Solvay: Pipeline, Products, Performance, Potential

Pharmaceutical company intelligence reports from Espicom provide a full review of the company's activities together with five-year sales forecasts for its key products. The company's financial performance is covered in-depth, from its latest results to a complete analysis of its latest full fiscal year and an outlook for the future. A section on company strategy covers mergers, acquisitions and divestitures, key agreements, products and R&D. An overview of key products and R&D is followed by a comprehensive review of the company's product portfolio and research and development pipeline by therapeutic area. In addition, supplementary appendices provide more in-depth information on financials, agreements and corporate events.

Despite a strong year for Solvay's Pharmaceuticals business as the world economies begin to recover, 2008 was a difficult year for the company overall, with growth of just 2.1 per cent in Chemicals and a decline of 6.5 per cent in Plastics revenues. As a result, Solvay implemented a number of cost reductions, however the company saw its profits continue to drop away in the first quarter of 2009. Further declines in Chemicals and Plastics during the second quarter of the year, were again offset by increases in Pharmaceuticals.

Solvay has made no secret of the fact that it has long been considering options for the future of its pharmaceutical business and, in April 2009, it was forced to confirm that it was in talks with third parties as part of an ongoing review of its business activities. On 28th September 2009, Solvay's Board of Directors decided to refocus the activities of the Solvay Group in order to accelerate the implementation of its sustainable and profitable growth strategy and, accordingly, made the decision to sell its entire pharmaceutical business to Abbott for EUR 4.5 billion (US$6.6 billion) plus other milestones and liabilities, which Solvay currently values at approximately EUR 400 million.

After closing of the transaction, which is expected in the first quarter of 2010, Solvay will reinvest the proceeds in organic and sizeable external growth, focused on long-term value creation. This will be done by investing in high value-added activities and strategic projects in chemicals and plastics, by continuing the geographical expansion into regions with growth potential and by continuing the development of activities and new products with low energy footprint and which significantly reduce the cyclicality in Solvay's portfolio of activities. Studies regarding such reinvestments are ongoing.

Solvay cited a number of reasons for its decision. The company believes that the pharmaceutical industry is undergoing rapid change, that the drug approval process is becoming too complex and costly, that there are increasing cost containment pressures and that the industry is undergoing rapid consolidation. Internally, the company believes that significant investments would be needed in all three Solvay sectors and that the most pressing need is to improve the sustainability profile of its plastics and chemicals portfolios.

Solvay believes that its Pharmaceuticals division is below the critical size required to appropriately address the changing market conditions and thus divestment was chosen as the best option to ensure the growth of the remaining two Solvay businesses.

With this acquisition, which includes Solvay's vaccines business, Abbott will gain more than US$3 billion in annual sales. The acquisition will also add approximately US$500 million to Abbott's annual pharmaceutical research and development investment, providing the company with the opportunity to further accelerate near- and long-term pharmaceutical growth. The acquisition also brings with it Solvay's significant pharmaceutical presence and infrastructure in key high-growth emerging markets, including Eastern Europe and Asia.