March 28, 2008

Cyanotech discontinues NatuRose animal feed on weak sales

Cyanotech Corp. announced to halt production of its NatuRose animal feed ingredient after more than two years of weak sales in Japan.

The company, which produces nutritional products from microalgae, will now exclusively focus on production of astaxanthin for the human market, where it has a cost advantage, CEO Gerald Cysewski, said.

Cysewski explained that although many believe that natural astaxanthin provides far more benefits for aquaculture than synthetic astaxanthin made from petroleum, the product now dominates the market for fish coloring.

Cyanotech announced last year that it would shift its marketing strategy toward human products after sales of NatuRose continued to slow down in Japan.

The company is instead focusing on differentiating its BioAstin natural spirulina line as a premium antioxidant touted as enhancing skin, muscle and joint health.

The company attributed an 8 percent increase in sales to US$7.9 million for the nine months ending December 31, 2007 largely to higher sales of BioAstin products.

Cyanotech has sold NatuRose, a natural pigment source, internationally for 11 years, gaining US Food and Drug Administration approval in August 2000 for sales in the US.

NatuRose has faced sales pressure since 2005 when Japanese demand failed to recover after disruption caused by a severe typhoon season a year earlier and growers began to use less natural astaxanthin in their feed while also turning to less costly substitutes.

Based in Kona, Hawaii, Cyanotech also said that it will discontinue production and marketing of phycobiliproteins, or fluorescent pigments made from microalgae and used in medical diagnostic testing and research, citing it as a small contribution to revenue in recent years.