31 Jul 2018 --- Thriving in today’s business environment requires not only financial success, but hinges on an awareness of social responsibility, taking into account local and individualized preferences and needs as well as consumer education. This is according to Jeremy Xu, President Human Nutrition & Health at DSM, who spoke with NutritionInsight about the company’s focus on human health and nutrition as well as the key trends informing its innovation cycle.
The past months have seen a number of developments highlighting DSM’s commitment towards advancing its position within the human health and nutrition space.
Last month, the company announced it had set aside about €3 billion to spend on acquisitions to expand its nutrition business and maintain its profit growth. In its 2018 outlook, DSM reconfirmed it will position itself towards a Nutrition, Health and Sustainable Living company, “pursuing enhanced organic growth, with a purpose-led coherent set of business activities, with value-creating acquisitions predominantly in Nutrition.”
The announcement was quickly followed by the news of a proposed sale of DSM Sinochem Pharmaceuticals (DSP) – a pharmaceutical joint venture with China’s Sinochem Group – to Bain Capital.
“That was part of our life sciences strategy, moving us from a chemistry-based portfolio to a more life sciences and advanced material based portfolio. It was a strategic intervention,” Xu explains. “We want to be the leader in the human nutrition and animal nutrition spaces. We believe in the future, and only companies that can succeed in both social responsibility and financial results will win in the end.”
“We are looking for more investment opportunities, especially in personalized nutrition as it’s an open field; we could grow through mergers and acquisitions and we are engaging some startups in that area,” Xu says, which is exemplified by the recently announced acquisition of an equity stake in personalized nutrition company Mixfit, making DSM the start-up’s largest shareholder with approximately 50 percent of shares.
The key market and consumer trends as identified by DSM lie in the areas of increased consumer awareness and personalized nutrition. These trends are opening up new opportunities in more developed delivery forms, thereby leading to an increased interest in more advanced technologies and intra-industry learning.
“On the consumer side, which is always the first step when we look at the whole value chain, the first key trend we are observing is that increasing consumer health consciousness and the aging population offer a lot of opportunities. People are willing to spend time and money on their health and wellness and as a result, personalized nutrition is making waves in the industry,” Xu says.
“The second trend involves innovations in delivery forms. The differences between delivery systems are blurring, by which I mean the lines between food and beverages, versus supplements, versus medicines – all forms for the delivery of health benefits,” Xu says. “Consumers are willing to take different forms to enjoy health benefits and the industry is responding very well to this. You see consumer goods companies going into the dietary supplement industry, or the pharmaceutical industry crossing over to the dietary supplement industry, and vice versa. This is because consumers are now much more flexible and open to experimentation.”
The third trend, according to Xu, refers to individualization of consumer identities, with technology providing a lot of convenience.
“In response to these trends, on the industry level, companies are facing different challenges. For many big players, the strength of economies of scale is diminishing. With social media, the internet, you don’t need huge marketing budgets to promote your brand. Consumers are starting to look more to local brands to fit their individualism,” Xu says. “This is a huge challenge for our larger customers. Meanwhile, smaller newcomers are looking for total solutions. They cannot afford to invest into R&D for manufacturing. As the world’s largest ingredient manufacturer, we see a lot of opportunities to use our long-standing, science-backed expertise and technologies to help both big companies and smaller companies to develop total solutions.”
Taking R&D a step further
In line with these consumer and industry trends, continued investment in R&D remains key, keeping a keen eye on localized demands and preferences.
“Innovations, also known as R&D, in our book, can take different shapes or forms. Traditionally, we only look at R&D as inventing the next blockbuster molecules. Although we will continue to do that, our approach to innovation is much broader,” Xu notes. “That’s what the market is looking for. For example, in addition to creating new ingredients, we are also looking at new formulations and how to deliver the bioactives in more protected ways, to deliver these to the right targets at the right time.”
“Another area in which we are innovating is applications. We need to better understand the needs of our customers and consumers and put ingredients in a format that consumers will enjoy. The sensory attributes of consumer products are critical. As we all know, dietary preferences are often highly localized. If it doesn’t taste good, no one will want it. This is why we also invest heavily in our application capabilities,” he says.
“The last piece within innovation is our business model. Personalized nutrition to us is innovation because it integrates all innovative tools and technologies, such as diagnostics, big data, new delivery forms. You need all those technologies put together to make economic sense. To me, this is where the biggest innovations are coming up,” he says.
“If you think about the challenges across the entire spectrum of populations, the aging population [is key] – people want to live longer, healthier lives. Cognitive health, memory loss, bone health, eye health are all top health concerns for many consumers. These are areas that the industry as a whole needs to address much more proactively, with an eye on prevention rather than treatment.”
Education as an industry responsibility
Next to ongoing R&D and investment opportunities, Xu says the company sees a role for itself in educating consumers and suppliers alike.
“Regarding education, it is also our responsibility to educate consumers, but that’s also because we have the capabilities. We invest a lot in our nutrition proposition and we are still exploring how to integrate that education piece into our business model, looking at many platforms – webinars, seminars and the new technologies presented to us – to create an ongoing engagement with consumers,” he concludes.
By Lucy Gunn
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