Forbes sales up since phytosterols re-focus
The Canadian maker of Reducol implemented a restructuring plan in May of this year, which involved ending its pharmaceutical research activities and focusing wholeheartedly on nutraceuticals instead.
The latest set of results are an encouraging sign that it has chosen the right path. Revenues from phytosterols increased to C$2.69m in the first six months of 2008, from $2.11m in the same period of last year.
Net loss per share was reduced from $0.71 to $0.63.
The global market for phytosterols was recently estimated by Leatherhead Food International to be worth some US$555m to $585m. It is seen as one of the most compelling areas of the functional food market; the first carrier products were fats and margarines, but now sterol-containing juices, milks and yoghurts are coming on the market.
The European market, in which Forbes has a presence, is said to be the most promising. It already accounts for around half of all sales, and new product development has been given a nudge in the last four years by regulatory approvals for the ingredients in new product categories.
Forbes’s Reducol sterols are derived from wood pulp. According to Leatherhead, there are around 20 countries active in the global phytosterols/stanols market; the market leaders are ADM, Cognis and Raisio.
"We realize the need to realign our business to focus on areas that are generating immediate revenue,” said Charles Butt, the firm's president and CEO, when the restructuring was announced.
The strategic focus on nutraceuticals was described as “a truly pivotal point in Forbes' development".
Forbes said the move will involve slashing personnel, as well as reducing research and development expenses by around C$2.7m. Last year, the company spent some C$3.5m (US$3.49m) on R&D.
To help fund its business development and operational plans, Forbes has recently completed a transaction with a private investor that yielded gross proceeds of C$3m. Subject to fulfilling certain conditions, it will also be in line for another C$800,000 in funding after one year.
Although the pharmaceutical operations have been discontinued and no revenue was generated from the R&D programs, the company still reported a loss from its discontinued pharma operations of C$683,000, due to R&D, admin, and depreciation and amortization.
Forbes Medi-Tech is currently considering selling its pharmaceutical business unit. It has a drug development unit in San Diego, California.
