BioGaia Posts Strong Results, Optimistic Future

13 Apr 2015 --- Swedish probiotics firm BioGaia has posts full year sales of $54.31m for 2014, up from $35.61m in 2013. This includes its licence revenues from Nestlé products. This equates to a sales growth of 53% (22%, excluding the Nestle agreement).

Founder and president Peter Rothschild said that 2014 can only be summed up as a successful year. Adult nutrition figures remained flat, while child nutrition claimed the bulk of sales ($46.12m).

Although one of BioGaia’s most important markets, Ukraine, declined significantly during the year, this negative trend was offset by very strong development in Brazil, where it launched during the autumn. Nearly all markets are growing at a solid pace and that the BioGaia brand is becoming more and more established, particularly among paediatricians, as the safest and most effective probiotic on the market.

The company faced challenges in the form of problems with the stability of the bacteria cultures from one of its suppliers. On delivery the cultures met specifications, but in the finished product the shelf life was shorter than normal. The problem was detected through BioGaia’s own control system. 

The company’s close collaboration with Nestlé has continued and during the year resulted in a new agreement through which it received the remaining outstanding payments under the agreement from 2012. 

The company also benefited from clinical studies that confirmed the efficacy of its products. Two of these concerned children with colic, one that showed significant positive results and one with neutral results. However, the neutral study, in which the researchers were only provided with study product and placebo, was poorly executed so the company could easily explain the results to its distributors, and they in turn to the paediatricians they visit. BioGaia now has a total of four positive colic studies, which is more than enough to convince doctors that the product works. 

The subsidiary IBT was formed to develop a drug to prevent NEC, a fatal disease that often affects premature newborns. And the company is now going from strength to strength. It has been granted orphan drug status in both the USA and Europe, started development of the manufacturing process and hired a bank to help secure financing through a license with a pharmaceutical company. During the year, consolidated profit was charged with costs of $760,000 related to IBT. 

Towards the end of the year BioGaia invested $1.35m in the Gothenburg-based company MetaboGen AB, which was founded by professors Fredrik Bäckhed and Jens Nielsen. The company conducts research on the microbiome, which is the collective genetic material contained by the large number of bacteria in the gut flora. The assumption is that the microbiome affects the onset of various diseases and that by altering its composition, it is possible to positively impact health. BioGaia sees this as a natural expansion of the probiotic concept and wants to be at the cutting edge of this exciting development. 

During the year BioGaia also succeeded in signing agreements to introduce its products in a few major markets such as the UK and India, where it is now working intensively to ensure successful launches. 

Rothschild concluded: “I am optimistic about 2015 and expect BioGaia to maintain a high rate of growth. At the same time, we are continuing to focus on further clinical studies and product development and are investing in TwoPac and IBT. I therefore anticipate strong growth in the company in both the short and long term.”