BioGaia’s probiotic ingredient will be used in a new line of Nestlé infant formulas in global markets excluding Japan and Korea – with the first due to hit the market in 2009.
The deal builds on BioGaia’s presence in the infant formula market – Lactobacillus reuteri is already present in infant formula products in Asia and Europe.
The company already supplies Nestlé healthcare nutrition products.
”The agreement is further proof that major organisations appreciate the value of our products, particularly in the area of child health,” said BioGaia president, Peter Rothschild.
“These products are based on many years of research proving good clinical results. The safety demands are naturally very high for this type of product. Our safety data has been a strong factor in facilitating the agreement with Nestlé.”
Nestlé announced in February that it would launch a new range of baby foods called NatureNes backed by a €25m investment.
BioGaia profits go higher
The deal comes on the back of an impressive set of half-yearly results for BioGaia that saw sales jump 41 per cent toSEK72.4 million (€7.71m) from SEK51.2m (€5.45m) in the corresponding period in 2007, as the benefits of a slew of new global partnerships and booming interest in probiotics kicked in.
Even more impressively, operating profit surged more than 484 per cent from SEK2.6m (€0.27m) in H1 2007 to SEK12.6m (€1.34m) this year.
After tax breaks were incorporated for accumulated losses, net profit came in at SEK22.1m (€2.35m).
Deals with Ferring Pharmaceuticals, Sunstar, Semper, NeoCare, Verman, Delta Medical, AllergyCare and Ewopharma had seen the company extend its reach into Eastern European markets such as Russia, the Ukraine and Hungary as well as the Middle East and Latin America.
Existing European markets were being consolidated with new deals signed in Switzerland, the UK and Sweden.
Rothschild told NutraIngredients.com the company’s end-products division, which incorporates branded BioGaia products as well as those manufactured for partners, is growing rapidly and accounts for the bulk of the company’s business.
Lactobacillus reuteri licensing deals – such as the one with Nestle – remained a successful and significant part of the BioGaia’s business during the sixth-month period, said the company.
BioGaia has also sold its products at the retail level since 2005.
The company said it expects the tablets, drops and oral health products markets to remain buoyant throughout the rest of 2008 and into 2009.
In a statement Rothschild said: "What we are now seeing in the form sales and earnings growth is the fruit of a long-term focus on R&D and product development, and that we have a well functioning business model. Our market is growing fast and our own brand is gaining increasingly widespread recognition. We anticipate continued strong sales development.”
In regard to the Nestle deal, Rothschild said “long-term and mutually beneficial cooperation” was expected in children’s probiotics.
BioGaia in May linked up with Bericap Sarl, one of the world’s biggest cap makers, to develop BioGaia’s LifeCap – an ingredient-delivering cap BioGaia has been developing for several years but which is yet to see the commercial light of day.
"This collaboration with BioGaia follows several years of searching by Bericap to find the best compromise between an efficient system of protection for the ingredients against humidity and a simple and cost effective solution that is easy to understand and to use by the consumer" Bericap Sarl chief executive officer Dominique-Paul Vallé said at the time of the launch.
Rothschild said its new partner, Bericap Sarl, the French subsidiary of the German Bericap Group, had the production know-how BioGaia lacked, as it is first and foremost an ingredients supplier.
BioGaia markets a straw based on the same concept that has been more successful and is available in about half a dozen markets.