munich

The pharmaceutical and chemical company Hoechst, one of the cornerstones of the German chemical industry since the Second World War, is to be restructured with a new focus on life sciences.

Plans to make the change were approved by the company's shareholders at their annual meeting in Frankfurt last week. But attempts to reduce the number of research scientists in a bid to streamline its research are meeting resistance from staff.

Hoechst will discontinue its traditional activities in industrial chemistry by the year 2000. At the same time, research at Hoechst Marion Roussel (HMR), the pharmaceutical company of Hoechst Holding, is to be restricted to core areas of drug design, contracting out other research activities, such as toxicology.

As a result, the number of scientific staff employed in research and development (R&D) in Frankfurt, HMR's largest research site, will be reduced by about 600 to 1,100. Similar reductions are planned at its research sites in Romainville, near Paris, and Bridgewater, New Jersey.

Hoechst has been under heavy financial strain in recent years, partly because of its broad spectrum of products and its low productivity in drug design. In the latter area, it has also been criticized for neglecting new methods, such as combinatorial chemistry, high-throughput screening of novel compounds and genomics.

In the past 12 months, Hoechst has been split up into eight separate companies, each with considerable independence within its field of business, but its difficulties have nevertheless continued.

“We cannot be at the top in everything we are doing,” Jürgen Dormann, chairman of Hoechst's board of directors, told last week's meeting of shareholders. He said that regional markets for industrial chemistry products, such as standard synthetic materials, are increasingly being met by new Asian competitors and by oil companies.

In contrast to the cost-intensive chemical production of basic materials, biotechnology and genetic engineering would offer new knowledge-based opportunities in drug design, diagnostics, blood products, seeds, veterinary products and food additives, Dormann added.

Hoechst's pharmaceutical company, HMR, is by far the largest of the eight subsidiary companies. Although some describe it as the company's ‘heart’, it has also become its biggest headache. It spends DM2.4 billion ($1.4 billion) a year on R&D, but its profits fell by almost 20 per cent in 1997.

“Productivity at HMR was much too low over the past 20 years,” said Dormann. He pointed out that, although an average of more than DM10 million a day had been spent on pharmaceutical research over that period, few marketable drugs had been developed.

Furthermore, only 5 per cent of HMR's turnover comes from drugs designed in the past five years, contrasting with an average of 20 per cent for its competitors. So HMR is to cut back on its research activities, confining them to promising projects in areas such as cardiovascular and metabolic disorders, rheumatology, immunology and cancer.

The company aims to reduce the time needed for the introduction of a new drug from 10-15 years to 6-9 years, and to quadruple the share of turnover from recently designed drugs within five years.

The generics part of the business will be sold, and research other than in the core areas of innovative drug design, such as toxicology, will be carried out in cooperation with external companies or research institutes, rather than by HMR's regular scientists.

The R&D department in Frannkfurt will be designated the ‘drug innovation and approval’ arm, and the scientific staff will be reduced by a third by the end of 1999. HMR's global research budget will then be cut by DM460 million, DM95 million of which will be saved in Germany.

Felicitas Feick, a company spokeswoman, says the nature of HMR's research staff will be changed by taking on young researchers, especially biologists and geneticists.

But researchers at HMR have been opposing the dismissals. Some 7,000 employees protested against the cuts in January, and several hundred have continued to demonstrate in front of the Hoechst headquarters in Frankfurt each Monday.

Hoechst's managers are negotiating with the company's works committee and the unions. A final plan, including proposals for minimizing the staff reductions, will be presented next week.