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Business
Business Concentrates
November 21, 2005
| A version of this story appeared in
Volume 83, Issue 47
Discovery Partners parts with CEO, shifts its business plan
Riccardo Pigliucci has resigned as chairman and CEO of the pharmaceutical chemistry services provider Discovery Partners International, effective immediately. Harry F. Hixson, the firm's lead independent director, has become chairman, and Michael C. Venuti, chief scientific officer, has been appointed acting CEO. DPI says the resignation was prompted by a mutual difference of opinion with the board over the company's strategic plans. DPI, like other service firms, has been struggling with heightened competition from Asian chemistry providers (C&EN, Oct. 31, page 14). According to Venuti, DPI plans to de-emphasize straight fee-for-service contracts and increase its emphasis on agreements that involve success-based fees, milestones, and royalties. He says DPI has lagged behind Western chemistry service firms such as ArQule, Array BioPharma, Evotec OAI, and Albany Molecular Research in forming partnerships where it shares risks and rewards with drug company clients. He adds that DPI will also explore acquisition of early-stage preclinical drug programs and outright merger or acquisition opportunities.
Phelps Dodge sells carbon black business
Phelps Dodge has agreed to sell its Columbian Chemicals subsidiary, a maker of the rubber additive carbon black, to a company jointly owned by One Equity Partners, a private equity affiliate of JP Morgan Chase, and DC Chemical, based in South Korea. Phelps Dodge says it expects to receive approximately $600 million from the sale. DC Chemical is a producer of inorganic, fine, and electronic chemicals. In the U.S., it owns soda ash producer OCI Chemical, which it bought from Rhne-Poulenc in 1996.
Dow to shutter panel business
Dow Chemical is closing the Elie, Manitoba, plant where it makes Woodstalk engineering panels, a move that will affect 68 Dow employees and 15 contractors. Woodstalk, made out of wheat straw and an isocyanate binder, was positioned as an environmentally friendly alternative to plywood. The appetite of the marketplace to support high-quality, low-VOC fiberboard was not sufficient, says Wayne Karolat, vice president of operations for Dow BioProducts.
A sculpture rises in Akron
The College of Polymer Science & Polymer Engineering at the University of Akron has dedicated a sculpture by Dale Chihuly that illustrates the connection between materials science and art. The sculpture was made with the help of Desmodur W brand polyisocyanate donated by Bayer MaterialScience. It is located outside the university's Goodyear Polymer Center.
Koch to buy Georgia-Pacific
Privately held industrial conglomerate Koch Industries is buying paper products maker Georgia-Pacific in a deal valued at $21 billion, including debt. Koch says the acquisition represents a new growth platform. Georgia-Pacific has annual sales of about $20 billion, including $600 million last year in chemicals such as wood adhesives, paper additives, and pine derivatives. Some of Koch's previous chemical-related acquisitions include the polyester producer KoSa, Farmland Industries' fertilizer business, BP's performance chemicals business, and Invista, formerly DuPont's fibers and intermediates company.
Blast kills fivein China
An explosion and fire last week at Jilin Petrochemical in northeast China killed at least five workers and injured more than 70. The accident led to the temporary evacuation of 10,000 people, mostly students at nearby colleges. China National Petroleum Corp., Jilin's corporate parent, is investigating the accident but reports that an operator apparently used the wrong method to unblock a pipe at an aniline unit at the complex.
Venture sets silicon hike
Hemlock Semiconductor, a joint venture among Dow Corning, Shin-Etsu Handotai, and Mitsubishi Materials Corp., will invest $400 million to $500 million in a polycrystalline silicon expansion in Hemlock, Mich. The project will increase capacity by about 50% and create up to 150 jobs. Polycrystalline silicon is used in solar cell and semiconductor manufacturing. Hemlock says the solar energy industry is expected to grow at a 20–25% annual rate. German chemical makers Degussa and Wacker are also investing in new polysilicon capacity.
More carbon fiber for Mitsubishi
Mitsubishi Rayon will spend about $60 million to build a new 2,200-metric-ton-per-year carbon fiber line in Toyohashi, Japan, by second-quarter 2007. Mitsubishi Rayon expects world demand for carbon fiber to grow to more than 30,000 metric tons per year by 2009, by which time its own capacity will be 7,900–8,150 metric tons. Carbon fiber is used by the aviation industry and, increasingly, to build wind turbines.
New wrinkle in Inamed deal
Inamed, a manufacturer of wrinkle treatments and breast implants, says it will evaluate an unsolicited $3.2 billion takeover bid from Allergan, the maker of Botox antiwrinkle products. Inamed had agreed to be acquired by Medicis Pharmaceutical, another skin care firm, for $2.8 billion earlier this year (C&EN, March 28, page 8). Medicis says it is confident that shareholders will see greater long-term value in its offer.
Sinopec plans Zhenhai buyback
China Petroleum & Chemical Corp. (Sinopec) will spend nearly $1 billion to buy all the outstanding shares of its subsidiary Zhenhai Refining & Chemical. Third parties own 28.7% of the firm on the Hong Kong Stock Exchange. Sinopec expects that full control of Zhenhai will improve management efficiency. Zhenhai, one of China's largest refiners and petrochemical producers, is preparing to build a new petrochemical complex featuring an 800,000-metric-ton-per-year ethylene cracker.
DuPont-Toray raising capacity for polyimide
The DuPont-Toray joint venture will spend about $95 million to build a new plant for Kapton-brand polyimide film in Tokai, Japan. The plant, the fifth Kapton facility worldwide, is expected to come on-line in mid-2007, raising capacity for the material by 25%. Kapton is mostly used as a substrate for flexible printed circuits and may become the main substrate for flexible flat-screen displays when such screens are mass-produced.
Asahi acquiring Lanxess fibers
Asahi Kasei Fibers is buying Lanxess' Dorlastan spandex fibers business for an undisclosed price. The business includes plants in Dormagen, Germany, and Bushy Park, S.C. Some job cuts are part of the deal: only 170 of the 280 Dormagen employees and 160 of the 190 Bushy Park employees will move to Asahi Kasei. The Dorlastan fibers business has suffered for many years from the migration of textile markets to Asia, says Lanxess Chairman Axel C. Heitmann. Asahi Kasei operates four spandex plants in Asia and says the purchase will nearly double the firm's capacity.
Plastics firmto enter MMA
Irish conglomerate Quinn Group plans to build a 100,000-metric-ton-per-year methyl methacrylate resin plant. The company will invest roughly $175 million in the facility, to be built in Leuna, one of the chemical centers of eastern Germany, by 2008. The government of Saxony-Anhalt has agreed to a significant subsidy for the plant, which will feature a continuous direct oxidation and esterification process for the resin, one of the raw materials Quinn uses to make processed and formed-sheet plastics.
Oleochemical pact widened
Cognis and Malaysian joint-venture partner Golden Hope Plantations Berhad are expanding their venture with the transfer of Cognis' oleochemical and plastics technology businesses. As of Jan. 1, 2006, Cognis' oleochemical business—including fatty acids, glycerin, oil-field chemicals, azelaic acid, and pelargonic acid—will be transferred to the 50–50 Cognis Oleochemicals joint venture. It now has annual sales of about $150 million, while the businesses being added have sales of about $700 million.
Roche, Gilead settle dispute
Roche and Gilead Sciences will set up joint committees to coordinate global manufacturing of the flu drug Tamiflu and to coordinate seasonal sales of Tamiflu in major markets. Roche has also agreed to pay Gilead $62.5 million in a retroactive royalty adjustment to settle a lawsuit in which Gilead accused the Swiss company of not doing enough to commercialize Tamiflu. Gilead invented Tamiflu but licensed the rights to Roche in 1996.
Chemical prices rise again
U.S. chemical prices con-tinued their post-hurricane increases in October, according to data from the Labor Department. The government figures show the October producer price index for all chemicals rising 2.6% from September to 198.7 (1982 = 100). Year-to-year, the index was 9.8% ahead of October 2004. Basic chemicals were hit hard by the August and September hurricanes, which caused lower production and higher costs. Thus, this segment posted an index of 199.7 in October, up 3.8% from the previous month, though much less than the 6.8% jump in September. On an annual basis, the October index was up 13.5% from the same month last year.
BUSINESS ROUNDUP
- Bayer MaterialScience is entering the carbon nanotube market with nanotubes that it says are more than 99% pure and made at considerably lower cost than ever before. Bayer says it will sell carbon nanotubes for less than $60 per kg, versus the $1,200 per kg they can cost today.
- OSI Pharmaceuticals has completed its acquisition of Eyetech Pharmaceuticals for about $650 million. OSI recently sought to delay the deal to evaluate potentially unfavorable data related to Eyetech's main drug, Macugen.
- Kemira will build a paper chemicals plant in Yixing, China, by the first half of 2006. The firm will invest a total of $10 million on the new plant and on an existing water-treatment chemicals plant in the city.
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- Degussa will expand its hydrogen peroxide capacity in Brazil to 100,000 metric tons per year. The company will expand an existing facility to 70,000 metric tons through introduction of its high-productivity technology; it will then build a second line designed to produce 30,000 metric tons.
- Drug-delivery technology firm Biovail plans to divest its off-patent drug line to shareholders as a new company, Crystaal Pharmaceuticals. The products involved, including Cardizem CD, Ativan, and Tiazac, generated about $137 million in sales in the past year.
- W.R. Grace has acquired Flexit Laboratories, an Indian manufacturer of columns and accessories for high-performance liquid chromatography and solid-phase extraction processes. Flexit is the sixth addition to Grace's discovery sciences business since 2001.
- IMS Health and VNU have canceled their planned merger by mutual agreement. VNU CEO Rob van den Bergh has resigned in the wake of the cancellation, which came at the behest of several big VNU shareholders.
The power is now in your (nitrile gloved) hands
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