Development in 2019 confirmed that the broadening of our operations with the microbiome company MetaboGen and B ioGaia Pharma, carried out in recent years, is strategically c orrect. The probiotics of the future and many drugs will in all probability be found from the results of the massive research efforts now taking place within the microbiome field. These two companies and the research agreements we have entered into with universities and colleges, as well as our more traditional research, put us in the race to develop the innovative and value-creating products of the future. The opportunities appear almost endless within a number of areas. These include totally new fields such as cancer, autism and stress or more traditional probiotic indications such as inflammatory bowel disease (IBD), irritable bowel syndrome (IBS) and allergies. Naturally, we are unable to invest in all these areas and one of the Board’s key tasks is to help management to focus on those investments where we believe that BioGaia can gain a leading and significant role. Many years ago, we made a strategic choice to invest in therapy areas and products where there was an unmet medical need for a treatment that did not have side-effects and where we could show significant clinical results. When we now view development in today’s market, with rising competition from what I would call generic probiotic feel-good products, we can see that this has been a strategically successful strategy and one that we will continue to work with. In the American market we can see a clear trend that these types of general feel-good products are finding it increasingly hard to grow their sales, while BioGaia’s sales in the USA are rising steadily. Our strategy represents a longer but more certain route. Here the Board also has a key role to support management in its long-term research and development plans. We are seeing strong growth in Asia particularly in Japan where we now run a profitable business with some twenty employees. But we must not forget that this is the result of a long-term focus which after a number of loss-making years is now yielding good results. The Board has continually monitored this performance and, despite earlier losses, has supported management’s investment in the Japanese 8
market and now also in the sales hub we are building up in Singapore, from where staff cover the other markets in Asia. Africa is today a small market for BioGaia but in our opinion could become the next major growth market. We therefore want to be there at an early stage and are looking to broaden our presence on this continent. BioGaia is a medium-sized company with some 150 employees but we are present in more than 100 geographical markets It is often forgotten that through our medical marketing model and thousands of salespersons at our distributors, we visit healthcare professionals and thereby can actually affect the global health situation of the world’s population, especially children. This knowledge is important to us and for our ability to retain and motivate our employees. It is naturally also important for our ability to attract skilled individuals within our key areas and for our collaboration with researchers at universities and colleges worldwide. We are grateful for the success we have had with BioGaia’s products and try to give something back to children and women who really need help but who lack the financial means to influence their situation. We have therefore been financially involved in a children’s home in the Philippines for many years and now also in the Panzi Hospital, run by Nobel peace laureate Denis Mukwege, where women who have suffered from sexual violence are offered treatment. I also want to highlight the investments being made by BioGaia through its grants to the Foundation to Prevent Antibiotic Resistance. The research projects supported by the Foundation aim to find ways to strengthen the immune systems of people and animals in order to avoid infections and thus reduce the need for antibiotics. Despite substantial investments in marketing and research, BioGaia continues to be a highly profitable company with good liquidity, favourable sales growth for the product portfolio and debt free. We continuously develop new products that complement our range as well as within totally new indication areas. A strong pipeline combined with good growth for our existing product range, guarantee a continued positive development for BioGaia’s shareholders.
Peter Rothschild, Board Chairman, BioGaia