Smaller Impact Of Govt Tax On France's Big Four

When the method of calculating the proposed 2.5 billion French francs ($495 million) contribution the French government wants from the pharmaceutical industry was first clarified, it appeared that the country's four leading stock exchange-listed pharmaceutical companies would suffer only a moderate impact. This was the view of analysts Marie-Helene Leopold and Jean-Pascal Rolandez of Paribas Capital Markets/Courcoux-Bouvet, reporting early-January on Rhone-Poulenc Rorer, Roussel Uclaf, Sanofi and Synthelabo.

These four companies, which together control 25% of the French market, were expected to account for only an estimated 16% of the 2.5 billion franc one-off contribution, which the analysts suggested would be much more onerous for a large part of the industry that consists of medium or small-sized family concerns. Moreover, they added, this should speed up the restructuring that is taking place in the sector.

The advantages of the "big four" were that they often have a lower ratio of promotional spending to sales than their foreign competitors in France, and a very high ratio of French R&D spending to domestic turnover, the analysts noted.