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Biotech / Medical : Pharma News Only (pfe,mrk,wla, sgp, ahp, bmy, lly) -- Ignore unavailable to you. Want to Upgrade?

To: Henry Niman who wrote (939)	10/16/1998 2:47:00 PM
From: Anthony Wong	Read Replies (2) \| Respond to of 1722

10/16 11:02 ANALYSIS-Europeans seen cool to AHP<AHP.N>advances By Jonathan Birt LONDON, Oct 16 (Reuters) - U.S. pharmaceutical and agrochemical group American Home Products Corp is likely to get a cool reception should it seek to cosy up to Europe's drugmakers, industry analysts said on Friday. AHP, which has seen potential and diverse alliances with Monsanto Co <MTC.N> and SmithKline Beecham Plc <SB.L> slip through its fingers this year, is gaining an unenviable reputation as a serial monogamist in the sector. "I don't think anybody will negotiate with AHP now -- they are tarnished goods," said Peter McDougall of Dresdner Kleinwort Benson. "Why is it that people who get into bed with them end up thinking there is something wrong with AHP?" But Merrill Lynch analyst Nigel Barnes said history showed the drugs industry was always capable of generating surprise. "The industry has a record of throwing up less obvious combinations," he said. "I'm not so sure you can rule anything out, but it is not obvious." Although it is possible to make a case for putting AHP together with any number of European companies, analysts said recent events highlighted the overriding significance of clashing corporate cultures in any merger equation. The spectre of the unhappy coupling of the Swedish Pharmacia with the American Uphohn <PNU.N> <PHU.ST> in 1995 continues to haunt the investment bank marriage bureaux and companies desperately seeking soulmates. Both Glaxo Wellcome Plc <GLXO.L> and SmithKline blamed different approaches to running a business for the failure of their merger talks in February, and the question seems to have been at the heart of the collapse of AHP and Monsanto's deliberations this week. "There is no obvious partner (for AHP)," said Williams de Broe analyst Peter Cartwright. "The issue there is (Chairman and Chief Executive Officer) John Stafford, who is not easy to deal with. He has been there a long time, it is a one-man band and he rules with a rod of iron -- he has no anointed successor and he hasn't set a leaving date," he added. Although shares in Smithkline Beecham picked up after news broke that AHP's relationship with Monsanto was off, no-one appears seriously to believe SmithKline would be interested in reopening talks. Sources close to SmithKline have suggested its Chief Executive Jan Leschly was preparing to abandon negotiations with AHP even before he received a fateful call from Glaxo Wellcome's Chairman Sir Richard Sykes late in Janaury, which flung those two companies into three weeks of fruitless communion. Analysts believe Leschly is now determined to prove SmithKline has a strong, independent future. Merill Lynch's Barnes said the failure of the AHP/Monsanto talks strengthened the hand of Leschly, who has taken a lot stick in the wake of the Glaxo/SmithKline fiasco. "One of the crucial issues that has to be right is culture. Why jeopardise the future success of the of the combined company by perservering if the culture is is wrong?" Barnes said. Another British company, drugs and agrochemicals concern Zeneca Group Plc <ZEN.L>, is also expected to maintain a determinedly independent stance. The group's Chief Executive Sir David Barnes, who has been hostile to the notion of mergers, moves up to be chairman next May, and is succeeded by an internal candidate, Pharmaceuticals Chief Executive Officer Tom McKillop. "The culture clash (with AHP) would be huge," said Cartwright. The most vulnerable of the European companies at present is Sweden's Astra AB <ASTRa.ST>, which has made no secret of its desire to find a partner as its battles with the demise of blockbuster ulcer drug Losec. "Astra is desperate, but the culture is all wrong," said Cartwright. "Astra come across as total innocents." Rumours also persist in Stockholm of potential for an alliance between Pharmacia & Upjohn and AHP. P&U's Chief Executive Officer Fred Hassan had been seen as John Stafford's heir apparent at AHP before taking over at P&U. But even ignoring the issue of culture, analysts said AHP carries a major health warning for potential suitors in the form of lawsuits over three drugs withdrawn after patients died or developed serious complications, including the slimming pills Redux and Pondimin. It is also facing potential liabilities for its Norplant contraceptive implants.