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Business Concentrates

October 25, 2004 | A version of this story appeared in Volume 82, Issue 43

Lilly cuts jobs, R&D in restructuring

Eli Lilly has announced a restructuring that will close facilities, eliminate some R&D, and cut jobs. The company says the plan will eliminate about 1,000 positions, including some 575 in marketing and sales. In R&D, Lilly will focus its efforts on the neuroscience, endocrine, oncology, and cardiovascular therapeutic areas. It will discontinue R&D associated with inflammation therapies. Lilly says this will allow for the positioning of scientific talent and investment in therapeutic areas where it has the greatest likelihood of innovation. It will close its Research Triangle Park, N.C., laboratory, which has traditionally been the company's center of excellence for high-throughput screening and combinatorial chemistry. Much of that technology has evolved to the point that these operations can be performed in existing facilities in Indianapolis, the company says. In manufacturing, Lilly's Clinton, Ind., plant will make products solely for the animal health division, and the portion of the site that produces human pharmaceutical products will close. Lilly has also canceled plans for production in Indianapolis of the bulk active ingredient for the sepsis treatment Xigris (drotrecogin alfa) after a determination that its manufacturing partner, Lonza Biologics, has enough capacity to supply demand for the foreseeable future. Lilly says the restructuring, which will be substantially completed by March 31, 2005, will result in a pretax charge in this year's fourth quarter of between $320 million and $450 million.

Rhodia sets silicone pact

Rhodia and China National Blue Star have signed a letter of intent to coordinate their silicone business activities in Asia. Initially, the two firms will launch a joint venture to market silicone-based products making use of a Blue Star plant in Nanchang, Jiangxi province. Later, the two plan to invest in a 100,000-metric-ton-per-year plant in Tianjin for the silicone feedstock methylchlorosilane. It is scheduled to go onstream in 2007 and will be based on a Rhodia process. The companies already expect to double the plant's capacity once it becomes operational. International silicone producers have boosted their presence in Asia in the past few years. Dow Corning and Wacker-Chemie are planning to invest several hundred million dollars near Shanghai in a 200,000-metric-ton complex that will produce silicones and fumed silica. GE and Shin-Etsu are building a similarly valued plant in Thailand.

3M faces lawsuits

3M is facing three lawsuits involving perfluorooctanoyl compounds. Plant neighbors in Decatur, Ala., and Cottage Grove, Minn., filed two of the suits; employees and former employees in Decatur filed the other. Plaintiffs seek medical monitoring for fear of illness associated with the compounds and seek remediation for contaminated soil around plants. A 3M spokesman says the suits are "without merit," adding that the firm has "monitored employees for decades and found no adverse health effect associated with the compounds." 3M stopped making the compounds, used to make nonstick pans and stain-resistant fabrics, two years ago. In September, DuPont agreed to a $343 million settlement in a similar suit brought by residents living near its Washington Works plant in West Virginia where it made perfluorooctanoic acid.

Rohm and Haas pursues green paints, coatings

Rohm and Haas has been awarded a $3.75 million grant from the Department of Energy to develop polymer technology that can remove as much as 30% of petrochemical raw materials now used to manufacture a variety of paints and coatings. Under the program, Rohm and Haas will match its novel water-based polymeric binders with biomass-derived coalescing agents developed by Archer Daniels Midland. The University of Minnesota will perform analytical chemistry and polymer characterization testing.

Sigma-Aldrich to relaunch fine chemicals

Sigma-Aldrich is rebranding its fine chemicals business as SAFC as part of an effort to become one of the world's top 10 fine chemicals makers. The move follows the recent purchase of Ultrafine and Tetrionics, companies that specialize in contract drug development chemistry and small-scale active pharmaceutical ingredient production. SAFC President Frank Wicks says he wants the rebranding to establish an identity for his division that is distinct from Sigma-Aldrich's laboratory chemicals business. SAFC had sales in 2003 of $235 million.

Cambrex boosts detection stake

Cambrex is buying and licensing to boost its presence in the microbial detection business. The company's French unit will spend about $6 million to acquire Genolife, a French firm with technology for detecting microbes in hours rather than days or weeks. And Cambrex's Bio Science subsidiary has licensed Epoch Biosciences' technology for rapid microbial testing. Cambrex says drug, food, and other companies spend more than $2 billion a year on microbial detection.

Teijin, Zoltek add carbon fiber

Both Teijin and Zoltek plan to beef up carbon fiber production in Europe. Teijin will spend nearly $50 million to add a 1,500-metric-ton-per-year carbon fiber line at its Tenax Fibers plant in Oberbruch, Germany. Tenax already operates a 1,900-metric-ton line in Oberbruch. The expansion is scheduled for completion in two years. Zoltek says it will end acrylic fiber production in Hungary and divert acrylic capacity to carbon fiber by May 2005. Including capacity in Abilene, Texas, now being reactivated, the firm says, it will have annual carbon fiber capacity of 4,500 tons.

Projects set at K show

Two big polyolefins projects were unveiled at the K 2004 plastics show in Düsseldorf, Germany, last week. Dow Chemical is building a polyethylene line with capacity of more than 300,000 metric tons per year in Tarragona, Spain. The unit, which will use Dow technology to produce polymers ranging from linear low-density polyethylene to plastomers and elastomers, is slated for completion in the second quarter of 2006. Similarly, Borealis is considering a 330,000-metric-ton polypropylene plant in Germany. The project is expected to cost about $250 million and is targeted to open by 2008.

Solvay joins fuel-cell fund

Solvay will contribute an undisclosed amount of capital to Conduit Ventures, a London-based venture-capital fund that focuses on investments in fuel-cell and related hydrogen technologies. Other investors include Shell Hydrogen, Mitsubishi Corp., Johnson Matthey, and Danfoss. Solvay will use the investment to gain insights into the latest in the emerging fuel-cell industry, according to Leopold Demiddeleer, Solvay's director of new business development.

Maxim, CuraGen to cut staffs

Maxim Pharmaceutical says it will cut half its workforce in a restructuring effort aimed at directing cash and resources toward the regulatory review process for its acute myeloid leukemia drug candidate Ceplene (histamine dihydrochloride). The San Diego company, which employed 96 at the end of 2003, says the restructuring is prompted by the negative outcome of Phase III clinical trials of Ceplene for advanced malignant melanoma. Meanwhile, CuraGen will cut 110 employees, or about a third of its staff, as part of a restructuring aimed at advancing the drugs in its pipeline that have the highest potential. The company says it will focus resources on CG53135, for the prevention of oral mucositis; PXD101, for the treatment of solid and hematological cancers; CR002, for kidney inflammation; and CR011, for metastatic melanoma.

Pemex picks Nova as partner

Pemex Petroquímica, the chemical arm of Mexico's state oil company, has picked Nova Chemicals and two Mexican firms, Grupo Idesa and Indelpro, as partners in the proposed Mexican petrochemicals complex known as Project Phoenix. Nova says the complex, which would start up in 2009 or 2010, would have a competitive position equal to or greater than that of its own Alberta facilities. The complex would include an ethylene cracker, two polyethylene plants, and other derivative units.

Akzo to divest coatings resins

Nuplex Industries has offered Akzo Nobel almost $140 million for its coatings resins business, which operates plants around the world and had sales last year of about $320 million. Akzo put the business on the block in September 2003 as part of a chemical divestment program. According to Akzo Board Chairman Hans Wijers, the deal would complete the divestment program and increase the program's proceeds to about $1.2 billion. New Zealand-based Nuplex is now a regional player in resins for coatings and other uses.

Hurricanes cut output

U.S. chemical production fell in September from the previous month, according to Federal Reserve Board data, but the board says output of chemicals was adversely affected by the hurricanes that struck the U.S. during the month. The seasonally adjusted production index for chemicals declined 1.1% from August to 112.0 (1997 = 100). Despite the monthly downturn, the index was still 5.6% ahead of September 2003. With the decreased output, capacity utilization fell to 76.3% in September from 77.2% in August, but it was still well ahead of the 73.4% seen in September of last year.

BOC Edwards in China venture

Asia Union Electronic Chemical, a Taiwanese outfit in which BOC Edwards acquired a 50% stake earlier this month, has formed a 50-50 joint venture with Shanghai Huayi to build a plant in Shanghai. The $20 million facility, which is expected to open next summer, will produce, package, and distribute high-purity wet chemicals used by electronics component makers. Municipally owned Huayi is Shanghai's main chemical and pharmaceutical conglomerate.

P&G expands an alcohol deal

Procter & Gamble Chemicals has increased the scope of an existing deal with Indonesia's Sawit Mas Group. Building on a pact announced in January, P&G says it will be the sole marketer of fatty alcohols from plants that Sawit Mas will open in Sumatra in early 2005 and in 2006. P&G says the $1 billion deal will add 140,000 metric tons of annual alcohol capacity, increasing its capacity to more than 400,000 metric tons. Separately, P&G has reached an agreement with Optimal Chemicals, a joint venture of Dow Chemical and Petronas, for the ethoxylation of its fatty alcohols for use in detergents and other products.


JSR Corp. will spend $20 million to build facilities for photosensitive spacers and protective coatings for liquid-crystal displays at the Ochan Science & Industrial Park in South Korea. JSR already makes color pigment dispersed resists at the same location.

Ferro has named James F. Kirsch, 47, as president and chief operating officer. Kirsch had been president of two thermoset molding compound manufacturers: Premix and Quantum Composites. He began his career at Dow Chemical.

W.R. Grace has delayed filing its plan of reorganization with the U.S. Bankruptcy Court in Delaware. Talks with asbestos creditors could soon lead to the filing of a consensual reorganization plan, the company says.

Yuancheng Technology has expanded its cinnamic acid capacity in Wuhan, China, to 1,000 metric tons per year and its cinnamaldehyde capacity to 1,500 metric tons (C&EN, April 26, page 14). The company also commissioned a 3,000-metric-ton swing plant producing either benzaldehyde or benzyl chloride.


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