media release

Akzo Nobel: labeled Europe’s fastest growing pharmaceutical company

Akzo Nobel’s worldwide Pharma operations are flourishing. Sales and earnings of the pharmaceutical businesses more than doubled in the past five years. The recent acceleration of growth resulted in Akzo Nobel being labeled as Europe’s fastest growing pharmaceutical company.

Arnhem, the Netherlands, September 29, 2000 - Akzo Nobel’s worldwide Pharma operations are flourishing. Sales and earnings of the pharmaceutical businesses more than doubled in the past five years. The recent acceleration of growth resulted in Akzo Nobel being labeled as Europe’s fastest growing pharmaceutical company. The company is striving for continued double-digit growth in Pharma, based on its excellent pipeline, strategic acquisitions and collaborations.

That was the message delivered today by Akzo Nobel’s Chief Financial Officer, Fritz Fröhlich, at the Pharma Analysts and Investors Day in New York. A similar meeting is being held in London next week.

Pharma is generating 42% of Akzo Nobel’s profit; the aim is to increase it to more than 50%. This will be achieved by internal growth and responding to opportunities for bolt-on acquisitions and selective alliances. A good example of a profit enhancing alliance is the recent agreement between Organon and French pharmaceutical company Sanofi-Synthelabo for the worldwide marketing and distribution of a potential blockbuster, a new antithrombotic (pentassacharide).

The pharmaceutical activities of Akzo Nobel are based on two healthy growth engines: human healthcare and animal healthcare. Over the past five years, sales of the pharmaceutical businesses more than doubled, growing from EUR 1.7 bln in 1995 to EUR 3.7 bln in 2000.

"We strive as passionately as ever to reach new levels of achievement", stated Chief Financial Officer Fritz Fröhlich. "We’re going for a continued double-digit growth in pharma and are determined to deliver. Our ambitions are based on the leverage of our excellent pipeline, selective acquisitions and collaborations." Fröhlich also stressed: "Akzo Nobel will continue to invest in R&D and in the marketplace and will target a ROS margin over the current 20%."

The US continues to be a key target growth region for Akzo Nobel’s pharmaceutical activities for the coming years. The share of Akzo Nobel Pharma sales derived from the US has already increased in the past five years from 10% in 1995 to 30% in 2000. The audience was told that in the next two years, seven product launches in the field of human healthcare are expected in the US, the biggest pharmaceutical market in the world. These new products include drugs for atherothrombosis, infertility, contraception, hormone replacement therapy, and the central nervous system (antidepressants).

Leverage on excellent pipeline in human healthcare

Organon, Akzo Nobel’s main human healthcare business, continues to invest 17% of its sales on drug discovery and development programs. Selective collaborations, for example concerning a new antithrombotic jointly developed by Organon and Sanofi-Synthelabo, further enhances the highly promising pipeline. Coupled with the increasing investments in its sales force in the US - currently 1,400 employees - Organon is convinced that it can enlarge its role as the key value driver of Akzo Nobel.

A new product in the area of contraception will be the new female contraceptive Nuvaring®. The US is the first market where this vaginal ring - which gives off a regular, low dose of the known ‘pill hormones’ during three weeks - will be launched (scheduled in 2001). During the presentations, analysts were also informed about the development of the male pill; the phase IIb trials for the oral contraceptive for men are about to start.

The traditional range of successful contraceptives is being extended with Implanon®, a single implantable rod which slowly releases progestagen for a three-year period. This highly innovative product was recently introduced in several European countries and is running very well. The contraceptive is to be launched in the US in 2002.

The launch of Xyvion® - a new drug developed especially for the prevention of osteoporosis - in the US is expected in the first half of 2001. The discussions with the FDA on the labeling of Xyvion® are ongoing.

The antidepressant Remeron® is currently Organon’s best selling product. In 2002, when the market protection of Remeron has ended, Organon will strengthen its position in CNS firmly through line extensions such as Remeron Soltab®. The new antidepressant Ariza® is now in phase III and FDA submission in the US is expected in the summer of 2001.

Akzo Nobel told the analysts – as announced earlier today in a separate press release - that Organon will invest EUR 44 mln (USD 38 mln) to prepare two facilities in the United States for the manufacture of its new antithrombotic (pentasaccharide).

Top league player in animal healthcare

Akzo Nobel is determined to enhance the role of Intervet, its veterinarian business. In this market, with a global size of USD 12 billion, Intervet is now no. 3 world wide, and is recognized for its innovative product development, high quality products, and excellent technical support. Its innovation power allows it to achieve a profitability comparable with human healthcare.

Intervet spends above 12% of it sales on R&D, significantly above the industry average. But Akzo Nobel will not rest on its laurels - it is currently increasing the R&D activities in animal pharmaceuticals substantially.

Intervet will defend and expand the leading positions in biologicals for livestock and companion animals and aims to become a major player in the new area of aqua health vaccines (e.g. vaccination of prawns and fishes). It is the intention to further expand Intervet’s position in the US and Asian markets.

Increasing role of biotechnology

The role of biotechnology in Akzo Nobel is rapidly increasing. Biotech products such as the infertility treatment Puregon® and vaccines in animal healthcare are cases in point. Successful R&D collaborations with several biotech companies are laying the foundations for future success.

Diosynth, Akzo Nobel’s world class active pharmaceutical ingredients business, is presently investing EUR 60 mln in a major expansion of its biotech-processing base.