Oil platforms
Commenting on the deal, executive director of the Global Organisation for [long chain fatty acids] EPA and DHA Omega-3s (GOED), Adam Ismail, says: "This is the first time one firm has had an algal and fish-oil source of omega-3s in its portfolio. Given the differing levels of DHA and EPA, being able to blend them may be a benefit. And being able to supply both is a real advantage."
Frost & Sullivan (F&S), which actively tracks this market, notes algal oils' relatively low share of European omega-3 markets (just 7%, according to a January 2011 report, compared with 15% in North America). But it puts the acquisition in the wider context of DSM's strategy to develop its nutrition and other businesses, while divesting its synthetics interests.
"Martek's intellectual property is the biggest prize, and this is driven by the attractiveness of the technology in non-omega-3 applications," says industry analyst Christopher Shanahan. "It's really about the firm's ability to produce high protein-yield algae for applications such as bio-based polymers."
But this broader perspective doesn't detract from the huge potential of the omega-3 sector in its own right. Indeed, new Cognis parent company BASF is busy exploring canola as an alternative future source for DHA and EPA within its Plant Science business. Martek/DSM is engaged on a similar long-term canola-based project.
There are other signs that bigger corporate bodies are gravitating towards the attractiveness of omega-3 markets. Shanahan predicts: "I wouldn't be surprised if DuPont, for instance, made a play in this market."
The 2010 global market for omega-3s was valued at some $1.6bn, with overall growth estimated at over 10% for Europe and just under 14% for North America. As Shanahan puts it: "Wherever you see growth at these levels on top of excess demand, you're going to attract larger players, including the global chemicals firms."
In F&S volume data for 2009, supplements accounted for just under 60% of EPA and DHA shipments in Europe. Functional and fortified food applications accounted for below 15% and infant nutrition for less than 2%.
Shanahan talks about "decent, double-digit growth" in EPA and DHA for food applications. But Ismail at GOED sketches out some possible limitations to growth.
Optimum levels of omega-3s have been something of a battlefield for some time. "Currently, the 250mg-to-500mg per day range is where most people say the Recommended Daily Intake (RDI) should be," says Ismail. "For their part, the regulatory authorities in Europe seem to be gravitating towards an RDI at the 250mg-per-day level."
At the same time, research suggests that intakes of over 1.5g a day would be necessary for consumers to see some of the benefits in particular health areas, he says.
Professor Clemens von Schacky, chief executive of DHA/EPA measurement specialist Omegametrix and head of preventative cardiology at the University of Munich Medical School, argues: "If you look at the average daily intake of EPA and DHA in Korea or Japan, it is around 1.5g. In a large trial in Japan, adding another daily dose of 1.8g of EPA for five years further reduced cardiovascular endpoints. So it seems that intakes of up to 3.3g per day are associated with less morbidity and mortality than lower intakes."
A more recent addition to this baffling interplay of sometimes contradictory intake levels has been a focus first by German officials and now by the European Food Safety Authority on upper safety limits.
"Originally, the German Risk Assessment Agency (BfR) raised concerns about how Novel Food approval [under EU law] for algal DHA could prompt consumers to take too much," says Ismail. "I think their data was flawed, and they overestimated the German population's intake of DHA."
Von Schacky at Omegametrix goes a step further, saying: "BfR seems to be on a mission against omega-3 fatty acids, but they don't know much about them." He adds: "I can only hope that, some day, the BfR will turn into an agency that does its work in a scholarly way." He claims that this debate, like the debate about RDIs, is a political rather than a scientific one.
Highly relevant to the issue of RDIs is the question of omega-3 types. Recent years have seen a struggle at EU level to differentiate EPA and DHA and plant-derived ALA, when it comes to on-pack communication. EU authorities have so far opted to retain references to sources of 'omega-3', rather than anything more specific, and Shanahan at F&S believes DHA and EPA suppliers have a "mature acceptance" that this is the case.
Putting the case for suppliers of ALA, nutritional marketing manager at Limagrain Céréales Ingrédients (LCI), France, Walter Lopez draws a comparison between the different sources of omega-3 and of iron in the diet. "I agree that DHA or EPA are more bioefficient than ALA, but that does not mean that ALA has no effect in comparison," he says. "Heme iron of animal origin (typically haemoglobin), much like DHA/EPA from fish, is much better-absorbed than non-heme iron from plants. But then, only 15% of our total requirement of iron is provided by heme iron."
A few months ago, LCI launched its LimaLin ingredient, which blends wheat and linseed flours to achieve omega-3 (ALA) levels of more than 9% of dry matter. A stabilisation process ensures shelf-life of a year.
Is Lopez's analogy with iron convincing? At Omegametrix, Von Schacky says: "ALA has no health benefits, at least not in terms of cardiovascular disease. This has recently, and convincingly, been demonstrated by the largest study on ALA yet, the Alpha-Omega study."
He is scathing about the European authorities' willingness to be persuaded of ALA's benefits. "It comes close to being a crime: continuing to deliberately confuse the truth about ALA versus EPA and DHA, because people die from that confusion."
Of course, there is nothing to stop firms advertising the presence of DHA/EPA, as is typically done with supplements. But these are expensive ingredients at meaningful dosages, and Ismail at GOED points out that consumer understanding does not always support such investment. "At least one children's yogurt, from Yoplait in the US, branded as 'containing DHA' has since been pulled from the market," he reports.
Shanahan at F&S says: "ALA derived from soy, canola and other crops will continue to dominate in food." This is partly because the multinationals are difficult for small fish-oil firms to deal with, he says, especially when they can get cheaper omega-3 elsewhere.
But would those supplying EPA and DHA, from all sources, be too upset if they lost functional/fortified food markets altogether? Ismail at GOED is certain that more, better-substantiated health claims for omega-3s in food will materialise. But he says: "I see the highest growth over the next few years on the pharmaceutical side. There are a lot of phase 3 pharmaceutical trials going on, and more on the way."
Higher margins in pharmaceuticals and, to a lesser extent, supplements will help justify many of the investments marine-sourced EPA/DHA suppliers are making. Critically, these are sectors that are closed to higher-volume ALA supply.
