Ask the man on the street to name a big drugmaker, and it’s unlikely that Boehringer Ingelheim would be first to roll off their tongue. Little known and difficult to pronounce, the family-owned company has generally kept itself to itself throughout its 133-year history. But it has quietly risen to become Germany’s second-largest drug producer, and one of the 20 biggest pharma firms in the world.
Boehringer gained some rare attention last year, when it entered into an asset swap deal with French rival Sanofi. And now, CEO Hubertus von Baumbach, a great-grandson of company founder Albert Boehringer, has even grander plans.
Presenting the company’s 2017 results on Wednesday, he said sales could hit €25 billion ($30.3 billion) by 2025, up almost 40 percent from the €18 billion generated in 2017, which was 14 percent above 2016. He plans to achieve growth organically. “We can’t buy the future. And we have nothing left to swap,” he said.
Boehringer Ingelheim took Sanofi's $13.5 billion veterinary health subsidiary in exchange for Boehringer’s consumer healthcare unit, valued at nearly $8 billion, plus $5.5 billion in cash. The complex transaction saddled Boehringer with a one-off tax bill that pushed it to a net loss of €223 million, its first in more than three decades. But operating profit improved by more than 20 percent to a record €3.5 billion.
President Donald Trump’s US tax reform cost Boehringer almost €600 million in additional taxes and pushed the group’s total tax liability for last year to €3.1 billion. “We’re paying more taxes than ever before, most of it in Germany,” said Mr. von Baumbach. In fact the firm, still based in its hometown of Ingelheim on the Rhine, was probably Germany’s biggest single taxpayer in 2017 after auto giant Daimler.
Boehringer Ingelheim has no debt, and its net cash holdings amount to €8 billion.
Despite the bottom-line loss, the CEO said he was pleased with 2017. All divisions delivered organic growth, including the veterinary medicine segment, which is still being integrated into the group.
The Sanofi deal is part of Boehringer’s biggest transformation in decades. Mr. von Baumbach, who completed an MBA at the Massachusetts Institute of Technology, took the helm in mid-2016 as the company’s first CEO from the Boehringer family in 25 years.
Within six months, he had launched the biggest acquisition in the company’s history, followed by a reorganization to give the group a more decentralized divisional structure. Mr. von Baumbach has also launched an initiative dubbed Research Beyond Borders to open Boehringer up to more external research alliances and a digital laboratory called BI X has been tasked with finding new ways to harness digital change to speed up product development and business processes.
Even though Mr. von Baumbach appears to be ruling out further acquisitions for now, the company has the resources for more takeovers. Boehringer has no debt and its net cash holdings amount to €8 billion even after last year’s purchase — the biggest war chest in the global pharma sector. Boehringer Ingelheim, it seems, could be about to become a whole lot better known.
Siegfried Hoffman writes about the pharma and chemicals sectors. To contact the author: [email protected]