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Omega 3 market updateAdam Ismail

OMEGA-3 Market

UPDATEIFFO ANNUAL MEETING 2017

Global Growth in omega-3 demand is

starting to accelerate again

87,814 88,58990,388

93,375

2014 2015 2016E 2017P

28,84929,444

30,412

31,820

2014 2015 2016E 2017P

Omega-3 Ingredient ConsumptionIn metric tons

EPA+DHA ConsumptionIn metric tons

Source: GOED Proprietary Research

+0.8% +2.0%

+3.3%

+2.0%

+3.3%

+4.6%

Concentrated forms of omega-3

ingredients are growing fastest

Source: GOED Proprietary Research

1581

185

604

42149

245 249

-105Concentrates Algal Oil Cod Liver Oil Krill Oil Refined

Anchovy OilRefined

MenhadenOil

Refined TunaOil

All Other Oils

Projected New Volumes of Omega-3 Ingredient Consumption in 2017In metric tons

Dietary Supplements are adding the

most volume

Source: GOED Proprietary Research

DietarySupplements

Infant Formula Pet Food Pharmaceutical Food andBeverage

ClinicalNutrition

Total

2,068

354

277139

89 58 2,985

Projected New Volume of Omega-3 Ingredient Consumption by Application in 2017In metric tons

However, INFANT FORMULA is THE

FASTEST growing SEGMENT GLOBALLY

Source: GOED Proprietary Research

9.0%

6.6%

4.2%

3.2%

2.9%

2.1%

Infant Formula

Pharmaceutical

Clinical Nutrition

Pet Food

Dietary Supplements

Food & Beverage

Projected Omega-3 Ingredient Volume Growth by Application in 2017

ASIA IS NOW CLEARLY THE DOMINANT

FOCUS FOR OMEGA-3 INGREDIENTs

Source: GOED Proprietary Research

1,406

843

479335

257191 165

32 12

-253

-482

China Rest ofAPAC

Japan Rest ofAsia

S Am Other Mexico Australia Canada US Europe

Projected New Volumes of Omega-3 Ingredient Consumption by Region in 2017In metric tons

CRUDE OIL DEMAND FROM THE OMEGA-3

MARKET IS ACCELERATING AS WELL

87,814 88,58990,388

93,375

2014 2015 2016E 2017P

196,085198,870

205,548

215,547

2014 2015 2016E 2017P

Omega-3 Ingredient ConsumptionIn metric tons

Crude Oil ConsumptionIn metric tons

Source: GOED Proprietary Research

+0.8% +2.0%

+3.3%

+1.4%

+3.4%

+4.9%

Anchovy AND like species STILL

DOMINATE THE CRUDE OIL MARKET

Source: GOED Proprietary Research

157,760

20,21315,322

7,474 6,403 3,807 2,885 1,682

Anchovy &Sardine

Cod Menhaden Salmon Tuna Single CellOrganisms

Squid All Other Oils

Projected Omega-3 Market Crude Oil Demand by Species in 2017In metric tons

Squid is the fastest growing source of

crude oil, but from small volumes

Source: GOED Proprietary Research

4.8%

5.5%

2.8%

-1.4%

8.0%

8.9%

23.4%

6.2%

Anchovy & Sardine

Cod

Menhaden

Salmon

Tuna

Single Cell Organisms

Squid

All Other Species

Projected Omega-3 Ingredient Volume Growth by Application in 2017

Supplements are adding the most

DEMAND, BUT PHARMA IS SIGNIFICANT

Source: GOED Proprietary Research

DietarySupplements

Pharmaceutical Infant Formula Pet Foods Food andBeverage

ClinicalNutrition

Total

7,247

1,395639

447 153 119 9,998

Projected New Volume of Omega-3 Market Crude Oil Consumption by Application in 2017In metric tons

There are a FEW FORESEEABLE EVENTS

THAT COULD IMPACT CRUDE OIL DEMAND

Potential Volatility Events

Concentrates are banned in the United States dietary supplement market

Pharmaceuticals are approved in China.

1

2

The VITAL Study delivers null results.3

AMARIN ITC CASE

• Amarin Pharma has asked the US International Trade Commission to stop the import and distribution of ethyl ester and triglyceride omega-3 concentrates in the United States

• Amarin is asserting that concentrates are not eligible for use in dietary supplements and should only be allowed for sale as approved pharmaceuticals

• If Amarin is successful, it could shift demand to 18/12 and other natural oils, or could cause a significant market contraction

• It is unlikely, in our view, that current concentrate demand would shift to pharmaceuticals

• Potential Crude Oil Impact:• If market shifted to 18/12: -15,000 tons• If concentrate market was eliminated: -27,000 tons

PHARMA APPROVALS IN CHINA

• Eight companies are seeking approval in China for omega-3 based pharmaceuticals for triglyceride reduction

• The formulas are based off of existing drugs in other countries, primarily Omacor and Epadel

• The best estimate says 17.7% of the Chinese population is hypertriglyceridemic, or 244 million people

• If they are able to gain the same penetration in the Chinese market as in Japan and the US, the omega-3 pharma market in China could exceed $50 billion

• However, there will be many competitors, which differs from how the US and Japanese pharma markets developed

• Potential Crude Oil Impact: +50,000 to 300,000 tons

VITAL STUDY DELIVERS NULL RESULTS

• We have already seen that a large negative trial could result in a significant market decline

• The VITAL trial could deliver sustained null results due to all the ancillary studies included in the trial

• There will continue to be positive, supportive science published in other trials, so the impact could be temporary but last a few years…similar to the prostate cancer study of 2012

• Potential Crude Oil Impact: -10,000 to 20,000 tons

About us

How to access this data for yourselfThis data represents only part of GOED’s proprietary research, and is freely available at varying degrees of curation to members of GOED, depending on their level of membership.

How to join GOEDPlease contact Mike Roberts at mike@goedomega3.com with any questions about membership.

Questions about this presentationPlease contact Adam Ismail at adam@goedomega3.com with any additional questions regarding this presentation.