Solvay to buy Fournier to boost pharma
in a move that ties into the group's long-term strategy to boost
its activities in the pharmaceuticals sector, reports Phil
Taylor.
The move has been tackled in the Belgian financial media for some time, first emerging as a rumour in December 2004.
Solvay aims to pay €1.3bn in cash for Fournier, which has largely built its business on the back of a single blockbuster drug, Lipanthyl (fenofibrate), for the treatment of elevated blood cholesterol. However, the Belgian firm said the purchase price could go up by an additional €300m depending on the future perfomance of Fournier within the Solvay group.
Alongside its pharmaceutical interests, Solvay has broad activities in the chemical sector and is the world's fourth-biggest manufacturer of PVC. Latterly the company has been trying to increase its stable of products in plastics, pharmaceuticals and specialty chemicals to improve margins and reduce the proportion of sales coming from commodity lines, and has already expanded share of operating profits from these lines for 50 per cent in 1999 to 58 per cent last year.
Fenofibrate is getting a little long in the tooth, having been launched nearly 20 years ago, but Fournier has been able to keep the franchise growing through geographic expansion, most notably via a collaboration with Abbott Laboratories in the US and new formulations.
After sales rises of just 1 per cent in 2002 and 2 per cent in 2003, Fournier's turnover leaped 7 per cent last year to €596m, helped by a 38 per cent hike in US turnover of fenofibrate to $779.0 million. Abbott has said it believes US sales of the drug, sold there as TriCor, will exceed $1 billion this year, helped by a new formulation of the drug which allows it to be taken at a low dosage outside mealtimes.
But this US expansion has enabled Fournier to compensate for a virtual no-growth picture in Europe, which still accounts for 60 per cent of Lipanthyl sales. The drug also accounts for some two-third of Fournier's total turnover, and no other new product introduction is scheduled before 2007, although Solvay seems impressed with the French firm's product pipeline, which includes drugs for obesity, congestive heart failure and high blood pressure.
"The acquisition of Fournier Pharma would be an excellent and well-timed opportunity to accelerate the growth and profitability of our pharmaceuticals business, which we further expect to gain tremendous momentum when the full potential of the combined R&D pipeline kicks in," said Solvay chief executive Alois Michielsen in a statement.
Solvay itself has 31 drugs, including at least one potential blockbuster, in its pipeline and recently moved its SLV308 drug to treat Parkinson's disease into final Phase III trials. The combined company would have an R&D budget of €370m on a pro forma basis, he added.
Solvay made €1.7bn in pharmaceutical sales last year, with operating earnings up 25 per cent to €236m, out of total turnover of €7.9bn for the group.
Solvay expects the acquisition to be completed in the summer of 2005. It will carry out a due diligence on Fournier's business in the next four weeks. Investors welcomed the deal, sending Solvay's shares more than 4 per cent to €91.45 at lunchtime today.
