Aventis to Be World's No. 1 Drugmaker, IMS Indicates (Update2)
Bloomberg News
March 23, 1999, 9:12 a.m. ET
Aventis to Be World's No. 1 Drugmaker, IMS Indicates (Update2)
(Adds drugmakers' shares in 6th paragraph.)
London, March 23 (Bloomberg) -- Aventis SA, the product of
Hoechst AG's planned union with Rhone-Poulenc SA, will be the
world's No. 1 drugmaker, ahead of the company to be formed by
Zeneca Group Plc's purchase of Astra AB, according to IMS Health
Inc., which tracked 1998 drug prescriptions.
The IMS rankings move Aventis, AstraZeneca and Novartis AG
-- which was formed by a 1996 merger between Swiss drugmakers --
ahead of Merck & Co. of the U.S., which ranked No. 1 in 1997.
IMS estimated worldwide prescription drug sales grew about 3
percent to $302 billion last year.
European drugmakers' dominance may be short-lived, though,
because they've grown by combining with one another rather than
by selling more drugs, analysts said. In three separate
agreements in December, six European companies said they'd join
forces as they sought to spread the costs of research and
marketing and boost drug development to take on U.S. rivals.
''U.S. drugmakers are enjoying the introduction of new
products,'' said Jo Walton, an analyst at Lehman Brothers in
London. By contrast, ''European companies are coming together to
get an earnings bridge until they have more new products to
support sales.''
Agreements in December between Hoechst of Germany and Rhone-
Poulenc of France, which had combined prescription drug sales of
$10.795 billion last year according to IMS, and Astra and
Zeneca, with revenues of $10.681 billion, capped a year which
saw New York-based rival Pfizer Inc. pull off the most
successful drug introduction yet with its impotence pill Viagra.
Shares Decline
Drugmakers' shares fell today as investors took recent
mergers as evidence companies are joining forces to cushion the
effect of slower growth. Hoechst shares fell 1.45 euros, or 3.5
percent, to 40.15 euros ($43.60). Glaxo Wellcome Plc declined 30
pence, or 1.6 percent, to 1,871p ($30.40). The Bloomberg index
of 24 European pharmaceutical stocks fell 1.2 to 181.37.
Novartis -- the product of the 1996 merger of Sandoz AG and
Ciba-Geigy AG -- had prescription drug sales of $10.639 billion
last year, according to IMS, which tracked sales through
wholesalers and retailers. Merck's sales totaled $10.635 billion
last year, IMS said.
Excluding the impact of the recently announced mergers,
Novartis rose to the No. 1 slot from No. 3 in 1997, less than a
week after it warned profit growth this year will slow. Still,
among the company's new drugs, products including a treatment
for asthma and one for a bowel disorder are expected to reach
the market in the next couple of years, boosting future sales,
analysts said.
Other drugmakers are following in Novartis's footsteps,
hoping to keep earnings growing by cutting costs and funneling
money into research that they hope will yield the next Viagra.
Rash of Mergers
Last week Hoechst and Rhone-Poulenc said they will speed up
their planned merger, while U.K.-based Zeneca said it expects to
win U.S. regulators' approval soon to buy Sweden's Astra for $35
billion. Meanwhile, Germany's Bayer AG announced plans to make
acquisitions in the face of falling chemical prices, and
France's Sanofi SA won European regulators' approval to buy
Synthelabo SA.
IMS rankings can differ from drugmakers' own estimates of
their size because they're based on prescription drug sales
alone. That means drugs such as the over-the-counter (non-
prescription) form of Glaxo Wellcome Plc's Zantac aren't
included in IMS's sales tally. Companies usually don't publish
separate figures showing their prescription-drug sales alone.
IMS published sales estimates only for companies in
existence in 1998. AstraZeneca's and Aventis's sales were
computed by Bloomberg News based on the merger candidates' 1998
sales totals.
Hoechst, for example, had sales of $6.225 billion last year
and moved down to No. 13 from No. 9 in the latest IMS rankings.
Rhone-Poulenc, with sales of $4.570 billion, kept its No. 17
place, IMS said.
Rhone-Poulenc's board meets today at 3:00 p.m. French time
to vote on the merger of the companies' drug and crop-protection
businesses. Most of Rhone-Poulenc's 15 board members will
probably approve the plan, as they did on Nov. 30, analysts
said. Only union officials, who have three seats on the board,
have said they're likely to oppose the merger.
'Too Close to Call'
Excluding the impending mergers, IMS's rankings show
Novartis and Merck ranked first and second, respectively. Glaxo
Wellcome of the U.K., born from Glaxo Plc's 1995 purchase of
Wellcome Plc, is No. 3 and Pfizer is No. 4, having risen from
No. 6 last year.
''We believe the top three pharmaceutical companies are in
a three-way tie for first place,'' IMS Health Chief Executive
Victoria Fash said in a statement. ''Novartis, Merck and Glaxo
Wellcome are separated by just millions of dollars, and it is,
in our view, a race that is too close to call.''
Rounding out the top 10 IMS-ranked drugmakers, in order,
were New Brunswick, New Jersey-based Johnson & Johnson; Madison,
New Jersey-based American Home Products Corp.; Basel,
Switzerland-based Roche Holding AG; Indianapolis-based Eli Lilly
& Co., and U.K.-based SmithKline Beecham Plc.
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