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Business

BASF To Sell Fine Chemicals Businesses To Siegfried

Pharmaceuticals: World’s largest chemical firm to shed custom synthesis unit and part of API business

by Rick Mullin
May 7, 2015 | APPEARED IN VOLUME 93, ISSUE 19

BASF says it plans to sell its custom synthesis business and part of its active pharmaceutical ingredients (API) business to Siegfried Holding, the Swiss parent company of the drug chemical producer Siegfried. The deal, involving manufacturing sites in Germany, Switzerland, and France, will affect about 850 employees.

Siegfried will pay BASF $306 million. The acquisition will increase Siegfried’s sales by roughly 50% to $955 million.

BASF, the world’s largest chemical company, says it wants to focus its API and services operations within its nutrition and health division, and will retain generic API businesses only where it holds a leading market position. These include ibuprofen, omega-3 fatty acids, and polyethylene glycol. APIs that will go to Siegfried include ephedrine, pseudoephedrine, and caffeine.

The divestiture will follow BASF’s sale of its Knoll Pharmaceuticals business to Abbott Laboratories, now Abbott, for $6.9 billion, in 2000, and its acquisition of Swiss pharmaceutical contract manufacturer Orgamol in 2005. BASF will join Dow Chemical, Eastman Chemical, Rhodia, and most recently DSM among the major diversified chemical companies to exit custom synthesis.

“This step is in line with BASF’s strategy of actively managing its portfolio,” says Michael Heinz, a member of the board of executive directors at BASF. He adds that it will focus the company’s performance chemicals unit on “high-margin core businesses.”

Fine chemicals market analyst Jan Ramakers says he was “a bit surprised” by the news, especially given the acquisition of Orgamol. Selling off Knoll, a finished drug product business, made sense, he says. But custom synthesis and generic APIs seem to fit the company’s integrated business model. BASF and Siegfried say they plan to transfer employees affected by the deal to Siegfried.

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Comments
manas haldar (May 8, 2015 12:15 PM)
"BASF will join Dow Chemical, Eastman Chemical, Rhodia, and most recently DSM among the major diversified chemical companies to exit custom synthesis".
I have no idea why these big companies are coming out of custom synthesis business. Could somebody please explain it.

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