Larex was recently called "undoubtedly the market leader in the arabinogalactan segment" by Frost & Sullivan research analyst Haricharan Desai, when it won the 2004 Product Innovation award for the development of its FiberAid AG branded product.
The value of the acquisition has not been announced at this time, but includes intellectual property, processing technology, manufacturing operations and certain inventory and customer lists.
Lonza's plan to expand its nutrition portfolio kicked off in December with the acquisition of Nutrinova's DHA business, striking out from niacin, or vitamin B3, and the vitamin-like substance L-carnitine to food and supplement makers.
The addition of the Larch Arabinogalactan (LAG) assets is said to complement the existing product line.
A branched polysaccharide, LAG is extracted from western larch (L occidentalis) and tamarack larch trees using the company's patented water-wood-and-steam process. Larex works in collaboration with several timber companies and the by-products of the process are used in the manufacture of wood products.
The soluble, tasteless and odourless prebiotic fibre can be added to food and beverage products to boost their fibre content.
It is said to have a beneficial effect on the gastrointestinal system, slowly fermenting to increase beneficial microflora like lactobacilli and bifidobacteria and decrease endogenous pathogenic bacteria. According to Lonza, LAG's benefits in the field of immune enhancement are also "significant".
Larex clients that have used LAG in their products to date include Kraft, Pepsi, Coke, Procter & Gamble and Johnson & Johnson. The company has said that the ingredient can be incorporated into 8oz beverages or single food servings to account for 25 percent of the daily reference value of fiber (25 grams based on a 2,000 calorie per day diet).
Larex's 20,000 square foot manufacturing facility has the capacity to produce eight million pounds of LAG each year.
FiberAid AG introduced in Europe through Swiss marketing group DKSH in May 2004.
In 2005 the operating margin of the organic fine and performance chemicals division somewhat belied a need for a new strategy in nutrition, dipping 0.4 percentage points to 14.2 per cent. This was attributed mainly to low margins in nutrition, particularly in increased niacin raw materials costs.
Last month the group unveiled a strategic investment of $200m in its operations in China, aimed at boosting all the business including its rapidly expanding nutrition business portfolio.
"This project will mark another important milestone in Lonza's long-term strategic plan. It is a key element in achieving the targeted growth for Lonza," said CEO Stefan Borgas.