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Novartis to profit from pharmaceutical merger

With a carefully calculated merger, healthy financial indicators and the support of a local manufacturer, the newly-formed pharmaceutical company, Novartis Pharma Services is seeking to become the king of Slovakia's competitive market.
Created by the merger of Sandoz and CIBA, Novartis is involved in pharmaceutical products, health care and contact lenses; agribusiness, which includes crop protection, animal health and seeds; and nutrition.
At the June 24 press conference officially introducing Novartis, Henning Remmer, the company's general manager, said, "In the Slovak Republic, CIBA and Sandoz have been active for many years. We are aiming at creating a new company based on the best philosophies and best practices from the two former companies."

With a carefully calculated merger, healthy financial indicators and the support of a local manufacturer, the newly-formed pharmaceutical company, Novartis Pharma Services is seeking to become the king of Slovakia's competitive market.

Created by the merger of Sandoz and CIBA, Novartis is involved in pharmaceutical products, health care and contact lenses; agribusiness, which includes crop protection, animal health and seeds; and nutrition.

At the June 24 press conference officially introducing Novartis, Henning Remmer, the company's general manager, said, "In the Slovak Republic, CIBA and Sandoz have been active for many years. We are aiming at creating a new company based on the best philosophies and best practices from the two former companies."

According to Remmer, Novartis aims to become the number one pharmaceutical company worldwide, a position they now share with Glaxo. Remmer added, "In the Slovak Republic, as I know the figures, we are the biggest international pharmaceutical company in the market."

Novartis does not, at least on a global basis, see Slovakofarma or other Slovak companies as their direct competitors. In fact, Slovakofarma manufactures several products for Novartis for the Slovak market.

Oriol Ros, the head country liaison for medicine, pointed out that Novartis, in essence, tied for number one in market share with Glaxo at 4.4 percent in 1995 and 1996. Hoechst, Bristol-Meyers, and American Home Products all trail in market share.

Outlining Novartis's strategy, Ros stated, "Two years ago, Novartis - CIBA at the time - started considering the possibility that if you want to have a leading position in the pharmaceutical sector, you need to have a big market share. And with less than three percent two years ago, this was impossible. The merger [allowed us to have] what we call a minimum critical mass and this minimum critical mass allows us to stay in first place with Glaxo."

According to a recent report from the independent analyst Merrill Lynch, projected sales figures for Novartis from 1996 to 2000 indicate an increase of 7.9 percent per year. The report also indicated that profit is expected to increase by 15.9 percent and, even more importantly, the return on sales are projected at a hefty 10 percent increase.

The total sales for the company for 1996 stands at 27 billion Swiss francs, 16 percent of which was invested in research and development, similar to its competitors.

When questioned about the amount spent on research and development, Remmer stated, "It is one of our favorite topics because we know that with spendings of about 2.4 billion Swiss francs, we are the number one spending research company. We have big hopes for the future that these investments in research will also bring out products that are needed for the future. And that is our number one aim. This is a long-term investment for six to eight years from now." Current plans call for 29 launches of new products in the next three years.

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