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Rhône­Poulenc
By
Markus Heissler
 
 
 
Keywords:  Rhône-Poulenc; Private industry; Trade; Human health; Feeding (animal); Agrochemicals; Drugs (animal). 
Correct citation: Heissler, M. (1994), "Rhône­Poulenc." Biotechnology and Development Monitor, No. 18, p. 20­22.

Rhône-Poulenc (RP) is not only the world's number one vaccine producer, but also a large producer of animal feed, veterinary products and agro­chemicals. With its partly state­funded Bio Avenir programme, the company also became one of the world's largest spenders on biotechnology research.

Rhône­Poulenc (RP), today the seventh largest chemical company of the world, was founded in 1858 as Poulenc Frères in France. In 1982, the majority of the voting securities of France's leading chemical company were taken over by the French state. Since the election of the new conservative government, however, the state's nationalization policy has changed. In the coming years all 21 state­owned companies are to be privatized. Following the successful sale of the Banque Nationale de Paris, the French state sold most of RP's shares to the private sector in December 1993.

Bio Avenir
Although the nationalization policy has come to an end, the French government is not retaining itself from interference. Its biotechnology research policy neither follows the US model of venture capital backed small companies, nor Japan's, which is based on large corporate structures. The French strategy is to merge these two approaches, combined with a high level of government intervention, and also to concentrate money in those areas of research which might rapidly reach application. In this way, France hopes to challenge the US and Japanese biotechnology industries.
Bio Avenir is the name of an ambitious five­year biotechnology research collaboration between RP and major French research institutions, such as Institut National de la Recherche Agronomique (INRA), Centre National de la Recherche Scientifique (CNRS) and Institut Pasteur.
The research programme is focused on three areas:

Bio Avenir started in 1991, and receives a total of about US$ 233 million, of which 40 per cent is contributed by the French government. The whole project employs 500 scientists.

Market and research strategy
The diversity of the Bio Avenir programme is illustrative for the activities of RP. The company has three core components: (1) Chemical intermediates, (2) applied chemistry and speciality chemicals, and (3) life sciences (including the health­ and agro­divisions). The latter component, life sciences, is the strongest one. The health sector alone accounts for 80 per cent of RP's net income. In 1993, RP reached net sales of about US$ 14 billion.
In RP's research strategy, biotechnology plays a crucial role. The application of biotechnology seems to be one deciding factor for the company's future market position, especially in pharmaceuticals and agro­chemicals. In 1993, RP spent about US$ 1 billion on R&D, of which nearly 20 per cent was spent on biotechnology. RP's research activities are spread over thirteen research centres in Europe, North America, Japan, and Brazil.
In the mid 1980s, the company's management decided to aim at a position among the top five world leaders in its business areas. Subsequently RP started the internationalization of its production and marketing with an aggressive expansion­through­acquisition policy. Between 1986 and 1993, it spent US$ 7 billion on acquisitions, thereby doubling its sales worldwide. Now the company is a true multinational, with affiliates in 140 countries and employing more than 83,000 people worldwide. The international operations account for 79 per cent of RP's revenues, 9.7 per cent more than seven years ago. Today, its biggest market is North America. Between 1986 and 1993, the company's sales in North America increased from 3 to 25 per cent, resulting in a larger turnover than its domestic market. Africa, Asia and Latin America account for 16.8 per cent of its net sales.

Human health
With its acquisition of 67 per cent of shares of the US company Rorer (now called RP­Rorer) in 1990, RP became a major player on the pharmaceutical world market. It now occupies the third position on the European market, and a fifteenth position on the American market. RP­Rorer is rapidly expanding its interests in biotechnology, illustrated by the recent establishment of a special biotechnology unit in its R&D­centre in Vitry, France, to develop new ways to treat cancer and AIDS.
Together with Institut Curie, France, RP­Rorer developed a topoisomerase II inhibitor, an important enzyme in the control of tumour growth and cell division. The company also launched a recombinant human identical granulocyte colony stimulating factor (Granulocyte). This growth factor is used in cancer chemotherapy and was developed in co­operation with the Japanese pharmaceutical company Chugai.
In a joint venture with Immune Response Corporation (USA), RP­Rorer is developing a therapeutic vaccine against AIDS. The vaccine consists of an inactivated HIV virus, which has been cultivated in human cells before its re­injection into patients. Clinical tests have shown, that the vaccine slows down the rate of viral replication. It also seems to stimulate the immune response: Treated individuals showed a larger number of antibodies in their blood stream.
RP­Rorer's goal is to play a major role in developing gene therapy. In 1993, the company therefore acquired a 37 per cent stake of the American company Applied Immune Sciences (AIS). RP bought from AIS a cell­selection system that selects a given cell population for therapeutic purposes. The selected cell population can be cultured and/or genetically modified and then re­infused into the patient. Such ex vivo administration allows pharmaceuticals to target only specific cells. Currently, the new technology is tested for applications in bone­marrow transplants, AIDS treatment, kidney cancer, and gene therapy.
A subsidiary of RP­Rorer, Armour Pharmaceuticals, USA, is also involved in the development of gene therapy technologies. Combined with the recently established research alliance with CNRS for gene therapy vectors, the company expects to gain a strong position on the future gene therapy market. By the year 2010 this market has been estimated to account for US$ 3.8 billion annually.
In January 1994, the company introduced a new malaria drug named Paluther. The new drug is expected to overcome resistance to conventional drugs in some African countries such as Nigeria, Kenya, Ivory Coast and Madagascar.
RP owns 51 per cent of the Institut Mérieux (IM) and will soon increase its stake to 100 percent. IM controls about one third of the global vaccine market. IM's earlier achievements include the production of the first European polio vaccine and of the first commercial vaccine against a specific form of meningitis. In 1986, it also introduced the first genetically engineered human vaccine on the market. The drug Recombivax is used against hepatitis B (see also Monitor no. 17). Two years earlier, IM had become the majority shareholder of  Pasteur Vaccins, which includes all the serums and vaccine activities of Institut Pasteur. This led to the establishment of Pasteur Mérieux Serums et Vaccins, which linked Pasteur's basic research and IM's manufacturing capability.
In the late 1980s, IM strengthened its position in the vaccine market through the acquisition of several biotechnology­based companies, such as the American company Virogenetics and the French Transgène, Europe's first biotech start­up. In 1989, IM took over the Canadian human vaccine developer, Connaught Laboratories, which gave IM a strong foothold on the North American vaccine market. Today the Institute concentrates its research efforts on AIDS and Hepatitis B.

Animal health and feed
RP's veterinary division Rhône­Mérieux (RM), a subsidiary of Institut Mérieux, is the world's biggest animal vaccine producer. It is the world leader for marketing vaccines against rabies and foot and mouth disease, which account together for 30­35 per cent of the total net sales of animal vaccines. In addition, RP's subsidiary, Rhône­Poulenc Animal Nutrition, holds a leading position in the world market of feed additives, such as vitamins and methionine.
In 1990, RM produced in collaboration with several subsidiaries the first recombinant anti­rabies vaccine for animals, Raboral. In developing countries, rabies leads to a high mortality rate in livestock and therefore to great economic losses in cattle­production. Recently, Raboral got the approval from the European Union for release. The German Federal Health Organization, however, is concerned about the vaccine, because it is based on a smallpox virus named Copenhagen. According to the Organization, RM could not prove that Raboral is less pathogenic than the conventional vaccine, with its known side effects. This is aggravated by the fact that regular vaccination against smallpox in Germany stopped years ago, because of its negative side effects. The green fraction in the European Parliament has threatened to enter legal action against the European Commission, if it does not withdraw its approval.
Today, RM directs its research efforts to the development of new recombinant vaccines, for example, one against Newcastle's disease in poultry. Newcastle disease is the most important virus disease of poultry in the world. Especially in Asia, where poultry meat and eggs form a major part of the human diet, broad vaccination against this disease is considered important. Recombinant vaccines are, however, often too expensive for developing countries.

Food additives
Food additives is another key sector for RP's biotechnological application. The company's goal is the close imitation of natural food. RP is already the world's largest producer of artificial vanilla (vanillin). Artificial vanilla is currently the most widespread flavouring in the world. It is found in most sweet products such as chocolate, desserts, cake and candies. Because of its high prize, natural vanilla was an early candidate for substitution through synthetic production. In 1876, the German scientist Reimer discovered the synthetic flavour of vanilla and RP started its production in 1920. Nowadays, synthetic vanilla is about 200 times cheaper than natural vanilla, which is mainly produced in Madagascar. But the imitation is still not comparable with the superior aroma of natural vanilla.
It is expected that RP will double its turnover in the food sector by the year 2000 up to US$ 800 million. The company recently discovered the new market of products which have low fat and cholesterol content. RP's first product in this line is a fat substitute, Oatrim.

Agro­business
Although the agro­business is only accounting for 12.4 per cent of RP's total net sales, the company is ranked fourth on the world's agro­chemical market. RP is primarily concentrating on crop protection products, which now account for 80 per cent of the agro­division's sales. During the last few years, RP has increased its agro­sector through acquisition. In 1986, it purchased Union Carbide's agro­chemical division after the chemical disaster of Union Carbide in Bhopal, India. Since seed is seen as the major vehicle of genetic improvements in agriculture, RP, as many other agro­chemical companies, entered the seed business. First RP bought the US company Callahan Seeds, which is specialized in the improvement of maize and soya seeds. It also acquired the French grain seed company Cérès. In 1989, RP joined its seed interests with Lafarge­Coppée's seed subsidiary Orsan in the new company Aritois. Aritois is now a leading company in the worlds's vegetable seed business. Clause, the French market leader in vegetable and ornamental seeds, and Harris Moran Seeds, the third largest seed company in the USA, are parts of this venture. Clause and Harris Moran have business operations in Asia, South America and the Middle East.
In 1984, RP started a research partnership with the US biotech company Calgene, that should lead to the engineering of resistance to RP's bromoxynil herbicide Buctril in cotton. In 1986, a gene that encodes an enzyme that detoxifies bromoxynil within the engineered plant was discovered.
Recently, the United States Department of Agriculture has approved Calgene's genetically modified cotton. This was the first time a genetically engineered herbicide­resistant crop was approved. It is expected that the new cotton plant will be commercialized in 1995. Also Callahan Seeds conducted research in herbicide­tolerance for soya.
In 1986, RP was involved in a project of the European research programme Eureka, to develop artificial tomato seeds. Artificial seeds are developed through the mass production of plant somatic embryos in fermentation tanks.

Welcome to a cleaner world?
RP is promoting a green image under the slogan "Welcome to a cleaner world". RP plans to join a new trend in agro­industry by developing biopesticides, which are considered more environment­friendly. However the company produces highly dangerous pesticides such as lindane and aldicarb.
The industrial area of Cubatao, Brazil, where RP's subsidiary Rhodia has a chemical plant, is known as the Ò'alley of Death'. It is one of the most polluted areas in the world and has the highest rates of infant mortality in Brazil. It is obvious that not only one factory is responsible for the disastrous environmental situation in Cubatao. Rhodia's plant, however, produces chlorinated chemicals and, until 1978, also pentachlorophenol (PCP).
According to Pesticides News, soil probes, taken around the RP's factory, showed a concentration of poisoning chemicals, which exceeds 7,840 times the permitted level. Also blood tests taken from residents in Cubatao have shown high levels of toxic substances such as PCP, which endangers human health.
In June 1993, a Brazilian court order required the company to close its factory at Cubatao, because of high pollution levels. The order followed a report that showed the existence of high quantities of organochlorinated residues including PCP in the factories' soil. The court's decision was made to stop the continued exposure of plant workers to the residues. RP has lodged an appeal against the factory's shut down. In its defence, the company says that since 1984 the factory's incinerator, a twenty­million dollar investment, eliminated all its organochlorine waste products.
Markus Heissler
 
Sources
Rhône­Poulenc (1993), 1992 Annual Report

Mike Ward (1993), "Rhone­Poulenc: From Bioscience to Markets". Bio/technology, July 1993

"Rhône­Poulenc: The Image and Reality". Pesticides News, no. 21 / September 1993

Greenpeace (1993), :A Case Study in Toxic Pesticide Exports and Pollution in Brazil's 'Valley of Death'". Greenwash Snapshot, no. 7



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