tesa SE puts faith in new tesa Labtec to grow position in German market
Langenfeld, Germany-based Labtec GmbH has begun a process of reinvention by adopting a new corporate identity, tesa Labtec. However, the new company name has wider implications than just operating under a new title for the drug delivery and generics developer. Wholly-owned by tesa SE, the newly-structured tesa Labtec has been integrated with certain other tesa SE businesses, to streamline the development and production of tesa Labtec's transdermal patches and fast-dissolving oral films under one roof.
tesa SE, headquartered in Hamburg, is one of the world's leading providers of adhesive tapes and self-adhesive system solutions for industry, trade and consumers. The company acquired Labtec at the end of 2008 for an undisclosed sum, as a wholly-owned affiliate. Founded in 1990, Labtec specialises in developing transdermal patches (Transfilm) and fast-dissolving oral films (Rapidfilm). It operates as part of tesa SE's Industrial business.
Effective 1st February 2013, Labtec, the pharmaceuticals unit of tesa Werk Hamburg GmbH, and the pharmaceuticals business unit at tesa SE have been consolidated to form the new tesa Labtec GmbH. tesa Labtec's operating units continue to be located in Hamburg and Langenfeld, but, according to tesa SE, closely integrating these businesses will position the company to offer a streamlined services for its customers. The group has reported it is already experiencing significant interest from industry, particularly in its high-efficiency production capacities.
Under the umbrella of tesa SE, tesa Labtec gained the opportunity to add important competencies to its business model, thereby further developing it. Integration into an international group of companies provides tesa Labtec with solid support for future growth. tesa SE is well positioned and keen to supply this support. One of tesa SE's key corporate strategies going forward is heavy focus on global expansion of its Industrial business, and particularly developing its presence in the pharmaceutical sector. In 2011, tesa SE's Industrial business accounted for 75 per cent of the group's sales.
In line with the restructuring, tesa SE has also invested around EUR 18 million in a clean room unit at the tesa SE plant in Hamburg-Hausbruch, accommodating a 6,000 sqm state-of-the-art pharmaceutical production facility. The site is reported to be one of the most modern in Europe and covers every aspect of pharmaceutical development and production processes including adhesive mixing and compounding, coating, converting and packaging. Regulatory approval to manufacture pharmaceutical products was obtained in March 2011, and since then numerous clinical trial products have been manufactured there. Development capacity has been doubled for tesa Labtec, which will be crucial for the successful expansion of partnerships with international pharmaceutical companies, both from the branded and generic sectors.
Germany's Pharmaceutical Landscape
Despite the threat of austerity measures, the German government's focus on cost-containment in the pharmaceuticals and healthcare sector, Germany remains an attractive market to innovative drug makers. In 2012, the German pharmaceutical market was estimated at EUR 50.6 billion (US$64.8 billion), equal to EUR 620 (US$793) per capita. Espicom believes this will continue to bring in substantial income for companies operating in the country.
Over-the-counter drugs represent around 12 per cent of the German pharmaceutical market and generics account for over a third. The generic market has become increasingly competitive in recent years. Reimbursement changes and greater use of substitution since 2004 have placed a lot of pressure on older branded drugs, and prescribers and patients have been given financial incentives to switch to generics. However, reforms have not been especially pro-generic, so whilst generics will continue to be increasingly widely prescribed, their value share of the overall market will alter less rapidly.
Germany is home to a strong pharmaceutical and biotechnology industry. The leading local companies in terms of market capitalisation include Merck KGaA and Stada Arzneimittel. A large number of foreign pharmaceutical firms are also already present on the German market, including AstraZeneca, Pfizer, Roche, GlaxoSmithKline, Abbott Laboratories and Eli Lilly. Smaller players are also becoming increasingly involved through partnerships or similar collaborative deals, especially as imports are encouraged by cost-containment.
With tesa SE looking to significantly expand its presence in the pharmaceuticals industry, there is no better market for the group than Germany to achieve this. With tesa Labtec developing its own generic drugs, as well as its proprietary transdermal delivery systems, the company is able to take advantage of the above-mentioned pharmaceutical giants in the German market, by partnering with them through licensing deals and expanding its share of the billion-Euro generics market that country offers.