Solvay Records 3% Y/Y Rise in Pharma Sales, All Clear for Disposal of Pharma Business

Record Sales for Solvay's Sold-Off Business

Belgian company Solvay has closed the books on a positive performance with its pharmaceutical division experiencing a 3% year-on-year (y/y) growth for the full year 2009 to 2.8 billion euro (US$3.8 billion) despite a fourth quarter marked by a 1% decrease in revenues. On the expense side, spending on pharmaceutical R&D decreased by 2.8% y/y to 416 million euro and was mainly invested in the development of molecules in the cardiometabolic and neuroscience areas. The group reduced fixed production costs and commercial and administrative costs by about 120 million euro in its pharmaceutical business compared to 2008. Operating income—calculated by IHS Global Insight as net sales minus cost of sales, commercial and administrative (C&A) costs, and R&D expenses—fell by 2.6% y/y to 953 million euro in 2009, while net income after minority interests jumped 27.4% y/y, reaching 516 million euro.

The year 2009 saw Solvay dispose of its entire pharmaceutical business in order to refocus its activities on chemicals and plastics. The sale transaction with Abbott, closed on 15 February 2010, entitles Solvay to a first cash payment of 4.5 million euro followed by additional potential payments of up to 300 million euro upon completion of certain milestones between 2011 and 2013.

Pharmaceutical sales were up 3.4% y/y in the reported currency, benefiting from good performance of Androgel (testosterone gel), Creon and Influvac. Influenza vaccine Influvac grew the fastest, up by 41% y/y to 162 million euro. In second position comes testosterone deficiency treatment Androgel (testosterone gel) with sales up 34% y/y despite a black-box warning imposed by the U.S. FDA in the United States ( see Belgium: 11 May 2009: Solvay Hit by FDA Black-Box Warning on Testosterone Gels). However, the year 2010 could see the U.S. patent protection on Androgel being further challenged after Israeli generics producer Perrigo filed an Abbreviated New Drug Application in the United States in June, seeking approval for its copy version of the drug (see Belgium: 15 June 2009: Solvay Faces First Post-FTC Challenge to Androgel Patent as Perrigo Files ANDA). Parkinson's disease drug Duodopa (levodopa/carbidopa) recorded an impressive 40% y/y increase in sales to 59 million euro while pancreatic enzyme Creon (pancrelipase) saw its sales jump 23% y/y to 268 million euro, following its U.S. approval in April.

On the negative side, sales of Solvay's flagship products were affected by significant pressure from generic competition. Sales of the top-selling cardiovascular drug Fenofibrate were down 11% y/y, while Serc and Luvox respectively suffer from a 13% and 10% y/y downturn.

Outlook and Implications