Roche revives takeover activity with Syntex buy

06 January 1994 00:00  [Source: PCE]

In the first big takeover bid in the pharmaceuticals industry since the 1980s, Roche has made a $5.3bn cash offer for US drugs manufacturer Syntex. If accepted it will create a group ranking fourth in the world sales league of pharmaceutical companies.

The bid came shortly after Roche fulfilled high expectations by reporting a 29% increase in earnings to $1.7bn, on top of an 11% rise in sales.

As well as lifting Basle-based Roche in world sales terms, the takeover would also lift Roche from 15th to sixth in the crucial US market.

Syntex is believed to have suffered since the beginning of 1992 as it faced the expiry of patents on its anti-inflammatory drug Naprosyn, used to treat rheumatoid arthritis, and a lack of new market leading products to replace it in the short term.

The move reflects growing pressures on drug companies to introduce greater economies of scale and wider product ranges.

Syntex has been under pressure to support its research and development budget - which last year ran at 19% of sales - in the face of falling sales.

Syntex chairman Paul Freiman said: 'Given the speed of changes in the industry and a radically different competitive situation, we ultimately felt the need to align with a strong global partner.'

Roche chairman Fritz Gerber said Syntax's substantial ethical business and its leadership in drugs for treating pain and inflammation, 'would ideally complement the portfolio of Roche and add a further centre of excellence to the Roche group'.

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