Schiff Nutrition International recently purchased Ganeden Biotech's probiotic supplement assets for $40 million, acquiring worldwide exclusive rights to GanedenBC30 in supplements and its over-the-counter brands, Sustenex and Digestive Advantage. The sale reflects Ganeden's current focus on delivering probiotics in the food/beverage market, animal nutrition and medical foods.

Ganeden's probiotic supplement business generated net revenue of approximately $17 million for the year ended Dec. 31, 2010, and is expected to increase Schiff's revenues and generate accretive earnings. Ganeden CEO Andy Lefkowitz said that Ganeden's supplements business, started in 2003, was built to sell. "There are more opportunities to push the ball up court with our science in food than there are in supplements," he said.

According to Nutrition Business Journal, Americans spent $527 million on probiotic supplements in 2009, up 24 percent over 2008 levels.  Of all the specialty supplements tracked by NBJ, probiotics enjoyed the fastest growth rate in 2009, with no signs of a let-up in the years to come. NBJ's initial estimates for 2010 show that U.S. consumer sales of probiotic supplements grew 16 percent to $610 million.

Despite the growth in probiotic supplements, Ganeden said the crystal ball reveals that foods are probiotics' delivery system darling. "If you look at the size of the food market worldwide versus the supplement market worldwide in probiotics, there's a big difference," said Mike Bush, vice president of business development for Ganeden, based in Cleveland. "You have a brand like [Dannon's] Activia that's outselling most of the probiotic supplement products combined."

The deal took six months to close and transition of the existing supplement products will last about 60 days. "We'll continue to be partners," said Lefkowitz. "We're working with them on a number of initiatives," such as adding GanedenBC30 to Schiff's existing products. And Ganeden will retain the intellectual property, but "as our clinical studies show new uses for the probiotics, they [Schiff] will have access to them as they relate to OTC [over-the-counter]," he said.

Delivering probiotics in foods vs. supplements

Probiotics are equated with food because of their proliferation in yogurt, but that doesn't necessarily mean one delivery system is superior.

"We don't really have good head-to-head comparison studies between supplements and foods, so it's really hard to say one is better than another," said Mary Ellen Sanders, Ph.D., probiotics consultant and owner of Dairy & Food Culture Technologies. "Where we stand today, there are a limited number of probiotic strains that have real compelling levels of science behind them." For this reason, Sanders said the delivery system is much less important than the science behind a particular probiotic strain.

"One of our strongest suits is science," said Ganeden CEO Lefkowitz. By increasing beneficial bacteria in the gut, GanedenBC30 has been shown to help regulate the digestive system, strengthen the immune system and help reduce inflammation. The spore-forming probiotic strain called Bacillus coagulans GBI-30, 6086 is safeguarded from stomach acid and food processing.

"We have a real head start when you look at the shelf-stable food market," said Bush. "We have the only clinically backed, safety-backed, field-proven, shelf-stable probiotic that can go into the many different places it goes into."

Ganeden said 10 new product launches are scheduled this year. On Monday, Cedar's Mediterranean Foods debuted probiotic hommus and the world's first fortified wrap with GanedenBC30 at the International Dairy/Deli/Bakery Association show in Anaheim, Calif.

It's rare for a supplier to become fully vertical and offer a finished product like Ganeden has done with its supplements, said Todd Runestad, editor in chief of the New Hope Supply Network, noting that it makes sense to sell this "proof of concept" to a large dietary supplements manufacturer such as Schiff. Salt Lake City-based Schiff Nutrition International develops, manufactures, markets and sells branded and private-label vitamins and nutritional supplements in the United States and globally.