A Raw Diamond - Soon after BASF acquired Cognis three years ago in a €3 billion deal, it set itself the objective of becoming a major global player in the world market for omega-3 pharma and food ingredients. BASF needed ownership of a cutting-edge process which would give it a technological lead in the extraction from fish oil of high concentrations of the two key fatty acids at the upper end of the omega-3 sector-eicosapentaenoic acid (EPA) and docosahexaenoic acid (DHA).

Cognis had a presence in the omega 3 market but only with a process providing 30 % concentrations. The answer to BASF's quest lay in Equateq, a startup at Callanish on the coast of the remote Isle of Lewis with a 20,000 population on the northwest periphery of Scotland. Over many years it had built up an expertise in the refining of EPA, DHA and other omega fatty acids to high levels of purity.
To scale up for commercialisation, it badly needed investment money for an advanced version of a high performance liquid chromatography (HPLC) process.

Within months of discovering the company with a staff of 25 people at the core of which was a world-class team of specialists in lipid chromatography, BASF took it over for an undisclosed amount in May of last year. By the end of last year a €22 million expansion had been completed which raised the annual capacity of the Callanish plant from 20 t to 250 t, using as raw material oils from anchovies, sardines and other fish from South America.

"The first I knew of Equateq was when a colleague came into my office and told me we had found what we wanted," Walter Dissinger, president of BASF nutrition and health division, told a press conference at the recent opening of the enlarged plant now called BASF Pharma Callanish. "We had to move quickly. Here was a valuable pocket of knowledge which had been created over a minimum of 20 years, if not 30 years." He said that Equateq's HPLC process was a global benchmark of lipid separation technology which was able to achieve a purity rate of 99 % EPA.

"When I was told about the company I had to look up where the Isle of Lewis is because I had no idea," explained Michael Heinz, member of BASF's executive board responsible for nutrition and health. "I had to be convinced and the rest of the board needed even more convincing. I now know we made the right decision. This technology-the most advanced in the world for separation of omega -3 fatty acids-fits in very well with our objective of a sustainable future. We are here to stay."

Concentrated Know How

Equateq had built up considerable expertise in lipid separation because its history is rooted in that of Scotia Pharmaceuticals, one of its predecessor companies which was founded by the late Dr. David Horrobin, a pioneer in the development of lipid technologies for pharma and food ingredients. Equateq's chief executive was David Kelliher, Dr Horrobin's son-in-law, who is now managing director of BASF Pharma Callanish.

Scotia, originally based in Nova Scotia, Canada, and since closed after running into financial difficulties, set up a research centre and plant at Callanish in the 1980s with the help of Scottish regional development funds. A local doctor was a research colleague of Dr. Horrobin into high purity fatty acids for treatment of cardiovascular and brain health conditions. A major focus of Scotia's research at Callanish was on chromatography processes which Dr Horrobin considered to be the most efficient way of separating out individual compounds like EPA and DHA from other omega fatty acids.

Simulated Mobile Bed (SMB) HPLC

Equateq concentrated on the development of a simulated mobile bed (SMB) technology, a variant of HPLC, which involves the use of multiple columns with moving feed and recovery entries.
Initially the company was able to create a sophisticated but expensive process. "We could not produce anything which anyone could afford," said Mr Kelliher.

The priority was then to bring down the operating and capital costs of the process under the guise of the technical manager Angus Morrison, described by Mr Kelliher as the "world's leading lipid chromatographer".

"The big breakthrough was creating a continuous rather than batch SMB process," said Mr Morrison, who was born and brought up on the Isle of Lewis before studying chemistry and lipid separation at Glasgow University. "We were also able to cut back considerably the use of solvents to parts per million. All this substantially reduced our costs."

"It's taken a lot of time and effort," he continued. "Separating one out of around 60 fatty acid is extremely complex. We now have a cost-effective process for doing that not just with EPA but with other essential fatty acids as well."
A major benefit of the process is that it gives BASF Pharma Callanish the ability to meet customer requirements for products with specific proportions of EPA, DHA and other polyunsaturated fatty acid such as gamma-linolenic acid (GLA).

BASF had to move fast with the takeover of Equateq because the development work at the Callanish site had alerted the interest of other chemical companies which also see chromatography as being the best means for tackling purity issues in the omega-3 market. At the upper end of the sector purity has become a crucial product differentiator.

The Omega-3 Market

Competition is also intensifying with analysts predicting that omega-3 sales will at least double over the next five years and that there will be an even more rapid growth rate among premium products.

last year DSM took over in a $CAD 540 million (€410 million) deal Ocean Nutrition Canada, the world largest producer of omega-3 derived from fish oil. In 2011 the Dutch life sciences company had acquired Martek Biosciences (U.S.), the world's largest producer of omega fatty acids from algae.
BASF and DSM have looked set to battle for global leadership in omega-3 products when BASF in November last year announced a €664 million bid to take over Norway's Pronova BioPharma, the worldwide biggest supplier of pharmaceutical-grade omega 3.

In 2011 the Norwegian company revealed plans to enter the omega food supplements market after expanding annual omega-3 capacity at its Norwegian and Danish facilities to 2,500 t.
The bid for Pronova, which supplies the active ingredients for GlaxoSmithKline's (GSK) Lovaza cardiovascular drug, underlined BASF's strategy of targeting the high and super-high concentration segments for EPA and DHA as well as other fatty acids like omega-6 GLA. These cover both pharmaceutical treatments and preventative health food supplements. Pronova uses a separation technology based on evaporation and condensation which is not considered a sophisticated Equateq's chromatography method.

Currently the high and super-high purity products make up only a relatively small proportion of the estimated $2 billion market for omega-3 ingredients. "With the help of chromatography technology we want to expand this upper end of the market," Michael Ceranski, senior vice-president at BASF's global business unit for human nutrition explained. "With 99-percent purity levels, we can encapsulate the fatty acids in much smaller pills and also achieve higher levels of bioavailability. By being able to vary the levels of EPA and DHA in each products we can target different groups according to their health needs."

Outlook

With the takeovers of Equateq and Pronova, BASF has the production capacity and technology to gain a strong presence in the premium omega-3 segment. It is also developing a new source of raw material through a joint research project with the agribusiness conglomerate Cargill for genetically engineered strains of rapeseed containing EPA and DHA. This could be a useful supply option when fish oil resources are expected to come under big pressure after 2020.