BASF to Acquire Switzerland's Orgamol

BASF has agreed to acquire the Swiss fine and custom chemical manufacturer Orgamol. The move will place the German firm among the top 10 providers of pharmaceutical contract manufacturing services worldwide, according to Martin Laudenbach, head of fine chemicals at BASF.

BASF has signed a deal with the private owners of Orgamol, who represent about 75% of the shares in the Swiss firm. BASF has scheduled a meeting with employees, who hold the remaining shares, to vote on the offer later this month. Financial details were not disclosed.

With 2004 sales of about $120 million, Orgamol specializes in phosgene and sodium azide chemistry at plants in Evionnaz, Switzerland, and St. Vulbas, France. Both are hazardous chemistries that drugmakers generally leave to contract producers.

Despite the retreat of diversified companies such as Eastman Chemical and Great Lakes Chemical from the sector, BASF views pharmaceutical custom manufacturing as a market with growth opportunity, according to Thomas Mller, the firms manager of corporate media relations. We have broad know-how, lots of technologies, and financial stability to invest in new capacity, Mller says. We are also back-integrated, which makes for a very interesting package. He says Orgamol will fit into BASFs Verbund, or highly integrated, manufacturing and supply infrastructure.

Peter Pollak, a consultant in the field of custom manufacturing, says Orgamol is an attractive acquisition prospect, given its substantial exclusive synthesis business with the top 10 European and U.S. pharmaceutical producers, as well as its cost-competitive, no-frills manufacturing assets. Pollak also notes the time is right for such a deal, given the death earlier this year of Orgamols president and majority shareholder, Laszlo Baum.

BASF is one of the few companies that believes in the future of fine chemicals and expects above-average growth in this sector, Pollak says.