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Fishy Stocks (Part 1)

13 December 2007 - Features - Editor

Seafood lovers have always reveled in the health benefits of white flesh versus those of red meat. Fresh water catches also make for the most delightful entrees. Fishing, food processing, and dining are the main sectors which provide vocations and revenues for untold numbers of small enterprises. However, stock options of our fish-eating habits have been almost non-existent because the line of business does not lend itself to scaling up to corporate dimensions. Fast food and hotel chains have fish products on their menus, but the matter does not have any stock significance. Drugs and diet supplements made from aquatic life forms are another matter. Omega-3 fatty acids have a host of significant health benefits, so there is money to be made from its quality and bulk production.

The nervous system and the heart are principal targets of omega-3 fatty acid treatments. Obese people, and those vulnerable to cardiac, vision, and cognition problems, are likely to be prescribed this class of compounds. Manufacturers may also go the over-the-counter (OTC) route, and promote their brands direct to consumers. The extraction is relatively simple and belongs to the generic category. Therefore, generating profits depends on sublime marketing skills. Domestic pharmaceutical companies have omega-3 fatty acids on their product ranges, but it is not common to receive any exciting stock news on this account.

This is surprising considering the rising incidences of obesity, cardiac pathologies, and awareness of the ill-effects of eating too much red meat. Concerns about fish being bred in contaminated waters, and their consequent associations with heavy metal pollution, and chemical residues, may have worked against omega-3 fatty acids until now.

How Technical Innovation Spurs Stock Value

Enter Martek Biosciences: a company that has developed a vegetarian way of providing omega-3 fatty acids is worth considering for its future stock value. Fatty acids from of plant origin have hitherto been chemically distinct from the ones found in fish. The human body can convert vegetarian fatty acids to the ‘fish form’ but only to a very limited extent. That is why physicians could be interested in supplies of docosahexaenoic acid (DHA) from microscopic algae cultivated in controlled conditions. Martek Biosciences has side-stepped the medical community, and has begun commercial operations by serving food processors. It has been able to win over some important industrial clients, including ones in the tightly regulated European Union.

Martek Biosciences has spent over $6 million on R&D in the third quarter of 2007 alone. It is therefore a powerful example of how to build stock value through technical innovation. The company’s vegetarian DHA brand should appeal to environmental activists and to vegans as well, though doctors would not write prescriptions for products that are not exclusively promoted through their pens! The company has developed an impressive array of products in a relatively short period, and seems to have built a core competency in industrial selling as well.

Fishy Stocks (Part 2)

 


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