Important note: Information in this article was accurate in 2005. The state of the art may have changed since the publication date.

Reuters NewMedia - July 13, 2005
Karl Emerick Hanuska

Ajay Puri, a former executive of Coca Cola's Minute Maid company, said that as Europe's largest maker of baby food successfully executes a turnaround strategy that has pulled it back from the brink, R&D was getting fresh attention.

He said the renewed importance that Numico -- also a major player in specialised nutrition for patients with diseases from cancer to AIDS -- places on the sphere was underlined by the creation of his board-level position two years ago.

"Science is the focus of all our products ... From a competency and capability standpoint we are stronger than we have ever been in the past. We are really reaping the benefits. There's no question about it," he told Reuters in an interview.

"Consumers and healthcare professionals are understanding it. We've launched new products and are continuing to add more clinical relevance to some of our existing products. It's having a direct impact on our business."

R&D KEY TO VALUE

Numico is rolling out many new and renovated products this year, including baby formula in containers designed to be more sanitary in a number of key markets.

The introduction of improved packing has been cited by analysts as one factor helping Numico boost baby food sales in Britain, Poland and Ireland in the first quarter.

Some analysts have also said that in future R&D will be key in extracting more value from the company, whose shares now trade at challenging multiples of around 27 times estimated 2005 earnings versus a sector average of around 18 times.

The shares, up more than quarter since the start of the year, were trading at 33.29 euros on Wednesday.

"We have really made sure that the R&D strategy is aligned with the overall Numico strategy ... Historically we have always had a great scientific underpinning but I think it was underleveraged and maybe at times misaligned," he said.

"Now we have brought really into align with the company and are starting to leverage that strength, and in the process are adding an even greater underpinning."

SHARPER FOCUS

Puri declined to specify how much Numico, whose former management executed a costly and ultimately failed expansion into the U.S. food-supplements business, was spending on R&D, saying only that it was several hundred million euros annually.

But he said one major change over the last two years was that Numico's research had a sharper focus, like the rest of the firm, under Chief Executive Jan Bennink's recovery plan.

Researchers, focused on seven core projects -- including one aiming to delay the onset of AIDS among HIV patients, are directing work more towards product creation.

"This is the consumer-led aspect. In today's world it is not enough just having the right scientific insights. You have to translate that into products that have consumer relevance and we are doing that now more then ever before," Puri said.

Numico said in its annual report for 2004 that it had been issued 15 patents that year and had another 16 pending.

The HIV programme has only just begun its first clinical tests and Puri said it would be premature to speculate how long it would be before Numico brought new products to market.

Other target areas include diabetes, cognitive development, and food allergies.

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