Ivax Nycomed, A Defensive Merger?

Last month's announced merger between Ivax of the USA and Norway's Hafslund Nycomed (Marketletter October 23) is being viewed by drug analysts in Oslo as a device by which both medium-sized drug companies can avoided predators. With annual combined turnover of $2.5 billion, the Ivax Nycomed group comes into the first 50 league of drugmakers.

Ivax has put $1.1 billion into the merger, with turnover from generics accounting for around 57% and that from infusion solutions about 30%. Some 40% of HN's 1994 sales of $1.2 billion came from the contrast media sector and the company's market position was strengthened with the acquisition of Sterling-Winthrop's activities in this area. Pharmaceutical sales account for 42% of sales, and the Norwegian group, like Ivax, is intensively concerned with generics, but the main weight falls on original drug products, an area reinforced in 1994 through a license agreement with the Altana subsidiary Byk Gulden for the gastrointestinal pantoprazole.

While Ivax offers the main force for expansion, the analysts note that HN has reported a higher gross return on sales and has a stronger profit base. This was neatly reflected in stock market reaction to the merger, which triggered a rise in the price of HN shares and a drop for Ivax.