Laboratoires Arkopharma S.A. - Company Profile, Information, Business Description, History, Background Information on Laboratoires Arkopharma S.A.

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ARKOPHARMA--The science of health, naturally.

History of Laboratoires Arkopharma S.A.

Laboratoires Arkopharma S.A. is France's leading producer and distrib utor of phytotherapeutic medicines--that is, medicine based on plants . The Nice-based company also has built up a leading position on the worldwide market, with subsidiaries in 12 countries, and sales to mor e than 65 countries. The largest part of Arkopharma's product range t argets the over-the-counter (OTC) market, with treatment for commonly self-medicated conditions such as headache, pain relief, cold relief , insomnia, and the like. Arkopharma also is a leading producer of ap petite control and diet-related products, vitamins and minerals, and skin care treatments, and also produces a line of veterinary products . In addition to its OTC range, the company also develops a range of prescription-strength medicines, including supplemental treatments fo r AIDS, cancer, and other diseases. Phytotherapy remains the group's largest market, at 65 percent of sales of EUR 247 million ($280 m illion) in 2004. Europe represents the group's core market, at nearly 90 percent of total sales. North America accounted for just 6 percen t of sales, while the Asian Pacific (in large part through Australian subsidiary Nutrasense) added 3 percent. Colette Robert is the group' s president, and founder Max Rombi is chairman of the board of direct ors. Sons Olivier and Philippe Rombi serve as co-CEOs. Arkopharma is listed on the Euronext Paris Stock Exchange. The Rombi family control s approximately 54 percent of the group's shares.

French Phytotherapy Pioneer in the 1980s

The use of plants for healing purposes had its roots in mankind's ear liest history. The earliest known records of attempts to classify pla nts according to their medicinal properties dated back to ancient Sum er, and the earliest Chinese dynasties also developed a system of med icine based on plants and herbs. In this way, hundreds of species had been classified as medicinal plants.

In the West, the first classification attempts appeared in Greece, an d included the efforts of such noted figures as Hippocrates, Dioscori des, and Galen. Yet the use of plants and herbs for their medicinal a nd pharmaceutical effects appeared universal among cultures and civil izations around the world.

Modern medicine itself grew out of the use of plants. A major step ca me following the work of Swiss alchemist Philippus Aureolus Paracelsu s (1493-1541), who developed the idea of the "active principal," that is, the part of the plant that contributed its medicinal effect. The notion of the active principal was to give rise to a global pharmace utical industry, which developed new drugs and medicines through the identification, and ultimately, the artificial synthesis of the activ e molecules in plants and other substances found in nature.

For many, however, the development of the pharmaceutical industry and of such highly targeted molecules had unpleasant consequences, not t he least of which were the often unpleasant side effects of many, if not most, modern medicines. By the late 1960s and especially during t he 1970s, a growing number of people had begun to question the basis of the pharmaceutical industry, particularly as it grew into one of t he most powerful sectors of the global economy. The highly symptom-or iented nature of Western medicine also came under criticism, particul arly as many common drug therapies were known to cause symptoms, and even illnesses, as painful as the treated disease itself.

This led to a growing interest in a return to more traditional healin g techniques, and particularly, an interest in the use of the whole p lant, rather than a single identified "active" substance contained in the plant, for the treatment of many common ailments. The branch of phytotherapy, that is, plant-based medical therapies, became part of a trend toward the development of gentler and less toxic treatment me thods. Unlike many competing "alternative" therapies, however, such a s homeopathy, among others, phytotherapeutic preparations presented c lear active ingredients that were capable of being identified and qua ntified.

In France, Dr. Max Rombi had become part of the movement toward more holistic medical treatment by the late 1970s. In 1980, Rombi went int o business for himself in order to produce his own phytotherapeutical preparations. Rombi founded Laboratoires Arkopharma that year, and w as joined by chemist Colette Robert, among others.

Rombi's idea was to break from traditional delivery methods of plant- based medicines, which generally were presented in liquid form, and w ere heated and/or dissolved in water or alcohol. Rombi recognized tha t a market existed for a more convenient form of delivery. Inspired b y the tablets and capsules of mainstream medicine, Arkopharma sought a method for encapsulating its plant preparations. By 1982, the compa ny's efforts resulted in the launch of its line of Arkogélules , which featured powdered, whole plant in gelatin capsules. The capsu les were an immediate success, not least because they seemed to captu re the spirit of the times, and the "on-the-go" nature of French soci ety in the early 1980s.

The launch of the Arkogélule enabled Arkopharma to claim an ea rly lead in the French phytotherapy sector. By the end of 1982, sales had topped the equivalent of EUR 8 million. Arkopharma extended its product range into the mid-1980s, adding a line of vitamins and miner als, as well as a line of veterinary products. Among the company's bi ggest sellers, however, was its line of dietary and appetite control preparations.

Arkopharma's research and development effort also worked toward a new breakthrough, inventing the Cryobroyage method of plant preparation. Launched in 1985, the new method employed liquid nitrogen to deep fr eeze plants and enabled them to be ground at temperatures below -196 degrees Celsius. In this way, the totality of the plant and its activ e ingredients was conserved, in contrast to traditional plant prepara tion techniques. The method also permitted the plants to be ground mo re finely, enabling them to be more efficiently digested.

Arkopharma's breakthrough came in 1986, when the Health Ministry of t he French government recognized phytotherapy as a legitimate branch o f medicine. The ministry put into place a certification system, calle d the "Autorisation de Mise sur Marché" (or AMM), as a means o f legislating the marketing of phytotherapeutical medicines. Arkophar ma quickly took advantage of the new legislation, achieving AMMs for 18 of its products by the following year. In 1987, as well, the compa ny launched a new line, Arkofluides, featuring encapsulated oils.

Acquiring Scale in the 1990s

The French government's recognition of phytotherapy not only boosted the branch's profile in France, but also enhanced its legitimacy else where in Europe. Arkopharma moved to capture a share of the growing E uropean market for plant-based therapies, creating subsidiaries in Sp ain, Italy, and the United Kingdom by 1987. The rising interest in pl ant-based treatments in North America also encouraged the company to set up a subsidiary in the United States. By the end of 1988, the com pany's sales had topped the equivalent of EUR 31 million.

Arkopharma made a number of strategic expansion moves in the early 19 90s. In 1990, for example, the company acquired one of its chief Fren ch rivals, Laboratoires Phytodif. Another acquisition, of Homé opathie Ferrier, enabled the company to boost its range with Ferrier' s production of homeopathic medicines. By 1991, Arkopharma also had e xpanded its sales network to include Germany. To meet its production needs, the company added a new 15,000-square-meter facility that year as well.

By 1994, Arkopharma had expanded its international sales reach by for ming a series of distribution agreements. In this way, the company en tered the Danish, Finnish, and Portuguese markets in Europe, and also added sales in Hong Kong, Malaysia, Taiwan, Singapore, and China. Pa rt of the success of the company's international expansion was due to the launch, in 1993, of a new line of diet products, called Arkoline , which became a strong seller for the company both at home and abroa d. In that year, as well, the company added the Nutriline family of n utritional therapy products.

Arkopharma continued rolling out new products into the mid-1990s. A s ignificant milestone for the company came with the launch of its Minc ifit line of "slimming" creams and oils in 1995. In this way the comp any became an early entrant into what was to become one of the fastes t-growing cosmetics categories at the dawn of the 21st century.

At the same time, the company entered the dental care field, launchin g its own brand, Arkofresh, in 1995. That year, as well, the company acquired Laboratoires Veterinaire ICC, a manufacturer of veterinary p roducts, and especially anti-parasite collars. The purchase of ICC ma de Arkopharma the number two maker of tick and flea collars in France .

Arkopharma's sales had topped the equivalent of EUR 80 million by the middle of the 1990s. The company then prepared for the next phase of its development by listing its stock on the Paris Bourse's Secondary Market in 1996. The public offering enabled Arkopharma to make a new acquisition, of Laboratoires Homéopathie Complexe, that year. The company also acquired a new logistics center, a 15,000-square-me ter facility in Carros.

Arkopharma returned to innovation the following year with the launch of the market's first 100 percent vegetable-based capsule coating. Un til then, the company's capsules had been based on gelatin, derived f rom cows. Yet rising concerns over mad cow disease in the late 1990s, and the inherent conflict between the company's plant-based therapie s and the animal-based delivery method, as well as the natural tenden cy of the company's core consumer market to reject the latter, had en couraged the company to commit to the development of the new capsule type, based on cellulose fibers.

The launch of the new capsule coincided with a boom in the company's international development. Arkopharma added to its foreign network, b uying up its Belgian distributor in 1998, and setting up a subsidiary in The Netherlands that year as well. The following year, the compan y established a true presence in the U.S. market with the purchase of New Hampshire-based Oakmont Investments, Inc., and its Health from t he Sun and Oakmont Laboratories brands. The acquisition gave Arkophar ma control of Oakmont's line of vegetarian essential fatty acid capsu les and, still more important, access to Oakmont's distribution netwo rk among the 6,000 some stores in the U.S. health food market.

Phytotherapy Leader in the 2000s

Arkopharma relied on outside sources for most of the raw products use d in its preparations. In 1999, however, the company launched a new s ubsidiary, called Burgundy, dedicated to the production of certain pl ants and plant extracts for use in the group's phytotherapy products. The company expanded its product line again in 2000, buying up a 75 percent stake in Nutrasense, based in Australia. The acquisition enha nced the company's access to the Australian, New Zealand, and related Pacific markets, and also extended its product range to include the strong Nutrasense brand of plant-based arthritic and rheumatic medica tions.

The Nutrasense and Oakmont acquisitions played a major role in the sh ifting geographic focus of Arkopharma's sales. From a purely French c ompany at the beginning of the 1980s, Arkopharma had grown into a tru ly international phytotherapy leader. By the early 2000s, internation al sales represented nearly 80 percent of the company's sales of almo st EUR 184 million in 2001.

Arkopharma moved to boost its position in the cosmetics market, takin g advantage of growing concerns over the massive use of often dangero us chemicals by the mainstream cosmetics and skin care leaders. In 20 02, the company launched a new brand, Laboratoires Plante System, fea turing 16 plant-based skin care and cosmetics products. The following year, the company had a new major success, this time in the diet-rel ated segment, with the launch of its drinkable appetite control bever age, Minceur. By 2004, that product had become the company's top seller.

Arkopharma maintained its growth momentum into the middle of the 2000 s. In 2003, the company moved into Switzerland, acquiring that countr y's PAD and Phyto Pharma Medika. That same year, Arkopharma added a C anadian subsidiary to boost its North American presence. By the end o f 2004, Arkopharma's sales had grown again, nearing EUR 250 million.

In the mid-2000s, Arkopharma and the growing phytotherapy industry fa ced new pressures. In 2003, Arkopharma was forced to withdraw one pro duct, Exolise, launched in 1999, from the market because of reports t hat the product had caused liver damage in a number of people. Then i n October 2005, Max Rombi, who had since retired as chairman of the c ompany, was charged with involuntary manslaughter because a reported mix-up between two Chinese herbs, one innocuous, the other toxic, use d in one of the company's weight-loss preparations allegedly had caus ed the deaths of two women.

These cases highlighted for many the potential danger of plant-based medicines, and especially the risks involved in the tendency for cons umers to self-medicate using phytotherapeutic formulations. For other s, however, the pressure to enforce stricter legislation on the phyto therapy sector, and the alternative healthcare sector in general, rep resented an attempt by the global pharmaceuticals industry to gain co ntrol of, if not eliminate, a growing competitive threat. Arkopharma' s strong growth since its founding highlighted the appeal of alternat ive treatment methods to mainstream medicine.

Principal Subsidiaries: Arkopharma UK Ltd.; Arkopharma GmbH (G ermany); Arkopharma LLC (U.S.A.); Nutrasense Australia Pty. Ltd.; Ark ochim España; Arkopharma Nederland B.V; Arkofarm S.R.L. (Italy ); Arkopharma Benelux; Arkopharma Ireland Ltd.; Arkopharma Canada.

Principal Competitors: Nature's Sunshine Products, Inc.; Pure World, Inc.


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