RORER GROWTH STRATEGY INCLUDES MAJOR ACQUISITION, ALTHOUGH ROBINS PURCHASE IS "UNLIKELY" -- CEO CAWTHORN; MONOCLATE LAUNCH EXPECTED BY FOURTH QUARTER
Rorer's growth strategy is based on another major pharmaceutical acquisition that could still include Robins if the Richmond-based company becomes available, Rorer Chairman Robert Cawthorn indicated in a presentation at a May 5 Alex Brown health care seminar in Baltimore. Cawthorn said that Rorer "must achieve a scale which will fund and support both the research and the marketing efforts needed to compete effectively with the leaders in our industry." Cawthorn's target is to double Rorer's marketshare in the next five years both by acquisition and by growing its existing business "through aggressive marketing and well-focused R&D." Rorer recently made an unsuccessful $2 bil.-plus offer for Robins ("The Pink Sheet" April 20, p.6). While noting that Rorer is still interested in acquiring Robins, Cawthorn said that Robins is "probably unavailable" after filing a Chapter 11 reorganization plan. "Most of you have heard that Rorer has an expressed interest in acquiring A. H. Robins." Cawthorn observed. "However, they filed their own plan of reorganization at the end of last week so it is unlikely that they will become available." The continued dissatisfaction of the Dalkon Shield(END ITALICS) claimants with Robins' proposed reorganization plan and a recent publicized bid for Robins' OTC line from Merrell Dow (see related story) indicate that Robins may still be in play despite management's interest in keeping the company independent. Robins has repeatedly stated that it "has no interest in selling major segments of its operations and intends to continue to pursue its Chapter 11 reorganization" under the plan it filed on April 16. In outlining the reasons for Rorer's attraction to Robins, Cawthorn cited the good therapeutic fit between the two companies' Rx lines, the greater critical mass in the hospital area from a combined Elkins-Sinn and Armour business, and Robins' strong OTC brands. "If those great brands, Robitussin and Dimetapp, were combined with our Maalox, Ascriptin, and Perdiem lines, the new and improved Rorer would have one of the largest and most attractive OTC businesses in the U.S.," Cawthorn said. "We would be about number six in the OTC market." In the hospital area, Cawthorn noted that a combined Elkins-Sinn and Armour business "would make one of the strongest hospital suppliers in the country, ranking seventh overall." Together, he added, Armour and Elkins-Sinn, despite their unrelated products, "could satisfy a broader array of hospital needs with combined sales forces." Rorer's acquisition strategy, Cawthorn said, includes four elements: "(1) the prospective company must be capable of providing opportunities for synergy; (2) there must be a strategic and therapeutic fit with our existing business; (3) the company should have a better than average cash flow generating capability; and (4) any dilutive impact due to reorganization expenses and one-time costs should be short-term in nature and should be corrected within a year." In describing Rorer's current business strategy, Cawthorn said the key word is "focus." Cawthorn explained that "in both marketing and research, we have increased spending while decreasing the number of projects and products we are spending on." The Rorer exec noted that its 500-person combined Rorer and USV sales force is focusing its efforts on five leading products. "In the U.S., we increased our sales force penetration by almost 50% and we are concentrating our marketing efforts" on Lozol in the hypertention market, Slow-bid and Azmacort in the hypersensitivity market, Calcimar in the bone metabolism area, and Maalox. The increased market emphasis on growth products is "already working," Cawthorn said. "We have already seen a 46% increase in new Rxs for Lozol over March of last year." In addition, "sales of Slo-bid and Azmacort are up over 50% in the first quarter, as are our U.S. sales of our bone metabolism product Calcimar for osteoporosis," Cawthorn pointed out. Rorer is also focusing its R&D on the same five therapeutic areas. In the cardiovascular area, Rorer's beta blocker celiprolol was recently launched in W. Germany and is in clinicals in the U.S. In the hypersensitivity area, Cawthorn mentioned the company's work in leukotriene inhibitors. Cawthorn highlighted the performance of Maalox in treating and preventing ulcers. "We have conducted extensive clinical trials that show that twice-a-day Maalox tablets are as effective as Tagamet(END ITALICS) in preventing the recurrence of duodenal ulcers," Cawthorn reported. "Preliminary results also show Maalox to be as effective as Zantac in healing ulcers." Rorer plans to launch an aerosol formulation of Maalox near the end of 1987. "We are also developing new formulations of Maalox including an aerosol formulation called Maalox Whip," Cawthorn said. "The Maalox Whip overcomes the major complaint that consumers have about antacids, namely the lousy taste. This product tastes great." In the blood products area, Cawthorn noted that Rorer plans to launch its highly pure Factor VIII product, Monoclate, by the fourth quarter of this year. Monoclate's 97% purity level, which compares to the current 2% products, "offers three advantages to the hemophiliac," Cawthorn said -- "First, fewer allergic reactions; second, less impairment of the immune system; and third, dramatic reduction in the possibility of viral transmission." Cawthorn called Monoclate "a very exciting product that is being eagerly awaited by the market." he predicted that Monoclate's introduction "at significantly higher prices" would "greatly" expand the current market for Factor VIII products. He estimated the worldwide Factor VIII market at approximately $250 mil., "with about $50 mil. in the U.S."
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