25 May 2011 Nestle makes third purchase in personalised health-science nutrition

Nestlé’s health-science unit has agreed to buy Prometheus Laboratories, a maker of treatments for cancer and gastrointestinal illnesses, as the world’s largest food company makes another investment in personalised nutrition.

Nestlé is believed to have paid 500 million Swiss francs ($567 million) to 1 billion Swiss francs for the San Diego, California-based company. Nestlé has declined to comment on the price, which wasn’t disclosed.

Prometheus is forecast to have sales of about $250 million next year from products that include tests for Crohn’s disease and cancer. The company was founded in 1995 and takes its name from the Greek god who gave humans the gift of fire. It’s owned by investors including DLJ Merchant Banking Partners and Apax Partners.

Nestlé, the maker of KitKat chocolate bars, opened a unit in January to develop personalised nutrition products for afflictions such as diabetes. The Swiss company has said it aims to become the world leader in health-science nutrition in 10 years, extending its dominance beyond coffee, powdered milk and baby food. The purchase is the third made by the unit since it opened.

“This shows Nestlé is serious about this initiative,” said James Amoroso, a food industry consultant based in Walchwil, Switzerland. “Because the group is so big, you probably won’t see the impact for another 10 years. Ultimately there’s quite a lot of money to be made. Pharmaceutical margins are higher than food margins.”

The research and development pipeline will encompass areas including metabolic conditions and brain health that are of interest to Nestlé Health Science, the company said. Prometheus said it expects the transaction to close early in the third quarter and that about 500 of its employees will join Nestlé Health Science after the acquisition.

The purchase will allow “personalised health-care solutions based on diagnostics, pharma and nutrition,” Luis Cantarell, chief executive officer of Nestlé Health Science, said in the statement.

Prometheus had a 14th consecutive year of sales growth in 2010, CEO Joseph Limber said. In addition to its own products, Prometheus has agreements with companies such as Novartis and AstraZeneca to sell and distribute medicines, according to the company’s website.