Nestle SA is planning to invest around $500 million for expanding its medical nutrition business in the coming years.

The Company wishes make food products that will be helpful in treating some chronic illnesses like diabetes and obesity. It also wants to capture the major chunk of the profit of the growing market of such foods.

The Company will open a medical nutrition institute in Switzerland and a separate subsidiary called Nestle Health Science SA. The main aim is to ‘pioneer a new industry between food and pharma’.

Nestle operates from Vevey and is considered to be one of the world's largest producers of processed foods. The main items that the Company is famous for are Nesquik cereal, Haagen-Dazs ice cream, and Nespresso coffee. In 2009, the Company gained $100 billion from the sale of its products.

The Chief Executive of the new subsidiary will be Luis Cantarell, who runs Nestle's business in the Americas. The operations will start early 2011.

The Company has decided the expansion plan of the medical nutrition segment to compete with Illinois-based Abbott Laboratories, which has make its presence felt outside the pharmaceutical sector in a short span of time.

Peter Brabeck-Letmathe, who is Chairman and ex-Chief Executive of Nestle, said that the main goal of Nestle’s new venture will be to “find efficient and cost-effective ways to prevent and treat acute and chronic diseases”.