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New pharma tie-up unlikely to drive Swiss mergers

(Reuters) -- News of another major merger is unlikely to hasten any move by Swiss pharmaceutical companies Novartis and Roche Holding to team up with rivals, said those in the industry.

This content was published on December 20, 1999 - 14:01

(Reuters) -- News of another major merger is unlikely to hasten any move by Swiss pharmaceutical companies Novartis and Roche Holding to team up with rivals, said those in the industry.

An announced move by two competitors, Pharmacia & Upjohn and Monsanto Co, to merge would form a company ranked below Novartis, Switzerland's largest pharmaceuticals concern, in terms of global pharma sales.

Novartis, though not first, is usually ranked by analysts among the top five in that category. Currently the top five pharma companies are seen quite close to each other in terms of market share, with none having more than 4 or 4.5 percent of global sales.

Novartis was also not likely to suffer much, despite rumours it itself had at one time been rumoured to be in talks with Monsanto. Any tie-up would have had major implications for the Swiss group's crop protection and seeds businesses.

Instead, Novartis announced earlier this month it was spinning off its agribusiness, merging it with that of AstraZeneca to form Syngenta.

Novartis's activities after the spin-off are now concentrated in healthcare -- largely pharma -- and the company has said it has a number of its own products in the pipeline.

“What matters is not the absolute ranking position, but the gap between competitors with respect to market share,” Novartis spokesman Mark Hill said on Friday. Novartis declined comment on the latest merger news.

Roche, considered among the top ten in global pharma sales, should also have larger overall sales than the new, merged company, said to rank 11th.

Roche spokesman Peter Wullschleger also declined to comment on moves by his company's competitors. In general, Roche was comfortable with its position, though it has not ruled out some sort of move in the future if conditions are right.

“But we don't need to run with all these mergers,” said Wullschleger. While Roche has said in the past that it is not opposed to mergers or cooperations, it has to be “the right company, at the right price, at the right time,” he said.

Analyst Birgit Kulhoff at Lombard Odier said of the latest merger: “I don't see any implications, not for Novartis, not for Roche.”

Kulhoff noted that Celebrex, the arthritis drug and painkiller co-marketed by Monsanto's Searle and Pfizer, already competes with Novartis's Voltaren. But she doubted the merger would lead to any change in that competitive aspect.

With respect to agribusiness, Pharmacia & Upjohn's Chief Executive Officer Fred Hassan said that the newly merged group would plan to have a “strong stand-alone agribusiness.”

Even the agribusiness were to be sold, Syngenta, the Novartis-AstraZeneca spin-off, was not expected to be interested in an acquisition due to anti-trust implications, analysts said.

Some believed that Germany's Bayer AG or BASF AG may be interested.

But even if Monsanto's agribusiness were put up for sale, the problem would be partly at what price, and the fact that the environment for genetically modified agricultural products, especially in Europe, remains depressed.

“I think that anybody looking at buying right now would be very cautious in what they would offer,” said Denise Anderson, analyst at Bank Sarasin.

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