Vitamin maker Blackmores buys into Chinese herbal medicine

Blackmores’ Asian strategy continues to expand with a $23m deal that launches it into Chinese medicine.

Blackmores chief executive Christine Holgate says Global Therapeutics has good growth prospects in Asia.

Vitamin maker Blackmores’ Asian strategy continues to expand with a $23 million deal that launches it into Chinese herbal medicine.

Blackmores announced yesterday it had acquired Global Therapeutics, and while the provider of the Fusion and Oriental Botanicals brands only retails in Australia, Blackmores chief Christine Holgate says that is about to change.

“We pick up the keys on May 10 and we need to get in there and understand the business a bit better first ... we’ve got a lot of opportunities in the Australian market but we absolutely believe that in the more medium term this deal enables us to have good growth prospects in Asia,” she said.

Blackmores has been on a solid run on the back of strong appetite for its products from Chinese consumers. The company revealed last week that net profit for the first nine months of the financial year increased by 145 per cent to $76m.

While China has fuelled Blackmores’ growth, it has also proven to be a hub that spooks investors. A recent announcement by Beijing on regulatory developments for cross-border e-commerce trading hit Australian listed stocks benefiting from those distribution channels, including Blackmores, because of confusion over the changes.

But investor caution has cooled as the rules have been digested, and Blackmores is not shying away from its expansion into the region.

Ms Holgate said the Global Therapeutics deal, which would be funded by debt, had been on the company’s radar for a few months.

“We do a lot of work with the National Institute of Complementary Medicine at the University of Western Sydney and we have been exploring with them the research behind Chinese traditional medicine and Chinese herbal medicine,” she said.

“In Asia ... you have to understand the health needs of those consumers and this is the type of medicine they take.

“It is a bit like how BioCeuticals gave us access to healthcare professionals. This allows us to get much closer to the Chinese herbalist and understand the healthcare needs of the Chinese people. There is a very big and growing population of Chinese people in Australia.”

The chief executive of the most expensive stock on the Australian market — it is sitting around $170 — said it wasn’t just Asian consumers interested in Chinese herbal medicines.

She said the fact that there were 4700 registered Chinese traditional medicine practitioners in Australia was a reflection of a growing interest in this area.

“It is rumoured that our Prime Minister (Malcolm Turnbull) worked with a Chinese traditional herbalist a few years back to address his own health plan. If we have our PM open to exploring the benefits of this, it’s a positive sign for the people of Australia.”

Global Therapeutics was established in Byron Bay in 1999 as Fusion Health by naturopath and medical herbalist Paul Keogh and natural health industry veteran Geoff Teasel. The product range is based on incorporating herbal extracts used in China with those validated by modern science.

Ms Holgate said the companies had a “lovely cultural alignment” with people passionate about natural health. She pointed to the fact that Mr Teasel’s father had worked with Maurice Blackmore, the founder of Blackmores and father of its present chairman Marcus.

Blackmores said the acquisition was expected to be earnings accretive in the first full year under its ownership, and highlighted that after the deal it would have leading brands in pharmacy, health food stores and the practitioner market.