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Boehringer to restructure in Southern Europe

Closes chemical plant in France as part of plans to “adapt” business structure

Boehringer to restructure in Southern Europe

Boehringer is to close a chemical plant in France as part of plans to “adapt” its business structure in Southern Europe.

Making the announcement at its annual conference in Ingelheim, the German pharma company said the move was to “consolidate our production network and make it more efficient”.

Boehringer's chair of the board of managing directors Andreas Barner described the decision as “unavoidable” as the plant had reached overcapacity of production.

He also said sales prospects across Southern Europe for Boehringer were becoming increasingly limited due to the “dramatic price reductions” in countries, such as Spain, Greece and Italy.

Future prospects don't look good for the region either, with Boehringer saying in a statement: “The market situation in Europe remains difficult, especially in France and Southern Europe, and is not expected to change in the years ahead.”

The company has made provisions of about €360m to cover the structural changes.

Elsewhere, the company also confirmed the closure of chemical operations at its site in Petersburg, Virginia, in the US. As announced in September 2012, between 80 and 100 workers are expected to lose their jobs.

Emerging markets
Of the emerging markets, China appears to hold the most potential for Boehringer.

The company posted growth of 32 per cent in the region from 2011 to 2012, achieving sales of €358m.

"We see significant potential in China as one of the major strategic markets for the company's future growth," said Prof Barner.

Growth in the region is expected to come from several areas, including stroke prevention in atrial fibrillation (with Pradaxa), oncology (with afatinib and nintedanib in development) and hepatitis C (with fladaprevir in development).

Diabetes was also mentioned by Allan Hillgrove, head of marketing and sales, as an important growth market in the region, considering the condition is now considered to be at epidemic levels.

Part of this growth in China includes an investment of €86m to expand the company's Zhangjiang plant, increasing the company's production and supply capacity and competitiveness, and boosting the number of employees from 240 to 350.

"We have a vision to build the China plant into one of our core global operation units," said Professor Wolfram Carius, member of the board of managing directors with responsibility for biopharmaceuticals and operations. "The plant in China will not only serve the local market with top quality medicines but will develop into a full-fledged launch site of our innovative product portfolio eg in diabetes."

India –another of pharma's major regions of growth – has less immediate potential for the company, which only has 500 people working in the region.

Part of this reluctance to expand is down to the patent situation in India, which has seen compulsory licenses effectively overturn patents for several major drugs.

Prof Barner commented that the patent situation in the county was “strange”, but in the long term the country was an “interesting market”.

25th April 2013

From: Sales

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