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M&A ACTIVITY IS BECOMING A KEY ENABLER TO CAPITALISE ON THIS TREND.
It is no surprise then that we are seeing lots of activity at the so called food- pharma interface. There are numerous examples of functional foods such as probiotics (Probacto, Yakult, Align, Activia) which are already household names. New medical nutrition products which are close to the pharma end of the food-pharma continuum are appearing such as Axona, Souvenaid, and Ensure. Meanwhile terms such as ‘naturally healthy’ or ‘nothing added’ abound on product labels. The fact is that many natural foodstuffs in their original form have prebiotic or nutraceutical properties. Examples are coconut water or almond milk, or prebiotics (tomatoes, asparagus, onions, garlic, artichoke, chicory and bananas). This all points to the convergence of the food and pharma industries.
M&A activity is becoming a key enabler to capitalise on this trend. Recent rumours of Danone selling the majority of its medical nutrition division came hot on the heels of Symrise’s acquisition of leading natural colorant business Diana Ingredients, and Suntory’s acquisition of Lucozade from GSK. (Interestingly Glucozade, the forerunner to Lucozade, was fi rst introduced as a convalescent drink served in Irish hospitals).
It will be fascinating to see who takes centre stage in this nutritional race; on the one hand Big Pharma have large R&D budgets and are highly competent at navigating clinical trials, but food companies are holding their own. Take Nestle’s recently established Health Science SA and the Institute of Health Sciences with a focus on tackling chronic health conditions such as cardiovascular disease, diabetes, obesity and Alzheimer’s. In many ways, food companies are already closer to the consumer’s day to day desires and concerns. They have an in-built advantage.
© 2014 KPMG LLP, a UK limited liability partnership, is a subsidiary of KPMG Europe LLP and a member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative, a Swiss entity. All rights reserved.
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Chris Stott Partner, UK Head of Agribusiness
T: +44 (0) 113 231 3825 E:
christopher.stott@
kpmg.co.uk
Chris has over 13 years of M&A transaction experience in North America, Mainland Europe and the UK. He is currently part of the leadership team in our European Consumer Goods business.
So in the next decade we expect to see the emergence of pharma food alongside the traditional farmer food. Taking a leaf out of Tolkien’s book and dreaming a little, the logical next step in this journey, now that human genes have been sequenced and we can understand more about our make-up, is the link between food preparation and nutrigenomics. Nutrigenomics is essentially the science that allows us to tailor food to fi t our genetic profi les – what’s known as farmaceuticals. For example, carrots fortifi ed to produce calcium which then become a possible cure for osteoporosis.
We predict that customised foods that match medical benefi t to your genetic profi le will be in your shopping basket soon.
PHARMA
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