LONDON (AFX) - Renewed concerns over the security of the patents protecting Tate & Lyle PLC's lucrative artificial sweetener Sucralose saw the British food producer's shares reversing earlier gains today.
Having earlier hit a lifetime high of 619.5 pence, Tate shares were trading 7 pence, or 1.2 pct, down on the day at 581.5 by 3.12 pm, valuing the company at 2.8 bln stg.
The slide came after the FoodNavigator website reported Bangalore, India-based drugmaker Pharmed Medicare had expressed confidence it had developed an alternative means of producing the product which would not be adjudged to infringe Tate's patent protection.
"This is the most serious threat to Sucralose yet seen. I don't think it's a death knell, but there's no doubt this is a serious threat," said Investec analyst David Laing.
A spokeswoman for the British company insisted the 32 patents protecting the product offered adequate protection.
"Tate & Lyle remains the only commercially viable producer of Sucralose,"she said.
Pharmed Medicare president Sundeep Aurora, who said the company had taken legal advice in the United States, Asia and Europe, appeared to admit as much.
He reportedly said the company had yet to develop a means of producing the product on an economically viable scale.
Nonetheless, Laing says fears that a rival will develop an alternative method of producing the sweetener on a commercial scale are bound to intensify.
The chief executive of privately owned US rival NutraSweet Company, Craig Petray, last autumn said he was exploring the possibility of producing a similar product.
Tate in September forced giant Wal-Mart Stores Inc to stop selling a sweetener, sold under a different brand name, after discovering the US retail giant was in fact selling Sucralose supplied by one of Tate's own customers.
Despite boosting manufacturing capacity Tate has been struggling to keep up with demand for Sucralose which it claims to be the only non-calorific sweetener to retain a similar taste to sugar.
Sucralose accounted for 4 pct of group sales in the first half and 22 pct of underlying pretax profit. robbranch@afxnews.com gl/joy/rhb/slm
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Having earlier hit a lifetime high of 619.5 pence, Tate shares were trading 7 pence, or 1.2 pct, down on the day at 581.5 by 3.12 pm, valuing the company at 2.8 bln stg.
The slide came after the FoodNavigator website reported Bangalore, India-based drugmaker Pharmed Medicare had expressed confidence it had developed an alternative means of producing the product which would not be adjudged to infringe Tate's patent protection.
"This is the most serious threat to Sucralose yet seen. I don't think it's a death knell, but there's no doubt this is a serious threat," said Investec analyst David Laing.
A spokeswoman for the British company insisted the 32 patents protecting the product offered adequate protection.
"Tate & Lyle remains the only commercially viable producer of Sucralose,"she said.
Pharmed Medicare president Sundeep Aurora, who said the company had taken legal advice in the United States, Asia and Europe, appeared to admit as much.
He reportedly said the company had yet to develop a means of producing the product on an economically viable scale.
Nonetheless, Laing says fears that a rival will develop an alternative method of producing the sweetener on a commercial scale are bound to intensify.
The chief executive of privately owned US rival NutraSweet Company, Craig Petray, last autumn said he was exploring the possibility of producing a similar product.
Tate in September forced giant Wal-Mart Stores Inc to stop selling a sweetener, sold under a different brand name, after discovering the US retail giant was in fact selling Sucralose supplied by one of Tate's own customers.
Despite boosting manufacturing capacity Tate has been struggling to keep up with demand for Sucralose which it claims to be the only non-calorific sweetener to retain a similar taste to sugar.
Sucralose accounted for 4 pct of group sales in the first half and 22 pct of underlying pretax profit. robbranch@afxnews.com gl/joy/rhb/slm
COPYRIGHT
Copyright AFX News Limited 2005. All rights reserved. The copying, republication or redistribution of AFX News Content,inculding by framing or similar means, is expressly prohibited without the prior written consent of AFX News.
AFX News and AFX Financial News Logo are registered trademarks of AFX News Limited
For more information and to contact AFX: www.afxnews.com and www.afxpress.com
© 2006 AFX News
