Gutsy Acquisition For Denmark’s Novozymes
Novozymes’ recent €80m acquisition of Cork company Precision Biotics was based on more than gut feeling. The Danish biotechnology group, which booked a profit of €420m in 2019 on revenue of €1.9bn, specialises in supplying industrial enzymes and microorganisms. It acquired Precision Biotics for its probiotic products, which boost inner health to combat irritable bowel syndrome (IBS) and stress.
Hundreds of bacterial species live in the gastrointestinal tract, affecting processes such as digestion, the immune system and vitamin production. It’s now believed that IBS is partly caused by imbalances in gut bacterial communities. The science is newer and hazier on direct links between gut bacteria and stress, but clinical trials are increasingly showing connections.
Millions of ‘brain cells’ (neurons) line the gut and communicate with the brain, so the theory is that probiotics can help these cells to work better. The gut also produces serotonin, a chemical that works in the brain to regulate mood, stress and anxiety.
Founded 21 years ago as a spinout from UCC, Precision Biotics has developed c.200 patented probiotic strains from gut bacteria. The company licenses some of its strains to Procter & Gamble for its Align probiotic supplement, as well as setting up partnerships with other healthcare providers.
In 2014, Precision Biotics launched Alflorex, an over-the-counter treatment for IBS. More recently the company introduced Zenflore, which claims to ease stress and fatigue. The product contains the usual suspects such as Biotin, Folate, Niacin, Thiamine and various vitamins, and the magic ingredient is registered as ‘1714Serenitas’, described as a “friendly bacteria that is naturally at home in the human gut”.
Novozymes is buying a business that saw revenue increase by two-thirds in 2018 to €12.7m. Precision Biotics booked a profit of €2.8m, paring accumulated losses to €5.9m. Year-end net worth was €7m.
The vendor has 52 shareholders listed in its annual return, among them CEO and co-founder Barry Kiely (11%), PTG Health Ventures (9.5%) and Seroba Bioventures (9%). Other investors included Gerald Fitzgerald, Breda O’Sullivan, Eamonn Quigley, Fergus Shanahan, Charles Daly and John Kevin Collins, each of whom owned a 7% stake. University College Cork had a 5% share of the business.