BAYER AND HOECHST BACK DRUG SECTOR

The leading German chemicals and pharmaceutical companies Bayer and Hoechst are putting increasing emphasis on pharmaceuticals, despite the calamitous effect this year of the government's Health Structure Law on sales volume and profits. Both companies have confirmed that - against the background of a steep decline in petrochemicals and agrochemicals businesses - they view the drug sector as a key area for the future.

While neither of these majors has followed Schering AG or Altana in announcing new products this year (see also story alongside), it is clear from Hoechst's statement when it acquired a 51% stake in the US generics producer Copley (Marketletter October 18) that pharmaceuticals, including generics, will be a major factor in future business development.

Hoechst Acquisitions Expected Hoechst, in fact, is widely expected to acquire stakes in other drug companies with patent-expired products both in Germany and abroad. German drug industry observers say this is a fundamental shift for Hoechst, which has so far operated in the generics area in only a small way. Hoechst's health care division sales in the first nine months of 1993 reached 8 billion Deutschemarks ($4.68 billion; Marketletter November 1) but operating profits were down around 200 million marks ($117 million) as a result of the downturn in Germany.