Dutch pharmaceuticals and chemicals group, Akzo Nobel, has posted a 42% increase in net income for 2004, up to 856 million euros, but sales were down 3% to 12.7 billion euros versus the previous year [[03/02/04e]]. However, the earnings rise was principally due to its 1 billion euro divestment of chemical catalysts and excluding this contribution [[02/08/04h]], net income would have fallen 14% to 90 million euros.
Once again, Akzo’s pharmaceuticals unit, Organon, did not fare so well. There, sales were down 9% to 3.2 billion euros and earnings before interest and taxes and exceptional items fell almost 25% on last year to 522 million.
The company noted that the generic competition in the USA which has eaten into sales of the antidepressant Remeron (mirtazapine) slowed toward the end of 2004, but started in Europe. On a positive note, sales of the follicle-stimulating hormone product Puregon/Follistim (follitropin beta injection) and turnover of the hormone replacement therapy Livial (tibolone) rebounded in the fourth quarter. Sales from the contraceptive NuvaRing (etonogestrel/ethinylestradiol)) doubled year on year.
Despite this gloomy set of results, Akzo was fairly upbeat and noted that pharma return on sales held steady at 16% thanks to aggressive cost savings. Chief executive, Hans Wijers, commented: “We have significantly realigned human healthcare, focusing on core treatment areas, leveraging our pipeline through alliances, and streamlining the organisation.” He went on to say that “Akzo Nobel met the challenge with excellent performance on margin protection [and] Organon has reached a turning point for top-line growth in 2005.”
Nevertheless, Akzo’s core chemicals business posted “its best performance in several years,” so observers are looking at whether there will be a pharmaceuticals sell-off soon.