Campina expands its pharma business-Joint Venture with Fonterra

All current products in the parents’ portfolio, used as excipients in pharmaceutical applications plus the lactose used in the production for so-called Fine Chemical or semi-Pharma applications will fall within the scope of the Joint Venture.

24/03/06 Dutch based dairy company Campina and Fonterra, based in New Zealand, intends to create a Joint Venture in excipients. The joint venture will employ approx. 100 people and generate a total turnover of approx. € 75 million. The 50/50-Joint Venture will firmly establish a leading role in excipients for the global operating pharmaceutical industry. Excipients are inactive substances used as carriers or diluting agents in active drug formulations, or to aid the process by which a pharmaceutical product is manufactured. Parties expect that the deal will be closed in Q2 2006, subject to regulatory approval.

The Joint Venture exists of the business unit Pharma of DMV International, part of the Group Industrial Products of Campina, and the business unit Lactose New Zealand, a wholly owned subsidiary of Fonterra. The Joint Venture will focus on expanding the business with a broad portfolio of excipients and with new product-lines and -functionalities. All current products in the parents’ portfolio, used as excipients in pharmaceutical applications (ethical, generic, OTC) plus the lactose used in the production for so-called Fine Chemical or semi-Pharma applications will fall within the scope of the Joint Venture. Lactose for food application will stay with both parent companies.

Campina’s industrial arm, DMV International reported that by joining forces Campina and Fonterra will enhance the critical mass and basis for continued long-term investments in innovation, quality and service to stay ahead to the ever increasing market demands. The Joint Venture is well positioned to become an even more successful partner for pharmaceutical companies as it will offer customers further improved reliability of supply. The Joint Venture will be one of the strongest players in the excipient field and therefore customers can trust continuity and long-term relationships.

The Joint Venture will have its own production locations in the Netherlands(Campina’s contribution: disintegrants, Foxhol), Germany(Campina’s contribution: direct compression lactose, Nörten-Hardenberg), and New Zeland (Fonterra’s contribution: inhalation lactose, Kapuni), with regional sales offices around the world. The difference in value of the respective contributions of Fonterra and Campina will be compensated by Fonterra in cash. It will be owned 50:50 by Fonterra and Campina, emphasizing the commitment of both parties to build a strong position in the pharmaceutical excipient industry. The CEO of the Joint Venture will be appointed by DMV International and headquarters will be based in Goch, Germany.

“With this Joint Venture Campina and Fonterra will improve their position in the global excipient market and strengthen the presence in the fast growing emerging pharmaceutical markets in the Asia Pacific region”, said J.J.G.M. (Justinus) Sanders, CEO of Campina BV. “The Joint Venture is fully in line with Campina’s growth strategy and will form a solid basis to continue long-terms investments in innovation, quality and service, needed to stay ahead. It is a unique opportunity to further strengthen our position in the pharmaceutical business. The complementary strengths of both parties and the unique situation of global dual sourcing will enable the Joint Venture to enhance growth and improve its position as a leading player in excipients.”

Fonterra CEO Andrew Ferrier said that the Joint Venture would enable both companies to better serve their pharmaceutical customers, and provide more market opportunities for Fonterra’s lactose business. “When we opened our new Inhalation Grade Lactose site at Kapuni (New Zealand) in May 2005, I said that we would seek to develop partnerships with leading pharmaceutical companies. Campina has a strong position in Europe and Japan, while Fonterra has been very successful in building a strong position in the Asia Pacific region, and has a major supply agreement with one of the world’s leading pharmaceutical companies.”

The Joint Venture with Fonterra is fully in line with Campina’s growth strategy. The company focuses on international growth with innovative dairy products in Europe and Asia, and strives for a leading role in dairy ingredients for the worldwide operating food and pharmaceutical industries.

The pharmaceutical industry is a truly global, profitable market with high quality standards and expectations. Also in the pharmaceutical industry the dynamics are changing and investments needed to develop new medicines forces also the pharmaceutical industry to focus on costs, through e.g. globalization, production in low cost countries and harmonization of raw materials and suppliers. At the same time suppliers are expected to play an active role in the fields of co-development, quality management and regulatory support.

The business unit Pharma is part of DMV International, a division of the Group Industrial Products of Campina selling ingredients to the food, nutritional and pharmaceutical industry. The business unit Pharma is developing, producing and marketing excipients to the pharmaceutical industry world-wide. It focuses on quality and implemented cGMP for Active Pharmaceutical Ingredients in all production facilities. Furthermore the business unit is dedicated to deliver high service level through a dedicated global sales- and distribution network.

Fonterra’s business unit Lactose New Zealand is the seller and marketer of Fonterra’s pharmaceutical lactose while the product it sells is manufactured by Fonterra Ltd. Similar to the business unit Pharma of DMV International Lactose New Zealand sells and markets to the pharmaceutical industry worldwide.