Nestlé will go back to making acquisitions in healthcare

Nestle Health Science, a subsidiary of Nestlé healthcare will come back shopping this year. Greg Behar, Chief Executive Officer (CEO) of Nestlé Health Science, said that evaluates options in the United States, in Europe, in China, in Japan, in Australia and Brazil.
The target of the company are product licenses and companies that develop dietary supplements used in hospitals or medical care at home. "I hope by the end of the year to make some acquisitions all over the world. The interest is greater in countries where there is greater support from the health system, "said Behar.
Created in 2011, the Nestlé Health Science aims to develop food intended for the nutrition of people with chronic illnesses that cause disability in the absorption of certain nutrients, products for tube feeding in hospitals or in home treatment and food adjuncts in the treatment of some types of cancer, depression, Alzheimer's, gastroenterological problems, among others.
The unit was created from the purchase of Novartis Nutrition and was reinforced with acquisitions made in 2011 and 2012, Prometheus Laboratories (May 2011), CM & D Pharma (February 2011), Vital Foods (July 2011) and a participation in Accera (July 2012).
Since it was created, the business unit grew above average of Nestlé group expansion, thanks to increased global demand, resulting from the ageing of the world population and the growing concern of consumers to adopt healthier diet, especially in the case of child and adult audiences with more than 50 years. According to Behar, the demand for products of nutrition for these audiences grows an average of 15% per year and the expectation is that consumption in this segment still double-digit increases annually until 2020.
Last year, Nestle Health Science obtained a prescription for 13.046 billion Swiss francs ($ 14,034 billion), which represented a growth of 8.7% over the previous year. The operating profit margin business division was 20.9%, with an increase of 2.1 percentage points compared to the previous year. The Nestlé Group closed the year with growth of 4.5% in revenue, to 91.6 billion Swiss francs ($ 98,13 billion). The operating profit margin advanced 0.1 percentage point to 15.3%.
The President of Nestlé Health Science stated that the business unit has been increasingly requested by Nestlé global to help in the development of healthier products with less salt, less sugar, no components that cause allergies, such as gluten and dairy free. "Most of the products sold by Nestlé Health Science already has these features, but they are complex formulations for people convalescing. The company sees opportunities to do more simplified formulations for the common public, "said the Executive. Behar estimated that in 2017, the Nestlé Group has product lines for the general public with these characteristics.
Currently, around 60% of the company's revenue is from the sale of clinical nutrition products (sold directly to hospitals and clinics). Other 15% of the revenue comes from the sale of products of nutrition for people with chronic diseases, like the HCU Express 15 Vitaflo, a food for people with restricted methionine. The remaining 25% come from the sale of food to consumers. The best-known examples are the Nutren lines, sold in pharmacies and supermarkets, which act as a food supplement.
"But the trend for the next few years is to change this Division, with an increase of sales to the general public," said Behar. He considered that consumers have increased the interest in adopting a more nutritious food. Acquisitions under evaluation, according to the Executive, can help the company move forward in this direction.
Nestle Health Science does not disclose information about its performance in the Brazilian market. Behar said only that the pace of sales growth in the country is higher than the global average, which last year was 8.7%. The Executive also said the company's lines account for 40% of the market of clinical nutrition in the country.
The company has invested "several million dollars" in recent years in the country at two factories, one in Araçatuba (SP) and another in Araras (São Paulo), said Marco Hidalgo, the company's regional director for Latin America. He noted that most products are developed abroad and suffers adaptations of flavor in Brazil. But there are cases, like Optifast cheese omelet (a powder that can be mixed with water), which was created in Brazil and ended up being exported to other countries, due to its success.
Without citing numbers, Behar said the company will continue making investments in research and innovation in Brazil. "This year the Brazilian market is a little more difficult, but the prospect is that the country will have long-term growth," he said. He also criticized the decision by the Brazilian Government to cut the budget for healthcare for $ 11.77 billion. "That was a mistake of the Government, but it is not enough to change our long-term investment plans," he said.