BNP EURO-CHEM REVIEW

In their recent review of the European chemicals sector, analysts at BNP Capital Markets say that where pharmaceutical companies are run as part of a chemical company parent, they are less successful than those which are set up as independent operations, such as Rhone-Poulenc Rorer and now Zeneca.

Managerially, they say, chemical companies have been too slow to organize their pharmaceutical business along product, rather than geographical, lines, and the German majors have been particularly guilty of this mistake. They add that pharmaceutical companies which are partly or wholly-owned by chemical companies have generally been worst hit financially by the health care cutbacks in Europe. On the more positive side, the analysts point out, the German government has now halted the refunds drugmakers were obliged to give the government to help pay for the health costs of the old East Germany, which has helped third-quarter profits.