August 2003 BASF Acquires Callery Chemical BASF has acquired the Callery Chemical division of Mine Safety Appliances (MSA), which is exiting the chemicals business to focus on its core safety equipment business. The transaction is valued at $65 million (Euro58 million). The purchase expands BASF's inorganic chemicals product line and will enable the company to rapidly grow its sales of inorganic products to the pharmaceuticals, agrochemicals and fine chemicals markets.   Famous Quotes of the Month - We can often do more for the other man by trying to correct our own faults than by trying to correct theirs. (Francois Fenelon) - Winning isn't everything, but wanting to win is. (Vince Lombardi) - Whoever said "It's only a game", wasn't winning. (Tom Greve) - Obstacles are those frightful things you see when you take your eyes off the goal. (Hannah More) - Every year it takes less time to fly across the Atlantic, and more time to drive to the office. (Unknown) - When you get to the end of your rope, tie a knot and hang on. (Franklin D. Roosevelt) Givaudan Gets New Fragrances Head Givaudan announced that as of January 1, 2004, Michael Carlos will replace retiring Errol Stafford as head of its fragrance division. Carlos joined the company in 1984 and has most recently served as the global head of Givaudan's consumer products unit. (picture shows Michael Carlos and Dr. Jürg Witmer; source: Givaudan) Millennium Chemicals Gets New CEO Executive vice president Robert Lee has replaced chief executive officer (CEO) William Landuyt as Millennium Chemicals' president and CEO following Landuyt's resignation. Worley Clark, the company's lead director, has been appointed board chairman. Millennium also announced it will cut 175 jobs, suspend its dividend and move its headquarters from New Jersey to Maryland as cost cutting measures. The company expects a net loss of 25-30 cents in the second quarter of 2003. New President Announced for Johnson Matthey Current board member for catalysts and precious metals Neil Carson will assume the position of CEO for Johnson Matthey in July 2004 when present CEO Chris Clark retires. On August 1, 2003, Pelham Hawker, director/environmental catalysts and technologies, and Larry Pentz, director/process catalysts and technologies, will join the JM board. ACC Sees Signs of Improved Economy, But Chemical Industry Still Struggling For the first time since March, the American Chemistry Council (ACC) has stated that there is reason to be optimistic about the economy and that the turning point may have been reached. However, in the chemical industry, high energy costs and decreased demand must still be overcome. Chemicals Industry in UK Expects Lower Prices According to a survey conducted by the Confederation of British Industries (CBI), 36 UK chemical companies expect prices from domestic sales to fall during the next three months. Respondents were divided over production output expectations, with half expecting a rise in production and half a decrease. Fifty percent of respondents indicated that their orders are below normal at this time. European Chemical Industry Struggling with Higher Feedstock Costs and Stronger Euro Earnings reports for European chemical companies are expected to be weak as a result of higher feedstock costs, the destocking of inventory and the rising Euro. Economic conditions have remained more difficult than expected, resulting in volatile earnings for specialty chemical companies. Overcapacity plagues the fine chemicals market and pricing pressures are beginning to impact the food ingredients sector. European Imports Outpace Exports in First Part of 2003 According to a report released by the European Union's statistical office Eurostat, EU chemical exports grew 1 percent to Euro51.1 billion ($57.3 billion) in the first four months of 2003 compared with the same period last year. Chemical imports were up 3 percent at Euro27.8 billion, and the trade balance fell to Euro23.3 billion from Euro23.7 billion. Latin American Chemical Industry Looking to Improve Through Logistics Changes The Latin American chemical industry is focusing on the improvement of logistics and transportation infrastructure and integration in order to aid its competitiveness. Alliances have been formed between chemical companies, transportation providers and distribution organizations, but there are still significant regional and economic differences that must be addressed. The Asociacion Quimica y Petroquimica Latinoamericana (APLA) believes that a network of local associations will be the most effective way to develop the necessary infrastructure. Trade agreements are also seen as having a positive impact on the development of more uniform logistics capabilities. Brazil is in the lead and is following the logistics approach used by the European Council for the Chemical Industry (Cefic), while the government is working to privatize ports, railroads and railways. Clariant Reorganizes to Improve Profitability Clariant plans to increase its pre-tax return on invested capital (ROIC) from 7 percent to at least 12 percent over the next three years with a comprehensive restructuring program. The company expects to raise greater than SF1.5 billion through the sale of its cellulose ethers, electronic materials and other businesses, and save an additional SF100 million per year by 2004 with short tern cost reduction measures. The company will be focusing on businesses where it can combine strong customer service capabilities with its leading-edge surface and color technology such as masterbatches, performance & process chemicals, textile chemicals and coatings. Four custom synthesis plants that produce intermediates for agrochemicals will be closed and the life sciences division will be reorganized. Clorox to Buy Back Shares From Henkel During the next two years, Clorox will buy back up to $255 million of its shares currently held by Henkel, which owns approximately 29 percent of Clorox's outstanding stock. During 2003 Clorox can purchase up to $50 million of the shares. Mitsubishi Chemical Restructures Mitsubishi Chemical has restructured into four distinct operating units with control of subsidiaries resting within each segment, unlike in the previous organization. The four units are petrochemicals, health care, functional materials and performance products. The company will also be reducing staff levels and looking for other ways to improve productivity, building and consolidating the four business segments, looking for investment opportunities in Asia and reducing its debt levels. Repsol to Make Significant Investment in Chemicals The Spanish oil and chemicals group Repsol plans to invest Euro1.20 billion ($1.35 billion) in its chemicals business through 2007 as part of a Euro17.5bn capital expenditure plan. The investment will target the company's petrochemicals, polyolefins and propylene oxide activities as with some monies going to its derivatives and rubber franchises in the Mediterranean basin, Latin America and Europe. Shell Adopts New Sustainable Development Strategy for Its Chemicals Business Shell has introduced five new performance goals aimed at bringing sustainable development thinking in to its day-to-day operations. The goals include raising overall energy efficiency by 7.5 percent, cutting critical air emissions per unit of production by 25 percent, relative to 2002, and spills by 50 percent, relative to the previous five-year average. The company also plans to have basic hazard data on all of its high production volume chemicals by 2004 with the aim of completing initial risk assessments by 2007. Shell will work toward receiving more reviews in local community surveys. SK Corp/SK Global Saga Continues Even though domestic creditors have voted to place South Korea's SK Global into court receivership, SK Corp still plans on bailing out the trading company by converting Won850 billion ($720.6 million /Euro627.6 million) of receivables owed by SK Global to new equity in the trading firm. This move by domestic creditors is seen as a way to induce foreign creditors to reduce their demands for repayment, since a court controlled SK Global bailout will lengthen the time creditors would be repaid. Foreign investors led by Monaco-based Sovereign Asset Management have been asking for a change in SK Corp's board of directors. During the past several months, foreign investment has increased from 32.17 percent to more than 45 percent. It has been suggested that other foreign investment funds have decided to cooperate with Sovereign Asset Management, which holds a 14.99 percent stake. The voting rights of SK Group units and SK Corp directors currently total 13.46 percent. DSM Announces Further Job Cuts in Restructuring Plan DSM announced that it will be cutting 500 jobs in its pharmaceuticals chemicals unit in addition to the 100 jobs it previously planned for in April 2003. The restructuring will also include the temporary or permanent shutdown of DSM production capacity in its pharmaceuticals and elastomers business units. AstraZeneca Faces Charges from EC on Misuse of Patent System The European Commission (EC) has launched an antitrust investigation of the European anti-ulcer market and claims that AstraZeneca has misused the patent system to prevent generic competition for its ulcer drug Losec (omeprazole). AstraZeneca denies that it "made misrepresentations before national patent offices or that it misused the rules and procedures applied by national medicines agencies." The investigation could last several years. FDA Approves Enbrel for Another Arthritis Therapy The FDA has approved the drug Enbrel for the expanded use as a treatment for ankylosing spondylitis, a form of arthritis that largely affects the lower back and joints. The drug is comarketed by Amgen and Wyeth Pharmaceuticals and already has applications in rheumatology and dermatology. Amgen predicts sales of Enbrel to reach $1.2 billion to $1.4 billion in 2003. FDA Approves Zavesca The FDA approved Actelion's new drug Zavesca for treatment of type 1 Gaucher disease in adults with mild to moderate cases for whom enzyme replacement therapy is not appropriate. Actelion, located in Switzerland, licensed Zavesca from Oxford GlycoSciences (OGS - England) and is developing the drug with Celltech, which currently owns OGS. The European Commission approved the drug in 2002. (Picture source: Actelion) Rankings for Top Pharma Based on 2002 pharma revenues, Pfizer is the top drug company (sales of $28,288 million). Other companies in the top five include GlaxoSmithKline ($27,060 million), Merck ($20,130 million), AstraZeneca ($17,841 million) and Johnson & Johnson ($17,151 million). When ranked by R&D expenditures, four of the top five revenue generators also appear in the top five. Pfizer once again leads with an R&D investment of $5,176 million in 2002. GlaxoSmithKline is again second ($4,108 million) followed by Johnson & Johnson ($3,957 million), AstraZeneca ($3,069 million) and Aventis ($3,235 million). Report Shows European Pharma Industry Still Strong According to a recently released Standard & Poor's report, the European pharmaceutical industry remains strong despite a decline in the growth rate from double digits down to 8 percent per year. The report cites better-balanced portfolios, promising early stage candidates, and growth above gross domestic product (GDP) growth rates for many projects. Increased spending on healthcare and healthcare reforms in the United States will also help the European pharma industry. Negative issues that must be dealt with include cost control measures by various governments, increasing regulatory burdens, patent expiries and generic competition. Roche Announces New Class of Drugs for Treatment of Diabetes Roche researches have reported in Science magazine that they have discovered a new class of drugs, glucokinase activators (GKAs), that increases the efficiency of an enzyme critical to maintaining the body's normal glucose balance. The drugs, if effective, could be a significant advancement in the treatment of type 2 diabetes. (picture - Roche research site; source: Roche) Suit Filed Against Solvay's Estratest Prescription Access Litigation project (PAL), a Boston-based consumer advocacy group, is suing Solvay Pharmaceuticals on behalf of the Congress of California Seniors and the California Public Interest Research Group (CALPIRG) for marketing and selling its hormone replacement therapy (HRT) Estrates without FDA approval. PAL is requesting that the court require Solvay to immediately remove Estratest from the market, compensate consumers and relinquish all profits. In 2002, sales of Estratest reached $233 million. The FDA is currently evaluating the effectiveness of estrogen/androgen combination products like Estratest to treat hot flashes. EC Approves DSM Purchase of Roche Vitamins & Fine Chemicals, Purchase Price Drops Again DSM has received approval from the European Commission (EC) for its acquisition of Roche's vitamins and fine chemicals business. The EC had been concerned about competition in the phytase (enzyme in animal feeds) market as alliances between DSM and BASF and Roche and Novozymes operated as the major suppliers. DSM has offered to end its alliance with BASF for the production and distribution of feed enzymes and will sell the business to a third party approved by the EC. The US Federal Trade Commission (FTC) is reviewing the deal between DSM and Roche. Meanwhile, DSM announced that the purchase price for Roche's vitamins and fine chemicals business has been reduced by $224 million, the second reduction since the deal was announced in September 2002. The price decrease, plus several other changes, was made due to the poor financial performance of the business and the current weak economic conditions. Fire Retardant Chemicals Experience Growth Stronger regulations in both North America and Europe and the introduction of fire regulations in Asia are creating robust global growth of 3 to 4 percent for fire retardant chemicals. According to a Rapra Technology report, stricter fire-safety levels in Europe and North America and harmonization of fire protection requirements for European construction products and railway rolling stock are key drivers for the growth. The adoption of fire regulations in Asian countries with increased technological capabilities, particularly China, is also a key contributor. Honeywell Files Suit to Stop Ashland and Air Products Deal Air Products' $300 million (Euro267.9 million) purchase of Ashland's electronic chemicals business may not be completed if the lawsuit filed by Honeywell International and GEM Microelectronic Materials is successful. According to Honeywell, a contract among Honeywell, GEM and Air Products that is in effect through 2008 prohibits Air Products from acquiring Ashland's electronic chemicals business and selling Ashland's products instead of GEM's and Honeywell's. Nanotechnology Has Bright Future According to the Freedonia Group, the U.S. market for nanomaterials will surpass the $1 billion mark in 2007 and reach $35 billion by 2020. Application for nanomaterials can be found throughout the manufacturing sector. Over the long term the best opportunities will be in the healthcare and electronics markets. Conventional nanomaterials, or products that are smaller versions of commercially available materials, will see strong growth, but it is new, yet-to-be commercialized technologies and products that will see the largest growth. Vitamins Market Remains Flat