India's Elder buys 20% of NeutraHealth

The Indian pharmaceutical company Elder has snapped up a 20 per cent stake in the vitamin and food supplement specialist NeutraHealth to tap into the growing trend for healthy products.

NeutraHealth was floated on the Alternative Investment Market in February 2005 with the aim of consolidating the UK nutraceutical market - worth £2.37bn last year. The nutraceuticals market comprises the £460m vitamins, minerals and supplements sector, and organic and functional foods. According to Mintel, the functional foods market, which includes probiotic yoghurts, expanded by 143 per cent between 2001 and 2005 and is now worth more than £1bn a year. The longer-established vitamins market grows at around 10 per cent per annum.

The sector is expanding rapidly as consumers search for a holistic answer to ailments, yet have less time to source ingredients themselves. Around half of all consumers are estimated to take some kind of supplement to their regular diet.

Elder, which is based in Mumbai, acquired the stake for £5.63m, or 16p a share, a 33 per cent premium to the share price ahead of the deal. Shares in NeutraHealth closed unchanged at 12.5p yesterday.

The deal gives Elder a platform to roll out its products in the UK and will also enable NeutraHealth to access the Indian market. Elder's key product is Shelcal, a calcium supplement derived from oyster shells.

The NeutraHealth chief executive Michael Toxvaerd said Elder were interested in distributing the company's first retail product TravelGuard, which helps to maintain friendly gut bacteria. He said the company's aim was to move away from ingredient-led products, such as vitamin A or C supplements and focus on developing products targeting specific needs and lifestyles, such as detox, high energy and travel products.

NeutraHealth has acquired BioCare, Nutrigold and Brunel Healthcare.