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Martek looks beyond infant formulas

This article was originally published in The Tan Sheet

Executive Summary

The maker of life'sDHA nutritional additive plans to overcome a drop in the U.S. birthrate by growing in global markets and conventional food applications. Martek Biosciences reported third-quarter revenues fell 12 percent to $77.8 million mainly due to inventory destocking, which the Columbia, Md., firm predicted (1"The Tan Sheet" June 8, 2009, In Brief). Martek's infant formula sales fell 15.4 percent, to $63.3 million, in the May-July period, although its pregnancy and nursing, nutritional supplements and animal feeds businesses shot up 58 percent to $7.9 million. Third-quarter net income dipped 4.3 percent to $8.9 million, Martek reported Sept. 2. ... DHA patents prevail: A ruling by the U.S. Court of Appeals for the Federal Circuit supports certain Martek patents on the process of extracting lipids from fermented microorganisms to produce DHA. Martek previously asserted that Swiss ingredients manufacturer Lonza infringed its patents, which Lonza said were invalid. In a Sept. 3 2decision, the court remands the case

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Sales & Earnings In Brief

Martek plans expansions in food applications, supplements: Following revenue contraction during 2009, the nutritional oils firm promises a return to earnings growth in 2010, led by launches of food applications for life'sDHA and deals with new customers. Martek Biosciences Chief Financial Officer Pete Buzy said during a Dec. 16 earnings call that major product introductions will come in 2010 after being delayed by economic conditions in 2009. Execs with the Columbia, Md.-based company said they hope to commercialize gummi, powder and emulsion formulations in the calendar year. Buzy also said Martek has "just scratched the surface" of the DHA supplement market and suggested the firm is eyeing worldwide expansion of its supplements. Martek's fourth-quarter revenues dipped 3.1 percent to $87.6 million, while net income rose 5.5 percent to $11 million, due to lower operating expenses. During the firm's fiscal 2009, ended Oct. 31, sales in Martek's pregnancy and nursing, nutritional supplements and animal feeds business shot up 37.3 percent to $28.6 million. Food and beverage applications generated $10.7 million in sales, up just 2.5 percent for the year, while infant formula fell 5 percent to $285.7 million. Buzy said Martek projects it will return to growing formula revenues in 2010 as its international expansion continues (1"The Tan Sheet" Sept. 7, 2009, In Brief)

Martek, Capsugel settle, strike DHA deal

After resolving a patent dispute, Capsugel agrees to purchase algae-derived DHA exclusively from Martek Biosciences. Columbia, Md.-based Martek, which filed an action for infringement against Capsugel France in November 2008, said Sept. 10 it will collaborate with the Pfizer subsidiary to add DHA to Capsugel's Licaps liquid-filled hard capsules. Martek said the patent settlement with Capsugel is not related to a separate dispute with Lonza dealing with certain patents on the life'sDHA production process (1"The Tan Sheet" Sept. 7, 2009, In Brief). After a federal appeals court ruled against Lonza in support of Martek's patents, Martek CEO Steve Dubin said Sept. 8 the firm continues to "vigorously defend its patent portfolio," which includes more than 700 granted and pending patents worldwide

Martek sales stable, inventory destocking looms

The maker of life'sDHA reports second quarter revenues inched up 1.9 percent to $92.4 million, despite a 1.3 percent dip in infant formula sales to $77.4 million. Martek Biosciences set records for revenues and pretax profits during the quarter ended April 30, reporting 19.7 percent growth in net income to $11 million over the year-ago period. The Columbia, Md.-based nutritional oils firm said during a June 3 earnings call it expects a $10 million to $15 million revenue hit due to destocking of infant formula during its fiscal 2009 third and fourth quarters. CEO Steve Dubin expects the destocking to be temporary and infant formula sales growth should resume in 2010


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