August 15, 2016 / 9:15 AM / in 3 years

Lonza buys InterHealth in health push

ZURICH (Reuters) - Swiss specialty chemicals and pharmaceutical ingredients company Lonza (LONN.S) has announced a deal worth up to $300 million to buy InterHealth Nutraceuticals, a developer and manufacturer of nutritional ingredients used in dietary supplements.

Lonza said the California company’s range of products like UC-11 to promote healthy joints would complement its own in sports nutrition, weight management, immune and pet health.

“With this acquisition Lonza is taking a further step along our strategic path as a high-value supplier to the healthcare continuum,” Chief Executive Richard Ridinger said in a statement, adding that the deal also boosted Lonza’s offerings in cognitive and diabetes health.

The consultancy KPMG has forecast that the nutraceuticals market will be worth $280 billion in 2018, a factor that it expects will prompt a wave of mergers and acquisitions (reut.rs/2btohwt).

Swiss food giant Nestle (NESN.S) is among companies that have shown an increasing interest in health foods, hiring a new CEO from German medical company Fresenius (FREG.DE) and investing in firms whose products are meant to restore a healthy bacterial balance in the gut.

GLOBAL ROLLOUT

Ridinger said Lonza would sell Interhealth’s products globally and use the U.S. company’s network to distribute the Swiss firm’s existing product range.

“Lonza has succeeded in making an important step in expanding its product portfolio into the attractive area of nutritional ingredients,” said Zuercher Kantonalbank analyst Philipp Gamper. “This area promises above average growth and good margins with less cyclical volatility.”

The Swiss company, which also makes products like drinking water sanitizers and preservatives for industrial applications, currently generates nearly 42 percent of its sales from pharmaceutical and biotech products.

But the nutraceuticals area is faster growing and more profitable than Lonza’s specialty ingredients business, which makes ingredients that go into consumer care products.

Additional reporting by John Miller in Zurich; Editing by Greg Mahlich

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