Dive Brief:
- Nestle signed a deal to expand its Health Science division by acquiring rights to DBV Technologies' infant skin patch test for cow's milk protein allergy. The deal is worth up to 100 million euros ($111 million).
- Nestle will pay DBV 10 million euros upfront for the technology, and the other 90 million would be delivered upon successful product development.
- The milk allergy test aligns with Nestle's recent efforts to move into health-related products, such as medical foods, as its grows its Health Science division. Nestle anticipates the division to eventually drive about $10 billion in annual sales, which would offset losses experienced by other food and beverage areas of the company's portfolio.
Dive Insight:
Nestle is pivoting to health products while leveraging its R&D and marketing experience with food and beverage.
For example, the infant milk allergy test complements Nestle's infant formula business and could boost sales of products developed for infants with this allergy. Nestle's medical foods endeavors could be used to treat prevalent chronic ailments, such as Alzheimer's. But these products also implement the company's R&D labs and manufacturing and marketing expertise to make pharmaceutical-grade foods more palatable for consumers.
With this pivot, Nestle is moving into heavily-regulated territory. This means slower speed to market and more intense scrutiny of ingredients, production methods, safety, and marketing.
Nestle may be able to offset loss of sales and market share from products that consumers no longer deem healthy. But these efforts come with costs and complications that may take time to grasp before Nestle sees significant impact to its top line.