Weleda AG

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Weleda AG

Stollenrain 11
CH-4144 Arlesheim,
Switzerland
Telephone: (41) 61 7052-121
Fax: (49) 61 7052-310
Web site: http://www.weleda.ch

Private Company
Incorporated: 1922 as Internationale Laboratorien und Klinisch-Therapeutisches Institut Arlesheim A.G.
Employees: 1,343
Sales: CHF 249.3 million ($295 million) (2005)
NAIC: 325620 Toilet Preparation Manufacturing; 325412 Pharmaceutical Preparation Manufacturing; 325411 Medicinal and Botanical Manufacturing; 325611 Soap and Other Detergent Manufacturing

Weleda AG is a globally active manufacturer of natural cosmetics, nutritional supplements and over-the-counter (OTC) drugs with a strong foothold in Germany, Switzerland, and France. Cosmetics generate roughly two-thirds of Weleda's revenues. The lion's share of pharmaceutical sales stems from the cancer remedy "Iscador," which is distributed in the United States as a homeopathic prescription drug under the name "Iscar." In addition to headquarters in Arlesheim, Switzerland, where the company owns a large pharmacy, the Weleda group consists of more than 15 subsidiaries, mainly in Western Europe, and North and South America. The two most important ones are located in Schwäbisch Gmünd, Germany, and Huningue, France. All body care products and most of the OTC drugs are manufactured in Switzerland, Germany, and France, using more than 400 organic ingredients from 30 countries. In its core European markets Weleda products are mainly distributed through pharmacies and drugstores. In large Japanese cities the company runs specialty stores under its own brand name. The Swiss General Anthroposophical Society and the association Clinical-Therapeutical Institute are major shareholders of the company, pointing back to Weleda's origins in the 1920s.

APPLYING ANTHROPOSOPHY TO MEDICINE IN 1922

Weleda owes its existence to Rudolf Steiner, an Austrian philosopher, and his partner Ida Wegman, a Dutch physician. Steiner, a convinced theosophist with a Ph.D. in philosophy from Vienna's Ecole Polytechnique, created a spiritually infused philosophy—which he called anthroposophy—that centered on human development. At the core of his theory was to view humans as an indivisible whole consisting of the physical body, the conscious mind, and the spiritually connected soul. Anthroposophical medicine was a logical extension of Steiner's ideas. Not only the physical, but also the mental and spiritual components, including the social context of a patient, had to be taken into account in order to make true healing possible. Since humans and their evolution were deeply rooted in living nature, pure natural remedies were needed to successfully treat disease.

While Steiner developed the theoretical foundation for this revolutionary concept of medicine at his School of Spiritual Science in Dornach near Basel in Switzerland, Wegman began to apply it in her own medical practice at the Institute of Clinical Medicine in neighboring Arlesheim. Together they developed the fundamental principles of anthroposophical medicine and a growing list of natural remedies based on these principles. A medicine, for example, had to stem from a plant, animal, or mineral with a special evolutionary affinity to the sick organ or organ system. Specific anthroposophical methods for the generation of medicines included, for example, the "vegetabilization" of metals and metallic minerals by using metals as "fertilizers," and the "Rh-Method" of making plant-based solutions more durable without using alcohol through a series of movements and exposures to light, heat, or cold. In addition to medical uses Steiner suggested formulas for nutritional supplements and for use in cosmetics.

Two corporate structures had been created in 1920 as organizational frameworks for realizing anthroposophical ideas and for generating revenues to support its institutions, including Steiner's School of Spiritual Science and a free Waldorf school in Stuttgart, Germany. The first one, Futurum Konzern AG, was based in Arlesheim and included Wegman's clinic and a chemical-pharmaceutical laboratory. The second one, Der Kommende Tag AG, which means "the coming day," was located in Stuttgart and consisted of a clinic and laboratory similar to those in Arlesheim. In addition, there was a fabrication operation for producing medicines and a sales department, which had been created to satisfy the growing demand by the clinics in Arlesheim and Stuttgart for anthroposophical medicines. In the early 1920s, a time of increasing economic volatility, social stagnation, and political radicalization, Futurum Konzern and Der Kommende Tag increasingly struggled with financial difficulties. To save the adjunct clinics and pharmaceutical operations, Steiner and Wegman pushed the idea of spinning these operations off as independent ventures. In April 1922 the newly formed Internationale Laboratorien und Klinisch-Therapeutisches Institut Arlesheim AG, consisting of Futurum's clinic and laboratory, commenced business and was officially registered in November. By that time the Arlesheim laboratories' list included 295 medical drugs and combination preparations. After Wegman's clinic was separated from the company in mid-1924, the latter was renamed Internationale Laboratorien Arlesheim AG. Later that year Internationale Laboratorien acquired a pharmaceutical production in Schwäbisch Gmünd, Germany, as well as the laboratory, pharmaceutical production, and sales offices in Stuttgart from Der Kommende Tag. The new German subsidiary, with 12 employees, manufactured plant-based formulas for medical, nutritional and cosmetic use in large amounts.

COMPANY PERSPECTIVES

The forces of our body, soul, and spirit are intrinsically connected, and they are closely related to the processes that occur in nature. Based on this insight, Weleda has developed the purest body care formulations and holistic, homeopathic and anthroposophic medicines, containing wholesome active ingredients since 1921—in harmony with nature and the human being. Pure Ingredients: Weleda skin care products are formulated naturally, without the use of synthetic fragrances, colors or preservatives. We do not test our products or ingredients on animals, and our formulations are free of genetically modified organisms. Pure Cultivation: We use only the purest materials—grown biodynamically, organically and naturally—in our own gardens in Europe and though our unique partnerships with farmers throughout the world. These sources ensure the highest quality products and help to maintain the delicate balance of nature. Pure Harvesting: Biodynamic and organic gardens are similar to one another in that they both work to enhance the soil and cultivate plants that are free of synthetic fertilizers and pesticides. Biodynamic cultivation, however, goes a step further. Homeopathic preparations are used to enhance the vitality of the plants. Each plant is harvested by hand at its peak, according to the season, time of day, and position of the planets in the universe. Pure Processing: After harvesting, we process and combine raw materials according to holistic criteria, with slow and careful hand processing, so that we can maintain the vital essences of the plants as much as possible. Pure Cooperation: Weleda participates in cultivation projects to support the sustainable development and recovery of the living organisms of the earth. These projects offer ecological, economical and social benefits to our cultivation partners. Ultimately, the Weleda customer reaps these benefits through the high quality formulations that result.

Right from the beginning Steiner envisioned the International Laboratories operating on a global scale. It soon became evident, however, that the company name was already being used by other firms in the United States and England. Steiner suggested "Weleda" instead—a general name in the Celtic tradition for wise women with a deep understanding of nature, and in particular the name of a famous ancient Germanic priestess and healer. In 1924 "Weleda" was registered as a trademark in Switzerland and Germany. In addition to the existing one in France, two foreign subsidiaries—now bearing the Weleda name—were established in the United Kingdom and The Netherlands. Rudolf Steiner's death in 1925 was a huge loss for the anthroposophical medicine movement in general and Weleda in particular. His vast legacy also included the company's logo, an upright staff with a spiral form winding around it, enclosed by two wavy lines, which symbolized integrity, truth and healing, social interaction, and protection. It was first registered as a trademark in March 1923. In 1928 the general assembly of shareholders approved Weleda AG as the new company name.

MODERATE POSTWAR GROWTH

At the beginning of the 1930s the Great Depression crossed the Atlantic and hit continental Europe. Weleda's output went up—yet prices began to fall. But this was only a minor disturbance compared with the following Nazi regime in Germany, which threatened the entire existence of the company. In 1935 the Hitler-led government banned the Anthroposophical Society in Germany. With the onset of World War II in 1939 sales dropped dramatically. Two years later a decree shut down all anthroposophical enterprises. As soon as Weleda's managing director, Fritz Goette, received notice to close down operations in late June 1941, he protested sharply and set the wheels in motion to prevent the end of the company. There were different speculations among journalists and historians about possible reasons for his success: was it influential friends or foul compromises with the Nazis? No one there, however, could protect the company from Allied bombings when the war returned to Germany. In 1944 the Stuttgart-based production was moved to Schwäbisch Gmünd, which was not hit as hard as big German cities were. Weleda survived the devastating war.

As early as 1945 the company resumed operations with about 150 employees. As Germany was rebuilt in record speed in the postwar decade, the company's workforce roughly doubled. In the mid-1950s Weleda's management made a strategic decision. To have total control over critical supplies of raw materials, Weleda began to employ a growing army of organic farmers who cultivated herbs and aromatic plants. The company's first medical herb farm after World War II near Schwäbisch Gmünd opened in 1956. Over the years additional sites were set up in France, England, South America, and New Zealand. At the same time Weleda's network of suppliers gradually expanded. The organic ingredients used in the growing number of Weleda products were shipped to the production sites in Germany, Switzerland, and France from almost all parts of the globe.

KEY DATES

1922:: Internationale Laboratorien und Klinisch-Therapeutisches Institut Arlesheim AG is officially registered.
1923:: Large-scale manufacture of natural remedies and cosmetic preparations commences.
1924:: "Weleda" is registered as a trademark in Switzerland and Germany.
1941:: Weleda's forced closure is prevented despite a ban on anthroposophical enterprises by the Nazi government.
1956:: The company's first medical herb farm opens in Germany.
1964:: Supplemental cancer remedy "Iscador" is approved by health insurers.
1976:: The official German Book of Homeopathic Medications contains considerable input from Weleda.
1992:: Weleda is present in 30 countries around the world.
1998:: The company launches the GLS Weleda Fund to attract private investors.
1999:: Weleda's first U.S. catalogue is mailed to more than 5,000 households.
2001:: Weleda is Germany's third largest manufacturer of baby care cosmetics.

1964 APPROVAL OF ISCADOR

The approval of Weleda's mistletoe-based cancer remedy Iscador by several health insurers in 1964 was the catalyst for its wider use in the medical community, especially in Germany. As early as in 1917 Steiner recommended using mistletoe to treat cancer. Following his advice, Wegman together with the Swiss pharmacist A. Hauser developed the first extract in water from the mistletoe plant called Iscar and began treating cancer patients at her practice in Zurich. The Iscar injections worked surprisingly well. Patients reported feeling better and having less pain. Steiner also recommended special procedures for preparing the mistletoe extract, which were explored by a growing number of researchers. In 1935 the Verein für Krebsforschung, the Association for Cancer Research, was founded in Arlesheim to study Is-car (later Iscador) and to improve the methods for preparing mistletoe extracts. To intensify these studies, the Hiscia Institute was set up in Arlesheim in 1949, where a growing staff of physicians and natural scientists optimized the Iscador range. The Hiscia Institute also took on the production of the basic mistletoe tincture, which was then diluted and bottled at Weleda's production facility in Schwäbisch Gmünd. In 1963 a clinic specializing in treating cancer patients with mistletoe extracts and in additional supplementary therapies based on anthroposophical and conventional medicines was added.

Iscador became Weleda's most important pharmaceutical product, accounting for up to two-fifths of the company's medicinal sales. In Germany in particular, Iscador became widely used as a supplemental therapy along with surgery, chemotherapy, and radiotherapy. In the United States the product was introduced as a homeopathic prescription drug under the name Iscar.

ACCELERATED GROWTH BEGINS IN 1990

Throughout the prosperous postwar era and the economic stagnation of the 1970s and 1980s, up until the 1990s, the company grew slowly, but steadily. With some 400 employees until 1990, Weleda had remained a fairly small enterprise. It was in the early 1990s when the combination of two factors accelerated Weleda's growth: a more systematic and strategic approach to marketing and the rising popularity of natural cosmetics.

The company began to focus on a closer direct relationship to its customers, mainly through a full-color customer magazine. Beginning in the mid-1990s the company also began to invite customers to open houses—or more precisely—to "open gardens." At such events visitors were able to inspect Weleda's organic herb gardens and to learn about biodynamic farming and alternative therapies using herbs and plants. Other events included "Parent-Child-Weeks" for promoting Weleda's line of baby care products or "Health Weeks" for people interested in alternative medicine and self-medication.

The late 1990s were the starting point for a series of new product launches to stimulate consumer appetite for Weleda cosmetics and OTC drugs. In 1998 a new "Wild Rose" body care line was first introduced, including body milk and two crèmes. Weleda's line of toothpastes and oral hygiene products was relaunched in the same year. The year 2000 saw the extension of the company's popular baby care line by a facial crème and body oil and the relaunch of two body oils and a cream bath. The newly introduced nose spray Rhinodoron was an instant success.

The significant investment in systematic marketing paid off. Weleda products received several awards at major trade shows. For example, Weleda Wild Rose Oil received the "Product of the Year" Award at the Biofach trade fair in Frankfurt in 1996. In a 2002 Reader's Digest consumer survey, the Weleda brand ranked third in Germany in the skin care product category. By that time Weleda was Germany's third largest manufacturer of baby care products and held a 30 percent market share in the cosmetic oils segment.

While Germany and Switzerland remained Weleda's main markets, the company intensified efforts to expand its distribution networks in the United Kingdom, Spain, Italy, The Netherlands, and Scandinavia. Other important target markets were Japan and the United States. At the same time the ties with distributors abroad were tightened, resulting in a consolidation of most foreign licensees into majority-owned Weleda subsidiaries. By the end of the 1990s Weleda had emerged as a mid-sized global player with an annual turnover of CHF 200 million.

FUTURE CHALLENGES

With natural cosmetics already generating a rising share of Weleda's revenues, the pharmaceutical branch got hit hard by ever-increasing demands from German regulators. In 1993 the Gesundheitsstrukturgesetz, a new law reorganizing the healthcare sector in Germany, raised patient co-payments for medication. Consequently, Weleda's sales of medicines suffered significantly. The same trend occurred in other countries. Most important, the requirements for registering homeopathic medicines increased. To meet the new demands from EU-regulators in Brussels, Weleda had to invest in expensive analytical equipment. Ten extra specialists were hired to prepare dossiers for the international registration of Weleda's medicines. A new German law effective in 2003 prescribed pharmaceutical manufacturers a 6 percent price cut, again reducing the company's sales.

To compensate for the increasing losses generated by Weleda's pharmaceutical branch since the early 1990s, the company straightened its product lines, cutting the number of medicines by 30 percent. Furthermore, the company reorganized internal processes to focus even more on customer demands and to better utilize existing talent. To finance further growth without compromising Weleda's philosophy and principles, the company's management came up with a creative solution for boost-ing its capital base. In September 1998 Weleda launched a money market fund through GLS-Gemeinschaftsbank, a bank based in Bochum, Germany, that focused on ethical investment. Within two months the bank lined up 550 investors, raising DEM 10 million—at that time roughly $6 million. A second offering in 2005 yielded another EUR 10 million—about $11.85 million.

Convinced that Weleda's medical branch would become profitable again in the mid-term because of a constantly expanding market for alternative medications, the company launched several major investment projects. In Arlesheim a brand new production facility for tinctures and medicines was built, greatly expanding Weleda's processing capacity. The new production line enabled the company to concentrate much of the tincture extraction in Switzerland that had been done previously in various European countries. The new facility also included a visitor center and a new administrative building for Weleda headquarters. Another brand new processing facility and visitor center were built in Schwäbisch Gmünd in addition to a new medical herb farm on 4.5 acres that employed 20 gardeners in 2005.

Although the company was planning to grow moderately, CEO Mathieu van den Hoogenband intended to keep focusing distribution on pharmacies and selected drugstores. A factory sale outlet for 10,000 Weleda visitors in Schwäbisch Gmünd was intended to generate additional revenues. Committed to strict environmental principles, such as keeping all of its products free from genetically modified ingredients, the company enforced its high standards with a number of "farm controllers" who visited Weleda's worldwide suppliers and refused to cooperate with manufacturers that engaged in animal tests. Most important, Weleda was committed to remaining an independent enterprise. The roughly 2,000 German and Dutch investors in the GLS Weleda Fund provided financial backing but had no voting rights. The Swiss General Anthroposophical Society and the Clinical-Therapeutical Institute remained the two major shareholders of the company that assured adherence to Rudolf Steiner's original vision of medicines that enhanced human well-being and self-healing rather than treating symptoms of disease.

PRINCIPAL SUBSIDIARIES

Weleda AG (Germany); Weleda S.A. (France; 80.5%); Weleda N.V. (Netherlands); Weleda (UK) Ltd. (93.8%); Weleda Italia S.R.L. (Italy); Weleda GmbH & Co. KG (Austria); Weleda Holding AB (Sweden; 95.5%); Weleda Inc. (U.S.A.); Weleda do Brasil (Brazil); Birseck-Pharmacy Arlesheim (Switzerland); Weleda S.A. Madrid (Spain); Weleda S.A. (Chile; 92.2%); Weleda S.A. (Argentina; 99.4%); med. Weleda Moskau (Russia; 75%); Weleda spol. s.r.o. Prag (Czech Republic; 99.3%); Weleda (Australasia) Ltd. (New Zealand; 99.52%); HeartBalance AG (Switzerland; 50%); Weleda Finance AG.