Shares jump as profits soar at Serono

Business is booming for this biotech Keystone Archive

Shares in Europe's biggest biotechnology group, the Swiss-based Serono, jumped 4.8 per cent at one stage on the Swiss stock market as the company revealed net profits up 64.2 per cent over last year to $301 million (SFr498 million).

This content was published on March 6, 2001 - 14:49

The Geneva-based group's fourth quarter performance was particularly strong with net income at $90.7 million versus $54.0 million a year ago.

Analysts had forecast net income for the year as a whole of between $268-292 million, up from $184 million in 1999.

"This performance results from the very strong growth of our business and our biotech products," said chief executive Ernesto Bertarelli. "With our financial strength, excellent products, discovery programmes and world-leading collaborations, we have a strong future."

However, the latest figures may not be enough to offset investor scepticism about the firm's growth after two consecutive quarters of sales disappointment.

The company reported in January that 2000 sales rose 15.2 per cent in local currency terms to $1.147 billion, undershooting forecasts again after a weaker-than-expected third quarter.

However, Serono's chief financial officer, Jacques Theurillat, was upbeat when he spoke to swissinfo about the outlook for sales in 2001.

"We expect growth in sales of between 15 and 20 per cent for the current year," he explained. "And through tight control of expenses, higher investment in research and development and lower costs of goods sold we will be delivering again this year growth of around 20 per cent in net income."

Analysts have said the outlook for the group depends on the performance of Serono's multiple sclerosis treatment Rebif in the US market.

Rebif has yet to gain a foothold in the US and Serono needs to convince the Food and Drug Administration that it is safer or more effective than Biogen's Avonex treatment if it is to accelerate a launch that would otherwise come after mid-2003.

Jacques Theurillat is confident that the results of a head-to-head drug trial between Rebif and Avonex will come through by the third quarter.

"Things are going on track as we continue to analyse the data, and as we continue we hope to have news on the test by the third quarter of this year, depending on our discussions with the FDA," Theurillat explained.

One way for Serono to reduce its reliance on the multiple sclerosis drug would be a major acquisition. The company currently has a war chest in excess of $1 billion.

"This money is going to firstly be invested in bringing forward the products on our pipeline, then we will also use it to continue investing in collaborations and partnerships with other biotech companies," added Theurillat.

"But in the meantime if we find a company which has interesting products we will invest in it if it makes industrial sense."

swissinfo with agencies

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