Netherlands-based drugs, coatings and chemical maker Akzo Nobel has announced a €500 million divestment program and suggested that it is unlikely to remain a player in all three of these sectors in the long term.
Akzo also said that a cost-cutting plan designed to save around €120 million is already underway at the firm, adding that the number of employees in its pharmaceutical division will be reduced to under 21,000 by year-end. The firm's pharmaceuticals activities are considered by some drug analysts to be too small to compete on the global stage with its rivals.
Acknowledging the difficulties in the business, newly-appointed chief executive Hans Wijers said the moves were "a normal part of doing business in a high-risk, high-reward environment," adding "to create room for manoeuvre we decided on the divestment programme [and] took some clear decisions about a roadmap to fix pharma."
Last year, Akzo reported a group decline of 4 per cent in net earnings to €892 million and ex-CEO Cees van Lede warned that "2003 will be a tough year," acknowledging that its pharmaceutical business, which saw earnings slump 20 per cent in 2002, was "temporarily under pressure". For the full year, the pharmaceutical business, which comprises Organon, Intervet and Diosynth, showed slowing growth.