Dowpharma sells its U.K. operations to India's Dr. Reddy's

Dowpharma says it will sell its small-molecule active pharmaceutical ingredient (API) assets in Cambridge and Mirfield, England, to Dr. Reddy's Laboratories, an Indian generic drug company that also runs a custom manufacturing business.

Dow says the divestiture is part of a company-wide portfolio review and will not affect its API assets in Midland, Mich., or its Pfenex Pseudomonas-based protein expression technology business. Dr. Reddy's will obtain a nonexclusive license to Pfenex as part of the agreement.

"The businesses are doing well, but they are not a strategic fit for the way Dow is run now," says a company spokesman, noting that their process technology differs from that used in Midland and that raw materials are more expensive in Europe. Dow acquired the U.K. facilities with its purchase of Ascot's Chirotech Technology and Mitchell Cotts fine chemicals operations in 2001.

James Bruno, an independent fine chemicals and pharmaceutical consultant, sees the deal as evidence that Dow is following other diversified Western chemical companies out of the custom pharmaceutical chemical manufacturing business. "These were supposed to be their strategic sites," Bruno says.

The Dow spokesman denies this. "The Midland plant has a lot of long-term contracts that are operating very well," he says. "We can build in more contracts if we want."

Dr. Reddy's, which purchased an API plant in Mexico from Roche in 2005, is on a campaign to build a global custom manufacturing operation. "The proprietary chiral and biocatalysis technology at the Cambridge site and the scale-up capability in the Mirfield site will add significant value to the company," Managing Director Satish Reddy says.