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Company Perspectives:
We have confidence in the development of our future business given the increasingly vital contribution of imaging techniques and contrast agents in Health Economics, both in terms of diagnosis, therapeutic management and cost control. Our market is still driven by technological innovation and is increasing in volume.
Family-controlled Guerbet Group is France's leading specialist producer of contrasting agents for medical imaging procedures. The company has also built up a leading position in its specialty on the European market, and has long maintained its independence against its larger competitors. The four leading companies--Mallincrodt of the United States; Nycomed Amersham, based in Norway and the United Kingdom; Bracco; based in Italy; and Germany's Schering--control some 80 percent of the global market. A pioneer in its field, Guerbert produces chemical compounds injected into or ingested by patients undergoing medical imaging procedures (x-ray, magnetic resonance, and the like) in order to enable and enhance the visualization of internal organs and structures. The company's flagship product is Xenetix, an X-ray agent that accounts for 25 percent of its sales; Guerbert also makes Hexabrix and MRI compound Dotarem. In 2002, the company, which had been searching for a stronger entry into the United States market--its U.S. distribution had been handled by Malincrodt--reached an agreement with the United States' Cook Group to take over all assets for that company's Oxilan x-ray imaging product, similar to Xenetix. Guerbet intended to set up an American subsidiary to support this product as well as to launch its Dotarem MRI compound in the United States. At the turn of the century, Guerbet has also been stepping up its international activity, adding new subsidiaries and affiliates in Italy, Japan, Austria, Turkey, the United Kingdom, Korea, Taiwan, and Germany. Some 30 percent of the company's 2000 sales of nearly EUR 200 million come from France; Europe as a whole accounts for 77 percent of Guerbet's sales. The company is quoted on the Euronext Paris stock exchange; the Guerbet family controls, directly and through a holding company, more than 70 percent of the company's stock. Michel Guerbet, grandson of the founder, is company chairman, while Philippe Décazes serves as CEO.
Imaging Pioneer at the Turn of the 20th Century
The discovery of x-rays in 1895 represented a revolution for medical science, allowing for the first time the imaging of the interior of a patient's body. X-rays enabled physician's to view the skeleton, but imaging of the soft tissues--and especially internal organs--remained impossible for some time.
Working in France at the turn of the 20th century, Marcel Guerbet had developed a new substance, dubbed Lipidiol, based on oil derived from pawpaw seeds. Released in 1901, the iodine-containing Lipidiol was presented by Guerbet as a treatment for cardio-vascular diseases. Together with a partner, Guerbet began producing Lipidiol for the medical market.
An important feature of Lipidiol was discovered only by chance in 1918. The compound was found to have opacifying properties when injected into the body, enabling physicians to visualize soft tissue and internal organs for the first time. Guerbet immediately recognized the potential for contrast agents and other diagnostic imaging compounds. Guerbet persuaded his son, André Guerbet, to begin conducting research into the development of contrast agents, and this market quickly became a company specialty.
In 1926, Guerbet's original partner died, giving Guerbet's son André the opportunity to purchase a 10 percent stake in the company, which was then incorporated as Laboratoires Guerbet, in Saint Ouen, north of Paris. Marcel Guerbet died in 1938, leaving André Guerbet with 60 percent control of the company. Over the next 30 years, Guerbet became one of France's most active developers of contrast media, producing compounds for applications including angiography (for measuring blood flow), brochography, hysterosalpingography and urography (visualization of the kidneys and urinary tract), as well as compounds for producing images of the digestive tract.
By the early 1960s, André Geurbet himself had grown terminally ill, and began preparing to transmit his share of the company to his wife and ten children, all of whom were still quite young and some of whom were still minors at the time. Guerbet's will stipulated that leadership of the company be taken over by son Michel Guerbet, a physician. The company's other shareholders were doubtful of the young Guerbet's ability to lead the company and decided to sell out their 40 percent stake to the Guerbets. The sale of property held by Marcel Guerbet's widow financed the purchase, and the Guerbet family now held 100 percent of the company. Renamed SA Laboratoires André Guerbet in 1964, the company remained small, with just 100 employees posting FFr 5 million in revenues.
Michel Guerbet, however, proved an able businessman. During the 1960s, the company developed a number of breakthrough products to establish itself as a leading developer of diagnostic contrast media in France and throughout Europe. Helping to fund the company's research and development program was a licensing agreement to develop and distribute Contrix, a compound developed in the United States, for the French market. In 1964, Geurbet released another breakthrough product developed in the company's laboratory, Telebrix.
Based on the success of Telebrix, Guerbet expanded rapidly, and began seeing a growing percentage of its sales come from its European neighbors. In 1968, the growing company moved its facilities to the Parisian suburb of Aulnay-sous-Bois. There the company operations increasingly diversified along two primary lines, those of pharmaceutical products and those of basic chemical compounds, including such active ingredients as barium for medicinal use.
In 1974, the company's laboratories launched a new imaging agent, Hexabrix, which became one of the company's leading products for more than two decades. Meanwhile, the growth of the company's two core operations led it to restructure at the end of the 1970s. In 1977, Guerbet reformed as holding company Guerbet SA, creating two principal subsidiaries, Guerbet, which took over its pharmaceuticals division, and Guerbet Chimie Aulnay, which absorbed the company's active ingredients operations.
Guerbet restructured again in 1981, creating separate export, marketing and research divisions. That same year, the company inaugurated a second production facility, in Lanester, which became a central production facility for its active ingredients division. Meanwhile, Michel Guerbet began opening up the company's capital to its employees, giving them options to buy shares in the still-private firm. This offering eventually led to listing Guerbert on the Paris stock exchange, a step the company took in 1986 when it floated on the Paris Secondary Market. As part of the offering, the Guerbet family, together with its employee-shareholders, placed much of their shares under a new holding company, Chandey, which became the company's majority shareholder, with 46 percent of the company's stock and 51 percent of its voting rights. The Guerbet family meanwhile directly controlled an additional 20 percent of the company's shares.
Guerbet's continued expansion led the company to open a new headquarters site, in Villepinte, near its main Aulnay production facility, in 1987. By then, Guerbet had captured the lead in its specialty in the French market; the success of Hexabrix, particularly in the United States, made foreign sales a growing part of the company's revenues.
Contrast Media Leader in the 21st Century
Guerbet's public offering enabled the company to step up its expansion at the end of the 1980s. In 1987, the company made two key acquisitions, Simafex, in 1987, adding fine chemicals, and another subsidiary, renamed Guerbet Biomedical, in 1988. Guerbet's product portfolio expanded as well during this period, as the company added Dotarem and Optiray x-ray contrast compounds.
The growing percentage of foreign sales in the company's revenues led it to begin opening foreign subsidiaries at the beginning of the 1990s. In 1990, the company opened a subsidiary in the Netherlands, which was followed two years later by the launch of a German subsidiary. These subsidiaries were joined by two more before the middle of the 1990s, when the company opened subsidiaries in Istanbul and London in 1994.
As the company's exclusive patent rights for Hexabrix wound down--the compound was opened to generic competition in the United States in 1995--Guerbet began preparing new products to take its place. In 1993, the company launched Lumirem. A year later, Guerbet had a new success on its hands with the launch of Xenetix. That product soon became one of Geurbet's strongest sellers, accounting for some 25 percent of its sales by the end of the decade. These products were followed by a new compound, Endorem, in 1995. By then, Guerbet's sales had risen to FFr937 million.
The company nonetheless faced disappointment at the end of the century. In 1996, Guerbert, which had held an option for the European commercialization of an ultrasound imaging product under development by an American, pulled out of the project after analysts proved skeptical about the product's performance. The company instead was forced to look elsewhere for an ultrasound product to complete its product range. Meanwhile, the company was hit hard by a doubling of the price of its core iodine ingredient during the latter half of the decade. At the same time, its four chief competitors, which together held some 80 percent of the worldwide market, had entered into a price
In 1998, Guerbet launched a radical restructuring program designed to return the company health. As part of its reorganization, the company, which had operated through its two primary branches since the restructuring at the end of the 1970s, now merged these two divisions, cutting out a great deal of redundant overhead costs. Guerbert transferred a growing share of its production to its Lanester site, which then became its main production facility. Michel Guerbet, who was preparing the succession of the company, also led the company to reorganize its executive board into a management board and a supervisory board. The company then promoted Philippe Decazes, who had been in charge of its Simafex subsidiary since 1995, as company CEO.
The restructuring, scheduled to take more than three years, quickly brought the company back to profitability, and by 1999 Guerbet was once again in the black. The strength of the restructuring effort was seen the following year, when the company's net profits rose again by nearly 67 percent. Meanwhile, Decazes and Michel Guerbet, who continued as company chairman, led the company on a new international expansion drive.
In 2000, Guerbet opened a new foreign subsidiary, in Italy, which had grown into Europe's second-largest contrast media market. The company also moved to capture a larger share of the Asian market, opening subsidiaries in Korea and Taiwan. Guerbert also opened an office in Hong Kong to assure distribution for the company's sales in Australia, New Zealand, and elsewhere in the Pacific region.
Guerbet was also promoting its latest product launches, notably Sinerem, a contrast medium for Magnetic Resonance Imaging, and the blood pool agent P792. At the same time, Guerbet began identifying new areas of research for the company's future expansion, targeting three key areas for the decade to come: the imaging of colon cancer, detection of atheromatous plaque, and detection of a universal cancer marker.
Guerbet's shareholding structure left it protected against the wave of mergers and consolidation among its competitors in the worldwide chemicals and pharmaceuticals industry, and enabled it to maintain its strong focus on its contract media specialty. Guerbet continued to pursue its expansion in the new century as well. In January 2002, the company announced that it was acquiring the worldwide rights to develop and market Oxilan, a non-ionic x-ray imaging product, from the United States' Cook Group's Imaging subsidiary. Similar to Xenetix, the Oxilan acquisition gave Guerbet a strong entry in the United States, where the company pledged to open a subsidiary by mid-year. Guerbet clearly revealed its determination to remain a key player in the worldwide contrast media market for its next century.
Principal Subsidiaries: Simafex; Guerbet Gmbh (Germany); Guerbet Austria Ges. M.B.H; Codali Sa (Belgium); Laboratorios Farmacéuticos Guerbet Sa (Spain); Guerbet Laboratories Ltd (United Kingdom); Guerbet Spa (Italy); Guerbet Nederland Bv; Martins & Fernandes (Portugal); Guerbet Ag (Switzerland); Guerbet As (Turkey); Guerbet Produtos Radio-Logicos Ltda (Brazil); Guerbet Japan Co Ltd; Guerbet Asia Pacific Ltd (Hong Kong); Guerbet Korea Co Ltd; Guerbet Taiwan Co Ltd.
Principal Competitors: Advanced Magnetics, Inc.; Amersham plc; Berlex Laboratories; Bracco SpA; DAIICHI PHARMACEUTICAL CO., LTD; Eisai Company, Ltd.; EPIX Medical, Inc.; E-Z-EM, Inc; Mallinckrodt Inc.; Molecular Biosystems, Inc.; Schering AG.
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