Long Rx drug romances end for two major conglomerates

Medical Marketing and Media, Jan 2001

Long Rx drug romances end for two major conglomerates

Two giant chemical companies are divesting their prescription drug subsidiaries, thereby ending long-sought efforts at making it in the prescription drug business.

DuPont said it intends to and BASF said it has obtained buyers for its drug units. Abbott Laboratories announced on December 15 that it was buying BASF's Knoll Pharmaceuticals for $6.9 billion in cash, outbidding Eli Lilly according to news reports.

The sale is designed to give BASF room for more profitable growth from its core businesses. Though Knoll is expected to post $2.1 billion in sales this year, the company is too small to compete against newly consolidated pharmaceutical companies, according to the announcement.

DuPont said it decided to divest its pharmaceutical subsidiary because required heavy research expenditures outweigh contributions to the bottom line. Again, the drug business is relatively small compared to that of other companies.

Prescription drugs had $1.8 billion in revenue last year, about seven percent of DuPont's total sales. The plan is to sell, swap, or spin-off the unit.