With its Centrum and Caltrate brands and its billion-dollar Capsugel division, the drug company Pfizer commands a strong presence in the global dietary supplement market—and this presence is only going to strengthen through the company’s acquisition of the Danish supplement maker Ferrosan. Announced February 7, the deal represents yet another foray into the consumer health products market by a multinational drug company.

Based in Denmark, Ferrosan sells its Multi-tabs vitamins and minerals, Bifiform probiotics, Zinaxin JointCare and other dietary supplement products throughout Northern Europe, as well as in the Ukraine, Poland, Turkey and Russia.

“Ferrosan is an excellent strategic fit that strengthens ourpresence in dietary supplements with a new set of compelling brands and product pipeline,” said Paul Sturman, president of Pfizer Consumer Healthcare. “The transaction will mark an important step towards expanding Ferrosan’s brands through Pfizer’s global footprint. As an immediate result of this acquisition, we will gain greater distribution and scale for Pfizer’s well-known brands such as Centrum and Caltrate in Ferrosan’s regions.”

Since being purchased by the Danish private equity firm Altor Equity Partners in 2005, Ferrosan has doubled its EBITDA from 147 million Danish Kroner (€19.7m) to 302 million Danish Kroner (€40.5m), an average annual increase of 15 percent. “During the last six years, Ferrosan has accelerated growth and increased profitability by focusing on key brands in core markets, improved operational efficiency and reorganized governance structure,” said Fredrik Strömholm, joint managing partner at Altor Equity Partners.

Russia a key piece of Ferrosan purchase

Drug and supplement companies have been eyeing the Russian market as a source of global growth. According to Nutrition Business Journal, dietary supplements were “virtually unheard of in this former Communist country,” but now more than 600 companies sell supplement offerings to Russian consumers—who are increasingly wealthy and prone to buy wellness products.

NBJ research shows that supplement sales in Russia are rising faster than functional or natural & organic food and beverage sales and are being used to offset the health impacts created by the typical Russian lifestyle. “One key sales driver is the hope that supplements can help blunt the ill-health effects of tough living conditions and detrimental consumption habits,” Maciej Majszyk, Capsugel's territory sales manager for Poland, the Czech Republic, Ukraine and Baltic countries, told NBJ.

Along with ISI Brands, Herbalife and Amway, Ferrosan is a leading supplement player in Russia. The country is a difficult one to penetrate for foreign companies because of product registration and other regulatory rules favor local entities over foreign ones. Still, Ferrosan’s establishment in Russia will provide Pfizer with better avenues for expansion in one of the fastest-growing supplement markets in the world.

Deal could strengthen nutricosmetics market

Through its Imedeen brand, Ferrosan is a key player within the burgeoning nutricosmetic market. Imedeen is currently sold in Europe, the Middle East, Asia, North America and South America.

Over the last several years, multinational food companies such as Kraft and Nestle and large global ingredient companies such as Cognis have entered the nutricosmetic market. All are attempting to capture a piece of the growing global “beauty from within” pie, which Frost & Sullivan estimates was valued at $2.1 billion in 2009.

According to market research firm Mintel, more than 300 new ingestible products (foods, beverages and supplements) with “functional beauty benefits” hit the global market in 2009—double the amount that came out in 2008.

Although the nutricosmetics market shows great potential, success requires consumer education on the beauty-from-within concept and research to prove a product’s benefits. Pfizer’s deep pockets and scientific prowess could help further strengthen the Imedeen brand from both an education and research perspective.