A.B. Astra

S-151 85 Södertälje
Sweden
(0755) 329 80

Public Company
Incorporated: 1913
Employees: 6,405
Sales: SKr4.435 billion (US$584.6 million)
Market Value: SKr2.256 billion (US$297.4 million)
Stock Index: Stockholm London

Astra is the leading pharmaceutical company in Scandinavia. Long recognized by the Swedish scientific community for its strong emphasis on research and development, the company is currently increasing its international presence through licensing agreements and joint ventures with foreign firms. The name Astra is now recognized well beyond the boundaries of Sweden.

Prior to 1913 Swedish law limited the manufacture of Pharmaceuticals to registered apothecaries. With the ratification of an amendment to the statute in 1913, it became possible for industrial companies to manufacture drugs. Astra was formed by the initiative of more than 400 doctors and apothecaries who joined together to establish the company and to become its first shareholders.

Principal among these early participants were a number of accomplished men who also assumed leadership positions in the new company. Prof. Hans von Euler, who was later to be the recipient of the 1929 Nobel Prize in Chemistry, joined Astra as its scientific adviser. Dr. Adolf Rising, a former employee of Ciba, the Swiss pharmaceutical concern, became Astra’s first production manager. Dr. Sven Carlsson, owner of another Swedish company, provided financial support and secured a production site, a factory manager’s house in Södertälje. Carlsson eventually assumed the chairmanship of the company.

Two products—Digitotal, a heart medication, and Glukofos, a nutritional supplement—emerged from Astra’s facilities in 1914, and the company began to prosper. When the apothecary Hjalmar Andersson Tesch joined Astra in 1915 as the company’s new president he brought with him a number of his own pharmaceuticals; Astra’s product line now comprised a variety of medicines and chemical compounds. Government war-time restrictions on imports created a demand for Astra’s products, and the company bought new factory buildings to meet that demand. By the end of World War I Astra was reporting handsome profits.

The years following the war proved less successful. In an attempt to create a company of international stature, the Swedish chemical company AB Svensk Färgämnesindustri acquired Astra’s entire capital stock. The directors of Svensk incorrectly assumed that the shortage of raw materials during the war would persist in the post-war years . They invested in equipment for the manufacture of artificial sweeteners (a lucrative product for Astra during the war) and acetylsalicylic acid, the chemical base for aspirin. But prices for raw materials dropped as war shortages disappeared. The company faced imminent bankruptcy as its manufacturing costs grew larger than the prices its products could command in the marketplace.

A solution seemed possible when Sweden’s first socialist government announced plans to create a nationalized pharmaceutical monopoly. Despite harsh criticism from the apothecaries, the press, and opposition members of parliament, the government authorized the state liquor monopoly to purchase Svensk Färgämnesindustri. Dr. Ivan Bratt, former leader of that monopoly, became Astra’s new chairman, and the company seemed ready to assume a major role in the proposed pharmaceutical monopoly. Yet, within months, the socialist government fell, and its successor was staunchly opposed to the new monopoly. From 1921 until 1925 the government sought a private buyer who would release the state from its responsibilities—even the employees of Astra were approached as potential buyers. A purchaser was finally found in the form of a private consortium, and Astra became an independent company once again. Meanwhile, Astra’s running deficit had cost the state millions of kroner.

The company’s new board members included Erik Kistner and Richard Julin, a merchant and a banker respectively, whose business acumen helped to stop Astra’s seemingly endless losses. In 1927 Börje Gabrielsson became company president; he remained in this position until 1957. The new hierarchy reorganized many of Astra’s operations. The most important of these changes allowed for the formation of the company’s own distribution network. In just a few years the company was again profitable.

With the establishment of research and development facilities in the 1930’s, Astra began to create more innovative products. Hepaforte, marketed in 1937, offered treatment for sufferers of pernicious anemia. Another important drug to emerge from Astra’s laboratories was Nitropent, a medication for angina pectoris.

Astra’s growth during the years prior to World War II resulted not only from its development of new products but also from its aggressive expansion and acquisition strategy. By 1940, company subsidiaries were operating in Finland, Latvia, Stockholm and Hássleholm.

Restricted imports and shortages of raw materials during World War II once again placed Astra’s products at a premium, and once again profits increased. The company constructed a new modern central laboratory and established a subsidiary to supervise the management of, and distribution to, Astra’s numerous branch offices. The company established new subsidiaries in Denmark, Argentina and the United States.

In the post-war years a number of successful pharmaceuticals emerged from Astra’s laboratories. Ferrigen, an iron preparation, and Sulfadital, a sulfa medication, were two products of many that were well received in the marketplace. The most important of all Astra’s products developed during this period was Xylocaine, a local anesthetic that even today remains one of Astra’s most popular products. Yet Xylocaine might never have happened if it had not been for Astra’s strong relationship with the academic community and its commitment to research.

In 1943 two chemists from the University of Stockholm, Nils Lofgren and Bengt Lundqvist, approached Astra with a discovery they thought worth further investigation. The chemists had offered their compound to other companies, but only Astra demonstrated the ultimate interest of financial support. After five years of clinical testing in Astra’s laboratories, Xylocaine appeared on the market, and its immediate success confirmed the chemists’ and Astra’s belief that they had produced the best local anesthetic available. Xylocaine’s quality was soon recognized in foreign markets as well, and Astra’s reputation as one of the world’s most important pharmaceutical manufacturers grew accordingly. By 1984, local anesthetics constituted 24% of Astra’s total group sales, with Xylocaine alone contributing SKr 696 million.

The worldwide production of Xylocaine began in earnest during the 1950’s, and during that decade Astra broadened its overseas activities with an international network of subsidiaries and foreign licensees. Domestically, Astra consolidated its holdings to forestall the problems usually associated with quick growth, overhauled its pharmaceutical line to remove any unprofitable products, and confined all drug manufacturing to the Södertälje plant. The company continued to modernize its facilities and increase the size of its sales organization. By far the most important of Astra’s measures during this period was its significant increase in research and development spending. As a result of this commitment, the company produced a number of successful new products throughout the 1950’s, including Secergan (an anti-ulcer medication), Ascoxal (a treatment for oral infections), Jectofer (an injectable iron preparation), and Citanest (another local anesthetic).

Throughout the 1960’s Astra continued to expand both at home and abroad. The company acquired a manufacturer of nutritional products and a distributor of medical supplies. It created and built new operations in Western Europe, South and Central America, and Australia. It joined with England’s Beecham Research Laboratories in an attempt to develop synthetic penicillins. By 1983, 80% of Astra’s sales were generated from overseas markets.

By the 1970’s Astra’s diverse activities required the company to form separate divisions. In addition to the variety of drugs developed in the past, the pharmaceutical division now manufactured cardiovascular and anti-asthmatic drugs. The chemical products division produced agricultural products, nutritional products, cleansers, and recreational items. The varia division was responsible for medical equipment and rust prevention products. By the end of the decade, however, Astra announced that it would henceforth concentrate solely on the production of pharmaceuticals and, as a result, the company sold all of its other holdings.

With a renewed commitment to the manufacture of pharmaceuticals, Astra’s unique and highly efficient research units emerged as the company’s strongest assets. One notable pharmaceutical to emerge from Astra’s laboratories in recent years is Seloken, now a very successful medication for heart disease. By 1984 Astra’s three most important products—Seloken, Xylocaine and Bricanyl (a bronchodilator)—generated 52% of the company’s revenues; specifically, Seloken had become Astra’s best selling drug as well as one of the best selling drugs in the world.

Astra now has a number of promising products still in the development stage—including drugs to treat viral infections, gastro-intestinal agents, and drugs for the central nervous system. Ulf Widengren, Astra’s current chief executive officer and president, now projects an annual growth in profits of between 16 and 22%.

Another notable achievement has been Astra’s record of good labor relations. The company operates a profit-sharing plan, and has subsidized the post-secondary education of one-third of its staff.

With subsidiaries in 21 countries (West Germany is Astra’s largest foreign market), the company earned more than one billion kroner for the first time in 1985. Large foreign companies, particularly in the United States and Japan, now compete for the right to market pharmaceutical products developed by Astra, and foreign investors have become increasingly interested in Astra’s shares. With its efficient worldwide organization, its line of proved products, its commitment to excellence in research and development, and with a new array of drugs about to enter the market place, Astra seems ready for a secure and profitable future.

Principal Subsidiaries

AB Draco; AB Tika; AB Hassle; Hassle Lakemedel AB; Astra Pharmaceutical; Production AB; Astra Pharmaceuticals; International Ab; Astra Development AB; Astra Pharmaceuticals AB; Astra Medictec AB; Astra Tech AB; Astra Chemical Products AB; Astra Fondaktiebolag; Astra-Merck (U.S.A.); Copthorne Insurance, Bermuda. Astra also has subsidiaries in the following countries: Argentina, Australia, Austria, Canada, Denmark, Finland, France, Ireland, Italy, Japan, Malaysia, Mexico, Netherlands, Norway, Philippines, Switzerland, United Kingdom, United States, and West Germany.