Short and long-term strategy for future success

BioGaia has progressed from a company to a group. The focus in the Parent Company is on developing and broadening the core business. The subsidiaries BioGaia Production and CapAble have key strategic functions linked to the core business in various ways, while the recently formed subsidiary BioGaia Pharma and the associated company MetaboGen are both at the leading edge of probiotic research.

 

Peter Rothschild, Group president: BioGaia is at the leading edge of probiotic research

When BioGaia was founded 28 years ago, probiotics were a comparatively unknown concept. We at BioGaia talked about good and bad bacteria and tried to convince the world at large that the good bacteria could be used to improve people’s health. Today probiotics are a fairly accepted concept, among consumers as well, and the talk now is about something called the microbiome which is the collective name for all genes in the gastrointestinal tract.

The background to this is that differences have been seen in the microbiome of healthy and ill people for a number of serious diseases such as diabetes, autism and liver disease. The correlation is not totally clear but in recent years an entirely new area of research has emerged to try and understand cause and effect as well as find ways to influence the microbiome in the “right” direction.

What are we at BioGaia doing to be part of this rapid development? Three years ago we invested in the company MetaboGen which was founded by two prominent researchers within this area, Fredrik Bäckhed and Jens Nielsen. In partnership with them we have entered this highly interesting area which should give us a basis on which to create new products that can address a variety of illnesses.

BioGaia’s products are usually sold as dietary supplements. We conduct our research and development work, however, without taking into account the regulatory category to which a possible future product might belong. It is important to find future products where studies on people prove that they work and are clinically relevant. It is therefore important that BioGaia, regardless of regulatory category, can in some way commercialize the product in question. This is why we formed BioGaia Pharma, whose mission is to take care of product ideas we consider should be developed into drugs in order to be able to make medical claims or have a different price level.

BioGaia Pharma will not itself develop drugs but will bring together a scientific base that makes it possible to license the product to a pharmaceutical company. Through the previously spun-off company IBT, which develops a drug for premature babies, we have shown that it is possible to find candidates for such projects.

With BioGaia, BioGaia Pharma and the cooperation with MetaboGen we are well placed to benefit from new methods and the knowledge that has emerged in recent years.

BioGaia Production, formerly TwoPac, manufactures almost half of BioGaia’s products, has GMP approval from the Swedish Medical Products Agency, and a highly efficient manufacturing unit. This is of course valuable since it increases our gross margins by a number of percentage points. Of far greater importance, however, is the company’s strategic know-how which we can use to develop even better and more sustainable products.

CapAble, which markets the Life Top Straw and Life Top Cap packaging solutions (also for other companies’ bacteria cultures) complements BioGaia’s range of high-quality, innovative probiotic products.

In recent years BioGaia has developed from a probiotics company offering dietary supplements and food for special medical purposes to a company that can work with the entire microbiome in all regulatory categories.

 

Axel Sjöblad, Managing director: The successful business model remains unchanged

Our business model will remain unchanged in the future but our goal is to continuously develop and strengthen it through new research, additional resources and a broader offering.

This means that in 2018 we will continue with several initiatives under the five main areas in our strategy: Growth, Customer Focus, Operational Efficiency, Innovation and Sustainability.

Within Growth, work on expansion of our existing product portfolio will continue. In Pediatrics, our most important segment, our aim is that existing partners will launch more of BioGaia’s products, while within Adult Health we will continue to sign agreements with new distributors.

To strengthen the BioGaia brand we will both support selected partners and continue the rollout of our new graphic profile. The goal is that this project, which reached half of our partners in 2017, will be completed by mid-2019. In 2017, almost 70 percent of our finished products were sold under BioGaia’s brand or co-branded and our aim is to further increase this figure in 2018.

We will also continue to develop our strategic collaboration with selected partners outside our present core business as well as evaluating possible acquisitions of strains, products and companies.

Within Customer Focus 2018 will be an exciting year for BioGaia’s organization. Through two new regional offices, in Miami and Singapore, we will ensure our ambition to support our partners through a better presence.

Our new educational platform, BioGaia Academy, will also be launched during the year. This is an important part of our efforts to develop the network of opinion leaders within probiotics.

In Operational Efficiency the main focus in 2018 will be on the installation of an upgraded ERP system.

Our investments within Innovation will continue. IP and research remain the core of BioGaia’s operations. In our new laboratory in Eslöv, Sweden, in collaboration with external players such as the Research Institutes of Sweden (RISE), Lund University and the Swedish University of Agricultural Sciences (SLU), we will further develop our knowledge about our strains.

In addition, through the new BioGaia Group structure, we will extend the collaboration with MetaboGen and open up opportunities for new drug candidates through BioGaia Pharma. With a broader pipeline in place, our future goal is to launch four products per year.

Within Sustainability in addition to work with the independent foundation, we will continue to work with the ambitions and goals we set in 2017 within our other chosen sustainability areas: products and production, the supply chain and attractive employer.