Business Concentrates

Bayer shows strong second-quarter results

For Bayer, second-quarter 2004 showed an increase of 44% in its operating profit from the same period last year. Operating profit was $794 million on sales of $9.12 billion. Net profit was unchanged at $154 million. Sales, which were up 4.5% compared with second-quarter 2003, benefited from a pickup in demand for industrial products from Bayer MaterialScience and the soon-to-be-spun-off Lanxess, CEO Werner Wenning says. Bayer HealthCare, however, showed a decline in sales, primarily because of divestitures in the unit. At an analysts' briefing, Wenning said the company plans to generate savings of $1.1 billion this year. And he confirmed that the company expects to announce the sale of its blood products unit "soon"--possibly by the end of the third quarter and certainly by the end of the year.

Sasol explosion kills six people

An explosion at an ethylene plant used to feed polymer production at Sasol's Secunda, South Africa, site has resulted in the deaths of six people--two Sasol employees and four contractors. Gas leaked from the unit as it underwent routine maintenance. The resulting gas cloud exploded, leading to the deaths and injuring at least 20 people who required overnight hospitalization. Five of the injured remained in intensive care at press time. Sasol says a fire following the explosion was put out within minutes. Company and government officials are now investigating the incident.

Glaxo settles legal dispute

A settlement has been reached in litigation between GlaxoSmithKline and New York State Attorney General Eliot Spitzer over the disclosure of drug data. Spitzer had accused the pharmaceutical company of withholding negative results about the effect of the antidepressant Paxil (paroxetine) on children and adolescents. GSK will pay the state of New York $2.5 million and establish a continually updated, freely accessible online clinical trial register with results for all GSK-sponsored clinical studies of drugs. According to Spitzer's office, GSK will be the first major drug manufacturer to publicly disclose this type of drug information. In a statement, the company says that the charges are "unfounded" but that it has agreed to the settlement to avoid the cost and time of protracted litigation.

Lubrizol to raise funds

Lubrizol says the Securities & Exchange Commission cleared the company's registration to sell up to $2 billion in stock and debt. Proceeds will be used to replace loans the company took out to finance the June acquisition of Noveon. Earnings this year are likely to be lower than expected for the specialty chemical segment because of higher prices for the raw materials toluene and benzene. However, earnings will be higher in the lubricant additives segment. Separately, the firm says CEO James L. Hambrick successfully completed treatment for early-stage testicular cancer.

Tire cord firm switches to the drug lane

SRF Ltd., a leading supplier of tire cord fabrics in India, says it is diversifying into pharmaceutical chemicals. The firm has announced a $6.5 million investment in two new manufacturing facilities, one for manufacturing trifluoroacetic acid and the other for manufacturing a range of drug intermediates. Initially, the firm will concentrate on fluorine-, chlorine-, and bromine-based pharmaceutical intermediates, according to CEO Rajdeep Anand. Anand says the firm is in supply talks with major Indian drug companies, such as Dr. Reddy's, Cipla, and Wockhardt. SRF already supplies pharmaceutical and agricultural chemical companies in India with chemicals from its refrigerant gases unit, according to Anand, and the move into intermediates is a logical step.

Ener1, Delphi collaborate

Automotive components and systems manufacturer Delphi and energy and nanotech developer Ener1 are forming a joint venture to combine their expertise in lithium batteries. The companies aim to foster military, automotive, power tool, and other applications for lithium batteries. The partnership is intended to leverage Ener1's vapor deposition process and nanotechnology expertise and Delphi's design, manufacturing, and system integration know-how. The companies hope they will be able to provide enhanced performance at a low cost.

Merck acquires Pfizer unit

Pfizer has agreed to sell its generics unit NM Pharma, based in Stockholm, to Germany's Merck KGaA. The purchase price is roughly $66 million for the business, which had sales just under $50 million last year. Merck, which is strengthening its Merck generics division, will integrate NM Pharma into its operations in Scandinavia and change its name to Merck NM. Generic products accounted for sales of about $1.85 billion at Merck in 2003, 21% of the company's total.

Octel buys aroma chemicals

The specialty chemicals producer Octel Corp. has bought Aroma & Fine Chemicals from financial investors Close Brothers Private Equity. The selling price was just under $40 million. Aroma & Fine Chemicals, based in northwest England, was the subject of a management buyout in December 2001 from previous owner International Flavors & Fragrances. The acquisition of Aroma further strengthens Octel's performance chemicals division and enables the company to expand into the high-growth area of additives for the personal care and household cleaning markets.

DSM launches energy drink

DSM has launched its new specialty sports recovery drink, PeptoProSports. The company's spokeswoman for the product will be Dutch swimmer Inge de Bruijn, who won four medals at the Olympic Games in Athens. DSM had supplied the drink to the Dutch Olympic team since December 2003. According to DSM, PeptoProSports is the first sports drink to incorporate peptides into a formulation in addition to sugar. The proteins, the company adds, can be absorbed directly and more rapidly into the bloodstream, stimulating production of insulin, which ensures that glucose is transported more rapidly from the blood into muscle cells.

Celanese profit off in second quarter

Celanese showed a drop of 50% in its operating profit for the quarter, to $65 million. The financial effects of the company's acquisition by Blackstone Group helped contribute to a net loss for the quarter of $109 million, compared with a net profit of $115 million for the comparable quarter in 2003. Sales declined slightly, falling 1% in the quarter to $1.23 billion, although the company said that volume grew strongly in most of its business segments.

Buyout at BASF pharma

BASF has sold its Cramlington, England, active pharmaceutical ingredients business in a management buyout, effective Aug. 31. Robert Hardy, the managing director, and his colleagues have established a new company, Aesica Pharmaceuticals, that will continue production of three products: two antidepressants and a nonsteroidal anti-inflammatory. All personnel on-site will transfer to the new owner.

Sinopec profits surge in China

China Petroleum & Chemical Corp. (Sinopec) and its subsidiaries recorded sharp improvements in profit in the first half of the fiscal year, which ends on Dec. 31. Sinopec's net profit surged over 50%, to $1.94 billion, compared with the same period last year. Sales increased 36% to $32 billion. Refining and chemicals contributed most to profits. The conglomerate derives about 20% of its business from sales of petrochemical products. Shanghai Petrochemical, a separately listed company that is 55% owned by Sinopec, more than tripled its net profit compared with a year ago, to $183 million. Like its parent, Shanghai Petrochemical says it operated its facilities at a high level during a period of growth in the Chinese economy and improving margins in the global refining and petrochemicals business. Polyester producer Yizheng Chemical Fibre, 42% owned by Sinopec, increased its net profit 29 times compared with a year ago, to $24 million. Yizheng credited the commissioning of a new purified terephthalic acid unit last year for reducing its cost to procure raw materials.

Eastman PET breakthrough

Eastman Chemical CEO J. Brian Ferguson unveiled a "breakthrough" polyester process and announced plans to build a new plant using the process at a press conference in New York last week. The firm's IntegRex technology is based on multiple process integrations from p-xylene to polyethylene terephthalate resin. The firm will build a $100 million PET plant with capacity of 350,000 metric tons per year using IntegRex in Columbia, S.C.; it will be up and running by fourth-quarter 2006.

BUSINESS ROUNDUP

Koch Industries says it will continue to license to Chinese companies the Invista process for producing purified terephthalic acid. Koch bought Invista from DuPont this April, and it had not been clear since then whether the new owner planned to maintain the same licensing policy as DuPont.

BASF has asked permission from Chinese authorities to set up a polyurethane formulations unit, a thermoplastic polyurethane plant, and a product development center in Shanghai's Pudong district. The firm expects the facilities to start operating in 2007. The Pudong specialties would make use of toluene diisocyanate and methylene diphenyl diisocyanate produced at BASF's $1 billion polyurethane complex now under construction in Shanghai's Caojing industrial park.

UCB Group has sold its pharmaceutical manufacturing plant in Limay, France, to NextPharma, a London-based holding company concentrating on contract drug development and manufacturing service firms. The facility, which employs 105, specializes in liquid, cream, ointment, and spray formulations.

SIGA Technologies has received two grants totaling approximately $12 million from the National Institutes of Health to support the development of biowarfare defense drugs such as antivirals targeting smallpox, arenaviruses, and other hemorrhagic fever viruses including Ebola.

Rhodia Pharma Solutions has received a $3.2 million grant, to be phased in over three years, from the Scottish Enterprise's R&D Plus program. The grant will go toward an $8.1 million upgrade of a production unit in Annan, Scotland, where Rhodia is manufacturing an active pharmaceutical ingredient for a cancer drug currently in clinical trials in the U.S.

Dow Chemical will exit the specialty ketones business because of declining revenues and poor market conditions. The company will shut down its plant in South Charleston, W.Va., in the first quarter of 2005.

ICI Pakistan has sold 19% of Pakistan PTA to a private investor. The sale will generate an exceptional third-quarter profit of about $41 million for the ICI Group, which will retain a 75% stake in the unit.