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MAY 30, 2005
Thomas & Andreas Strüngmann Co-founders, Hexal, Germany There's more than one secret to the success of the twin brothers who recently agreed to sell Hexal, a German generic drugmaker, to Swiss-based Novartis (NVS ). Thomas and Andreas Strüngmann, 55, have a reputation for being tough negotiators, for making fast decisions, and for being a couple of nice guys. When the sale was announced in February, the consensus among European analysts was that the price of nearly $8.3 billion for Hexal and Eon Labs Inc., its strategic partner in the U.S., was high. (The Strüngmanns hold a majority stake in Eon.) But Novartis was determined to do the deal, which will make its generic division, Sandoz, the largest generic-drug company in the world. Before the announced sale, which likely will be green-lighted by European and American regulators later this year, Hexal was No. 2 in the German generics market, the second-largest after the U.S. Its sales had more than doubled in five years, to $1.65 billion in 2004. At the same time, Hexal has been expanding in Latin America and Asia. Eon Labs is one of the fastest-growing companies in the U.S. generics market, with 31% growth from 2003 to 2004, when sales reached $431 million. For the Strüngmanns, pharmaceuticals are a family affair. Their father, Ernst, ran the family-owned drug company, Durachemie, until 1979, when he asked his sons to take it over. Thomas left his job in international marketing at Schering-Plough Corp. (SGP ) in the U.S. to return home, while Andreas moved back from South Africa, where he was a medical doctor. The brothers sold Durachemie in 1986, then used the proceeds to launch Hexal. Starting with 22 employees in an apartment building near Munich, the Strüngmanns quickly figured out that the way to beat their competitors was to offer not just cheaper versions of brand-name drugs but innovative dosage options. First they developed a lower dosage of a kidney drug. Then they progressed to sustained-release capsules and tablets, skin patches, and implants for a variety of medications. To what do the Strüngmann twins attribute their success? "There were a lot of factors -- speed, flexibility, quick decisions and execution, adjusting to market needs," says Thomas Strüngmann, who holds a doctorate in business management from the University of Augsburg in Germany. While the brothers have shared ownership and management of the company, they divide responsibility for different regions of the world. Thomas says they fill in for each other as needed. In keeping with that harmonious relationship, the Strüngmanns, who will join the executive board of Novartis, have received numerous compliments for their business style. Hexal won an award as the best pharmaceutical employer in Germany three years running, and last year it won a Europewide good-workplace award. Observers say the brothers give employees a lot of freedom and keep hierarchy to a minimum. Thomas is said to eat often in the employee cafeteria. "They are really nice people, the kind of people you like to do business with," says Dave Maris, a pharmaceuticals analyst at Banc of America Securities (BAC ) in New York. And soon they will be nice guys with billions to spend.  By Katharine A. Schmidt
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