Nestle sold its peanut allergy business due to insufficient demand

Nestle divested its peanut allergy business, which it had acquired three years earlier. The treatment was not taken up by doctors or allergy sufferers.

Palforzia is designed to reduce the frequency and severity allergic reactions in children to peanuts. It has been sold to Stallergenes Greer in Switzerland, a healthcare group that specializes in allergy diagnosis and treatment.

KitKat, the maker of Nespresso and KitKat, acquired Palforzia in 2020 with its $2.6bn acquisition of Aimmune Therapeutics. This was part of an expansion into food allergy and its health science division.

Nestle however, announced in February that it had written off the majority value of the investment after “a slower than expected adoption rate by patients and health care professionals”. The deal’s size was not disclosed.

Mark Schneider, the chief executive of the company, admitted to investors that its foray into allergy medications was a mistake. Consumer goods chief Mark Schneider told investors that the company knew there was a medical need unmet, but “we had to accept reality that this is a niche-product”.

Treatment involves giving peanut protein in small doses to build resistance against the allergy. This will reduce the severity of reactions over time.

Not all parents and patients can make the commitment to regular doctor visits. Palforzia was approved by the FDA in January 2020, but its launch has been delayed due to the pandemic. The lockdowns that followed prevented patients from attending doctors’ appointments, further affecting sales.

Nestle’s Health Science division has been identified as the company’s growth engine. The division’s growth was 4 percent last year compared to the previous year.

Nestle has also been able to hedge against any possible backlash from unhealthy food. In 2021 the company acknowledged that more than 60% of its mainstream foods and drinks did not meet “a recognized definition of health”.

Schneider stated that the division will focus in future on existing products such as vitamins, supplements and special nutrition for people who have health conditions.

Nestle Health Sciences chief executive Greg Behar said, “We’re confident that Stallergenes Greer can take Palforzia to the next level and support this unique treatment for patients all over the world.”

Nestle Health Science can now focus on its core strengths, key growth drivers and divestiture.

Nestle announced that it will receive ongoing royalties and milestone payments from Stallergenes Greer. Nestle shares were flat at midday.

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