Arklow unit of Servier sees profits fall despite sharp rise in revenues

PRETAX PROFITS at the main Irish unit of French pharma giant Servier last year fell by nearly a quarter despite a sharp increase in revenues.

Accounts just filed by Servier (Ireland) Industries show the Co Wicklow-based group saw profits drop 23 per cent to €23.4 million, while revenues jumped 29 per cent to €443.4 million in the 12 months to September last year from €342.6 million in 2010.

Servier, a subsidiary of a privately-owned French-based group, manufactures pharmaceuticals, primarily for export markets.

Employment at the plant, which was subject to a €47 million investment two years ago, rose to 392 last year from 375 a year earlier.

Directors noted in the annual filing that the additional production facilities, as well as the development of markets in the Middle East, had seen a significant increase in sales.

On the firm’s future developments, the directors state: “The group expects to increase its sales levels and further improve its financial performance in the coming year with sales to new markets such as Romania, Bulgaria and South America.”

This year Servier’s Arklow site received a boost after the European Medicines Agency gave approval for Servier’s drug Procoralan, which is manufactured in Arklow, to treat patients suffering from chronic heart failure.

The drop in pretax profit was down largely to a dramatic increase in operating expenses – to €85.8 million from €50.9 million a year earlier.

The entry to new markets saw sales and marketing costs rise to almost €36 million from €30.5 million, and foreign exchange movements accounted for a swing of €7.5 million. However, the bulk of the difference was attributed to a doubling in administrative expenses to €42.5 million.

Despite the fall in profit, directors have agreed a €20 million dividend payout, up from €15 million in 2010.

The filings show that in spite of the increase in employee numbers, staff costs dipped to €19.3 million from €21.9 million.

Servier employs 20,000 worldwide, and last year had global revenues of €3.9 billion, with a quarter of its turnover invested in research and development.

No RD is undertaken at the Arklow site.