Financial Statements - Solvay

– the risks attached to ongoing litigation in the USA in relation to our pharmaceutical products, in the fi eld of
female hormone treatments in the USA, following the publication of study reports on female hormone treatments
by the “Women’s Health Initiative” in 2002. The amount of the provisions refl ects the current estimate of the number
of plaintiffs treated with our products; the number of cases continues to evolve, though it has tended to stabilize
since 2007. The status of this litigation did not change signifi cantly in 2008. Proceedings can be expected to continue
in 2009 and after.
The litigation (class actions and individual suits) outstanding against Laboratoires Fournier relates to the application of
competition rules linked to changes in fenofi brate formulation in the USA and Canada. Our opponents here are generic
product manufacturers, distributors and third party medical care reimbursement bodies. These risks are the subject
of certain contractual guarantees furnished by the former Fournier shareholders at the time of the acquisition in 2005.
Proceedings are expected to continue during 2009 and beyond.
In January 2008 the Group was informed that an application to register a generic equivalent of TRICOR ® had been
fi led by Teva in the United States (ANDA: Abbreviated New Drug Application). Fournier Laboratories Ireland Ltd and
Laboratories Fournier SA together with Abbott Laboratories and Elan Plc fi led patent infringement actions against Teva
in the USA. Similar circumstances occurred in September 2008 with an ANDA fi led by Biovail Corp.
Solvay Pharmaceuticals, Inc. was informed in January 2009 that the U.S. Federal Trade Commission (FTC) and
the California attorney-general had fi led suit in the U.S. District Court of California contesting the validity of the agreements
concluded in 2006 with Watson and Par regarding ANDROGEL ® . Solvay Pharmaceuticals is disputing the merits of
this case and will defend its actions in court.
Other provisions
Other provisions, set up to cover specifi c risks such as obligations related to the shutdown or disposal of activities,
amount to EUR 127 million, compared with EUR 237 million at the end of 2007.
This decrease is mainly due to:
– reclassifi cation from provisions to working capital (short-term liabilities) of EUR 50 million of milestones due to
the previous shareholders of Fournier Laboratories as a consequence of the absence of generics for TRICOR ® in 2008;
– reversal of a provision of EUR 25 million originally set up to cover the additional research expenses to speed up
development of the psychiatric compounds included in the agreement concluded with Wyeth.
Group policy on insurance
Solvay’s group policy is only to use insurance to cover very large risks, when insurance is required by law as well as
whenever insurance represents the best fi nancial solution for Solvay.
The Group maintains and develops appropriate insurance coverage for insurable risks in line with the policy to limit
the fi nancial impact of risks that could materialize.
In 2008, the global insurance programs were renewed with improved coverage and at a lower level of premium.
The liability insurance market remains diffi cult for companies selling pharmaceutical products.
(30) Net indebtedness
The Group’s net indebtedness is the balance between its fi nancial debts and cash and cash equivalents. It increased by
EUR 290 million from EUR 1 307 million at the end of 2007 to EUR 1 597 million at the end of 2008.
EUR Million 2007 2008
Financial debt 1 882 2 480
- Cash and cash equivalents -575 -883
Net indebtedness 1 307 1 597
Financial
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Solvay Global Annual Report 2008
Financial