BioGaia hit by delayed product launches

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Delayed product launches will see losses at Swedish probiotics
company BioGaia continue into next year, warned the firm yesterday.
It had been counting on two major contracts to help it back into
the black by the end of the year.

Both a French beverage company due to introduce drinks with BioGaia's patented screw cap 'LifeTop Cap' as well as the Chinese dairy expected to launch a milk drink with the LifeTop straw have postponed their launches, previously planned for the last quarter, until the first half of 2005.

BioGaia's goal to reach profitability before the end of 2004 will, therefore, not be achieved. It underlines the small firm's dependance on new contracts.

In both cases the delays are due to the customers' concept development and other launch preparations that have taken longer than expected, said the Swedish company.

BioGaia​ reported first half sales of SEK20.8 million (€2.27m) to June, down 14 per cent on the previous year's first half, when figures were swollen by large volume sales to Japanese dairy firm Erina - its biggest customer in 2003. Losses reached SEK13.1 million, already slightly higher than those for the full year 2003.

But in a recent interview​ managing director Peter Rothschild said the current organisation has the potential to generate significantly higher sales. It has invested significantly in novel delivery concepts that extend the shelflife of probiotics, offering higher gross margins for the company and marking it out from competition.

Its latest delivery method is a chewing gum to go on sale in a test market in Sweden this autumn before rolling out to other markets.

Commenting on the delayed French and Chinese products, Rothschild said: "It is regrettable that these launches are delayed but it is important for us and our customers that the concept is developed to completion before launch so that our customers, and thereby BioGaia, have the maximum chances of success in the market."

BioGaia has an 8 per cent share of Europe's dairy probiotics market, according to a recent Frost & Sullivan analysis.

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