Nestlé sells peanut allergy business after insufficient demand

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Nestlé has divested the peanut allergy business it acquired three years ago after the treatment failed to be taken up by doctors and allergy sufferers.

Palforzia, which is aimed at reducing the frequency and severity of allergic reactions to peanuts in children, has been divested to Swiss healthcare group Stallergenes Greer, ​​which specialises in allergy treatment and diagnosis. 

The KitKat and Nespresso maker acquired Palforzia with its $2.6bn purchase of biopharmaceutical company Aimmune Therapeutics in 2020, as part of a push into the food allergy sector and expansion of its health science division. 

However in February Nestlé said it had taken a $2.1bn impairment on the investment, writing off the majority of its value, after “slower than expected adoption by patients and healthcare professionals”. The size of the deal was not disclosed.

Speaking to investors last year, chief executive Mark Schneider acknowledged the company’s foray into allergy drugs had been a mis-step. The consumer goods head told investors the company was certain there was an unmet medical need, “but we had to accept the reality that it is a niche product”.

The treatment uses gradual doses of peanut protein to help patients build up resistance to the allergy, which over time reduces the severity of the reaction. 

But undergoing the treatment requires regular trips to the doctors, which not all patients and their parents can commit to. Palforzia received FDA approval in January 2020 but its launch was delayed because of the pandemic. Ensuing lockdowns prevented patients from attending doctor’s appointments, further impacting sales.

Nestlé has identified the consumer giant’s health science division as a growth driver. Last year the division grew 4 per cent compared with the year before.

The shift towards health has also offered Nestlé a hedge against a possible backlash against unhealthy foods. In 2021, the company admitted more than 60 per cent of its mainstream food and drinks products do not meet a “recognised definition of health”.

Schneider said the division would in future focus on existing products like vitamins, supplements and specialist nutrition for people with health conditions. 

“We are confident that Stallergenes Greer will take Palforzia forward and ensure this unique treatment supports patients around the world,” said Nestlé Health Science chief executive Greg Behar. 

“At the same time, the divestiture allows Nestlé Health Science to focus on its core strengths and key growth drivers.”

Nestlé said it would receive milestone payments and ongoing royalties from Stallergenes Greer. Shares in Nestlé were flat in midday trading.