Galenica strengthens its omega -3 platform after UK buy
- December 05, 2006
||âadd-onâ company acquisition agreement signed in December 2006;
||Equazen Nutraceutical (UK), market leader in omega-3 nutritional supplements in UK;
||Galenica Group (Switzerland), international diversified healthcare company;
||family owners and investors in Equazen;
||enhanced Omega-3 and OTC naturals business; to achieve critical mass in UK;
||timing, attractive valuation;
||Equazenâs âeye qâ brand is market leader in omega-3 supplementation in UK, with 30% share;
Fish-derived fatty acids have been linked with improvements in cognitive health (learning and concentration), as well as heart, pregnancy and eye health. The omega-3 etc market has exploded in the UK in the last few years, and Equazen have been right at the forefront of it - a classic case of how a small company can âblind-sideâ the big players, when it comes to breakthrough technologies. Expect more acquisitions by Galenica in this category, in continental Europe.
Galenica is focused on serving all parts of the healthcare value chain. Its diversified profile, which includes nutritional supplements and non-pharma distribution channels (FMCG, healthfoods), marks it out as a âpharma-cum-nutritionâ business. This small âadd-onâ brand deal represents a realignment of Galenicaâs portfolio and geography. In 2003 it bought Potters, the UKâs leading supplier of herbal remedies. This was a platform, onto which other herbal medicine and nutritional supplement brands needed to be added. Add to that the almost-simultaneous acquisition of Equazen, the UKâs leading Omega-3 products developer, and you have a portfolio orientation towards âOTC naturalsâ (whereas historically Galenica is best known for iron deficiency products). That both deals are in the UK shows how Galenica regards it as a core market even though, after this deal, it will still consitute under 5% of group turnover. This strategy is possibly influenced by Galenicaâs strategic alliance with UK-based Alliance Boots.
Equazenâs turnover was about âŹ13 mln in 2005. Given current valuation levels, the husband-and-wife team must have grossed at least âŹ20-25 mln from the sale (before debt and minority interests). Probably more, given Equazenâs growth rate, research backing, UK market position and international trajectory (the company already exports to 17 countries). Bear in mind that the UK fish oil supplements market has nearly trebled in since in the last three years.
Not bad for seven yearsâ work (Equazen was established in 1999), especially when you consider that the husband and CEO, Adam Kelliher, had had no prior experience in healthcare or business (heâd been a journalist for nearly 20 years). Just goes to show that itâs never too late. On the other hand, Adamâs father-in-law spent his whole career researching the health benefits of fish oils, so on the whole you could say that Equazen was âan overnight success after a lifetimeâs hard workâ.