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PROCORDIA MERGES KABI PHARMACIA AND ADRIA LABS IN CONSOLIDATION

Executive Summary

PROCORDIA MERGES KABI PHARMACIA AND ADRIA LABS IN CONSOLIDATION of its U.S. pharmaceutical businesses, creating a single company which is being headed by President Fernando Correa da Costa, formerly director of the Americas for Adria parent Erbamont. The restructuring follows the March purchase of 51% of the stock of both Farmitalia Carlo Erba and Erbamont by Kabi's Swedish parent, Procordia. The stock was acquired from Italian firm Montedison-Ferruzzi ("The Pink Sheet" March 29, p. 13). Kabi and Adria had combined U.S. sales of $470 mil. in 1992. Headquarters for the merged U.S. pharmaceutical businesses are being combined in Dublin, Ohio, at Adria's 92-acre facility. The relocation of Kabi management from Piscataway, N.J. is expected to be completed during the first quarter of 1994, Adria said. The Kabi and Adria sales forces have been realigned, and two sales forces were created -- one focused on oncology and one on therapeutics -- with district managers who are responsible for sales reps in both. About 12 overlapping territories were eliminated, leaving 205 reps. The proposed name for the merged Kabi/Adria unit -- Phannacia -- must still be approved by Procordia shareholders at a Nov. 11 meeting in Sweden. The shareholders will also vote on a plan to break up the holding company Procordia and spin off its consumer products businesses to major shareholder Volvo, in exchange for which Volvo would relinquish part of its share. Procordia would then be purely a health care company, and the Swedish government, the other major shareholder, would vote to change the name of Procordia to Pharinacia. The government has indicated that it plans to sell its interest in Procordia to the public, which now owns about 20% of the company. Managers of the new company will include VP-Finance and Chief Financial Officer Joseph Reed, VP-Medical Research Joseph Bianchine, VP-General Counsel Bethany Beck, VP-Marketing Ola Magnussen and VP-Regulatory and Scientific Affairs Larry Versteegh. Former Kabi Pharmacia manager Anders Wiklund is remaining with Procordia in the U.S. in a strategic planning position. Other U.S. units of Procordia, including Kabi Pharmacia Diagnostics, Kabi Pharmacia Hospital Care and Kabi Pharmacia Ophthalmics, will not be affected by the restructuring.
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