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Executive Summary

Erbamont is focusing 40% of its R&D spending, or close to $ 55 mil. in 1988, on the development of cancer drugs, Montedison Vice Chairman and CEO Alexander Giacco told securities analysts at a recent New York Society of Security Analysts meeting. "Committed to expand its franchise in this market, Erbamont devotes almost 40% of each R&D dollar towards cancer or oncology, its flag technology, ]and[ in the closely related immunology ]field[, probably the second largest spending in the whole pharmaceutical industry," Giacco said. In 1988, the company spent 14% of sales, or about $ 140 mil., on R&D. "With estimated sales in 1988 of a billion dollars and R&D expenses of $ 140 mil.," Giacco noted, ". . . Erbamont doubled its R&D spending over the last four years, taking it up from 9% of sales to 14%." The Montedison pharmaceutical subsidiary currently has 34 pharmaceutical products in development, with at least four products either in late clinicals or pending at FDA. Three of the late-stage drugs are cancer agents: Pharmorubicin (epirubicin), toremifene and idarubicin HCI. The fourth product is an antiviral drug, Rifabutin (ansamycin). The 34 development projects puts Erbamont fifteenth among drug companies in terms of the number of drugs in its pipeline, Giacco asserted. "Equally important, the pipeline is well-balanced, as it contains a similar number of entries in each phase, thus ensuring a steady flow of new products over the next ten years," the Montedison exec commented. Erbamont is the worldwide leader in cancer drug sales, with Adriamycin (doxorubicin) "the single largest selling anti-cancer drug in the world," Giacco said. He added: "Adriamycin together with its first successor product, Pharmarubicin (epirubicin), command market shares ranging from 20-50% in each major country." Although the product patent for doxorubicin expired in June 1988, the company has been defending its franchise in the courts. Erbamont reportedly filed suit against the Italian firm SICOR in Italy in an effort to assert the validity of its process patent for doxorubicin, which expires in 1991. Erbamont subsidiary Adria Labs also filed suit against FDA seeking a revision in the antibiotic monograph for doxorubicin solution ("The Pink Sheet" Feb. 13, T&G-3). Despite the expiration of the Adriamycin product patent, Erbamont is predicting a doubling of sales over the next five years: "70% of this growth is expected to come from internally discovered ]drugs[ or externally in licensed drugs, and the remaining 30% from the acquisition of selected product lines or businesses. As many of the most promising new products will begin to be marketed in the early 1990's, we can speculate that the rate of growth will tend to accelerate beyond 1993," Giacco said.

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