February 2004 Sanofi-Synthelabo Makes Hostile Bid for Aventis Sanofi-Synthelabo made a $60 billion (Euro 47 billion) hostile takeover bid for Aventis in order to take advantage of Euro 1.6 billion in synergies beginning in 2006. While three options were given to Aventis shareholders, the main deal includes Euro 37.9 billion in stock and Euro 9.1 billion in cash. The Aventis board rejected the bid because it has unreasonable risks associated with it and only includes a 3.6 percent premium - "an inferior value" - compared to what Aventis can achieve on its own. Sanofi is in a hurry to complete the deal because it could be a takeover target itself by the end of the year.   Famous Quotes of the Month - The brain is like a muscle. When we think well, we feel good. Understanding is a kind of ecstasy. (Carl Sagan) - It takes self-confidence to say "I'm sorry." (Alexandra Stoddard) - Pay attention to your enemies, because they are the first to discover your mistakes. (Antisthenes) - You are not judged by the height you have risen, but from the depth you have climbed. (Frederick Douglas) - As you climb the ladder of success, there is always someone behind you keeping it steady. (Jacob M. Braude) Why don't you feel a mosquito bite until it begins to itch? Interestingly, mosquitos take their time to bite. They usually rest on human skin for at least a minute before starting to bite. They are so light that and so skillful with their biting technique that most humans can't feel them, even though the mosquito might be resting on their skin for five (5) minutes or more. Before the mosquito presses her lancets into a capillary, she lubricates her mouth parts with saliva and proceeds to suck blood for up to three (3) minutes until her stomach is literally about to burst. The mosquito then flies off to deposit her eggs and most of us don't feel the bite until after she is long gone. This is because the saliva acts not only as a lubricant in the biting process but as an anesthetic to the bitee. This allows us to be oblivious of the fact we are being bitten. But the saliva contains anticoagulant materials to keep the blood flowing into the mosquito. These materials cause allergic reactions in many people and it is this allergic reaction that causes the bumps, swelling and itching associated with mosquito bites. Clariant Reduces Workforce in Indian Business Clariant reduced the workforce at its Indian subsidiary Colour-Chem, of which it owns 50.1 percent, as part of a restructuring program to consolidate much of its production at its Roha location. Nearly 500 positions in production and infrastructure were eliminated at company's Thane facility. The restructuring is intended to improve Colour-Chem's competitiveness and enable its growth. Digital Photography Impacts Eastman Kodak In response to the changing photography market, which is converting from traditional film to digital technology at a rapid pace, Eastman Kodak will cut about 20 percent of its workforce (approximately 15,000 employees) over the next three years. The company expects to achieve annual cost savings of $800 million to $1 billion beginning in 2007 in its traditional photographic operations. Givaudan Reduces Workforce Givaudan will cut 300 jobs in the expectation of saving $53 million (Euro 43 million, CHF 67 million) annually beginning in 2005. A one-time restructuring charge of CHF 68 million will go against 2003 earnings. Some of the positions were reduced late in 2003 and the remaining jobs will be eliminated this year via non-replacement/retirement and targeted job reductions. SK Chairman Jailed The chairman of South Korea's SK Group, who is also a board member of petrochemicals company SK Corp., has been placed in jail while he awaits prosecution on charges of embezzlement and fraud. The charges against Son Kil-seung are connected with an investigation into alleged illegal accounting practices at SK Shipping, which was created in 2003. Nearly $1 billion is connected to the illegal activities. The chairman made no official statement, and a spokesman for the group indicated that a five-member committee would be responsible for operations while Son is in jail. Sovereign Tries to Gain Control of SK Corp. Major shareholder Sovereign Asset Management has continued its attempts to gain a large enough stake in SK Corp. to gain control of the company. Sovereign holds a 14.99% stake in SK Corp. and hopes to replace six company directors at the shareholders' meeting in March. The company responded by selling its remaining treasury stocks to investors that support the current board, ending up with 35.54% of shares supporting the board. The determining votes will come from domestic individual and corporate investors, who hold a combined 33.46% of the company's stock. Terapia Focuses on Pharma In order to become a pharmaceutical-only company, Romania's Terapia Cluj plans to cut nearly 150 jobs (close to 20 percent of its staff) and sell off its chemicals business. U.S.-based Advent International has a 90.7 percent stake in Terapia, which it gained in August, 2003. Stephen Stead took over as the new general manager effective February 1, 2004. Bayer CropScience Gets New CEO Friedrich Berschauer has been named CEO of Bayer CropScience, succeeding Jochen Wulff who will retire as of April 1. Berschauer currently is a board member of Bayer Healthcare and head of the business' animal health division. Gunnar Riemann, who is responsible for biological products with Bayer, will replace Berschauer in both positions. Cargill-Dow Names New Leader Cargill Dow, the 50:50 joint venture between Dow Chemical and Cargill, has named Kathleen Bader chairman, president and CEO. Bader, currently corporate vice president, quality and business excellence and business group president for styrenics and engineered products at Dow, replaces the retiring Randy Howard. Crompton Gets New Head Crompton appointed Robert Wood, most recently business group president of thermosets for Dow Chemical, as its new president and CEO. Wood replaces the retiring Vincent Calarco. Dow's Gross to Retire; Company Appoints R&D Council Rick Gross, head of R&D at Dow Chemical, will retire after completing a special assignment for the company. Gross will have three projects to complete: defining an R&D strategy for Dow in emerging markets like China, India and Russia; creating an R&D strategy with regard to relationships and alliances; and pinpointing a technology focus for the company that goes beyond biotechnology. Dow will replace Gross with an R&D Council consisting of five directors responsible for different areas of R&D within the company. The council will manage company-wide R&D resources and activities. This new leadership approach is expected to align R&D efforts more closely with Dow's business operations. DuPont Rearranges Management As part of its plan to reduce yearly costs by $900 million over the next two years and grow its revenue by $1 billion annually, DuPont has reorganized its senior management to "rebalance resources toward emerging markets." A chief marketing and sales officer position was created, and top appointments were made for the performance materials and global human resources groups. Geographic-based appointments include leading positions for Asia-Pacific, China, India and Pakistan, and Latin America. Business units receiving new leadership include Pioneer Hi-Bred International, titanium technologies and the business finance group. Dynea Gets New CEO Finnish adhesives and resins producer Dynea has appointed Roger Carlstedt, business area manager for ABB Utilities, to replace Oivind Isaksen as president and CEO of Dynea International and Dynea Chemicals, the group's operating businesses. Carlstedt has also been named as president and CEO of holding company Dynea Oy. The management change came as the result of poor financial performance Gemuend Resigns from Lonza After Poor Company Performance Due to his inability to implement effective organizational change, Lonza's CEO Markus Gemuend will resign as soon as a replacement is found. The announcement came after the company reported a 28 percent decline in group operating profits in 2003. Custom manufacturing, fine chemical and biotechnology activities suffered the greatest losses. Expected improvements in these businesses did not come in 2003 and are not likely in 2004, either. The board plans to become more heavily involved in the business and to fully reorganize its operations. PCAS Gets New President Christian Moretti has replaced Jean-Pierre Stephan as president of fine chemical manufacturer PCAS. Moretti is currently president of Dynaction, a holding company with a 70 percent stake in PCAS. According to company reports, PCAS will merge with Dynaction Analysts Look Positively on Chemical Stocks Overall, chemical stocks performed well last year despite high energy prices, SARS and the war in Iraq. Analysts are expecting the trend to remain in 2004 as the economy continues to improve. Rising prices are contributing to the growth in many chemical sectors. Low inventories are also expected to lead to increased demand. An anticipated decline in energy prices and a continued weakness in the dollar will also benefit many chemical companies. Several companies have already reported better than expected earnings for the fourth quarter of 2003 European Recovery Slowed by Strong Euro Continued improvement in the European and global economies will drive the economic recovery in the European chemical industry. The strong Euro, however, will impact sales of chemicals outside of Europe and to customers that rely on foreign sales. Competition from Asian countries linked to the U.S. dollar is also expected to be stiffer for European chemicals because of the strong Euro. Since export sales are often a key driver for an economic recovery, output growth is predicted to be only a moderate 2 to 2.5 percent during 2004. Both gross domestic product (GDP) and overall manufacturing production for chemicals are expected to increase by nearly 2 percent in Western Europe. Natural Gas Prices Rise Again Despite inventories being higher than historical levels, natural gas prices spiked once again during the first part of the New Year, climbing from $5.50/million Btu to over $7.00/million Btu. Analysts predict the price will remain well above $5.00/million Btu for the next several months. Several companies and the American Chemistry Council have called for an investigation into the price hikes. Some believe that concerns about the future ability to meet demand are causing the instability. There is definitely a perception that supply and demand are out of balance. Prices for Naphtha, Ethylene and Benzene have also gone up in the first month of 2004. FDA Approves Seroquel The U.S. FDA approved AstraZeneca's Seroquel (Quetiapine) as both a monotherapy and adjunct therapy for the treatment of manic depression. The drug was initially approved for treatment of schizophrenia in 1997. Recently the company received approval to use Seroquel for manic depression from the UK, Italy, Mexico and New Zealand in addition to 14 other European countries. Chemwerth Announces 4th Qtr Audit Record Chemwerth, Inc. of Woodbridge, CT, has announced that they have completed nine (9) FDA inspections in China and the U.S. during the 4th quarter, 2003. Seven of the plants in China received zero 483's and the eighth manufacturer in China had only three (3) minor observations based on a product unaffiliated with Chemwerth. The US manufacturer was given a 3-point 483 inspection by the FDA. There are over 3,000 pharmaceutical plants in China but only 51 have passed FDA inspections; a mere 0.02%. Of the 51 FDA inspected plants, 30 were inspected through Chemwerth, which represents 59% of the total inspected plants. FDA Considers Legal Action for Drug Re-imports The FDA is considering taking legal action against cities and states that implement drug re-importation programs from Canada to obtain low-cost pharmaceuticals for their employees. A ban on re-imports without the approval of the U.S. Department of Health and Human Services took effect late in 2003. Discussions have been held between the FDA and officials from Boston and Springfield Massachusetts, and Illinois and Iowa, among others. Congress is expected to resume discussions over legalization of drug re-imports when it is back in session. Medeus Gets Elan's European Sales and Marketing Business Medeus UK Ltd., the newly created pharmaceutical company backed by Apax Partners Funds, has purchased the European sales and marketing business of Elan Corp. PLC. The deal, valued at nearly $120 million, will close in the first quarter of 2004. Medeus will acquire Elan's operations in Europe with net revenue and gross profits of $56.4 million and $38.7 million, respectively, for the first nine months of 2003. Elan has retained its R&D center in the UK and its operations in Ireland. The company expects to clear about $10 million from the deal. New generic APIs from BASF Decreasing revenues from its three major generic pharmaceuticals (Caffeine, Ibuprofen and Psuedoephedrine) have led BASF to develop new generic active pharmaceutical ingredients (APIs). Paroxetine, the active ingredient in generic antidepressants, is one new product for the company that is expected to grow. BASF has several other products in development and will use the funds generated by their sales to invest in its excipients and contract manufacturing businesses. Pfizer to Unload Diagnostics Business Pfizer announced that it will sell the Swedish in-vitro allergy and autoimmune diagnostic testing business gained in its acquisition of Pharmacia to private European equity investors Triton and PPM Ventures for $575 million (Euro 463 million). Pfizer says the diagnostics business does not fit with its core operations. The company expects the deal to receive regulatory approval and close in the first half of 2004. Teva Acquires Sicor Generic pharmaceutical manufacturer Teva (Israel) completed its $3.4 billion (Euro 2.9 billion) acquisition of U.S. generics company Sicor on January 22, 2004. The acquisition, first announced in October of last year, adds Sicor's generic injectable business and biogenerics capabilities to Teva's oral dose generic drugs expertise. Sicor's active pharmaceutical ingredients business will also expand Teva's product offerings in this area. Zyprexa Approved by FDA Eli Lilly's drug Zyprexa (Olanzapine) has been approved by the U.S. FDA for the treatment of bipolar disorder. According to Lilly, Zyprexa is the first drug approved by the FDA for both acute mania and bipolar disorder in nearly 30 years. Over 2.5 million Americans have been diagnosed with bipolar disorder.