Rhodia To Exit Custom Synthesis

Shasun Chemicals & Drugs has signed a letter of intent to purchase the custom synthesis operations of Rhodia Pharma Solutions (RPS), the core of which is the ChiRex business that Rhodia acquired in 2000 for $545 million.

The companies say they are targeting March 31 for the completion of the deal. The purchase price has not been disclosed.

Under the preliminary agreement, India-based Shasun will take over Rhodia's custom synthesis plants in Dudley and Annan, U.K. Rhodia will retain the bulk pharmaceutical business, which manufactures aspirin and acetaminophen in France, Thailand, and China.

According to Nick Green, president of RPS, the company will also discontinue custom synthesis operations at the Chambers Works facility in Deepwater, N.J., where it has been operating in space rented from DuPont since 2004. He says the firm will complete existing contract work at the site in coming months and that final plans for an exit are yet to be determined. Green says Rhodia and Dupont may seek a buyer for the Chambers Works operation.

Under the proposed deal, Shasun would also attain Rhodia's technology and patents in areas including hydrolytic kinetic resolution, aromatic bond formation, and radical trifluoromethylation.

The agreement comes after months of speculation as to whether Rhodia would retain the business. Last year, the company wrote off $125 million in the value of RPS. A Rhodia spokeswoman says RPS reported a loss of $24 million in the first three quarters of 2005, all due to its custom synthesis operation.

Shasun CEO N. Govindarajan says the proposed acquisition fits his firm's strategy of enhancing its global presence in active pharmaceutical ingredients, custom synthesis, and contract manufacturing. "Shasun will be in a better situation to serve pharmaceutical industry clients throughout the drug life cycle by offering services for prelaunch, launch, and postlaunch supply, as well as late-life cycle."

Independent fine chemicals industry analyst Peter Pollak says the sale of RPS to an Indian firm comes as little surprise. "The Indian companies all want a foothold in the West so they can claim they are operating under Western regulations and have Western intellectual property rights," he says.