July 2003 Chemical Information Services Files Suit Against Indian Company Chemical Information Services of Dallas, Texas has filed a copyright infringement lawsuit against Chem-Info Corporation and its principal, Vipul Parekh, both based in Mumbai, India. The company claims that Chem-Info directly copied significant portions of its databases from Chemical Information Services' own copyrighted products. "This is a shameless act of exploitation on their part," Ron Schwarz, Managing Director of Chemical Information Services, said. The suit was brought before a judge in the High Court of Judicature at Bombay. The judge ordered the seizure of Chem-Info's products in order to compare to Chemical Information Services' works. The judge issued an injunction against Chem-Info, prohibiting them from selling their databases until the settlement of the suit. "Basically, we showed the judge about fifteen examples of mistakes that had occurred in our product that had also occurred in theirs," Schwarz said. Afterward, Chem-Info filed a written response to Chemical Information Services' complaint. According to process, Chemical Information Services must file a rejoinder and the two parties will continue to argue the case in this way until the judge makes a decision. Though the process could prove long, Schwarz believes it is well worth the wait. "We will not tolerate the theft of our livelihood and hard work anywhere in the world. We will wait as long as it takes to make sure justice is carried out."   Cefic responds to EC REACH Proposals Cefic, the European chemical trade association, provided a response to the European Commission on its proposals for a new chemicals policy for Europe. The association finds the scope of Reach to be too wide, especially in the areas of polymers, intermediates and endocrine disruptors. CEFIC also believes the design of the system, which relies on a central European agency but has management at the local member state level, will cause difficulties and would prefer to see a single European environmental agency. The trade group also warns that the requirements of the proposals will put European chemical companies at a disadvantage, and many businesses may move to other parts of the world. Confidentiality is also a concern for Cefic. EC Introduces Chemical Safety Program Targeting Children The European Commission (EC) announced a new strategy called SCALE (Science, Children, Awareness, Legislation and Evaluation) to investigate the link between chemicals and childhood diseases and disorders. Endocrine disrupters, dioxins and polychlorinated biphenyls (PCBs) will receive special attention. The EC has not indicated how this new strategy will relate to the REACH initiative or other existing programs. Japan's New Chemical Safety Law Could Cost Billions of Yen The newly revised Chemical Substances Control Law (CSCL) in Japan, expected to be effective in 2004, will require additional testing and evaluation of new chemicals to determine ecotoxicity properties and determine if the chemicals are persistent and/or bioaccumulative. These tests can cost up to 12 million Yen per chemical, and industry sources believe chemical companies will choose not to introduce new products if the cost is too high. The new regulations also impose reporting requirements and carry heavy fines and penalties. SARS Still Affecting Business Despite reports that severe acute respiratory syndrome (SARS) is under control, the impact of the disease on the Chinese chemical industry is expected to continue. With the Christmas buying season approaching, some business has shifted to Indian suppliers in response to fears about SARS. Capacity utilization remains low in many Chinese chemical facilities, and analysts have lowered projected growth rates for many key chemical products. However, these same analysts expect the impact of SARS to be relatively short term. Sumitomo Implements New Code of Conduct As of July 1, all management and employees within Sumitomo Chemical must adhere to the company's new "Code of Corporate Conduct." The code requires that all of Sumitomo's worldwide board members, officers and employees must comply with all applicable laws and regulations and observe business ethics and social norms that underlie those regulations. Executives above departmental must sign a written oath indicating their compliance, and a Compliance Committee composed of various executives and board members will advise the company on necessary improvements and reforms. Global Chemicals Still Look Gloomy While volumes and prices rose in the first quarter, a downward trend has followed in the chemicals sector since then. The American Chemistry Council sees continued weakness in many areas of the U.S. chemical industry. European companies are coping with recession and deflationary tendencies in some cases while the rising Euro is hurting margins on exports. SARS has impacted East Asia's economy. Overall it appears that the global chemical industry cycle is trending downwards. The United States has dealt with increasing raw material and energy prices, and production and shipment figures have declined year-on-year for several months in a row Japanese Chemical Industry May Be On Rebound In response to company restructurings and an improved economy, the Japanese chemical industry is seeing positive signs of growth. Many companies experienced double-digit growth in revenues and healthy improvements in net profit as well. Some analysts believe that increased activities in markets outside of Japan have made the industry stronger. However, the impact that SARS will have on Japanese chemical industry performance in 2003 is not yet known. No Improvement Expected for German Chemicals Business Currently there are no indicators that the German chemical industry will experience a recovery in the near future, according to VCI, the German chemical trade association. The depressed German economy and the economic difficulties in the United States have impacted the chemicals sector, from basic chemicals to downstream products. Expectations for increased sales in the second half of the year have been revised, and the VCI predicts it will take much longer to regain confidence in the economy. Strong Euro Hurts European Chemical Industry The increasing value of the Euro (up one-third over the dollar in the last year) is causing European companies to lower prices to maintain exports. Many chemical companies are hoping that the higher Euro will also result in reduced raw material prices and therefore prevent margin erosion. The Euro is expected to remain at a high value into 2004 and some worry it will continue to rise. If so, many smaller European chemical companies many have difficulty remaining competitive. AstraZeneca Pleads Guilty in Fraud Case AstraZeneca Pharmaceuticals will pay a $354.9 million settlement charge after pleading guilty to committing a "healthcare crime" related to its U.S. sales and marketing practices for the prostate cancer drug Zoladex. Specifically, the company pleaded guilty to conspiring to violate the Prescription Drug Marketing Act by providing free samples of Zoladex to physicians with the doctors billing Medicare for reimbursement. AstraZeneca said it is settling the matter "without admitting liability, civil claims involving allegations that the company provided inducements to physicians to purchase Zoladex and for improperly setting and reporting its price." FDA Approves Cancer Treatment Bexxar The FDA approved the new drug Bexxar from Corixa Corp. for the treatment of non-Hodgkin's lymphoma in patients who relapse after chemotherapy and are not responsive to Rituxan. The company, which co-developed the drug with GlaxoSmithKline, expects to achieve sales of $50 million to $60 million in 2003. FDA Approves Emtriva for AIDS The FDA approved the once-daily AIDS drug Emtriva from Gilead Sciences for use in combination therapies. Gilead has now received three approvals in the past two years, including Viread (HIV) and Hepsera (hepatitis B). Analysts predict Emtriva sales will reach $200 million in 2005. Gilead plans to offer a Viread-Emtriva combination pill in 2004. Sales of the combined drug could top $1 billion per year. FDA Approves FluMist Spray Vaccine The FDA approved MedImmune's FluMist spray vaccine, the first influenza vaccine designed to be sprayed into the nose rather than injected. The vaccine is co-marketed with Wyeth Vaccines, a unit of Wyeth Pharmaceuticals. FDA Approves Novartis' Xolair The FDA approved Novartis' asthma drug Xolair (Omalizumab), and the company expects it to be available in the United States by July. Xolair, which is the first approved humanized monoclonal antibody to target the IgE antibody, is co-marketed in the United States with Genentech. Sales are predicted to reach $750 million by 2008. FDA Working to Streamline Drug Approval Process FDA Commissioner Mark McClellan indicated that the agency is adopting a strategy of "efficient risk management" in order to decrease the approval time for new drugs, while continuing to ensure safety and efficacy for patients. He also noted that the FDA is looking to remove multiple cycles in the review process. Prices Climb in Response to India's Revised Drugs and Cosmetics Act Prices of some bulk drugs in India have risen 40 to 200 percent in response to new licensing and registration requirements of the revised Drugs and Cosmetics Act. In addition, shortages of supply for some drugs may occur due to the backlog of registrations. Applications must be approved for import of any drug into India, and the site of foreign manufacture of the drug must be registered with the government. In response to these difficulties, the Indian government has exempted producers/exporters from the registration requirements for import of active pharmaceutical ingredients (APIs). Material imported for clinical trials and formulation development will be exempted on a case-by-case basis. Roche Launches Test for SARS Virus Roche has developed a test based on its patented real-time polymerase chain reaction (PCR) technology that can detect the virus that causes severe acute respiratory syndrome (SARS). The product was developed in just 8 weeks at the company's Penzberg, Germany, research facility. Roche collaborated with virology institutes and government agencies including the Genome Institute of Singapore. Senate Committee Approves Bipartisan Generic Drug Legislation The Senate Health, Education, Labor and Pensions Committee approved a bill designed to speed the introduction of lower-cost generic versions of name-brand pharmaceuticals to the marketplace. The Committee planned to attach the bill to legislation creating a Medicare prescription drug benefit. The legislation will prevent the use of patent claims for packaging, color or other superficial changes as a way to extend the patent life of drugs and only permits only one 30-month stay per abbreviated new drug application or 505(b)(2) application, which is expected to reduce both the cost and time taken for patent litigation. Suven Acquires Synthon Chiragenics Hyderabad, India-based contract research and manufacturing company Suven Pharmaceuticals Ltd. has acquired the remaining assets of the Monmouth, N.J, company Synthon Chiragenics, a developer of carbohydrate-based technologies, following the formation of its subsidiary Suven Life Sciences USA in New Jersey. Terms were not disclosed. Synthon previously sold its pharmaceutical and fine chemicals business including its C-3, -4 and -5 chiral technologies to Avecia in early 2003. With the acquisition Suven gains rights to Synthon's drug discovery and development technology, including preclinical development and synthesis of intermediates and active pharmaceutical ingredients. Novartis and GSK To Go To Trial Over Augmentin The US International Trade Commission (ITC) remanded an earlier decision against further proceedings in the dispute between Novartis and GlaxoSmithKline over a generic version of GSK's antibiotic Augmentin. Novartis sells the generic version AmoxC (Amoxicillin/Clavulanic acid) to the U.S. market through its Geneva Pharmaceuticals subsidiary. GSK claims that AmoxC contravenes Augmentin patents. The case will now go to trial. Agrochemical Costs Soar The cost of introducing a new agrochemical product rose slightly more than 21 percent to $184 million from 1995 through 2000, according to a report by Phillips McDougal. The report also notes that, although a greater number of candidates are being synthesized, a much smaller fraction is actually reaching the market. R&D has become an increasingly large portion of the cost of new agrochemical products because of the use of combinatorial chemistry and high throughput screening techniques. Court Denies Restoration of Pesticide Judgment The Supreme Court denied a Wisner, Nebraska, man's request to restore a $2.2 million judgment awarded in 1999 by a Cuming County District Court in his pesticide exposure case. Harold Evl sued Ciba Geigy, manufacturer of Pramitol, and local retailer Northeast Cooperative after he received burns on his feet from walking through a city park that had been treated with the pesticide. Evl appealed to the U.S. Supreme Court after the Nebraska Supreme Court overturned the 1999 award. Air Products to Buy Ashland Electronic Chemicals Business Air Products will acquire the electronic chemicals business of Ashland for $300 million in cash assuming the deal is approved by antitrust authorities. The Ashland business will add $200 million in sales to Air Product's $1 billion worldwide electronics division. Ashland will use the proceeds to pay down debt. OM Group Sells Precious Metals Business to Umicore Belgian metals and materials company Umicore has agreed to purchase the precious metals business of OM Group Inc. for $752 million in cash. OM Group acquired the business, which had 2002 sales of $4.4 billion, when it acquired the dmc2 business from Degussa in August 2001. Proceeds from the sale will be used to pay down debt. Sales of Chiral Technologies to Experience Healthy Growth Sales of chiral technologies will reach nearly $15 billion by 2009, according to Frost & Sullivan. Today, separations technologies account for 55 percent of the market, followed by asymmetric synthesis at 35 percent and biotransformations at 10 percent. Pharmaceuticals will continue to be the major market and the driver behind the more than 10 percent growth predicted by the firm. Frost & Sullivan also expects to see consolidation among suppliers of chiral technologies services, as well as an increasing number of relationships developing between chiral technology companies and emerging pharma and biotech. Tagatose Enters U.S. Sweeteners Market Tagatose, a sugar alcohol, is the latest new low-calorie sweetener approved for the U.S. market. Arla Foods, a Viby, Denmark-based food company, and the Braunschweig, Germany-based sugar producer Nord-zucker manufacture Tagatose using a process patented by Spherix Inc., a Beltsville, Md.-based biotechnology company. The two companies are currently involved in countersuits about royalties and other issues concerning patent rights. Business Communications Company (BCC), a Norwalk, Conn.-based market research firm predicts growth for Tagatose between 20 and 25 percent during the next five years. Total global sugar alcohol production was 836,905 tons in 2002, according to BCC, with sorbitol accounting for more than 54 percent of the market. U.S. consumption of sugar alcohols was estimated at 376,640 tons in 2002. Feedstock Shortages Plague State-Owned Olefin Plants in Venezuela The El Tablazo petrochemical complex in Western Venezuela is running only one of its two olefins plants due to shortages of natural gas and tight currency controls that prevent imports. The natural gas shortage has resulted in reduced production of ethylene and downstream products. The importation of polystyrene has been significantly curtailed due to the currency control measures. The government claims that petrochemical operations returned to normal after a strike in December failed to force President Hugo Chavez from office. If dollars are not made available to purchase imported raw materials, some petrochemicals firms may have to shut down soon. Petchem/Gas Projects in Saudi Arabia Stalled Talks between Western oil majors and Saudi authorities are stalled because of three 'core venture' gas, power, water and petrochemicals projects. Issues remain regarding the extent of infrastructure development, the amount and purchase terms of gas and petrochemical feedstock produced and the current attitude toward westerners. The Saudi Arabian Gas Initiative (SGI) will potentially consist of three multibillion-dollar cracker projects. It is expected that negotiations will continue until an agreement is reached. However, the SGI will not be a source of feedstocks in the near term. Biogen and Idec to Merge Idec Pharmaceuticals announced that it will acquire Biogen in a stock swap valued at approximately $6.4 billion, making it the second largest acquisition in the biotech industry after Amgen's $16 billion acquisition of Immunex. Biogen Idec will be the third largest biotech company, after Amgen and Genentech, with annual revenues of $1.5 billion based on 2002 sales. The merger is expected to provide $300 million in cost savings, which will come from avoiding duplication and new hiring in the future. Biotech Looking to Alliances to Stay Competitive The biotech industry is undergoing a transformation to virtual integration in order to be successful, according to a report by Ernst & Young. The availability of contract research organizations and companies offering regulatory assistance are making it possible for biotech to become virtual pharmaceutical companies. Networks of alliances will enable companies with expertise in different areas to work together to achieve profitability in significantly reduced timeframes. Former Imclone CEO Receives Sentence, $3 Million Fine After pleading guilty to insider trading, former ImClone Systems chief executive Samuel Waksal was sentenced to more than seven years in prison and fined $3 million. Waksal was also ordered to pay an additional $1.26 million as restitution to the State of New York tax commission. Waksal attempted to sell approximately $5 million worth of his shares of ImClone in December 2001 after receiving private word that ImClone's drug candidate Erbitux would be denied approval by the FDA. Waksal has already agreed to pay $800,000 in fines to the U.S. Securities & Exchange Commission (SEC) and agreed to a ban on his serving as an officer in any public company. U.K. Biotech Companies Say New Directive Reduces Competitiveness of Industry A European directive on clinical trials for novel drugs with an implementation date of May 2004 will impact the competitiveness of the UK biotech industry, industry participants said. The regulations require that experimental drugs comply with the same GMP standards as commercial drugs. In the United States, the standards for production are increased as a drug passes through the various stages of development. Malaysian Oleochemicals Struggling Recent capacity investments combined with a downturn in demand have led to a surplus in Malaysian oleochemicals. Oleochemicals capacity annual figures grew 14 percent in 2002, while demand growth decreased from 3 to 4 percent down to 2 percent. Some industry experts predict the surplus will be absorbed in two to three years, but others believe the overcapacity situation will continue through this decade. Malaysia is also struggling with a decline in production of palm kernel oil, the major raw material for oleochemicals. Akzo Nobel Reorganizes Surface Chemistry Business Akzo Nobel plans to cut about 200 jobs in its Surface Chemistry unit, with about 120 coming in the company's three U.S. plants and the remainder in Sweden. The company hopes to have the reorganization completed by the end of 2004. DuPont Finalizes Canadian Unit Purchase DuPont now owns 93 percent of DuPont Canada after 70.7 percent of the minority shares in DuPont Canada were tendered in response to the company's $16.06/share offer for the 24 percent stake it did not already own. The purchase of DuPont Canada will facilitate the spin-off of DuPont Tectises & Interiors (DTI). Great Lakes Invests in Fine Chemicals Business Great Lakes Chemical has invested $8 million in its fine chemicals business. A new business unit, Great Lakes Fine Chemical, which is up for sale, was created by combining the company's Holywell, U.K. and U.S. fine chemicals operations. The investment included upgrades and expansions to early drug development and cGMP facilities.