Health science company Forbes Medi-Tech Inc. announced this week that it has reached an agreement with Novartis Consumer Health SA to acquire the licensing and distribution rights to consumer products fortified with Reducol, the company's proprietary cholesterol-lowering functional food ingredient.
The agreement involves a one-time payment of US$4 million (€4.4m), payable by March 18, 2002. Forbes also has the option to acquire potential sublicenses currently being negotiated by Novartis on or before June 30, 2002.
Novartis Nutrition AG, an affiliate of Novartis, will retain the exclusive option for the worldwide royalty-bearing license to use Reducol in medical foods and its interest in the Quaker Oats/Novartis joint venture, Altus Food Company. Forbes has agreed with Novartis that the Altus Food Company may retain the right to incorporate Reducol into certain fruit beverages, ready-to-eat cereals and grain-based cereal bars.
"This agreement will provide Forbes with more flexibility to provide Reducol and different specifications of sterols to a much broader range of companies which will result in the opening of a significant number of new markets for the Company," said Tazdin Esmail, Chairman and CEO of Forbes.
"During the past 12 months, through our ongoing research and development efforts, Forbes has significantly extended its expertise in food formulations covering a wide range of categories including dairy, spreads, baked goods, cereals, cooking oils, and confectionary items."
The new agreement will enable Forbes to supply a customer base, which now includes Twin Laboratories Inc., Pharmavite and the Altus Food Company. In addition, Forbes will retain 100 per cent of the royalties on products sold, plus full profits on Reducol.
At the time of signing the agreement, Novartis was in the process of negotiating two new sublicense and/or supply agreements with companies in Japan and Switzerland.
Reducol is a proprietary plant sterol/stanol functional food ingredient developed and manufactured by Forbes Medi-Tech.