EPAX managing director Bjørn Refsum was with the company during a portion of its odyssey, when the company was acquired by Norwegian fishing company Austevoll AS in 2007. He left in 2010 shortly after the firm was acquired by Trygg Pharma Group, a joint venture of which Aker Biomarine, better known as the world’s leading vertically integrated manufacturer of krill oil, was one of the partners.
In Refsum’s absence the company was bought and subsequently sold by specialty chemical company FMC Corporation. FMC paid $345 million for EPAX in 2013; terms of the sale of the division to Pelagia AS were not disclosed.
Refsum, who spoke by phone with NutraIngredients-USA during the recent GOED Exchange meeting in Seattle, said the new ownership brings EPAX back to a more rational corporate structure.
“Pelagia AS, the owners that came on in August, are a huge fishing company, with sister companies in both Chile and Peru,” Refsum said.
Omega-3s difficult to integrate into other businesses
Omega-3 ingredients, especially those extracted from fish, are unique in the realm of dietary ingredients, being by a long margin the largest by volume extracted from a wild caught source. While animal-sourced dietary ingredients abound in the dairy sphere, they are relatively rare elsewhere. There are some so called ‘glandulars’ on the market, sourced form thymus, pituitary and other glands from livestock. But ingredients that come from ‘wild caught’ sources other than from the oceans? One could perhaps point to cordyceps fungi, which has a parasitic component with an insect species.
So, while companies like FMC acquire omega-3 businesses with the best of intentions to broaden their nutrition portfolios, the divisions, in particular those harvesting marine sources, come with their own special supply and price concerns. And FMC had the bad luck of investing into an omega-3 producer just as the market for these ingredients was hitting the first period of flat sales in its history.
Similarly, it has proven difficult to integrate from a fishing platform back into the supply of other sources of dietary and feed ingredients.
Prior to its recent acquisition by Cooke, a Canadian fishing company, Omega Protein Corporation, a harvester of menhaden, had sought to invest in the human nutrition sphere. It acquired a supplier of botanical ingredients, a whey protein producer, and a marketer of lipid ingredients. But the effort failed to bear enough fruit to impress investors, who launched a successful proxy fight that sought to redirect the company back toward its fishing operations.
Refsum said that having a fishing company as owners means EPAX can rely on a secure supply, which has been a concern for years for omega-3 ingredient extractors. More than ten years ago, when Austevoll had completed its acquisition, Refsum noted that that ownership structure helped secure the division’s access to raw material supply. Even then there was pressure on fish oil sources from the rising aquaculture feed demand, a pressure that still exists.
Refsum said that being under the Pelagia umbrella will help EPAX have a cost effective access to raw material, even if the threat of overweening demand from aquaculture has abated somewhat in the intervening years.
“With these owners we are back where we were 18 years ago,” Refsum said. “The beauty is that we have immediate access to raw material. In general, I’m not concerned about raw material supply. Ten years ago we were frightened about the future on this topic, but in aquaculture they have developed other alternative sources of feed.”
But Refsum said that while absolute supply is not currently an issue, quality remains a sticking point. And being part of the value chain will be helpful in that regard, he added.
“Finding the right quality, that has never been easy, even in the old days,” he said. “Being a direct part of the fishing group will give us the first pick.”
EPAX was known as one of the first innovators of higher concentrate fish oils. The company at one time expended a lot of effort in marketing these toward condition specific endpoints—one for cognitive support, another for heart health, and so forth. Refsum said the plan is to expand that history of innovation under the new ownership.
“The product development portfolio with EPAX is quite impressive. We will continue not only with different concentrations but we are also working on different species in the oceans. We will have new products from these in quite a short time, maybe one or two years,” Refsum said.
Having a more streamlined ownership structure will also speed the innovation process, he said. And it will help clarify funding on the research front, something which can get a bit jumbled when an omega-3 supplier is tossed into a bin with other parts of a diversified chemical company.
“We will have much less bureaucracy than we’ve been used to in the past. We can move much faster than in recent years. We have more than 120 clinical studies on our ingredients. It has been a bit slow in recent years and that is something we definitely want to change. We have been a science-driven omega-3 company and that’s what we are going to be in the future also,” he said.