Rhone-Poulenc and Hoechst Review Plasma Protein Joint-Venture Amid FDA Insights

Strategic Insights -

Rhone-Poulenc S.A. and Hoechst AG, the two shareholders of Centeon, have reassessed their plasma proteins joint-venture following interactions with the US Food and Drug Administration (FDA). The facility in Kankakee, Illinois, was temporarily suspended due to a recent FDA inspection. Centeon plans to restart production in late October, focusing on FDA-approved medically necessary products. The potential impact of the production suspension, including inventory write-offs and lost business, is estimated to result in a net loss of between $80 million to $150 million for the remaining 1998.

Key Takeaways:

  • Centeon will restart production at the Kankakee facility in late October, focusing on products deemed medically necessary by the FDA.
  • The production suspension and reduced activity for the rest of 1998 may result in a net loss of $80 million to $150 million for Centeon.
  • The loss will be split equally between Rhone-Poulenc and Hoechst AG, the two parent companies.
  • The impact will be largely driven by inventory write-offs, facility enhancements, and other non-recurring charges.
  • The Centeon loss will join Rhone-Poulenc's existing 1998 non-recurring items, including restructuring costs, to be offset by the exceptional gain from the Rhodia listing.
  • Rhone-Poulenc remains cautious for the remainder of 1998 due to global economic uncertainties.

Statistics:

  • Estimated net loss for Centeon: $80 million to $150 million for the remaining 1998.
  • Inventory write-offs, facility enhancements, and other non-recurring charges: major portion of the estimated loss.
  • Cost of lost business: remaining amount of the estimated loss.
  • Number of people employed by Rhone-Poulenc S.A.: 68,000.
  • Sales in 1997: FF90 billion (approximately US$15 billion).
  • Number of countries where Rhone-Poulenc S.A. operates: 160.

Sources:

  • "Rhone-Poulenc S.A. Press Release, 1998"
  • Note: This press release was issued earlier today in France by Rhone-Poulenc S.A. (NYSE: RP).