DSM Integrated Annual Report 2020

Human Nutrition & Health

Highlights 2020

About Human Nutrition and Health

Human Nutrition & Health provides solutions for early life nutrition, dietary supplement, pharmaceutical, medical nutrition, nutrition improvement and food & beverage markets. We serve these industries with:

  • a portfolio of high-quality products (vitamins, nutritional lipids, minerals, carotenoids, human milk oligosaccharides (HMOs), nutraceuticals, digestive enzymes, probiotics and prebiotics, as well as active pharmaceutical ingredients (APIs)
  • a suite of customized solutions (premix, Market-Ready Solutions and personalized nutrition)
  • a range of expert services

Human Nutrition & Health performance

Human Nutrition delivered 5% organic growth, with volumes up 7%. Dietary Supplements and Pharma recorded a very strong performance throughout the year, as COVID-19 drove strong consumer demand for immunity-optimizing products. The Food & Beverages segment also performed well with the strong demand for packaged food recorded in the first two quarters normalizing in the second half. Early Life Nutrition sales were soft especially due to weak market conditions in China, the biggest market for infant formula.

Prices significantly improved as the lower vitamin C price effect faded during the year, while Early Life Nutrition saw lower contractual prices in 2020.

Total sales were equal to the organic growth at 5%, as the -2% foreign exchange effect fully offset the +2% contribution from the Glycom acquisition.

Glycom, the world’s largest developer and producer of human milk oligosaccharides (HMOs), which was consolidated as of 1 April 2020, delivered €43 million sales with an Adjusted EBITDA of €21 million.

These results reflected ongoing soft market conditions in Early Life Nutrition, with COVID-19 also impacting Glycom’s development work at customers. The work on its second and third generation HMOs continued at pace, with Glycom strengthening its innovation pipeline and reinforcing its industry leadership in early life nutrition.

Expansion along the value chain

A growing proportion of our revenue now comes from expert services, especially for the pharma market, and customized solutions. Our customized solutions — besides premixes — include Market-Ready Solutions (MRS) that address diverse health or lifestyle benefits. They also include the personalized nutrition sector, a key pillar in our nutrition strategy.

Growth in dietary supplements

The COVID-19 pandemic increased consumer focus on immunity and overall health, heightening awareness of the health benefits associated with brands and intensifying the significance of e-commerce. Additionally, a fast-evolving body of evidence suggests an association between vitamin D status and sensitivity to viral infections like COVID-19 incidence and severity. As a result, the health benefit categories that grew most due to COVID-19 were immunity and mental well-being. We were well prepared to meet this rise in demand, helping our dietary supplement customers around the world to launch new immunity-supporting products in record time. Important achievements in this context in 2020 included:

  • Rapid forecasting of consumer demand to enable our customers to keep up their supply of products to their markets. Compliance with unprecedented demand peaks, at times up to 30% in a month
  • Specific ingredients to enhance our customers’ existing product ranges with immunity offerings including Ampli-D, our three to five times faster-acting vitamin D
  • Complete new range of Market-Ready Solutions to enable our customers to launch new immunity-supporting products in a matter of months
  • Immunity Probiotics Market-Ready Solution range via our BioCare Copenhagen organization for our customers focusing on the pharmacy channel
  • Global launch of Culturelle® immune defense product line for both adults and children and the launch of the Culturelle® brand in the Brazil market
  • Focus on e-commerce and direct-to-consumer channels to capitalize on the shift in consumer shopping behavior

Pharma and Medical Nutrition growth

Our growth in the pharmaceutical sector came from implementing our value selling strategy, while big steps were made in operational and regulatory excellence. We continued to outperform the medical nutrition market driven by premix growth and our immunity supporting ingredients.

Acquisition of Glycom in Early Life Nutrition

In February 2020, we announced the acquisition of Glycom A/S (‘Glycom’), the world’s leading supplier of human milk oligosaccharides (HMOs). This acquisition expanded our leadership position in the early life nutrition space. There is also significant interest in the use of HMOs as a dietary supplement and potentially in food & beverage applications. Glycom is a major pioneer in HMOs, with a rich, science-backed product pipeline (GlyCare™) and the only fully integrated HMO production facility in the world. The GlyCare portfolio currently comprises six HMOs that are commercially available across 165 countries. The exciting potential of cross-innovation outside Early Life Nutrition was highlighted in 2020 through the launch by DSM’s i-Health business of a new Culturelle® product range containing HMOs to support a healthy gut microbiome and helping the management of irritable bowel syndrome.

Food & Beverage supported by increased focus on health

We have developed and launched concepts supporting immune health, meeting the demand for food and beverages designed to support immunity, that have grown in popularity. An increased focus on health is triggering a windfall in consumer health and wellness spending, and has positively impacted our growth.

Personalized nutrition: Integration of AVA and start new Hologram Sciences venture

At the end of 2019, we acquired AVA, a personalized nutrition platform, to further expand our offering and meet growing consumer demand in the Dietary Supplement space. During 2020, AVA was integrated into our new US-based personalized nutrition venture — Hologram Sciences, Inc. — bringing together all of the necessary capabilities needed to develop end-to-end turnkey personalized nutrition solutions that are commercially validated with consumers.

Personalized nutrition is the next frontier in health. We are creating a new business in nutritional science, diagnostics and advanced recommendation technology that will ultimately create consumer-facing concepts for targeted health conditions. Everybody (and every body) is different, and people who are conscious about health increasingly want individually tailored solutions. Hologram Sciences, Inc. will build on recent advances in diagnostics and technology to create science-based, data-driven solutions.

Nutrition Improvement

Our activities in the field of nutrition education continued in 2020, highlighting the importance of multiple micronutrient supplementation (MMS) for vulnerable populations, especially in the light of the COVID-19 pandemic. UNICEF, for example, recommended the use of MMS for pregnant women, to help meet their increased micronutrient needs and support healthy pregnancy outcomes during the pandemic.

‘Products with Purpose’

In October, we unveiled our enhanced purpose-led brand strategy ‘Products with Purpose’. Based on the targeted development of new products, selected acquisitions, and a strategic focus on key market segments, the new strategy is designed to support our continuing growth trajectory.

Earnings before interest, tax, depreciation and amortization (EBITDA)
EBITDA is the sum of operating profit plus depreciation and amortization. Adjusted EBITDA is the EBITDA adjusted for material items of profit or loss coming from acquisitions/divestments, restructuring and other circumstances that management deem it necessary to adjust in order to provide clear reporting on the development of the business.