Business Concentrates

PPG CEO promotes industry growth

Charles E. Bunch, who became president and CEO of PPG Industries in March, told a banquet audience at the 38th annual Pittsburgh Chemical Day last week that the chemical industry needs to undertake five major improvements to enhance returns to shareholders. First, chemical firms have to increase R&D spending "to make the discoveries people are willing to pay for." Second, they must continue to reduce overhead costs and become more efficient. Bunch suggested that firms could achieve smarter growth if they showed greater discipline when considering capacity expansions. As a corollary to that third point, Bunch noted that mergers and joint ventures might be the smartest approach to gaining market access and conserving capital. His fourth improvement requires government help. The U.S. industry, he said, needs an energy policy that gives back some of the traditional advantage chemical producers once had through access to reasonably priced natural gas. And finally, Bunch urged industry to focus on continued improvements in environmental health and safety. Mindful of recent railroad chlorine spills and the Washington, D.C., government's attempt to ban rail shipments of hazardous chemicals near the nation's capital, he called on firms to put more pressure on railroads to improve track safety.

Crompton moves ahead on plan

Crompton has made progress on its plan to enlarge and reorganize itself. First, the U.S. government didn't object to the firm's plan to buy Great Lakes Chemical within the period of time allowed by law. So while the merger can go ahead under U.S. law, Crompton still must wait for approval by European authorities. Second, Crompton completed the formation of a polymer processing equipment joint venture combining its Davis-Standard subsidiary with Black Clawson Converting Machinery, owned by private equity firm Hamilton Robinson.

Gilmartin out at Merck

Merck has elected Richard T. Clark as CEO and member of the board of directors. Clark will immediately replace Raymond V. Gilmartin, who is also stepping down as chairman. Gilmartin's departure follows months of bad news for the beleaguered drug firm, dominated by the decision to remove Vioxx (rofecoxib), a COX-2 inhibitor, from the market late last year. Clark, currently head of Merck's manufacturing division, is the former CEO of Medco Health Solutions, a drug distribution company that Merck spun off in 2003. Merck also announced that Lawrence A. Bossidy, former CEO of Honeywell International, will chair the board's newly formed executive committee. The board has not named a new chairman.

Solvay outlines new top team

Solvay has announced the team that will take over the company's management following the annual shareholders meeting in May 2006. Board Chairman Baron D. Janssen, who will reach the age of 70 in April 2006, will be succeeded by current CEO Aloïs Michielsen, 64. Michielsen, in turn, will be succeeded by Christian Jourquin, 56, currently director of Solvay's chemicals business. René Degrève, 62, who has been general manager for finance--the chief financial officer--for 14 years, will be appointed general manager for North America, replacing David Birney, who will be retiring in March 2006. The new CFO will be Bernard de Laguiche, 45, currently managing director of Solvay Solexis in Milan. The new head of chemicals will be Vincent De Cuyper, 44, currently general manager of Vinythai, a polyvinyl chloride maker that is listed on the stock exchange in Thailand. Denis Solvay will become vice chairman, replacing Janssen as the one member of the founding Solvay family on the firm's board of directors.

Ciba unveils labs in China

Ciba Specialty Chemicals has opened an R&D center in Shanghai that is expected to employ 100 scientists. The center, which cost some $20 million to build, is charged with combining expertise in organic, physical, polymer, photo-, and analytical chemistry with application and formulation sciences. At an inauguration ceremony, Ciba CEO Armin Meyer said the lab "reflects Ciba's belief that innovation is the key to profitable and sustainable growth, everywhere in the world."

Lonza pumps up peptides

Citing increased demand for peptide active pharmaceutical ingredients, Lonza has launched a $20 million program to expand its peptides facility in Visp, Switzerland. The project will boost Lonza's peptide and oligonucleotide manufacturing capacity and will include a new plant for clinical-trial materials as well as expanded high-pressure liquid chromatography and new lyophilization equipment.

Biovail drugs sold to Kos

Biovail has launched an overhaul of its marketing efforts in which it will eliminate about 500 jobs--approximately 23% of its workforce--and sell its Teveten (eprosartan mesylate) and Teveten HCT (eprosartan mesylate/hydrochlorothiazide) lines to Kos Pharmaceuticals. In addition, Kos will receive exclusive marketing rights to Cardizem LA (extended-release diltiazem) in the U.S. Kos will pay Biovail approximately $104 million for the drugs, which are hypertension treatments. Kos will also make payments to Biovail for the development and manufacture of new formulations of Cardizem LA and Cardizem LA/enalapril. Solvay Pharmaceuticals will continue to manufacture the Teveten products and supply them to Kos. Kos will offer jobs to 200 Biovail employees.

Genzyme to buy kidney drug firm

Genzyme has signed a definitive agreement to acquire Bone Care International in an all-stock transaction valued at $600 million. Bone Care's main product is Hectorol (doxecalciferol), a vitamin D-2 prohormone used to treat secondary hyperparathyroidism in dialysis patients. Genzyme notes that Hectorol, with annual sales of about $82 million, can be used in tandem with its own Renagel (sevelamer) and other phosphate binders.

Dow to build solvents plant

Dow Chemical will build a new phenolic glycol ether plant in Freeport, Texas, "to meet the changing needs of its performance solvents customers." The unit will replace existing capacity in Midland, Mich. One of the key factors behind the decision to build in Freeport, Dow says, is easier access to key raw materials: phenol, ethylene oxide, and propylene oxide. The unit will come on-line in third-quarter 2006.

Degussa buys additives firm

Degussa has acquired German specialty chemical producer Ratec International for an undisclosed price. Included in the deal is Ratec's 49% stake in Gorapur, formed in 2001 to combine the release agent businesses of Degussa and Ratec. According to Degussa, over the past five years, Gorapur has become one of the leading European suppliers of release technology for demolding polyurethane foams. Release agents are sold to makers of cars, shoes, and other products.

Chemical prices still climbing

U.S. chemical prices maintained their upward momentum in March, according to data from the Labor Department. The producer price index for all chemicals hit 189.2 (1982 = 100), up 1.6% from the previous month. The March index increased 12.6% from the comparable month in 2004. Meanwhile, the index for industrial chemicals surged 4.1% from February to 186.6. The industrial chemical index was 24.4% ahead of where it was in March of last year.

Loan set for Russian firm

In one of its first investments in the Russian chemical sector, International Finance Corp., the private sector lending arm of the World Bank, will provide a $15 million loan to Kuibyshevazot Joint Stock Co. Kuibyshevazot was privatized in the early 1990s and has grown to become the largest Russian producer of caprolactam. The loan will help the company modernize and expand its facilities, IFC says. The loan will also help the firm strengthen its current position in caprolactam and fertilizers and forward-integrate its business into nylon products.

Braskem deals with Petrobras

Braskem has granted Brazilian state oil company Petrobras an option through the end of the year to increase its stake in voting shares of Braskem, Brazil's largest private chemical company, to 30% from about 10% today. It return, Petrobras would contribute petrochemical assets that it holds in Triunfo, Rio Grande do Sul. Such a deal would mark the largest consolidation of the Brazilian petrochemical sector since Braskem's formation in 2002 from a state auction of the chemical complex in Camaçari, Bahia.

Bayer teams up in holography

Bayer MaterialScience has entered a development agreement with InPhase Technologies, a Longmont, Colo.-based developer of holographic optical data storage media. Bayer will pay $5 million for an equity stake in the company, which was spun off from Lucent Technologies and Bell Labs in 2000. Bayer will also cooperate on the development of polymer raw materials for storage media and will license research results. InPhase plans to release a holographic data storage medium with a 300-gigabyte capacity in 2006 and ultimately wants to develop discs with 1.6 terabytes of capacity. In holographic data storage, lasers create a 3-D interference pattern in a polymer material that can later be read with a laser and retrieved.

BUSINESS ROUNDUP

• Saudi Basic Industries has pulled together its European operations into one entity to be called SABIC Europe, in place of SABIC EuroPetrochemicals. Frans Noteborn, chairman of SABIC Europe, says SABIC's portfolio in Europe "has come to comprise a good deal more than petrochemical activities alone." 

• Borden Chemical has completed its acquisition of the thermosetting resins firm Bakelite. The purchase is a prelude to the formation of the new company Hexion Specialty Chemicals (C&EN, May 2, page 7).

• Avecia and Pfizer have announced a long-term supply agreement under which Avecia will supply clinical and commercial quantities of the oligonucleotide active ingredient for Pfizer's cancer drug ProMune.

• Kemira has acquired the 40% stake it had not held in Kemiron. Kemiron and Eaglebrook International, acquired last year, together give Kemira roughly 20 water treatment chemical plants with net annual sales of $165 million in the U.S. and Canada.

• Terra Industries has mothballed indefinitely its 500,000-ton-per-year ammonia plant in Donaldsonville, La. Terra is converting the plant into a storage terminal that will distribute ammonia produced by fertilizer maker Yara.

• VioQuest Pharmaceuticals has agreed to acquire Greenwich Therapeutics in a stock deal partly tied to the development of two of Greenwich's anticancer agents, sodium stibogluconate and API-2. VioQuest says the deal will add an oncology pipeline to its existing chiral chemistry business, Chiral Quest. 

• Air Products & Chemicals has signed a contract to supply Wison Chemical with oxygen and nitrogen for Wison's carbon monoxide and methanol plant in China's Nanjing Chemical Industrial Park. The Wison plant will in turn supply CO for a Celanese acetic acid plant to be built nearby.