RHONE-POULENC: A TRANSFORMATION

French chemical and pharmaceuticals company Rhone-Poulenc has been transformed from a domestically- focused chemical group into a truly international life sciences group via 40 billion French francs ($6.7 billion) worth of acquisitions and around 75 disposals, say analysts Percy Lomax and John Doree at broker Robert Fleming Securities in the UK. They say that the next phase will see the group's growth potential realized through the motivation of its new decentralized management structure.

At its current rate, the analysts believe that the group is undervalued based on its growth/recovery prospects. It is already a leader in health care in the European arena and will grow at a rate well above the industry average. Its diversified product range gives protection against health care spending reforms, while its new anticancer compound, Taxotere (docetaxol) has the potential of being a significant contributor to revenues.

The analysts also suggest that R-P will be able to offset pressures in the medium term in agrochemicals, where it is market leader in Europe, with strong new product growth and opportunities in the USA, Far East and central Europe. In the chemical sector there are hopes of a significant recovery next year once the group has completed substantial restructuring.