GlaxoSmithKline underlines its commitment to the nutritional products space by acquiring Maxinutrition Group Holdings, a leading U.K. sports nutrition firm.

The £162 million deal – about $256 million –announced Dec. 13 helps diversify Glaxo's international Nutritional Healthcare business, which already includes the Lucozade and Horlicks brands.

Hertfordshire-based Maxinutrition increased sales at a compound annual growth rate around 21% the past three years, reporting sales of about $55 million for the 12 months ended in April.

GSK Diversifies Nutritionals

Glaxo Nutritional Healthcare now includes:
- A protein nutrition business with Maxinutrition
- A carbohydrates business with Lucozade
- A calcium micronutrients business with Horlicks

The company markets Maximuscle bodybuilding products, the Maxitone line aimed at women's weight management and muscle toning and the Maxifuel brand for endurance launched in June.

A GSK spokeswoman pointed out in an e-mail the Maxinutrition deal gives the pharma giant "a carbohydrates business with Lucozade, a calcium micronutrients business with Horlicks and a protein nutritional business with Maxinutrition."

GSK Nutritionals Staying Put

In the months leading up to the acquisition, CEO Andrew Witty clarified GSK sees great upside in its nutritionals unit, especially in developing markets.

"I think lots of people have always thought, 'Sooner or later, they're bound to sell the nutritional business,'" Witty said in June at the Goldman Sachs annual Global Healthcare Conference in Los Angeles.

But the executive rebuffed such expectations. "This is an absolutely phenomenal business for us," he said. "If you look at where the growth opportunities are in some emerging economies, it's clear that in things like functional nutrition, this is where there is tremendous scope for growth."

Witty explained GSK is leveraging Horlicks, a malted nutritional drink mix, to gain access to upwardly mobile consumers in India, Africa, Central America and other markets.

In GSK's fiscal 2010 third quarter, global Nutritional Healthcare sales climbed 12% to $408.6 million. In its October financial statement, the firm credited the growth to innovation, geographic expansion and a strong marketing presence in support of Horlicks.

Maxinutrition's Growing Footprint

Maxinutrition's powders, gels and bars target a very different consumer than does Horlicks, though GSK sees the same type of potential in the new acquisition for expanding its sports nutrition brands globally.

About 90% of Maxinutrition's sales are in the U.K., though the firm has limited distribution in several other European markets, including Germany, Spain, Sweden, Portugal and the Netherlands.

In sports nutrition, GSK sees a global business worth more than $4.7 billion, and still with room for growth in established markets. In the U.K., the segment is growing about 12% to 15% annually, Glaxo said.

"GSK will invest behind Maxinutrition's science-proven products to extend the growth of Maxinutrition within its U.K. and European footprint, and expand to the global marketplace, where GSK has existing infrastructure and capabilities," said John Clarke, president of GSK Consumer Healthcare.

Despite Glaxo's enthusiasm for nutritionals in much of the world, the company maintains a modest nutritional presence in the U.S., where its supplement brands include Tums, Beano, Citrucel, FiberChoice and Os-Cal, some of which are co-labeled as drugs.

GSK further trimmed its North American supplement offerings with a divestment of three brands made public Dec. 14 (see sidebar this page).

By Dan Schiff

Glaxo Beefs Up Nutritionals Business With Maxinutrition Buy

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