News Releases

Jan. 13, 2004

Completion of Livestock Bone Extract Production Plant and Pork Packing House in Thailand

Betagro-Dainippon Techno-Ex Co., Ltd. (BDTE), a joint venture company specializing in the production of livestock bone extract production, announced that it will be completing the construction of its 190 million baht (approximately JPY 530 million) production facility in Lop Buri, Northern Thailand on January 15. The company is a joint venture between Sumitomo Corporation (Headquarters: Chuo-ku, Tokyo; President and CEO: Motoyuki Oka), Dainippon Pharmaceutical Co., Ltd. (Headquarters: Osaka; President and CEO: Kenjiro Miyatake) and Betagro Agro Group Co., Ltd. (Headquarters: Bangkok, Thailand; President and CEO: Vanus Paepaisitphongse), one of Thailand's largest poultry growing, pig farming and animal feed manufacturing interests. The plant itself has the capacity to produce approximately 10,000 tons of bouillon extract annually. Mass production is planned as orders for safe "raw bones" of chicken and pig come in from either Betagro Agro Group or the below mentioned joint venture company. The plant hopes to expand sales primarily to the Japanese market where demand is booming because of the popularity of ramen noodles and other goods. With this in mind, BDTE projects sales of 200 million baht (approximately JPY600 million) in three years time.

On the same day, Betagro Safety Meat Packing Co., Ltd. (BSMP), another joint venture company this time between Sumitomo Corporation and Betagro Agro Group, expects to complete the construction of a 280 million baht (approximately JPY780 million) slaughter and cut processing plant specifically designed for pork products. The plant that is situated in close proximity to the BDTE livestock bone extract production plant has the capacity to produce approximately 35,000 tons of meat products annually. Mass production is planned as orders for safe pork come in from Thai SPF Products Co., Ltd. and other Betagro Agro Group companies. Thai SPF Products was established by Sumitomo Corporation and Betagro Agro Group in 1993 as a way to develop the specific pathogen free (SPF) pork market. The plant hopes to expand sales to the Thai market where awareness of food safety is rising as income levels improve. In addition, the plant also hopes to develop more business with local processing companies that target the Japanese market. Sales of 1 billion baht (approximately JPY3 billion) is projected in three years time. Furthermore, Sumitomo Corporation will locally manufacture processed pork products using the meat from the packing plant and supply it to the Japanese market.

A grand opening ceremony for the animal-related facilities zone, which includes both of the above-mentioned plants, will be held on January 15th with the Prime Minister of Thailand and the Ambassador of Japan among others in attendance.

Dainippon Pharmaceuticals maintains a food business (food materials, extract products, etc.) that in the past manufactured extract products solely through affiliated companies in Japan. The increase in demand for these products and the boom in the Japanese poultry and pig farming industry led the company to decide on Thailand as an area where the raw materials (i.e. raw bones) for these products could be secured on a stable basis. As a result, Dainippon Pharmaceuticals formed a joint venture company in the December of 2002 with their partners, Sumitomo Corporation and Betagro Agro Group. The completion of the plant will mean that Dainippon Pharmaceuticals will now have a stable source of raw materials for its extracts business from both Japan and Thailand, allowing the company to further expand this area of business in the future.

On the other hand, Sumitomo Corporation has continued to jointly develop a SPF pork business with Betagro Agro Group for ten years. In the past, pigs were sold directly (or through a broker) to slaughterhouses, but with greater awareness of food safety in the Thai market, the company decided to enter into the packing house business as a way to further ensure the added-value associated with SPF pork. As a result, Sumitomo Corporation decided to enter into a joint venture partnership with Betagro Agro Group in December 2002. The completion of the two plants means that Sumitomo Corporation will now have in place a fully integrated manufacturing and sales system (from pig farming to meat packing) for its pork business in Thailand, thus putting the company in a solid position to further expand in the future.