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ecoglobe [yinyang] news (6 July 1999)
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"Start selling your ag-biotech shares now!"

"Novartis, AstraZeneca, AHP trying to jettison their agri divisions. I'm not sure I'm ready to believe this article, but perhaps they are running scared, with Monsanto's PR blundering, and have decided the best thing is to get rid of those divisions before if all turns to custard," writes stu, who posted this article to the GE listserve.

[International Herald Tribune 1 July 1999]
Farm Divisions Are for Sale
After Gentically Engineered Crops Flop

By David J. Morrow
[New York Times Service, New York]

Three big drug companies are having a hard time selling their troubled agricultural divisions, analysts said, because the most likely buyers are one another.

"It's like a lot of houses suddenly becoming available in a poor market"' said David Saks, a managing director at Gruntal & Co. '

The flight out of agricultural products such as seeds and herbicides is an abrupt change, for the pharmaceutical industry. Not more than a year ago, many pharmaceutical companies were trying to strengthen their agricultural hold- ings during a downturn in pharmaceuticals.

Since then an agriculture division has become more hindrance than help. Plagued by market troubles in Europe and Southeast Asia, sales worldwide of- agricultural products are projected to drop 3 percent or so this year, analysts said.

As more pharmaceutical companies raced to develop genenetically improved crops, many European consumers were becoming increasingly concerned about crops with altered DNA. As a result, many European governments are trying to limit their use, dampening what executives had hoped would one day be a booming market.

The three major companies that would like to jettison their agricultural divisions are American Home Products Corp.,Novartis AG and AstraZeneca Group PLC.

Analysts said that several board members at the three companies had balked at allocating additional research money to agricultural projects when the cash could be used to develop new drugs, which, would deliver much higher profit margins.

It was unclear this week how the sales of the agricultural divisions — three of the world's largest— would take place. Novanis, which is based in Switzerland, and AstraZeneca of London declined to comment on what each company called "market speculation."

A spokesman for American Home, which is based in Madison New Jersey, reiterated that the company was "re- viewing strategic alternatives" for its agriculrural division. While agricultural divisions did once provide several advantages, like research synergies with some pharma- ceutical projects, the worldwide market for seeds and herbicides was more turbulent than most pharmaceutical executives had believed possible.

"The pharmaceutical companies learned an important lesson here.'' said Alex Evans, a pharmaceutical analyst at Deutsche Bank Securities in London. "When things get messy in the agricultural industry, they really get messy. The beautiful thing about pharmaceulicals is that they are noncyclicals.'

Many pharmaceutical executives who had an agricultural presence had projected that sales of seeds and herbicides worldwide would grow by 9 percent annually. These pro- jections proved to be shortsighted.

During the past several weeks, there has been speculation in European markets that AstraZeneca and Novartis would spin their agricultural businesses into one, which would easily be the world's largest.

** NOTICE: In accordance with Title 17 U.S.C. Section 107, this material is distributed for research and educational purposes only. **
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ecoglobe [yinyang] news (6 July 1999)
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