...foundation in female healthcare

09 December 1996 00:00  [Source: ICB]

With the purchase of a 74.9% stake in east Germany's Jenapharm, the Berlin-based pharma group, Schering has successfully re-established itself as the German leader in female oral contraceptives. Along with the purchase of Finland's Leiras the company looks set to achieve a firm ...

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In 1991 the east German privatisation agency the Treuhandanstalt put Jenapharm, the female healthcare drugs producer, up for sale. Two firms were in the running, the pharma trader Gehe and Berlin's birth control pioneer, Schering.

When it was announced that Gehe had been the successful bidder Schering's management found it hard to conceal its disappointment. Schering 'regrets' the Treuhand's decision, was all chairman Giuseppe Vita could bring himself to say.

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It had regarded itself as the leading candidate: Jenapharm had a similar product portfolio while Gehe was generics-based. Reasons put forward for the pharma trader's success are many but it is suggested that the strongest factors were that Gehe did a better job of convincing the Treuhand that it would preserve more of Jenapharm and safeguard more jobs.

Five years later, with Schering having shed all but its pharma division - the situation has been reversed. In spring of this year Schering took over 74.9% of Jenapharm's equity, and announced that it would operate the business as a joint venture with Gehe.

With the takeover of Jenapharm's assets for DM500m ($325m), Schering, regained the number one slot in the German oral contraceptive (OC) market after losing it to Jenapharm following reunification. The east German firm had managed to work itself up into the top spot in Germany, claiming a share of 18%, compared with Schering's 13-14%.

The incorporation of Jenapharm and the Finnish female healthcare company Leiras, which Schering acquired in early 1996 for DM400m, will move Schering's female healthcare into a 'new dimension,' asserts Christian Nowak, director for Europe, who is coordinating the process of integration. Not only has Schering broadened its position in hormone drugs, it has gained potential for restructuring its production setup, he says.

The strategic decisions on how Schering will absorb Jenapharm and exploit synergies have been taken, and are now being implemented, says Nowak. As regards portfolio, 'we will look at the oral contraceptives, to see how the various formulations fit with our own portfolio'. But he stresses that 'no product lines will be dropped; we will just have to decide in which form we want to offer them'.

In any case, the low-dose birth control pill Valette, based on the progestogene dienogest will play an important role in Schering's future strategy.

The drug is unaffected by restrictions placed by the German drug regulation authority BfArM on other pills of its category, simply because it was not on the market in western Europe and therefore not considered in studies that suggested a possible link between the hormones gestodene and degestodril and strokes.

SCHERING BUSINESS DEVELOPMENT OVER
THE FIRST NINE MONTHS OF 1996 (DM M)
 
Sales by sector
Q1-Q3 1996 Change, %
Diagnostics 1203 1
Fertility control and
   hormone therapy
1171 11
Therapeutics 1003 15
Dermatology 305 2
Other* 164 447
Total 3846 12
 
Operating profit
481 7
 
Sales by product
Betaferon 395 36
Iopamiron 390 (11)
Ultravist 340 23
Magnevist 298 17
Diane 189 11
Androcur 165 (3)
Femovan 175 (6)
Triquilar 144 12
Microgynon 135 29
Fludara 78 44
 
* including Medrad from October 1995 and Leiras
from September 1996
 
SOURCE: SCHERING

By adding dienogest to its portfolio, the Berlin group has become the only hormone producer with five progestogens - which include gestoden, levonorgestrel, drospirenon and cyproterone acetate.

Along with Valette, which has annual sales of DM40m, Jenapharm has two OCs based on levonorgestrel, both of which compete with Schering products: its Trisiston is a competitor to Schering's Triquilar, its Minisiston vies for market share with Microgynon. Valette is currently registered only in Germany, but approval by the European drug authority EMEA is anticipated for the second half of 1998.

According to Nowak, Schering will look closely at new products in Jenapharm's pipeline, scheduled for launch between 1998 and 2000, including hormone replacement therapy (HRT) treatments based on dienogest.

A first step towards developing a new production concept for female healthcare will be to move a tabletting plant for oral contraceptives from Berlin to Jenapharm's new DM140m solids facility at Weimar.

Other moves for pharmaceutical solids production units may follow.

The solids plant at Weimar will operate as Schering Produktionsgesellschaft, while the name Jenapharm will be preserved for the branch of the company that carries out research and development, produces hormones and develops active ingredients.

During the Cold War Schering's management made a political statement by deciding to stay in West Berlin, even as other corporations were moving out.

As production facilities in Berlin were surrounded by communist territory, it was decided to establish a bulkhead at Bergkamen in Westphalia, for any eventualities. This not only provided more room, it also improved logistics.

Now with additional bases at Jena and Weimar, the group's German-based hormone production segment has won an even better geographical spread, one that also takes in its distribution arm Asche AG at Hamburg. In future, the three production sites will be managed by three general managers, who will coordinate activities. At present, nine project groups and a steering committee are working feverishly on implementing the reorganisation, which Nowak says 'must be completed by mid-1997'.

Once the new structure is in place, Schering will take a close look at where its markets are. Eastern Europe, where Jenapharm's products already are market leaders in Russia, the Czech Republic and Poland, will be a central focus. Schering itself is well known in these markets, where it has had representative offices for a number of years.

Leiras, the third link in the chain, has an established position in Russia, as well as in the Baltic states.

Developing female healthcare markets outside Europe is still a priority. While the strengths of Schering's therapeutics business lie for the most part on the other side of the Atlantic, due to strong competition, the Germans have never succeeded in building up an important position in the US hormone drug market.

'With Leiras and Jenapharm we hope to make more progress in the US,' says Nowak, adding that management feels reaching this goal is now 'simply a question of time'.





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