, it would bring a demand of approximately 838.4 tons of taurine.
Behind the demand explosion lies the synchronized force of multiple application scenarios. In the functional beverage revolution, some brands increased the taurine content in functional beverages to the highest level in the industry, reaching 400 mg per can, driving an upstream raw material demand surge. At the same time, the pet economy is booming, with high-end pet food penetration rates breaking through 35%, where some cat foods contain ten times the amount of taurine for humans.
Moreover, Chinese young consumers' consumption of functional beverages containing taurine grows at an annual rate of 20%. For instance, in 2024, Dongpeng Beverages' energy drink business had a gross profit margin of 52.09%, close to 60%, indicating certain profit margins and market value.
On June 13, Yong'an Pharmaceutical responded to investor inquiries, emphasizing the diversified applications of taurine and expressing optimism about the market prospects under the support of national policies to expand domestic demand. The company has made full preparations for this.
Yong'an Pharmaceutical particularly values its fast-moving consumer goods brand, with its Yong'an Kangjian product line focusing on the development of the health industry chain centered around taurine. The Yijia Neng brand is currently implementing a big product strategy, planning to launch a series of products based on different physiological functions of taurine, such as anti-fatigue, liver protection, eye fatigue relief, memory enhancement, and immunity improvement.
However, alarm bells are ringing on the supply side globally. According to information from HuiCheng Chemical Network on April 12, the global annual taurine demand is approximately 160,000 tons, while current capacity is only 140,000 tons, creating a gap of about 20,000 tons. More seriously, China accounts for more than 90% of global capacity, and under the叠加impact of environmental protection restrictions and shutdowns by overseas peers, supply elasticity has almost disappeared.
Currently, global taurine capacity is highly concentrated in three companies: Yong'an Pharmaceutical, Shengyuan Environmental Protection, and Xinhe New Materials. Among them, Yong'an Pharmaceutical has an existing capacity of 58,000 tons, Shengyuan Environmental Protection is expected to commission 40,000 tons of food-grade capacity in the second half of 2025, and Xinhe New Materials has a new capacity of 20,000 tons expected to be commissioned in the fourth quarter of 2025.
Monopoly and Fragility: A Supply Chain Moves Global Industry Nerves
The competitive barriers in the taurine industry are far higher than imagined. Globally, only Yong'an Pharmaceutical has obtained both U.S. FDA pharmaceutical-grade certification and EU EFSA safety certification. Its taurine products meet 21 key indicators of the U.S. Pharmacopeia standards, including purity requirements ≥99.5%, heavy metal residues ≤10 ppm, and microbial control Ames test negative. These high-standard certifications make the unit price of Yong'an Pharmaceutical's taurine products as high as $82,000 per ton, with a gross margin reaching 82%, far exceeding the price level of food-grade products at $25,000 per ton.
These certification barriers have built a solid moat for Yong'an Pharmaceutical, allowing it to achieve significant success in both the U.S. and EU markets. In the U.S. market, FDA certification makes Yong'an Pharmaceutical the sole supplier of raw materials for pharmaceutical giants like Pfizer and Merck. In 2024, the export volume of its pharmaceutical-grade products grew by 120% year-on-year. In the EU market, EFSA certification helped Yong'an Pharmaceutical successfully enter the pharmaceutical, food, and pet food sectors. In the first quarter of 2025, its exports to Europe grew by 120% year-on-year.
This highly centralized industrial structure evokes another special pharmaceutical sector—antivenom. In China, Seren Biotech is the only company capable of producing antivenoms for pit vipers, five-step snakes, silver-ringed snakes, and cobras. This monopoly reflects a unique phenomenon in China's supply chain.
It is reported that preparing antivenom involves four major processes: toxin collection, horse immunization, antibody purification, and inactivation verification, taking six to twelve months. During this process, single horses must be repeatedly injected with trace amounts of snake venom to stimulate antibody production, while precise dose control is required to avoid horse fatalities.
However, technical barriers are not the only reason for Seren Biotech's "exclusive monopoly." In China, there are approximately 250,000 cases of snake bites annually, but real market demand presents an awkward dichotomy: geographically, southern provinces like Guangdong and Fujian consume over 90% of the serum, while northern hospitals often see their stock expire after five years of non-use; cost-wise, the production cost of a single vial exceeds 2,000 yuan, but government-guided prices range from 280 to 520 yuan; additionally, the current variety of serums is limited, with the existing four types failing to cover mixed-toxin snake species like king cobras.
Globally, Seren Biotech's antivenom products lead in many key quality technology indicators, as well as cure rates and adverse reaction rates, and its treatment costs are significantly lower than those of leading international companies. Seren Biotech's antivenom products have passed the KGMP on-site inspection by South Korea's MFDS and have been exporting raw antivenom for pit vipers to regions like South Korea for the long term, demonstrating strong international competitiveness.
Since 2019, Seren Biotech's products have begun supplying the Hong Kong region and have been sold to the Macau region via Hong Kong. This has replaced antivenoms produced by the Thai Red Cross Queen Sirikit Institute of Innovation and the National Health Research Institute Biochemical Plant of Taiwan, achieving import substitution.
Taurine and antivenom represent two different monopoly logics. The taurine industry builds market monopoly through technological certification and scale effects, while the antivenom industry forms a natural monopoly based on specific national conditions and public welfare attributes. However, they share one commonality: their supply chains are extremely fragile.
Currently, risks in the taurine industry are beginning to emerge. Despite Yong'an Pharmaceutical's stock price surging during the capital frenzy, its fundamentals hide crises. From 2022 to 2024, its revenue plummeted from 1.462 billion yuan to 839 million yuan, a cumulative decline of 42.6%; the gross profit margin of its taurine business dropped from 29.4% to 24.02%; the current P/E ratio (TTM) is as high as 261 times, far exceeding the average of 32 times for the pharmaceutical manufacturing industry.
Moreover, more threatening challengers have entered the scene. Shengyuan Environmental Protection uses the ethylene oxide method, which reduces costs by 30% compared to traditional methods. Its 40,000-ton taurine project will go online in the second half of 2025. Shengyuan plans to target 90% of its products for export, mainly aiming at the European and American markets. Although it cannot break through the FDA certification barrier in the short term, its cost advantage may change the landscape of the mid-to-low-end market.
Original article: https://www.toutiao.com/article/7517992872466219556/
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