The Swedish biotech is involved in the research and development of products using the lactic acid bacterium Lactobacillus reuteri (Reuteri), including novel delivery systems to elongate shelf life. In its year-end results, BioGaia has reported after-tax operating profit of SEK 2.7m (c €0.29m), up from SEK –19.8m (-€2.15m) last year. Net sales for the year were up 46 per cent to SEK 86.8m (€9.4m) Although BioGaia's main sales activities relate to finished probiotic products like tablets, drops, and oral health products, it also sells license rights for the use of Reuteri cultures in a customer's own products, such as yoghurts and infant formula. On this front, the most significant news in 2006 came early on in the year, with the signing of an agreement with Novartis Consumer Health for the use of Reuteri and delivery technology in medical nutrition products. Key events in the fourth quarter included the signing of distribution and marketing agreements in Central Eastern Europe (Ewopharma), Germany (HSO Pharma), Indonesia (PT Kalbe Pharma), and "four key markets in Europe" (oral health products, Sunstar Suisse). BioGaia is also looking to make inroads in the Japanese – the single country with the biggest supplements market in the world. In Q3 it established a wholly-owned subsidiary in Hiroshima, which plans to launch products in the country under the BioGaia brand in 2007. BioGaia is continuing with its research programme, and its R&D spend for the year was SEK 18.8m (€2.04m). Although this was SEK 5.7m (€0.62m) less than 2005, the prior year figure included more than SEK 5m (€0.5m) in one-off expenses relating to the allergy research product aborted in December 2005. At the beginning of 2007, a clinical study in Reuteri's effects on colicky infants was published in the journal Pediatrics, and received much media attention. BioGaia's stated objective is to "attain solid and sustainable profitability". It said: "In view of the company's strong portfolio of innovative products, successful clinical trials and growing distribution network covering a large share of the key markets, BioGaia's future outlook is bright."