DMV-Fonterra Excipients buys Domo Pharma business from FrieslandCampina

31 December 2009

DMV-Fonterra Excipients, the 50/50 joint venture between Royal FrieslandCampina and Fonterra for pharmaceutical excipients, has announced to buy the activities of FrieslandCampina Domo in pharmaceutical lactose as per 1 March 2010. This will further strengthen the knowledge base, sales network, sourcing and R&D capability. This, in turn, will improve the ability to better serve worldwide pharmaceutical customers in providing non-active ingredients for medicines, such as tablets and inhalation concepts. The new combination will have an annual turnover of approximately EUR 120 million.

The transaction brings together two companies with more than 100 years of experience in supplying the pharmaceutical industry. Both have successfully built up their own customer base, which they serve from their individual production facilities. DMV-Fonterra Excipients sources its products in Europe and New Zealand, while FrieslandCampina Domo-Pharma sources its products in Europe. They were the first in the market to develop inhalation grade lactose, which is used for inhalation medicines.

Shared technology and experience
“This transaction underlines the shared ambition of FrieslandCampina and Fonterra to further develop their excipients business through the joint venture DMV-Fonterra Excipients”, says Frans Visser, COO at FrieslandCampina responsible for the Ingredients business group.

Long-term synergies will be achieved by improving the shared base of the two companies. This includes: the core technology and experience in producing pharmaceutical lactose; the shared knowledge base needed for innovations, formulations and applications; and the shared expertise in dedicated quality systems applicable to the production of pharmaceutical ingredients. The integration will create a broader base for future investments to better serve customer needs. “These synergies will benefit the shareholders of Fonterra and FrieslandCampina as well as customers”, explains Andrei Mikhalevsky, Fonterra’s Managing Director for Ingredients.

Continuity for customers
“After the integration, DMV-Fonterra Excipients and Domo Pharma will continue to serve their own customers in their own distinct and successful ways with their well-known product ranges. By doing so, we offer the customers consistent reliability and continuity, which are essential in the global pharmaceutical industry”, according to Herman Ermens, CEO of DMV-Fonterra Excipients. The Domo infant food grade lactose business will stay within FrieslandCampina Domo.

The total value of the transaction is EUR 52.5 million (NZD 106 million), which will be equally divided between both joint venture partners. The transaction concerns the formulas, marketing activities, sales and distribution channels and use of the Domo name for pharmaceutical excipients. In addition, in future the current FrieslandCampina locations which produce for Domo Pharma and DMV-Fonterra Excipients will serve both brands. The number of employees involved will not change due to this transaction.

The transaction is subject to regulatory and other approvals. The employee representative bodies have been informed.