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Business Concentrates

August 16, 2004 | A version of this story appeared in Volume 82, Issue 33

Economy buoys Ciba and Degussa

European specialty chemical makers Ciba Specialty Chemicals and Degussa both reported improved second-quarter results last week. At Ciba, second-quarter sales were up 2% to $1.37 billion on an 18% jump in net income to $78.4 million. The firm said economic conditions improved, but added that "the upswing was volatile and only visible in selected markets, with sizable swings noted between individual months." Ciba announced that it is disbanding its home and personal care segment for lack of critical mass and folding it into two of its four other segments. Degussa's core business sales rose almost 6% to $3.46 billion while net income almost tripled to $124 million. Chairman Utz-Hellmuth Felcht told shareholders that he expects the global economic recovery to continue, although he cautioned that Degussa's earnings in the second half will be dampened by rising raw material costs.


Merck, DOV in drug pact

Merck & Co. and DOV Pharmaceutical have signed an agreement for the development and commercialization of DOV's novel triple-uptake inhibitors for depression and related psychiatric disorders. Merck has licensed worldwide rights to the compound DOV 21,947, now in Phase I clinical trials, for all indications, and to DOV 216,303 for depression and anxiety. DOV will receive $35 million up front, up to $300 million for reaching certain milestones, and up to $120 million for hitting certain sales levels. "We believe that a triple-uptake inhibitor that affects the neurotransmitters norepinephrine, serotonin, and dopamine has the potential to offer physicians a real advance in the treatment of depression and related conditions," says Peter S. Kim, president of Merck Research Laboratories.


Bayer's big Olympics cover-up


Spyridon Louis stadium in Greece, site of the Olympic Games' opening and closing ceremonies, all track-and-field events, and the men's soccer final, is topped by the largest transparent roof ever built. According to Bayer MaterialScience, which supplied the Makrolon polycarbonate used to form the roof, the structure covers nearly 25,000 m2 and weighs 17,000 metric tons. Had glass been used, the roof would have weighed more than twice as much. The polycarbonate has been mixed with a heat-deflecting additive to reflect the majority of the sun's heat while allowing the visible part of the electromagnetic spectrum to pass through.


BASF seeks GPCR targets

BASF will use technology from Norak Biosciences in its search for active ingredients for crop protection. The technology, called Transfluor, helps find compounds that are active against G-protein-coupled receptor targets. It is more typically used in the field of drug discovery, where Norak has agreements with firms such as AstraZeneca, Roche, and Merck. Under the deal with BASF, Norak will receive technology access and screening fees, as well as milestones and royalties. It licensed the technology from Duke University Medical Center in 1999.


Asbestos suit targets Dow

A wallboard maker has sued Dow Chemical and subsidiary Union Carbide for $100 million in a California state court, claiming that Carbide conspired to hide the dangers of asbestos. The suit also names asbestos distributor Harcros Chemicals. From 1970 to 1978, Hamilton Materials used asbestos from Carbide and others to make wallboard joint taping and texturing materials. Hamilton says it is nearly bankrupt because of the cost to litigate and settle claims from people asserting lung injuries from the asbestos-containing products. A Dow spokesman says Carbide "provided detailed product warnings to Hamilton," adding that Dow has "no liability to Hamilton for any of its historic or future asbestos claims."


Wellman moves ahead on PET

Wellman Inc. is installing equipment at its Pearl River, Miss., polyester plant so that it can produce an additional 300 million lb per year of polyethylene terephthalate resin. The expansion is expected to go onstream in 2006 at a cost of about $50 million. Wellman is converting a polyester fiber plant that it opened in 2000 and soon idled because of poor market conditions. The company previously announced plans for the conversion but canceled them, also due to market conditions.


Rentech slates plant conversion

Rentech, a developer of gas-to-liquids technologies, is planning to buy Royster-Clark's East Dubuque, Ill., nitrogen fertilizer plant for $63 million. Rentech wants to convert, over a three-year period, the natural-gas-based plant into a coal-based Fischer-Tropsch unit that will make 1,400 tons of ammonia and 4,800 barrels of hydrocarbon fuels per day. Rentech says it will need financing to complete the purchase.


Air Products looks outside for R&D help

To accelerate its research effort, Air Products & Chemicals has joined the Internet-based science and technology sourcing networks InnoCentive and NineSigma. "No single company can employ all the best people in every market they serve," says Miles P. Drake, chief technology officer at Air Products. "With these tools, we can scout out new ideas and technologies complementary to our existing business models."


New fragrance plant in China

Drom Fragrances International, a family-owned German firm, is building a plant in Guangzhou, near Hong Kong, to produce fragrance compounds for the Asian market. Annual output will be 5,000 metric tons of a variety of fragrances. Its major target market: local companies that make products on behalf of European manufacturers and retailers, says Lesley Taylor, sales manager for Drom's U.K. operations. "We will no longer have to transport [fragrances] from plants thousands of miles away," she adds. The facility is scheduled to be fully operational by October.


Ajinomoto plans amino acids

Japan's Ajinomoto will spend almost $200 million over the next several years to expand its capacity for pharmaceutical- and feed-grade amino acids. The firm says it will spend $63 million to build a plant in São Paulo, Brazil, making pharmaceutical-grade amino acids. In the U.S., it will spend $23 million to double capacity for feed-grade threonine in Eddyville, Iowa. And Ajinomoto will increase capacity for its biggest selling amino acid, feed-grade lysine, by building a second plant in São Paulo at a cost of $86 million and by expanding a plant in Chengdu, Sichuan province, China, for $27 million.


Custom service from zuChem

The glycochemistry specialist zuChem is offering custom synthesis of rare and modified glycochemicals. The service will operate out of the firm's Peoria, Ill., research labs and be based on fermentation technology. "Pharmaceutical products that incorporate glycochemicals have tremendous therapeutic potential; however, only a small number of natural glycochemicals are available as starting research materials, and synthetic glycochemicals are expensive and rarely available," zuChem President David Demirjian says.

DyStar, Rhodia deals complete

Platinum Equity has completed its acquisition of DyStar, the textile dyes maker, from joint owners BASF, Bayer, and Hoechst/Aventis, following clearance from antitrust authorities. Johnny O. Lopez, Platinum's executive vice president for mergers and acquisitions, says his firm expects DyStar to be a strong company with significant potential as both a stand-alone business and a platform for future acquisitions. Separately, Rhodia has finalized the sale of its water treatment operations to Sweden's Feralco. The deal will double Feralco's annual sales, which were roughly $30 million in 2003.


Ferro opens analytical lab

Ferro Pfanstiehl's new lab more than triples the size of its analytical services.
Ferro Pfanstiehl's new lab more than triples the size of its analytical services.

Ferro's Pfanstiehl Laboratories unit has opened a new analytical services laboratory at its Waukegan, Ill., site. The firm says the lab will serve its two main businesses: develo pment and manufacture of high-potency active pharmaceutical ingredients, and production of high-purity, low-endotoxin carbohydrates that stabilize therapeutic proteins. Ferro says it has hired 20 chemists, engineers, and managers to staff the new lab.


Chemical jobs slide in July

Chemical industry employment in July declined from an upwardly revised June figure, according to Labor Department statistics. The seasonally adjusted data show U.S. chemical industry employment at 893,200, down 1,200 from the previous month. Compared with July of last year, employment was off by 15,000. Meanwhile, the number of production workers increased by 500 over June to 522,200. But the July figure is still down 4,700 from July 2003. The number of hours they worked also increased in July from the month before, with the average workweek rising to 42.8 hours from 42.5 hours in June. Thus, the index of aggregate hours of production rose to 99.4 (2002 = 100) from 98.6 in June.


Honeywell is building a hydrofluorocarbon blending and packaging facility in Qingpu, Shanghai, China, to open in November. The facility will be the Asia service center for environmentally friendly refrigerants including R-410A, R-407C, and R-404A.

Excel Polymers is now the name of the former PolyOne Elastomers & Performance Additives business. Lion Chemical Capital and ACI Capital completed the $120 million purchase of the business earlier this month.

Array Biopharma will create small-molecule oncology drug candidates for QLT under a new collaboration. QLT will provide research funding to Array and make success-based milestone and royalty payments.

Westlake Chemical priced its shares at $14.50 for their debut on the New York Stock Exchange last Wednesday, below the expected $16 to $18 range but still garnering some $159 million for the company. The shares closed their first trading day at $14.65.

ExxonMobil Chemical and Venezuelan state oil company PDVSA are resurrecting plans for a petrochemical project in Jose, Venezuela, first proposed some five years ago. In September, the companies will commence feasibility studies for the 1 million-metric-ton-per-year ethane-based ethylene complex.

Praxair has won a contract to supply oxygen and nitrogen to the petrochemical complex that Shell Chemicals and China National Offshore Oil Corp. are building in Huizhou, Guangdong province, China. Praxair says it will construct two air separation units at the site by May 2005.

Tetra Technologies will acquire Kemira's calcium chloride business for about $41 million, subject to approval by authorities. The business has sales of about $60 million per year.


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