Pharmacia A.B.

views updated

Pharmacia A.B.

S-75182 Uppsala
46 18 16 30 00

Public Company
Incorporated: 1921
Employees: 5,566
Sales: SKr3.481 billion (US$511.8 million)
Market Value: SKr9.691 billion (US$1.414 billion)
Stock Index: Stockholm

Pharmacia began in 1911 in Stockholm with one product, the phospho-energon energy pills made from animal products. The recipe for the energy pills was created by Kunwald and was patented in 1910. Phospho-energon sold so well that the turnover during Pharmacias first year was above 20,000 crowns. From 1912 to 1962 phospho-energon, in various forms, was sold in Finland, Russia, the United States, Denmark, Norway, and England, and remained throughout that time a strong 30% of Pharmacias total production.

While Pharmacia began with one product, it had never been the intention to rely on a single product. From the outset, the 21 people who invested 32,100 crowns in initial shares were told that the new company would produce medicines on a commercial scale. In 1912 Pharmacia took on the production of cedar oil, from cedar wood from Lebanon. The cedar oil was used in the production of Cedrolinol, an ointment used for rheumatic complaints. In 1913 another product, Sodamint, to be used against throatache and stomach complaints, was launched. Paraform, which contained formaldehyde, was another product Pharmacia made to fight throat infections.

In that year, foreign competition was pressing hard upon Pharmacia and other Swedish companies, and the former invested in heavy use of the advertising slogan Favour the Swedish preparations. Anachronistically, Pharmacia continued its expensive advertising campaign, sending marketing managers to the United States and Russia, and sending detailed brochures on Pharmacia products to each and every doctor in Scandinavia. By 1915 the company had suffered tremendous losses, all due to this campaign, most of it for the promotion of phospho-energon.

During these years, the company, perhaps consequently, was always on the move. In 1912 the lease on the original building expired, and Pharmacia moved to a new building. In 1916 it moved again, to a larger factory where it could produce 500 tablets per hour. It later sold that building for a profit and, in 1920, moved to south Stockholm.

Pharmacia was adventurous in business as well as in products and advertising. It tried selling chocolate and cocoa with phospho-energon in it; and in 1920 it began selling Quina Laroche, a type of Chinese wine. In 1919 another pharmaceutical firm, Malmsten & Bergvalls, had grown so quickly since its formation in 1914 that it wanted access to Pharmacias larger production capacity. The two companies decided to co-operate, using one anothers resources, but not sharing chemists directly. Pharmacia would buy raw materials from Malmsten & Bergvalls, and would serve as its exclusive agent in New York and Paris, while Malmsten & Bergvalls would buy Pharmacias partially finished products needed for its own production.

The leading pharmaceutical companies of Sweden felt that the state should establish a central laboratory for the development of medicines. In October 1920 it was agreed that the state would underwrite such a laboratory. The new enterprise, called Apotekarnes Droghandel AB, was officially formed in March 1921, and included the majority of the countrys leading chemists, including Pharmacias Grönfeldt.

Pharmacia continued in its struggle between growth and marketing, and with the eternal problem of cashflow. In 1922 it was still expanding, with ever larger orders, but the profits were so low that all employees had to take a cut in wages. The next year the company began producing laxatives, a product with a proven market. After its marketing splurge, the company remained somewhat timid about promotions and concentrated on product development. After the laxatives came the 1926 launch of Kreosan Simplex, used in the treatment of bronchitis and tuberculosis. In 1927 it started to produce vitamins.

At this time one of the founding chemists, Grönfeldt, stepped down as managing director because of ill health, and was replaced by Carl Erik Häggert, a former vice president of the company. Nils Winckler, the Information Chief, was later proposed as the head of development and research. The company spent 15,000 crowns on building a new alkaloid facility and, in 1933, started a Drogfarmen on which to grow its own ingredients for morphine, opiates, and belladonna. Expansion and production within the country were less vulnerable to internal competition as there was a high degree of co-operation among the companies. The medicine manufacturers met very often to discuss rationalization of production so as not to overlap, and so that each could have its own specialty. These meetings lasted until the 1950s, when a new, more official, union was formed, the Läkemedels-Industri Föreningen (LIF).

Prior to the Second World War the research department of Pharmacia received the increased resources that came in from the dramatic new product created by Nanna Svartz of the Karolinska Institutet. Her interest in the treatment of rheumatic diseases and her brilliant research with sulpha led to the launch of Salazopyrin, a product which is still used, now in the treatment of ulcerative colitis. With the proceeds from this and other sulpha products, Pharmacia could afford to launch, with Uppsala University, another major product. Professor T. Svedberg and Arne Tiselius, both Nobel Prize-winners, had been asked by sugar manufacturers to do research on the sugar beet. Björn Ingelmann, a student, worked with them on the project, and it was he, in 1941, who identified and separated dextrose. During the Second World War the team developed from this Dextran, a plasma substitute, which was in use by 1943.

Sweden is a country with a small population, and so Pharmacia was under constant pressure to expand and export its production. In 1955, in conjunction with the Danish AS Pharmacia and the Dutch Organon, it launched and marketed until 1969 a line in hormones. The market in the United States was actively pursued by Gösta Virding and L. Arling Elwinger. In 1948 they established Pharmacia Laboratories Inc. in New York, with Elis Göth as director and Nathan Katz as secretary and financial advisor. This company sold Salazopyrin in the United States and reported on its research results in the Mayo Clinic Bulletin, encouraging many other doctors to try it in the treatment of ulcerative colitis.

At home, Pharmacia moved first to a building shared with Apotekarnes Droghandel AB, then to Uppsala, its final home. There, it had many good contacts with chemists at Uppsala University, with the added advantage that Uppsala was a growing new industry town.

Björn Ingelmann began working on pectin as well as dextrin. In the 1950s he had developed a separation process, using a centrifuge, that had been unsatisfactory. Later, Jerker Porath and Per Flodin developed a new separation method using a cellulose powder which eventually was marketed as Sephardex. This was a big success and took Pharmacia into the new production area of aids for research. Pharmacia Fine Chemicals AB was formed in 1967, with Bertil Gelotte as director, to produce separation products. In 1985 Bioteknik-Gruppen (BTG) was formed, to spend 826 million crowns to develop and market aids for biotechnical research and industrial cleaning. BioSensor AB was formed to concentrate on work in molecular biology, particularly DNA technology.

As Pharmacia expanded, it licenced the manufacture of its products in foreign countries, allowing for foreign expansion through subsidiaries. Pharmacia GB Ltd. was formed in Great Britain to produce Dextran, Macrodex, and Rheomacrodex, and for the sale of Sepharon. The same pattern was followed in Japan when, in 1960, Pharmacia co-operated with Green Cross KK. In 1971 Pharmacia KK was finally formed, withdrawing from Green Cross KK and working on its own. To control these and other licencing requirements, a separate company, Pharmacia International, was formed in 1967. These subsidiaries led to contacts with foreign chemists and clinics, particularly in the United Kingdom, but also elsewhere. In 1980 a Hungarian, Endre Balazs, developed for Pharmacia Healon a remarkable product used in eye surgery, now one of the companys biggest sellers.

Pharmacia adopted a major restructural plan in 1985. This divided the companys business interests into four large groups: biotechnology, health care, opthamology, and diagnostics. It also included a firm commitment to expansion, and, in 1986, Pharmacia acquired AB Leo, LKB-Produkter AB, and assets of Intermedics Intraocular Inc. Its largest selling products for 1986 include some of the old familiar names, such as Salazopyrin and FPLC, a descendant of the separation systems, as well as Healon, the allergy test Phadebas RAST, and Intraocular lenses. Net sales for 1986 were up 7% to 3,646 million crowns, and income rose 11% for the same year. The group employs over 6,000 people in more than 22 countries. Concentrating on the new industries of genetically engineered pharmaceuticals and diagnostic products, and expanding into the information technology necessary to support and control this work, Pharmacia seems to be preparing for control of the field by the end of the century.

Principal Subsidiaries

Meda AB; Pharmacia Biosensor AB; Pharmacia Biotech AB; Pharmacia Biotechnology International AB; Pharmacia Diagnostics AB; Pharmacia Fine Chemicals AB; Pharmacia Food AB; Pharmacia Infusion AB; Pharmacia International AB; Pharmacia Pharmaceuticals AB. The company also lists subsidiaries in the following countries: Australia, Austria, Belgium, Brazil, Canada, Denmark, Finland, France, Italy, Japan, the Netherlands, Switzerland, the United Kingdom, and the United States.