Forum Topics Biome Australia - Market Research
mikebrisy
Added 4 months ago

Product Online Availability and Pricing: Australia, NZ and UK

In the post, I look at product availability and pricing from several perspectives, focused on Australia, but also picking up NZ and UK.

1. Products are readily available online in Australia; more limited presence in NZ and UK

  • Widely available including on Amazon.com.au, returning 8 unique products of 390 returned on the search term “probiotics” – with 6/60 featuring on page 1
  • When searching "Activated Probiotics", 10 Biome products are returned from 198 products, all on page 1 of 7 pages
  • 18 e-commerce websites identified selling the Biome range (maybe more exist)
  • Also available online in the UK (4 sites identified) and NZ (3 sites) – more likely
  • In all markets, these sites represent a small fraction (perhaps less than 10%-20% of site selling probiotics and supplements)
  • Products not found on “deep discounter” sites
  • A small minority of sites require a practitioner recommendation. One or two had a chatbot, asking if you have a recommendation, but you can buy anyway.
  • Additional Insight: Neither "Activated Probiotics" nor "Biome" appear as a "Brand" in some of the large website filtering tools


2. Average product prices are in a fairly narrow range across the product range

  • Average: $44.31
  • Range Min-Max: $34.95 - $59.95
  • Based on the observed modal online price in Australia
  • These appear broadly consistent with more generic products and herbal remedies
  • Insight: Pricing strategy is achieving broad price parity with more generic products. Withholding products from deep discounters appears to be allowing higher margins to sellers without requiring premium pricing.


3. For each product, price variations across sites are tightly clustered towards the lower end of the range, with a small number of sites charging extreme prices

  • Biome Daily Probiotic was selected as a reference product (one of the big sellers)
  • Mean: $40.35
  • Range: $29.95 - $69.95
  • Mode: $34.95 (this looks to be the RRP; 8/18 sites at this price)
  • Prices are tightly clustered at the low end, showing there isn’t significant discounting (see pricing histogram below)
  • For several products, a small number of outlets charge extreme prices (>$66, n=3)
  • For some products, this is even more extreme. e.g., Biome Lax has a mode of $39.95, with high price sites charging $99.95!


4. Australian prices are relatively low, reflecting a more mature, competive market compared with both NZ and UK

Taking Biome Daily Probiotic as a reference product, the following online prices were observed, converted from the local currency to AUD at today's FX.

  • Australia:  $34.95 (modal price across 18 online outlets)
  • NZ: $44.06 (average of 2 online outlets)
  • UK: $57.88 (modal price across 4 online outlets)


Hypothesis: Australia has a comparatively mature and competitive market for probiotics, and lower prices as a result. Overall segment prices are dragged down by discounting of competing brands in the discount pharmacy chains.


Figure 1: Price Histogram for Biome Daily Probitoic Across Sites (n=18)

a536243ccb6caa1bbbf16c100be147fca75cef.png

Key

Vertical axis: number of sites

Horiztonal axis: price interval

Wow - there are some sellers out there who think their customers won't shop around online. Are they right?

13
mikebrisy
Added 4 months ago

"Two+Two" Practitioner Experiences ( 3 Naturopaths +1)

SUMMARY

  • I recently spoke with two experienced naturopaths in two very different contexts, and encoutered two other industry participants incidentally along the way.
  • Neither currently recommends Activated Probiotics (AP).
  • One is aware of the brand, has used it before, but has now stopped. This naturopath told me about a colleague who currently, actively recommends and stocks "the full AP Biome range."
  • The other appeared completely unaware (although the context of this discussion is relevant - a non-stocking, discount pharmacy chain - not a $BIO target customer)


My KEY TAKEAWAYS

In this micro-study, I came across four industry workers who could potentially know about and point me to the AP Biome product range to meet my need.

It's not a statistically significant sample, but I got some insights.

  • 2-of-4 had AP Biome brand awareness. Of these, one is an active "prescriber", and one a lapsed "prescriber"
  • Within the discount pharmacy context, the pharmacy assistant recognised the value of referring my need to an available, in-house naturopath
  • For practitioners who do not have brand awareness, even specific requests from "patients" may fall on deaf ears
  • Even within a receptive and informed market audience, some practitioners feel they have been over-marketed to by the industry, and are skeptical about efficacy based on experience.


These were illuminating discussion. It is great to get into the trenches and talk to industry participants, and take the journey of the customer.

------------------------------------------------------------------------------------------

THE DETAILS

Practitioner 1: Naturopath and Wellness Coach, Independent Sole Trader

Background

This wellness coach and naturopath runs her own business in a small regional town in SA. I prompted her with two simple questions: 1) Was she aware of the Activated Probiotics Brand, and 2) What was her experience and opinion of them, and why?

Key Messages (paraphrasing exactly what she said)

  • I know the brand Activated Probiotics. They have Biome Daily, Biome IBS Support, Biome Eczema and a whole range of probiotics
  • I previously used them (i.e. prescribe to clients) quite a bit, especially Biome Advanced and Biome IBS – they were the main two
  • I’ve moved away from probiotics (generally) because: 1) I don’t know if they are as beneficial, as we've been led to believe and 2) I think there are other ways that we can influence the microbiome
  • I now only use two probiotics brands: Cell-Logic and Integra. These both use the Lactobacillus plantarum (HK-137), a very well-studied probiotic for inflammatory bowel disease and the cardiovascular.
  • Overall, I’ve shifted my practice away from probiotics. It’s not that I don’t think they work. They do. I just feel that we’ve been a bit misled as to how much they actually do.
  • That said, I have a colleague (another naturopath) who has the full AP Biome range, and does a lot more with them.


My Assessment

  • The practitioner appeared quite knowledgeable and has informed themselves through research, and has also received a lot of marketing from the brands
  • Having used at least two products with clients, clearly she didn't observe significant reported benefits. (This pratitioner operates in a small regional town, where people know each other, and where client relationships are long standing, with many clients trying a range of complementary and alternative medicine and wellness modalities (e.g. yoga, meditation, reiki etc.). I imagine they'd have feedback from repeat clients who clearly were not refilling their doses - these are relatively expensive products, so the clients would let her know!)
  • In identifying and continuing to use products containing Lactobacillus plantarum (HK-137), she has selected a specific strain probiotic, supported by a range of clinical studies, including in the publication Nature. The clinical studies on HK L-137 suggest that it offers several health benefits, particularly in enhancing immune function, reducing inflammation, improving gut health, and lowering the incidence of infections. The studies also indicate that both short-term and long-term consumption of HK L-137 is safe and effective for improving various health outcomes. (I have not identified if any of these studies have included placebo controlled, randomised, double-blind clinical trials. But that's because I haven'y yet looked)
  • One way or another, this practitioner is unlikely to be a future "outlet" for $BIO. They are open to evidence and education, but in feeling that the benefits of probiotics have been overmarketed, they will likely be resistant.
  • However, in the same or a nearby community, they clearl have a peer who has a different view, and I might try to speak with that practitioner too!


Conclusion

  • A sample of two (including the bonus reference): 1 active customer; 1 non-customer. Non-customer unlikely to ever become a customer, unless the evidence is compelling.


Practitioner 2: Staff Naturopath Working in a Small Pharmacy Chain Outlet

Background (a bit more complex, but relevant)

I entered a branch of an inner Brisbane suburban Good Price Pharmacy Warehouse store. They are a small chain, with about 50 outlet nationally. They are a discount pharmacy chain.

The Customer Journey

Based on what BVN said, I didn't expect to see the AP product line in stock or online. Correct - neither.

I approached the pharmacy assistant behind the dispensing counter at the back of the store and articulated my genuine customer need. I said I had heard about Activated Probiotics Biome products, and did they stock them. The assistant's eyes lit up, but she said: "You are in luck. Our resident Naturopath is running free instore consultations this morning. He'll be able to help. Look, he's just over there, and he can see you now."

The Naturopath came over and introduced himself - 40 years of experience as a naturopath. I repeated my medical need, expressed an interest to try a probiotic, and asked after the Activated Probiotics Biome brand.

Response: a moment's hesitation. Did I detect a "does not compute" response, then his face brigthen and he said enthusiasitically "I have just the thing". To which he referred me to a herbal remedy, by a New Zealand company (must be good, eh!) and said he'd been prescribing it for years, and promised me his clients had reported positive benefits. He rattled off the cocktail of herbal ingredients, which sounded something like a Jamie Oliver receipe.

Then I asked, "is there any clinical evidence to support the product claims"? A cloud came over he face, and he hesitated and thought for a moment, before offering, "oh yes, there are lots of studies. And customers have reported it to be effective."

So, why not, I paid the discounted price of $32.99, thanked the kindly naturopath and left the store. (On the manufacturer's website, the product retails for $63.99, RRP, but is available to "Members for $41.59". So Good Price appear to have negotitated a good discount.

My Assessment

I only went to this store this morning, because it was next to Bunnings where I had to pick up an order. Clearly from inspection, this was never going to be a stockist of $BIO products, based on what BVN told us. But I wanted to see if there was any hint of brand recognition with the staff. Blank. More than that, neither appear to pick up on the fact that I was asking for a probiotic. I didn't get one, even though they had rows and rows and rows of discounted probiotic brands on display, with Blackmores Bioceuticals most prominent.

Conclusion

This experience confirmed my hypothesis. The area of complementary medicine is lightly regulated if at all (beyond food standards). There are a vast range of offerings for a wide range of health needs that conventional medicine is often unable to fully diagnose, let alone cure.

While $BIO's products do not fit the Good Price business model, this experience shows to me that an effective science-based, education camapign, targetted is the prescribing (or at least recommending) practionner makes sense.

The question is, what are the economics of converting the remaining 60%+ of outlets and practitioners who might be potential customers. That required further work.

21
UlladullaDave
Added 4 months ago

Thanks for your write up on this @mikebrisy.

This experience confirmed my hypothesis. The area of complementary medicine is lightly regulated if at all (beyond food standards).

That is the takeaway for me too. I think Blair has done a fantastic job of building something from scratch in such a competitive sector, but I would make the argument that this is still very much a marketing business with a bit of "science" layered over the top. Your interaction with the naturopath is quite telling in that regard: Does credible science actually matter or is it just something you put on the box? Blair definitely comes across as a person with a strong sales skillset. I think a lot of the practitioner led sales strategy is ultimately about paying pharmacists to push their product. Maybe that's too cynical.

I backsolved the R&D spend from the R&D tax credit. $750k doesn't go very far in the medical business, and I don't mean that to sound overly negative. Like I said what he's managed to do from a standing start is impressive, I just think this is much similar to a vitamin business than a medicine business – with an absolutely wild valuation thrown into the mix.

BTW, you can buy the products on Amazon.

9ab7a9c104eb56e9fda11eefa914ee84837b5c.png

15
mikebrisy
Added 4 months ago

@UlladullaDave - thanks for breaking out the R&D spend. It's absolutely peanuts - you're right. So, I think we need to understand how $BIO's R&D model makes it possible for them to have a 16 commercial product portfolio. And whether $BIO has a competitive and differentiated strategy.

What struck me in the Strawman interview is that of the 45 total staff, they have 25 "health qualified". Let's assume that a handful (3-5) are focused on "R&D". It sounds like what they are doing is mainly scanning the literature, and talking to the university researchers (or other contacts BVN has through the Internation Probiotics Association), screening targets (desk exercise), and running a collaborative process with the chosen university department, with a pre-agreed commercialisation framework ready for the success case, which includes ownership or co-ownership of IP and a royalty deal.

On "R&D" what has dawned on me from the BVN discussion, is that while probiotic species mixtures have been promoted for their general contributions to many health conditions for decades, the thing that is really taking off is now trying to isolate specific strains to create more targeted products, with more specific, clincally-proven benefits. (This was my big ah-huh moment in the Strawman meeting.) I believe the probiotic industry has been built on a lot of arm-waving, faith, and disillusionment with conventional medicines. Heck, I even experienced that first hand today for the first time in my life, in my Good Price Pharmacy 40-year Naturopath conversation. This was a very, very general conversation, without any references to the specific benefits I might expect. There was zero science in the conversation, even when I asked for some. (I'm a conventional pharma guy. I've never knowingly even spoken to a naturopath before today.)

$BIO are by no means the first to do this, but BVN has said that, since he started 12 years ago, they are among the leaders. (This is another claim to test in a $BIO R&D "deepdive", but for now I will take it at face value.)

Before returning to this point. Let's just recap what conventional pharma clinical trials are all about.

1. First there is all the pre-clincal work, before the molecule even enters the human body. This requires lots of capital in laboratory equipment, lab animals or testing servies and analytical infrastructure.

2. Phase 1 is about safety, toxicity, tolerability, metabolism as well as looking for confirmation that the clinical effect translates from the model into humans. (n=20-100)

3. Phase 2 in then about side effects and finding the optimal dosage, and getting initial data on efficacy. (n=100-300; common diseases)

4. Phase 3 is then looking for efficacy vs. placebo or standard of care. as well as building out stats. on side effects profile. (n=1,000-3,000; common diseases)

Now in conventional pharma, most new chemical entities (NCE's) have a well-defined and targeted inhibition or promotion of a biochmical process in the human body, requiring the molecule to be delivered to the targeted "receptor" where there desired biochemical effect takes place.

In probiotic "clincal development", if we are starting with a known probiotic species, and seeking to isolate a specific, valuable strain, many of the CT deliverables about safety, side effects, and even dosage will already be known. In any event, the "receptors" reside in the micro-biome and the probiotic is simply digested producing the harmless by-products of food digestion, without the potential toxicity of many conventional pharma NCEs or their breakdwon products.

Therefore, many elements of the traditional clinical trial process has a cost close to $0 for probiotics.

Turning to endpoints, for probiotics often they are more about quality of life, and patient perception, rather than life or death disease progression (that's not always true, for sure). In those cases, the "n" required for the trial is probably small, comparing placebo, with non-strain specific and specific strain products to see if there is a meaningful improvement in the chosen endpoints.

Importantly, in these cases, the time of the trial will be short - likely weeks or a few months, because the endpoints are symptomatic or measurable in the short term (e.g., oral bacterial load for the dental product). Some conventional pharma clinical trials where endpoints are about disease progression require years to measure. The cost is broadly in proportion to the time.

So although BVN is right to refer to their trials as "clincal trials", I can easily see how $1-2m in spend by $BIO in the probiotic space is equivalent to many $100 millions or more in the conventional space.

Now, you add to that the collaboration model, and you get even further leverage. $BIO just waltzes up, offers a royalty deal, access to forumulation(capsules), packing and "Phase 3" clincal trial design. Bottom line: much of the heavy work of pharma R&D is either not needed, or has already been done by partner organisation, and $BIO is just there to help with the final bit.

The value $BIO offers the university partner is expertise in clincal study design (1 or 2 people) and access to their formulation/packaging (outsourced) capability and supply chain (freight handling) in exchange for the university's/partner's staff and facilities to support the trial, analyse the results, and publish the study outcomes. No doubt the university labour includes grant-funded PhD students and university research technical staff, and laboratory facilities (probably paid for by legacy grants and donors!) I imagine there are a few good government grants to support the actual, incremental costs.

On top of this, universities really value commercialisation. So to have $BIO offering a royalty deal from the outset probably has the university principal investigators salivating. (In some universities they get a lot of added "performance points" for this in their appraisals and rankings. A few $000,000 goes a long way!)

This all sounds very easy. And I think that, if you have a few scientists on your team, it is! Hell, it's even something I think I could manage.

So, that means the model can be copied easily. Right again. And it is. There are [several / a lot] (to be clarified in the R&D deep dive) of companies out there tyring to do this.

So now I return to your other point. This is all about building a brand. Yes. But it is a brand backed by science. The firms with good science-based brands and a market footprint will be the most attractive partners for universities and other research organisations to collaborate with (R&D-to-Brand flywheel, sorry, for using the F-word).

So, the next question is, is this a strategic play where there is a "first mover" advantage? And is BVN right when he says that $BIO is a first mover?

These are all questions that require further investigation. All in due course.

Based on what I have learned so far, it is entirely possible that $BIO is an Aussie "flash in the pan" that will get swallowed up as 100's of $BIOs chase the same play over this current decade. In this case, we'll soon see the competition for effective probiotics strains to commercialise exceeds the supply, and $BIO's innovation pipeline will dry up. Game over in 5-10 years, max. If that's the case, then $BIO is certainly overvalued.

However, if $BIO has its nose ahead of the pack, or if it is even among the leaders (because the global TAM is huge), and gets going in ANZ, UK/EU and Canada/USA in the next three years, and can keep bringing differentiated and science-backed products to market, as it builds its brand, then maybe, just maybe, there is a global, science-based brand in the early stages. And over time this could in the success case be worth 5x or 10x what it is today.

I'm keeping an open mind on this. (My bet is 0.75% of my portfolio, at this stage.)

20
Scoonie
Added 4 months ago

Wonderful piece of investigation @mikebrisy . and also @UlladullaDave . I think you are well justified to be somewhat skeptical of the “’science” that Blair is talking about when using terms like “clinically validated”

One of BIO’s point of difference in a very crowded marketplace appears to his “clinical trials” that allow Blair to market his products on the basis of a particular health condition eg  “Biome Her Probiotic – to help maintain a healthy vaginal microbiome” or similar along the lines of Mental Health or Oral Health and many others.  I suspect the science behind it all is pretty weak.   Further marketing “innovations” such as placing the packets “behind the counter” appears for now, to have pushed them ahead of the pack.

All well and good. And you could argue that Blackmores did similar and became a billion dollar plus company. Clever marketing of what some would argue is not much more than bread pills in a glass jar took them a long way.   

It is worth looking at what is being done by the likes of ASX listed Microbia Life Sciences (MAP) in the realms of testing and developing therapies with some scientific rigor.   And it is costing them a bomb.   MAP CEO Luke Reid will be available for questions on Strawman on the 30/7/24

17
mikebrisy
Added 4 months ago

I agree @Scoonie . I intend to get into the details by sampling at least 4 of the products for a deep dive into the clinical evidence. (Any suggestions?)

BVN’s claim is clear, so let’s see if it stacks up. I maintain an open mind until I see the facts.

9
UlladullaDave
Added 4 months ago

Thanks for that @mikebrisy

Digging around it seems as though a lot of what BIO has is rebadged Probi AB products.

You can see in the prospectus the terms of the contract with Probi, where Probi retains all the IP associated with the formulations but BIO is allowed to repackage in their own branding.

d68ceb6f8daa0b23d2d5cd79da7402d381603b.png


The highlighted part is interesting.


You can see here below that the La Trobe ProBone trial, which I believe is the clinical trial BIO relies on, appears to have been funded by Probi although Biome seem to present themselves as being part of the study with La Trobe. I assume that, like the above contract terms, this formulation used in this study remains the property of Probi and BIO merely have a licensing agreement?

847e9724b7e836093f8b6492b8e23cacdca913.png

0194a9a337ee9ce32f08b0c257fa4d4c48e0f2.png

https://www.probone.com.au/our-partners


Last year, BIO stated they had entered into a supply agreement for


If nothing else, it does seem to explain the negligible R&D spend. Like I said, I am OK with a business just being a great marketing business – which I kind of think is what these guys are. I don't believe there's much there in the way of hard science. Your excellent description of the approval process for a new drug is illustrative of just how flimsy a lot of the research backing up this complementary medicine is. And I just can't get past the price here – 10x revenue for a business that will probably only ever manage 5%-10% NPAT margins.


19
UlladullaDave
Added 4 months ago

Thanks @Scoonie

The Biome Her Product is actually licensed from an Italian company Probiotical – who I think BVN mentioned in the context of contract manufacturing but not distribution of Probiotical's existing portfolio.f99e5ce6524d08f3768b523d1e85cbf49bc824.png

11
Remorhaz
Added 4 months ago

@mikebrisy (& @UlladullaDave @Scoonie) really enjoyed your writeup of your market research into practitioner experiences and the follow on discussion - my (admittedly completely uninformed) gut feel (no pun intended) in this area is I'm concerned that products and marketers in the probiotics and prebiotics space are perhaps somewhat closer to witch doctoring and snake oil salesmen masquerading as "science" and "medicine" (not helped by the non existent regulations and controls in this whole "vitamins", "supplements" and "health products" space)

And as it happens I've had a constant gut issue for over a decade and have tried so many "therapies" over the years (everything from dietary supplements like these, pharmacy over the counter products and so on through to doctor and specialist prescribed tests and medicines) with little (no) success. I have tried a number of probiotics over the years but can't remember if I've tried a Lactobacillus Plantarum (HK-137) based product

I could find Cell-Logic's ImmunoGenex (it's a powder you mix with liquid and drink) online but nothing for Integra. It looks like Biome also has a Lactobacillus Plantarum based product (their Activated Probiotics Biome IBS capsules) - given it was available on Amazon I've ordered one for a little of my own "market research"

I also note that Inner Health (a mainstream provider of all sorts of complimentary health products) also has some Lactobacillus Plantarum based capsule products including their IBS Support and IBS Control - which look to be direct competitors to the Biome IBS product - after I try the Biome IBS I'll probably give one of them a try too

All the product "marketers" list as their first statement on products "Relieve the symptoms of medically diagnosed Irritable Bowel Syndrome" (my emphasis) to I presume give the air of "medical science" to their products (even tho no prescription is actually required for any of them and I presume most people wouldn't have even seen a doctor before deciding to use one of them)

12
mikebrisy
Added 4 months ago

$BIO Outlets in Australia for Probiotics: Current and Potential

We start gently, by noting that BVN said $BIO currently has about 5,000 distribution points in Australia.

  • $BIO is in 2,500 community pharmacies of a total of 5,900 (Source for total: Pharmacy Guild of Australia, 2021 - assume 6,000 in 2024 )
  • $BIO being prescribed by 2,500 practitioners, primarily naturopaths, dieticians, and GPs ( Totals and sources: Total Naturopaths in Australia = 2,400. Jobs and Skills Australia; Dieticians = 8,000, Healthdirect.gov.au; and c. 40,000 GPs based on AMA data updated to 2024 - noting shortage of over 11,000 by 2032!)


So when BVN said that $BIO - having captured 5,000 distribution points - has a footprint of some 40% of the total Australian market, that might be a reasonable estimate of the current market recommending ProBiotics today. However, the potential market is larger - and potentially as high as >50,000+ outlets, recognising that many of these do not, and might not ever, recommend probiotics.

Insight 1. BVN's claim that $BIO has a footprint of c. 40% of TAM is reasonably conservative.

Insight 2. If clinical evidence of the efficacy of probiotics continues to emerge, there is the potential for significant expansion of distribution points.

Insight 3. Assuming that there is a large body of clinical evidence of the clinical efficacy of probiotics, then the latent potential of "distribution points" can be accessed by practitioner education. This is a core part of the $BIO sales and marketing strategy. Makes total sense.


Tomorrow: Its not all roses in the garden. Interview with a Naturopath "Maybe the Market isn't quite so sticky!"

21
mikebrisy
Added 4 months ago

This is probably the point at which many of you might elect to use the "Mute a Topic" function that @Strawman has so thoughfully provided, because within this new forum I am going to start posting my findings of a deep dive into $BIO and the probiotics market. While I've started the work already, if previous "deep dives" are anything to go by, this one will run for some weeks - perhaps longer.

My goal is that I want to use the information given by BVN at this week's meeting together with some detailed research to build a bottom up revenue growth model for ANZ, UKI-then- EU, and Canada-then-USA. I'll then use some simple assumptions on margins and cost structure to try and get my arms around a range of valuations.

When BVN announces the 2027 Growth Strategy, I'll be able to assess and update the model.

My reason for doing this is that I think it will be possible to build a meaninful set of scenarios for the potential future growth of the business, given the strategy that BVN clearly articulated.

I thought I'd share it as I go along because a couple of StrawPeople have expressed a desire to "get into the weeds" on this one, and those who are interested might have observations to add as we go along (such as the anecdotes shared today). Please do.

This approach is just a little more granular and bottom-up than you might encounter from the "Talking Heads" on Ausbiz. :-)

Just to be clear, I am not trying to pump this stock. In fact, I commit to write up an interview I recorded this afternoon with a friend who is a Naturopath, and someone I respect. You'd probably "Sell" today if you allowed their view to infuence your view of valuation! (I will be more circumspect)

So, Mute Away!

And if you stay connected, them just remember, this is not advice and I do not warrant that my analysis is free from errors.

26
Arizona
Added 4 months ago

@mikebrisy No muting over here.

I am keen to hear your thoughts and hope to hear from the collective mega brain that is the crew at Strawman.com and hopefully have something to contribute myself.

I think BIO is in a fascinating and important space.

However, that doesn't necessarily make it a great investment.

I look forward to kicking this around.

Bring it on!

13