Jun 01, 2016

    Nestle pumps cash into milk allergy test


    NESTLE, the world's biggest food company, is stepping up its push into medicine with a global deal worth up to 100 million euros (S$154 million) to develop and market an experimental milk allergy test for infants.

    The Swiss group will pay DBV Technologies 10 million euros upfront for rights to its skin patch test for cow's milk protein allergy, with the balance depending on successful development, the two companies said yesterday.

    The deal with the Franco-American company underscores Nestle's ambitions for its Health Science division, which it believes could eventually generate more than 10 billion Swiss francs (S$14 billion) in annual sales.

    Nestle has signed a series of similar deals with other small companies in its bid to create a new kind business that is midway between food and pharmaceuticals. The goal is to find new ways to treat, diagnose and prevent a range of diseases, from gastrointestinal problems to Alzheimer's.

    An allergy to cow's milk is common in babies and children. Nestle sees a significant market for this test.

    Under the deal, DBV will be eligible to receive up to 90 million euros in development, regulatory and commercial milestones - on top of the upfront payment - and will also collect royalties on eventual product sales.

    The new test will need to go through extensive clinical trials before it is cleared for sale and DBV expects it to be submitted for approval to regulators worldwide by 2021.

    Strategically, the shift towards health offers Nestle a hedge against slowing growth in packaged foods and may also offset crackdowns on unhealthy foods blamed for obesity and other lifestyle problems.