Omega-3 Biscuits and Protein Meat Snacks: A Growing Industry Where Food Fuses With Medicine

A surge for “nutraceuticals” – food and drinks that have potential beneficial health properties – could be setting the way for a flood of deals as pharmaceutical and food companies battle for dominance over this market, which is predicted to grow to $280 billion in 2018. Consumers are being urged to eat healthier by the increase in obesity and the use of fitness-related technology, such as gadgets and apps, to monitor the amount of calories consumed and exercise. Companies that sell products like probiotics, yogurt, which is touted as healthier for the gut, as well as omega-3 biscuits that are believed to boost brain and heart function, are seeing demand rise dramatically. “It’s only a matter of time before the fight spills over into corporate takeover wars,” consulting firm KPMG predicted in a study. Bankers suggested that moving to nutraceuticals was natural for pharma and food firms due to the blurring of lines between their respective industries. “The space is ripe for M&A, and I think you are going to see more,” said Jeremy Johnson, managing director of North Carolina-based Bourne, which provides advice on acquisitions.

Food companies will likely become the leaders, looking for healthy foods to boost their image, as drug companies, hammered by expiring patents and growth of biotech-based medicines, will look to shed units, says Bourne Partners, which estimated that the market would reach $280 billion by the end of 2018, which is more than double the amount of 2011. M&A activities so far have been minimal, but the pace is increasing. Bourne reported more than 185 mergers and acquisitions between the public and private sectors of nutraceuticals in 2014, a rise from 95 in. “It’s an industry which has seen a lot of interest and is likely to see a lot of deals,” stated a consumer-focused banker, noting that many smaller businesses were seeking deals with larger companies to make reaching potential customers easier. While the idea of nutraceuticals isn’t new, it was invented in 1989 KPMG director for life sciences Chris Stirling believes the current attention to health will result in more tie-ups as companies are looking to leverage increasing consumer awareness. “The consumer arms of pharma companies are going to have to look at this area hard because there is so much public interest,” Stirling said. “They need to get on the bandwagon.”¬†COMPLEMENTARY SKILLS¬†Each industry has the potential to contribute significant knowledge to a merger, and at the same time, they must be able to produce particular outcomes. Food companies are proficient in supplying low-cost goods; however, they are looking for products that can give them advantages – as well as an increase in price – due to changing food habits and a brutal cost war. Drug companies, for instance, can provide deep research expertise and an understanding of regulatory processes that food producers can only imagine. Many have decided to continue to build a solid consumer health company to reduce the risks inherent to their research on the drug’s side. There have been a few recent deals in the food sector, like Mondelez International’s purchase of a gluten and allergen-free snacks company and Hershey’s agreement in January with a company that makes high-protein meat snacks. But none of the major food companies like Nestle have done as much to integrate medicine and food. In 2011, the company created its Nestle Health Science unit, which has since invested in companies that manufacture drinks and other products marketed to people suffering from metabolic diseases and an agro-medical food sold to treat the dietary needs of Alzheimer’s disease. Late in 2012, Nestle restructured the unit to focus on consumer health, including medical nutrition and new therapeutic nutrition. Nestle CEO Paul Bulcke said last week that the team is in “an excellent position to lead the development of nutritional therapies that transform the way people, patients, and healthcare professionals manage health.” “It’s a promising and interesting new opportunity for Nestle,” Bulcke told the annual shareholders meeting. On the pharmaceutical side, big names such as GlaxoSmithKline, Abbott, Pfizer, and Johnson & Johnson all have nutritional brands and dietary supplements, which could play a more significant function as the nutraceutical industry grows. Alliance Boots, now part of Walgreens Boots Alliance, indicated its future when it announced that it had purchased Ph.D. Nutrition, which makes protein powder and nutritional bars.

Leave a Reply

Your email address will not be published. Required fields are marked *