Serono sheds no light on its future course

Serono is Europe's largest biotechnology concern. Serono

The Serono biotechnology company says it is still considering its options, as it reported a net loss of $106.1 million (SFr137.22 million) for 2005.

The Geneva-based firm, which failed to find a buyer last month, said turnover was up by 5.2 per cent to $2.586 billion, with product sales of $2.339 billion.

The firm’s figures went into the red because the company booked a $725 million charge last year to cover costs relating to the illegal marketing of an Aids-wasting drug.

Net income before the charge was $565.3 million, an increase of 28.4 per cent over 2004.

Serono announced in November that Goldman Sachs had been retained to explore “strategic alternatives” for the company.

There is speculation that Britain’s GlaxoSmithKline is considering a bid after an auction in January failed to find a buyer for the $15 billion asking price.

In a statement on Monday, Serono said this process was continuing but there was no assurance that any transaction would take place.

“There are a lot of question marks about the strategic direction that they are going in,” commented analyst Bob Pooler at private bankers Lombard Odier Darier Hentsch. “Is this a sale or not?”

Fourth quarter

Sales and profits missed market expectations in the fourth quarter as sales of its most important product, a multiple sclerosis drug called Rebif, increased by only 8.2 per cent.

“We anticipated higher sales for Rebif and these are roughly six per cent lower than forecast,” Pooler said.

But Serono chief executive Ernesto Bertarelli was upbeat about the company’s performance for the year.

“2005 was a year of continued growth and business expansion. Our improved operating leverage led to higher adjusted profit, while our aggressive business development strategy resulted in a stronger pipeline,” he commented.

“During 2006, we will maintain our focus on maximising the potential of our market products, the efficiency of our business operations and the advancement of our most promising clinical trials,” he added.

Serono forecast single-digit product sales growth in 2006, as its Rebif drug becomes established in major markets.

It also said it would earnings per bearer share this year of between $42 and $43.40.

The firm said it would propose a cash dividend of SFr10 per bearer share, SFr4 per registered share and SFr0.25 per American Depository Share, an increase of 11.1 per cent over the 2004 dividend.

Serono also said it had started enrolling patients to take part in a Phase III trial for its oral cladribine drug, one of two frontrunners in the race to make a multiple sclerosis medicine that is easier to take than others.

swissinfo with agencies

In brief

Serono, which is Europe’s largest biotechnology concern, surprised the markets in November when it announced that it had hired Goldman Sachs to look into possible options.

There have been no takers at a reported price of S15 billion but GlaxoSmithKline has been holding talks with the company.

In December, a United States judge ordered Serono to pay $704 million to settle claims that it offered kickbacks to doctors.

The company pleaded guilty to criminal conspiracy charges relating to its Aids treatment drug Serostim.

Serono is active mainly in biotechnology, fertility drugs and neurology.

Chief executive Ernesto Bertarelli leads the management team of Alinghi, Switzerland’s victorious yacht in the last America’s Cup.

Key facts

Financial figures 2005

Turnover: $2.585 billion (+5.2%)
Research and development expenses were flat at $593.6 million)
Pre-tax profit/loss : – $72.4 million (+$574.2 million in 2004)
Net profit/loss: -$106.1 (+$479.7 million)