By Ben Klayman
CHICAGO (Reuters) - Martek Biosciences Corp (MATK.O: Quote, Profile, Research, Stock Buzz) is aiming this year to boost the number of long-term supply deals it has with infant formula makers who use the company's Omega-3 fatty acid supplement, the company's president said on Tuesday.
Martek has long-term supply agreements running through at least 2011 with about 70 percent of its infant formula customers.
"I'm certainly hopeful we'd increase the percentage between now and the end of the year," David Abramson said at the Reuters Food Summit. He declined to provide a target.
Shares of Martek closed up $1.72, or nearly 6 percent, to $30.46 on the Nasdaq.
Almost all the infant formula sold in the United States includes Martek's product, life's DHA.
DHA, or docosahexaenoic acid, is seen as benefiting brain, eye and heart health. The current market for Omega-3 enriched products is $2 billion and is expected to hit $7 billion by 2011, Martek said, citing data from market research firm Packaged Facts.
Abramson also said Martek is constantly looking at expanding its product lineup by adding another nutritional ingredient, but it has not found anything that has the scientific backing and also makes economic sense.
"While there are several things that we're interested in at this point in time ... we are not going to do anything that we don't believe has solid science behind it," he said.
"We're not going to get something that is the next low carb, where two years down the road you're on to something else," Abramson added. "We're looking for other nutritional ingredients that essentially have the same vitality and they're hard to find."
The Columbia, Maryland-based company would look at adding a third plant to make its Omega-3 supplement used in infant formula overseas, as well as food and drinks, as business expands, he said.
Martek has plenty of manufacturing capacity at two plants in Kentucky and South Carolina, but adding a third plant or shifting part of the manufacturing process overseas could eventually occur, Abramson said. However, any such move is at least several years away.
"One of the things we've talked about is potentially taking certain parts of the process and moving those abroad," he said.
"There could be certain aspects of that (process) that may make sense to move, but we are really not seriously looking at it, and if ever, it would be several years down the road," Abramson added.
Martek's manufacturing process starts with fermentation of algae in stainless steel fermenters as large as seven-story buildings, he said. After that is the "downstream" part of the process -- including bleaching, refining and deodorizing -- which might make sense to move one day.
The company, with sales last year of almost $307 million, has offices in Europe and Shanghai, China. Its sales in China are about $20 million. Continued...
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