Fonterra Cooperative Group, the world's biggest dairy exporter, said last month that it plans to form a venture with Campina of the Netherlands to develop products for the $100 million pharmaceutical lactose market.

Fonterra Cooperative Group, the world's biggest dairy exporter, said last month that it plans to form a venture with Campina of the Netherlands to develop products for the $100 million pharmaceutical lactose market.

Lactose New Zealand, a Fonterra unit that sells all of the company's pharmaceutical-grade lactose, will own half the business. Campina's DMV International unit will hold the balance. Fonterra did not put a value on the venture, which will produce dairy-based substances used to make drugs.

Fonterra is investing in new processing to make more use of its milk in higher-value food supplements and medicinal products, thereby raising sales for the 12,000 New Zealand farmers who supply it. It is the preferred supplier of tablet-grade lactose to GlaxoSmithKline, one of the world's largest drug makers.

"Campina has a strong position in Europe and Japan, while Fonterra has been very successful in building a strong position in the Asia Pacific region," said Fonterra chief executive, Andrew Ferrier. "This joint venture will lift our pharmaceutical lactose specialty products business to a whole new level."

Fonterra spent 25 million New Zealand dollars, ($16 million US), last year on a plant at Kapuni, which made it the world's second-largest producer of pharmaceutical-grade lactose. The transaction remains subject to regulatory approval.