Generics
Patent Law in Effect in India
New patent laws that apply to generic
drugs launched after January 1, 1995 are
now in effect in India.
Approximately 12,000 patent applications have been
filed by global pharmaceutical companies that have
active patents for drugs that are currently on the
market in India as generic versions. Generics make up
about 15 percent of the Indian pharmaceutical market.
Under the World Trade Organization (WTO) rules agreed
to by India, the generic drugs must be withdrawn from
the market immediately. A large number of patent suits
are expected in India in the near future.
- I think knowing what you cannot do is more
important than knowing what you can do. In
fact, that's good taste. (Lucille Ball)
- Getting older is no problem. You just have
to live long enough. (Groucho Marx)
- A vegetarian is a person who won't eat
anything that can have children (David
Brenner)
- The moment of victory is much too short to
live for that and nothing else (Martina
Navratilova)
Why
Don't Cigarette Butts Burn?
Even cigarettes without filters don't burn
quickly. If the shredded tobacco is packed
tightly enough, not enough oxygen is available
to feed the combustion process. The degree of
burn is also regulated by the porosity of the
paper surrounding the tobacco. On a filtered
cigarette, an extra impediment is placed on
the combustion process. This is because the
filter is attached to the tobacco by a special
paper which is essentially non-porous. This
paper acts to extinguish the burning coal by
reducing the amount of available oxygen. So,
in effect, there is a barrier between the
tobacco and filter but it is around the
cigarette, not actually between the tobacco
and the filter in the interior of the
cigarette.
Arkema
Plans Job Cuts
Total's recently spun off chemicals business
Arkema announced that it will reduce its
chlorochemicals workforce in France by 548
jobs over the next two years. The largest
number of positions will be eliminated at the
company's facility in Saint-Auban in
Alpes-de-Haute-Provence. Arkema will also
invest Euro 37 million to increase production
of Chlorine and Vinyl chloride and make other
improvements at three sites in France.
Dow
Chemical Receives Notice from Indian Court
Dow Chemical received a notice from the
District Court of Bhopal in India asking the
company to explain why Union Carbide
Corporation (UCC) will not participate in a
continuing court case regarding the Bhopal gas
release in 1984. The court issued the notice
in response to an application filed by the
Bhopal Group for Information and Action, which
is seeking justice for victims of the
disaster. Dow has responded in the past that
it did not own or operate the UCC plant in
Bhopal and therefore did not have any
responsibility for the tragedy. The company
has also stated that the issue of
responsibility was previously addressed in a
1989 settlement between the Indian government
and UCC. Dow is expected to respond to this
new notice by February 15, 2005.
ExxonMobil
Wins Appeal Regarding Sabic Joint Ventures
The Delaware Supreme Court denied Sabic's
appeal regarding overcharges of $416.8 million
(Euro 319 million) to ExxonMobil Chemical. The
court initially ruled in favor of ExxonMobil
in March, 2003. The licensing fees pertain to
two 50:50 joint ventures between Sabic and
ExxonMobil Chemical (the Kemya complex at Al
Jubail and the Yampet complex at Yanbu ) that
produce Monoethylene glycol (MEG) and
Polyethylene (PE).
Merck
to Set Up Indian Subsidiary
After being absent from the Indian
pharmaceutical market for 18 years, Merck
applied for approval from the Indian
Government's Foreign Investment Promotion
Board to set up a wholly owned subsidiary. The
company plans to invest $15 million (Euro 11.3
million) over five years and will import and
produce drugs for sale in the Indian market as
well as source raw materials and pursue
R&D efforts.
Sanofi-Aventis
Faces Law Suit from Rhodia
Rhodia has filed a law suit against
Sanofi-Aventis regarding environmental
liabilities at sites in Silver Bow, Montana
and Cubatao, Brazil that Rhodia acquired from
Aventis. Sanofi-Aventis indicated that an
agreement signed by Aventis and Rhodia in 1998
settled all claims in connection with
environmental indemnification, and final
payment was made in 2004. Rhodia has begun the
legal proceedings to claim additional
environmental liabilities identified based on
new international accounting standards
requiring estimates to be made over a 15-year
period rather than five under previous rules.
The company expects to incur additional
liabilities of $92 million (Euro 70 million)
after considering the payment received from
Aventis.
Zeon
Chemicals Agrees to Price Fixing Charge
Zeon Chemicals, the U.S. affiliate of Nippon
Zeon, agreed to one charge of price fixing of
Acrylonitrile-butadiene rubber (NBR) from May
to December 2002. The company will pay a $10.5
million fine to the Department of Justice. If
approved by the court, the agreement will
resolve all charges against Nippon Zeon and
its affiliates with regard to NBR business in
the U.S.
Valspar
Appoints New CEO
Richard Rompala will be replaced by COO
William Mansfield as president and CEO of
Valspar effective February 23, 2005. Rompala
will remain as chairman.
China
Offers Investment Risk and Opportunity
While there is tremendous opportunity for
growth in China, (growth in company sales of
20 percent or greater per year is predicted by
many in the industry), companies also face the
risk of misunderstanding the market. The high
growth of both the domestic and export markets
in China are attractive to investors in the
chemical industry. Companies tend to either
form joint ventures with existing Chinese
companies or acquire existing facilities.
Risks include the overheated economy and
governmental policies, particularly during a
time of large-scale reform. The huge size and
complexity of the Chinese chemical industry
and the associated logistics issue also pose a
challenge for foreign investors. Concerns
about intellectual property protection also
loom for many potential investors.
Foreign
Patents Important in All Countries
According to intellectual property protection
expert and patent attorney Mark Kassel,
obtaining patent protections is important even
in countries that are not known for having
strong patent enforcement policies in the
past. These countries are currently seeking to
become part of the global business community,
and their governments can be expected to
recognize the value of strong intellectual
property protection. Companies that seek
patent protections in these countries will be
in a good position when the governments do
begin playing by the same rules.
Japanese
Imports and Exports Increase in 2004
Japan's chemical imports climbed 10.2 percent
and exports increased 10.8 percent in 2004 as
compared to 2003. Chemical imports totaled Yen
3.812 trillion ($36.94 billion, Euro 28.23
billion), while chemical exports reached Yen
5.223 trillion ($50.62 billion, Euro 38.72
billion). The largest imports were organic
chemicals, plastic materials and medicinal
products. Top exports included organic
chemicals, plastic materials and non-metallic
inorganic chemicals.
Petrochemicals
Sector Poised for Strong 2005
Tight supply and improving global economies,
particularly in the U.S. and China, will
contribute to significantly increased
profitability for petrochemical producers in
2005. Wall Street analysts expect that 2005
and 2006 will be very strong years for
petrochemicals following a good recovery year
in 2004. Commodity chemical companies are
predicted to achieve profit gains of 55
percent or more, while highly leveraged
companies will experience much greater growth.
Specialty and diversified firms are projected
to see gains of approximately 20 percent.
Slowdown
in Chemicals Possible in China
Contracting margins, weaker demand growth and
new capacity may contribute to an economic
slowdown for the Chinese chemical industry.
High raw material prices and slowing domestic
demand are impacting margins after the
tremendous highs of 2004. Despite these
conditions, most analysts expect margins and
utilization rates to remain high through 2007,
but peak levels are passed. Chemical prices in
China fell during the end of 2004, but
rebounded a little at the start of the new
year. Inventories of many chemical products
also remain low, which suggests that the
potential slowdown may not severely impact the
industry.
Slowing
Asian Economies May Impact Chemical Industry
Global economic growth is predicted to drop
from 4 percent in 2004 to 3.2 percent in 2005.
Growth of China's gross domestic product (GDP)
is expected to decrease from 9.1 percent in
2004 to 8.5 percent in 2005. In Japan, GDP
growth is predicted to drop from 2.9 percent
in 2004 to 1.7 percent in 2005. South Korea
will experience the greatest decline in
growth, with a rate of 3.2 to 4 percent
expected in 2005 as compared to 5 percent or
more in 2004. India could be one exception,
with GDP growth forecasted at 6.5 percent in
2005, up from 6 percent in 2004. Despite the
slowing economy, petrochemical margins are
expected to remain healthy, but will not be as
great as in 2004. Demand for petrochemicals
will also remain strong despite higher raw
material prices.
Strong
Growth in 2005 Expected for Brazilian
Chemicals Market
The chemical industry in Brazil is expected to
see a growth of 8 percent in domestic demand
(volume sales), according to Lafis, a
Brazilian consulting company. The improving
economy and increased demand in the automotive
and civil construction markets are attributed
with the strong demand. The consultancy also
expects prices of chemicals and feedstocks to
continue to rise in 2005. Exports are
predicted to remain stable, while imports into
Brazil will rise approximately 5 percent, as
much of the industry is running near capacity.
Avecia
to Form New Drug Development Company
Avecia will launch Reaxa, a new drug
development company focused on discovering and
developing "easier, faster and
cleaner" synthetic processes. The company
is based on a six-year collaboration between
Avecia and Professor Steven Ley of Cambridge
University. Avecia vice president Pete Jackson
will be CEO of Reaxa. Funding for the new
company is currently being finalized. Reaxa is
expected to generate $20 million (Euro 15.3
million) in revenues by 2009. Avecia's EnCat
encapsulated palladium catalyst technology
will be part of the company's initial
portfolio.
Bayer
Finalizes Roche OTC Business Acquisition
Bayer finalized the $3.24 billion (Euro 2.38
billion) acquisition of Roche Consumer Health,
the global over-the-counter (OTC) consumer
health business of Roche. Bayer's new consumer
health business has sales of approximately
$3.27 billion (Euro 2.4 billion) and is one of
the top three OTC consumer health companies in
the world. With global headquarters in
Morristown, New Jersey, Bayer's new business
will be run by Gary Balkema, president of
Bayer's global consumer care division.
BMS
to Put Consumer Medicines Business On the
Block
Bristol-Myers Squibb announced that it will
sell its U.S. and Canadian consumer medicines
business, including the brands Excedrin, Keri,
Choice, and Comtrex. Sales for the business in
2003 totaled approximately $240 million (Euro
181.8 million). The Japanese, Chinese, Latin
American, European, Middle Eastern, and
African consumer medical businesses are not
included in the sale.
FDA
Approved Macugen
The FDA approved Macugen (Pegaptanib sodium
injection) under fast track designation for
the treatment of neovascular (wet) age-related
macular de-generation (AMD). Co-developed by
Eyetech Pharmaceuticals and Pfizer, Macugen is
the first in a new class of opthalmic drugs
that target vascular endothelial growth factor
(VEGF) and are based on an anti-angiogenesis
approach.
Regulatory
Process Under Review Resulting From Vioxx,
Celebrex Difficulties
The unexpected problems recently identified
with Cox-2 inhibitors such as Vioxx and
Celebrex are expected to lead to revisions in
the drug approval process at the FDA. Many
analysts predict that a new pharmaceutical
regulatory system that involves more extensive
clinical trials and a new process for tracking
marketed drugs will be introduced. It is
possible that comparison trials for drugs
within the same class will also be required.
Overall these changes will contribute to
higher costs and higher risks for all
pharmaceutical companies. Medium sized
companies will face the greatest impact.
DSM
Increases Position in Chinese Vitamin Market
Shanghai Pharmaceutical Group (SPG) agreed to
sell its 35 percent share in Roche (Shanghai)
Vitamins Limited (RSVL) to DSM for $13.8
million (Euro 10 million). Once the
acquisition is complete, RSVL will become a
wholly owned subsidiary of DSM and will be
named DSM Vitamins (Shanghai) Ltd. The deal is
expected to close by the end of the first
quarter of 2005, following receipt of
regulatory approvals in China.
Sucralose
Now Leading High Intensity Sweetener
Sucralose (brand name Splenda), has become the
largest selling high intensity sweetener,
beating out both Saccharin and Aspartame, with
US sales totaling greater than $172 million
and growing at over 9% per year. Consumers may
perceive Sucralose as being safer since it is
synthesized from sugar. Producer Tate &
Lyle PLC, is spending $182 million on a new
facility in Singapore which is expected to
come on stream in early 2007. The company
acquired its McIntosh, AL site from McNeil
Nutritionals in February 2004 for $134
million, and immediately began expansion
projects worth about $75 million. These
efforts are expected to be completed by April
2006 and will approximately double the
capacity at that facility. Sucralose has done
well in Japan, and Tate & Lyle plans to
expand to other parts of Asia. Final approval
for Sucralose in all member states of the
European Union takes place in February of
2005, with significant opportunities for
market growth anticipated in this region of
the world as well.
Agrochemicals
Sector Forecasting Growth in 2005
The agrochemicals sector appears to be headed
for improved conditions in 2005 due to low
grain inventories, evolving demographics, and
reduced available acreage. Early sales of
seeds indicate that this segment will see a
large benefit from the growth of the sector.
Monsanto has forecasted higher projected
earnings and higher corn seed sales for 2005.
Smaller companies like Syngenta are expected
by analysts to benefit significantly in the
seeds market as the demand for higher yielding
seeds continues to grow.
Wacker
Acquires ProThera
Wacker-Chemie acquired recombinant protein
therapeutics process development and contract
manufacturing company ProThera. With the
purchase, Wacker gains a position in biologic
drugs, adds pharmaceutical proteins to its
New patent laws that apply to generic
drugs launched after January 1, 1995 are
now in effect in India.
Approximately 12,000 patent applications have been
filed by global pharmaceutical companies that have
active patents for drugs that are currently on the
market in India as generic versions. Generics make up
about 15 percent of the Indian pharmaceutical market.
Under the World Trade Organization (WTO) rules agreed
to by India, the generic drugs must be withdrawn from
the market immediately. A large number of patent suits
are expected in India in the near future.
Total's recently spun off chemicals business
Arkema announced that it will reduce its
chlorochemicals workforce in France by 548
jobs over the next two years. The largest
number of positions will be eliminated at the
company's facility in Saint-Auban in
Alpes-de-Haute-Provence. Arkema will also
invest Euro 37 million to increase production
of Chlorine and Vinyl chloride and make other
improvements at three sites in France.
Dow Chemical received a notice from the
District Court of Bhopal in India asking the
company to explain why Union Carbide
Corporation (UCC) will not participate in a
continuing court case regarding the Bhopal gas
release in 1984. The court issued the notice
in response to an application filed by the
Bhopal Group for Information and Action, which
is seeking justice for victims of the
disaster. Dow has responded in the past that
it did not own or operate the UCC plant in
Bhopal and therefore did not have any
responsibility for the tragedy. The company
has also stated that the issue of
responsibility was previously addressed in a
1989 settlement between the Indian government
and UCC. Dow is expected to respond to this
new notice by February 15, 2005.
Rhodia has filed a law suit against
Sanofi-Aventis regarding environmental
liabilities at sites in Silver Bow, Montana
and Cubatao, Brazil that Rhodia acquired from
Aventis. Sanofi-Aventis indicated that an
agreement signed by Aventis and Rhodia in 1998
settled all claims in connection with
environmental indemnification, and final
payment was made in 2004. Rhodia has begun the
legal proceedings to claim additional
environmental liabilities identified based on
new international accounting standards
requiring estimates to be made over a 15-year
period rather than five under previous rules.
The company expects to incur additional
liabilities of $92 million (Euro 70 million)
after considering the payment received from
Aventis.
Avecia will launch Reaxa, a new drug
development company focused on discovering and
developing "easier, faster and
cleaner" synthetic processes. The company
is based on a six-year collaboration between
Avecia and Professor Steven Ley of Cambridge
University. Avecia vice president Pete Jackson
will be CEO of Reaxa. Funding for the new
company is currently being finalized. Reaxa is
expected to generate $20 million (Euro 15.3
million) in revenues by 2009. Avecia's EnCat
encapsulated palladium catalyst technology
will be part of the company's initial
portfolio.
Bristol-Myers Squibb announced that it will
sell its U.S. and Canadian consumer medicines
business, including the brands Excedrin, Keri,
Choice, and Comtrex. Sales for the business in
2003 totaled approximately $240 million (Euro
181.8 million). The Japanese, Chinese, Latin
American, European, Middle Eastern, and
African consumer medical businesses are not
included in the sale.
The FDA approved Macugen (Pegaptanib sodium
injection) under fast track designation for
the treatment of neovascular (wet) age-related
macular de-generation (AMD). Co-developed by
Eyetech Pharmaceuticals and Pfizer, Macugen is
the first in a new class of opthalmic drugs
that target vascular endothelial growth factor
(VEGF) and are based on an anti-angiogenesis
approach.
Shanghai Pharmaceutical Group (SPG) agreed to
sell its 35 percent share in Roche (Shanghai)
Vitamins Limited (RSVL) to DSM for $13.8
million (Euro 10 million). Once the
acquisition is complete, RSVL will become a
wholly owned subsidiary of DSM and will be
named DSM Vitamins (Shanghai) Ltd. The deal is
expected to close by the end of the first
quarter of 2005, following receipt of
regulatory approvals in China.
