Visit Chemical
Information Services at CPhI
Chemical Information Services (CIS) will be
at CPhI Worldwide in Milan, Italy from
October 2nd to the 4th. Come visit us at
stand 9A34 at the Fiera Milano Rho
Exhibition Centre. We will be featuring our
Directory of World Chemical Producers (DWCP),
PathFinder Catalogue of Chemical
Intermediates, Worldwide Bulk Drug Users
Directory (WBDU) and the Worldwide Contract
Manufacturers Directory (WCMD). CIS also
sponsors and provides the information for
the Raw Materials Section of Wayfinder,
which allows visitors to find out which
exhibitors at the show produce specific raw
materials (bulk pharmaceuticals,
intermediates, fine chemicals, etc.)
- It takes 20 years of hard work to
become an overnight success. (Diana
Rankin)
- Experience is the name everyone
gives to his mistakes. (Oscar Wilde)
- A positive attitude may not solve
all your problems, but it will annoy
enough people to make it worth
while. (Herm Albright)
- You can't wait for inspiration.
You have to go after it with a club.
(Jack London)
- I fight every day, but who said a
fight has to be tongue and feet? You
fight by showing you can overcome. (Mookie
Wilson)
Why does seawater appear blue?
Seawater appears blue because it
absorbs all wavelengths of light
except for the shorter blue
wavelengths, which it effectively
scatters. The light attenuation is
caused by the combined absorption
and scattering properties of
everything in the water (inorganic
particulates and dissolved matter),
as well as the water itself.
Plankton has the greatest effect on
the color of seawater. Tropical
oceans have very little suspended
sediment and plankton and are very
clear and have an azure blue color.
Cooler, temperate ocean regions are
plankton-rich and appear more
greenish blue.
2006 was a Good Year for Top
Chemical Companies
Most of the large chemical companies
increased both sales and profits in
2006, with European firms
outperforming those in North
America. Growing demand and price
increases offset climbing energy and
feedstock costs. According to ICSI,
the top 20 companies saw sales
increase by 14 percent with
operating profits up by 6 percent
compared to 2005. Companies to watch
for the rest of 2007 and into 2008
include Sabic, Basell, Dow Chemical,
Hexion Specialty Chemicals, Akzo
Nobel, PPG Industries, DuPont,
ChemChina Group and Chemtura.
Chemical Industry Concerned by High
Court Damage Awards
The American Chemistry Council and
other manufacturing industries have
expressed concern about two recent
court decisions resulting in very
large punitive damage awards.
Continental Carbon was ordered to
pay $17.5 million (Euro 12.4
million) in punitive damages in
addition to $3.2 million to cover
actual damages, clean-up costs and
legal fees for causing property
damage as a result of venting of
carbon black. No personal injuries
were caused by the release.
The ACC and the National Association
of Manufacturers (NAM) argue that
the punitive damage awards are
"grotesquely excessive" considering
the circumstances of each case and
the level of actual damages paid.
They are asking the Supreme Court to
provide guidance to lower courts on
what constitutes reasonable punitive
awards.
In the second case, ExxonMobil was
ordered to pay $2.5 billion (the US
9th Circuit Appellate Court reduced
the initial $5 billion award by 50
percent) in punitive damages
relating to the 1989 Exxon Valdez
ship grounding. ExxonMobil has
already paid $3.4bn in actual
damages, fines and remediation
expenses related to the oil spill.
Mexico Passes Tax Law Opposed by
Chemical Industry
The Mexican legislature passed a new
corporate tax law, the 'flat-rate
business tax' or IETU, that raises
business tax rates to 16.5 percent
of earnings in 2008, 17 percent in
2009 and 17.5 percent in 2010 and
beyond. Allowable deductions will
include expenses, regional and bank
deposit taxes, fines, unpaid trade
credits and charity contributions.
The chemical industry in the country
lobbied against the tax as double
taxation on top of the federal
income tax and indicated it would
significantly erode profits. Pemex,
state oil-to-petrochemicals monopoly
Petroleos Mexicanos, already pays
taxes worth about 6 percent of
Mexico's gross domestic product,
which has restricted investment in
petrochemicals. Mexican President
Felipe Calderon Hinojosa must ratify
the measure.
U.S. House Passes Patent Reform Act
The U.S. House of Representative
passed the Patent Reform Act of 2007
that will bring changes to the
patent system desired by information
technology companies and disapproved
of by the pharmaceutical and biotech
industries. The bill makes many
changes including switching the U.S.
from a 'first to invent' to 'first
to file' system, modifying the way
damages are calculated and granting
broader rulemaking authority to the
Patent and Trademark Office. Others
opposing the bill include small
inventors, labor unions and the Bush
administration.
BP Settles with Plaintiffs from
Explosion Trial
In the 11th day of its trial, BP
reached an agreement with four
plaintiffs that brought civil suits
against the company for injuries
related to the explosion at its
Texas City plant in 2005. These
cases were the only ones to make it
to trial. The amount of the
settlement was not disclosed. BP
previously settled 1,600 other
cases. Another 1,200 lawsuits
connected to the event remain to be
settled. The company has set aside
$1.6 billion to cover the costs of
the lawsuits resulting from the
accident.
Evonik is New Name on the Block
RAG changed its name to Evonik
Industries and will pursue an
initial public offering in the first
half of 2008. Its chemical business
Degussa will take the same name. The
company also announced that is will
invest heavily in its solar silicon
business to develop products for the
solar energy market. The first
project is the construction of the
first integrated solar silicon
manufacturing facility with partner
The Silicon Mine.
J&J Takes Red Cross to Court
The American Red Cross (ARC) has
been using its symbol since the late
1800's, having been granted
permission by Johnson & Johnson
(J&J), which began using the "Red
Cross" symbol and words several
years prior. There has not been a
problem until recently. J&J has
filed a law suit against the ARC
because the ARC has been licensing
the J&J trademarked Red Cross to
products made and sold by a third
party. J&J seems to have put itself
in a "no-win" situation. The ARC
made only $2 million on the sale of
these products in 2006. That doesn't
mean its actions are acceptable. But
whether it wins or not, J&J does not
look good as a $50 billion company
taking on a charitable organization.
Lanxess Looks to Asia
Lanxess plans to invest $1.4 billion
(Euro 1 billion) within the next
three years, with a focus on Asia.
Three-fifths of the capital
expenditures are earmarked for
capacity expansions, while
acquisitions will be pursued if they
can create value within three years
or less. One possible project is a
new Butyl rubber plant to come on
stream in 2010 in Singapore,
Thailand or Malaysia. A decision
will be made on the facility by the
end of 2007. The company also
announced that is will meet is 2009
earnings targets a year early.
Restructuring Announced by DSM
In order to focus on life sciences
and materials, DSM will sell off its
Melamine, Urea, fertilizers, energy
elastomers, specialty products and
Maleic anhydride operations, all
with sales worth about $2 billion
(Euro 1.4 billion). It is also
seeking a partner for its Citric
acid business. The company hopes to
complete the divestments by 2010 as
part of its Vision 2010 strategy.
Rohm and Haas Company Restructures
Rohm and Haas Company will eliminate
200 jobs through the closure of its
digital imaging business in Bristol,
PA. The restructuring plan will also
include reductions of administrative
and business service operations,
improvement of manufacturing
efficiencies and the consolidation
of R&D activities. The actions are
expected to save $15 million per
year beginning in mid-2008.
Separately, over the next five
years, the company will invest $100
million (Euro 70 million) in India
with the goal of achieving annual
sales of $250 million by 2012. The
expenditure will include
establishment of a technology center
in Maharashtra and an acrylic
emulsions plant in northern India.
Doubling of production capacity at
an acrylic emulsions plant in Taloja
is already underway. Other expected
growth areas include ion exchange
resins, biofuels and electronic
materials.
Sigma-Aldrich Invests in China,
Israel
Sigma-Aldrich Fine Chemicals
announced that it will invest
approximately $25 million to build
its first manufacturing plant in
China, a large-scale non-GMP
facility in Wuxi. The plant is
expected to start operations in the
fourth quarter of 2008. The company
then expects to double its initial
investment with expansions over the
next few years. Products will target
the pharmaceutical and electronics
markets.
Separately, SAFC announced that it
will invest $29 million (Euro 21
million) to expand its high-potency
biologics facility in Jerusalem,
Israel in order to provide process
development and GMP manufacturing
for large scale active
pharmaceutical ingredients. The
expansion is expected to be
completed by the first quarter of
2009.
Solutia to Move Out of Bankruptcy
Solutia announced that it will file
a consensual plan of reorganization
that will prepare the company to
emerge from bankruptcy by the end of
2007. The revised plan includes $250
million of new investments,
reallocation of legacy liabilities
assumed when the company was spun
off, and resolution of litigation
between the settling parties
including Monsanto and Pharmacia.
The prior agreement with Monsanto
that Monsanto will accept financial
responsibility for tort litigation
and environmental remediation
remains a part of this settlement.
U.S. Private Equity Invests in China
U.S. Private equity firm The
Blackstone Group, which is partly
owned by the Chinese government (9
percent, $3 billion), has agreed to
invest up to $600 million (Euro 438
million) for a 20 percent stake in
the state-owned chemicals producer
China National Blue Star (Group)
Corp., a wholly-owned subsidiary of
ChemChina. Blue Star plans to become
more globalized and increase its
rate of development through
strategic foreign investments. Areas
for growth include silicones, animal
feed, engineering plastics and
coatings for cars. Financial backing
from Blackstone and access to global
markets will be a first step towards
these goals.
Congress Passes New FDA Drug Safety
Bill
The bill renews for five years
programs to collect fees from drug
and medical device producers to fund
FDA product review programs and also
gives the agency the power to
require further safety studies by
drug makers and mandate label
warning changes when problems with
marketed drug products occur. The
FDA could also issue fines for
non-compliance with these
requirements and if companies do not
complete follow-up studies once
drugs receive approval. The agency
would itself be required to more
actively monitor drug safety of
commercial products. Clinical trial
results at some level will also be
made public.
Pharma Top Ten Hold On
Pfizer managed to hold on to the
number one spot as the largest
pharma company, while
GlaxoSmithKline (GSK) pushed past
Sanofi-Aventis to take the number
two position, according to Wood
Mackenzie. Roche climbed from firth
to eighth place, while Eli Lilly
booted Bristol-Myers Squibb out and
returned to the top ten. The global
pharmaceutical industry is estimated
to have grown by 6.5 percent in
2006, with an annual compound annual
growth rate from 2006 to 2013
predicted to be lower at 4.3
percent. Companies with strong
pipelines and prospects in biologics
will fare best.
Tremendous Growth Predicted for
Indian Pharma Market
McKinsey & Co. predicts that the
Indian pharmaceuticals market grow
from $6.3 billion in 2005 to $20
billion in 2015, at which point
India will be one of the top 10
global pharma markets. The rapid
growth is attributed to growing
disposable incomes and an expanding
middle class combined with greater
access to health care and health
insurance and an increase in chronic
diseases. Small and medium-sized
Indian pharma companies are reaping
the largest benefits and achieving
excellent market penetration.
Petronas Expands Position in
Lubricants
Malaysia based Petronas, pursuing
its goal of becoming a leading
global player in the lubricants
market, announced that it will
acquire FL Selenia, a major European
lubricant manufacturer, for
approximately $1.4 billion (Euro 1
billion). FL Selenia serves
customers in Europe, South America
and the U.S. with lubricants, and
transmission, anti-freeze and
functional fluids for a variety of
vehicles and machinery. The purchase
will provide Petronas with a captive
market for base oils to be produced
at its new plant in Malacca, which
is expected to come on-stream by the
end of 2008.
PPG Divests Businesses
PPG Industries announced the sale of
its fine chemicals and auto glass
businesses. ZaCh System, a
subsidiary of Zambon, has agreed to
pay $65 million (Euro 47 million)
for the fine chemicals business,
while Platinum Equity will pay $500
million (Euro 360 million) for the
glass operations. The transactions
are expected to be complete by the
end of the fourth quarter of 2007.
With these divestments, PPG has
taken the necessary steps to focus
on becoming a leading coatings and
specialty products and services
company, according CEO Charles
Bunch.
Monsanto, Iowa State University
Settle Soybean Patent Dispute
Monsanto reached an agreement with
the Iowa State University Research
Foundation (ISURF) to settle a
patent infringement lawsuit the
group filed against the company
regarding low-linolenic acid content
soybean. Monsanto stated that it
developed the technology
independently but worked to reach an
agreement with ISU in order to avoid
litigation. Monsanto will receive a
commercial license from ISURF for
current and future low linolenic
acid product lines developed by Iowa
State University. The University
will receive a research license for
the use of Roundup RReady2Yield
soybeans. Monsanto hopes to
collaborate with the university in
the future. Low-linolenic acid
soybeans have greater shelf-life and
make it possible to avoid the need
for hydrogenation, which produces
unwanted trans fats.
Separately, Iowa's attorney
general's office has requested
information regarding Monsanto's
seed, trait, and chemistry related
licensing and marketing programs as
part of an inquiry into possible
antitrust violations by the company.
Monsanto is providing information
and will make it available to any
state attorneys general.
Generic Biologics Soon to be Real
Competition
Nearly $10 billion worth of biotech
drugs will go off patent in the next
two years. Low cost versions of
biotech drugs will soon be an
important sector within the pharma
market. The European Commission
recently granted final approval for
Novartis' generics business Sandoz
to launch 'biosimilar' epoetin alfa,
a generic version of Amgen's very
popular Epogen.
Because biologics are derived from
living things, it is not easy to
make exact copies as is the case for
chemical-based therapies.
Biosimilars are close approximations
of original medicines, and their
regulation requires a new framework
separate from that for traditional
generics. Europe is ahead of the
U.S. in developing legislation for
handling biogeneric approvals.
The new competition will force
biotech companies to change their
approaches to product development,
marketing and regulatory submissions
as pressure from generics
manufacturers will be high. Leading
Indian generics firms such as Dr.
Reddy's Laboratories, Wockhardt,
Biocon and Panacea Biotech are
already preparing to take advantage
of the opportunity.
Commodity Chemical Prices Rising in
Asia
Methanol supplies are tight in Asia
following a fire on four barges at
the Yangtze River transshipment hub.
The key port remained closed for
some time. Prices for Methanol are
highest in China as demand remains
strong. Global shortages due to both
planned and unplanned outages have
resulted in price hikes around the
world. Asian prices are up as much
as 20 percent, but are still lower
than those in Europe and the U.S.
With high inventories of previously
importer material, Indian importers
are re-exporting Methanol to take
advantage of the large price
differential. Even so, spot material
is difficult to find.
Butadiene spot prices in Asia rose
dramatically in response to tight
supplies. Planned maintenance
shutdowns were implemented at a time
when other manufacturers were
experiencing production problems,
leading to limited availability.
Acrylonitrile (ACN) prices in China
have hit new highs in response to a
shortage of supply resulting from
unexpected plant outages and
maintenance turnarounds across the
globe. Downstream Acrylic fiber
producers in China have cut
operating rates and may shut down
operations completely in response to
the negative impact on their profit
margins.
High feedstock costs (Acetone and
Naphtha) and tight supplies are also
driving up Methyl isobutyl ketone (MIBK)
prices in Asia.
Styrene monomer (SM) prices in China
are also rising in response to
strong demand and short supplies.
Toluene prices in Asia hit a
six-week high in mid-September as a
result of high crude oil prices.
Many traders do not expect the hikes
to last because demand remains
stable to weak.
Phenol Markets Unsettled
Lack of demand from the downstream
Phenolic resins sector has led to
price declines for Phenol in China.
Prices for both domestic and
imported material have dropped and
are expected to fall further.
Meanwhile, India began collecting
anti-dumping duties on Phenol
imports from the European Union,
Singapore, and South Africa. The
government is also investigating
imports from South Korea, Taiwan and
the U.S. Domestic prices in India
rose in response to the increased
duties on imported material.
Europe Faces Tightness in Several
Intermediates
Rising prices and tighter supplies
of Monoethylene glycol (MEG) could
impact downstream Polyester and
antifreeze customers in Europe.
Availability is short due to both
planned and unplanned European
shutdowns and lack of material for
import. There is very little spot
material available, and record high
prices are expected in October.
Diethylene glycol (DEG) spot prices
are also climbing due to low
producer stocks and limit
availability of import material.
Tightness in Ethylene oxide due to
both planned and unplanned outages
is expected to lead to price hikes,
which will in turn affect the spot
markets for Butyl glycol ether (BG)
and Butyl di-butyl glycol ether (BDG).
Polyethylene terephthalate (PET)
supplies are expected to diminish in
October as a number of suppliers
implemented maintenance shutdowns.
Glycerine Market Tightening
Spot prices of Asian Glycerine
continue to climb in response to
strong demand and tight supplies.
Refined Glycerine prices have risen
more than 75 percent in five months.
Prices aren't expected to decline
unless biodiesel production resumes
in Asia, which is unlikely while
crude Palm oil raw material costs
remain extremely high. Shortages in
the U.S. and Europe have also driven
up prices in these regions. Demand
is attributed to growing use of
Glycerin instead of Propylene for
the production of glycols and
polyols. Solvay and Dow Chemical
have begun construction of new
Glycverine-to-Epichlorohydrin plants
that will also increase demand once
they come on-stream. Suppliers of
crude Glycerine are seeking the
opportunity to refine product to
meet the growing demand. Typically
crude product is not refined because
it has a high salt and residue
content.
Tight Market Remains for VAM
Availability of Vinyl acetate
monomer (VAM) continued to be tight
as all four producers - Celanese,
Dow Chemicals, DuPont and Lyondell
remained on force majeure and
despite the return to production of
Lyondell's plant and increased
supplies to contract customers from
Celanese. Dow restarted its Texas
plant on September 21, 2007 after a
maintenance turnaround and has
indicated it may be able to increase
allocation levels above the current
50 percent level in early October.
European suppliers have also
declared force majeure on VAM. BP
recently restarted production at its
UK plant. Asian markets are dealing
with record high prices after
experiencing increased of more than
30 percent since the beginning of
2007 in response to high feedstock
costs and unplanned outages. In
Taiwan, a shortage of Acetic acid
feedstock due to shipment delays
resulting from typhoons led Dairen
Chemical Corp. to cut VAM output to
20-30 percent, further tightening
supply. Downstream users are
considering cutting their own
operating rates or finding
substitutes for VAM.
Polymer Prices Declining in China
Slower demand in the face of
plentiful supply has affected
pricing for polymers in China.
Various grades of domestic low
density Polyethylene (LDPE), linear
low density Polyethylene (LLDPE) and
Polypropylene (PP) yarn and block
co-polymer will likely experience
pricing declines. High density
Polyethylene (HDPE) film and blow
molding grades, however, will remain
stable due to tighter supplies and
better demand. The market has been
hit by the recent export rebate cut,
reduced operating rates at
downstream customers due to
electricity restrictions and
rainstorms and slower demand. Recent
capacity expansions have exacerbated
the situation.
PVC Market Active
Exports of Polyvinyl chloride (PVC)
from China climbed 33 percent month
on month in August as traders rushed
to conclude business before the
export subsidy cut took effect.
Demand in India for PVC has been
driven by the government's push to
provide clean drinking water for
everyone in the country. Expansion
of India's water and sanitation
infrastructure is predicted to
consume 1.2 to 2.5 million tonnes/year
of PVC over the next three years.
The one difficulty is teaching
builders about the durability of PVC
while convincing government
officials about its safety. In the
U.S., the PVC market is expected to
grow over the long term but will be
highly volatile and experience
difficulties in the short term due
to the decline in the housing
market. Researchers continue to work
to improve PVC, and recently have
discovered that adding
montmorillonite improves its flame
resistance, stiffness and imparts
good transparency with reduced gas
permeability, which may lead to new
applications.
The Mexican legislature passed a new
corporate tax law, the 'flat-rate
business tax' or IETU, that raises
business tax rates to 16.5 percent
of earnings in 2008, 17 percent in
2009 and 17.5 percent in 2010 and
beyond. Allowable deductions will
include expenses, regional and bank
deposit taxes, fines, unpaid trade
credits and charity contributions.
The chemical industry in the country
lobbied against the tax as double
taxation on top of the federal
income tax and indicated it would
significantly erode profits. Pemex,
state oil-to-petrochemicals monopoly
Petroleos Mexicanos, already pays
taxes worth about 6 percent of
Mexico's gross domestic product,
which has restricted investment in
petrochemicals. Mexican President
Felipe Calderon Hinojosa must ratify
the measure.
The U.S. House of Representative
passed the Patent Reform Act of 2007
that will bring changes to the
patent system desired by information
technology companies and disapproved
of by the pharmaceutical and biotech
industries. The bill makes many
changes including switching the U.S.
from a 'first to invent' to 'first
to file' system, modifying the way
damages are calculated and granting
broader rulemaking authority to the
Patent and Trademark Office. Others
opposing the bill include small
inventors, labor unions and the Bush
administration.
In the 11th day of its trial, BP
reached an agreement with four
plaintiffs that brought civil suits
against the company for injuries
related to the explosion at its
Texas City plant in 2005. These
cases were the only ones to make it
to trial. The amount of the
settlement was not disclosed. BP
previously settled 1,600 other
cases. Another 1,200 lawsuits
connected to the event remain to be
settled. The company has set aside
$1.6 billion to cover the costs of
the lawsuits resulting from the
accident.
In order to focus on life sciences
and materials, DSM will sell off its
Melamine, Urea, fertilizers, energy
elastomers, specialty products and
Maleic anhydride operations, all
with sales worth about $2 billion
(Euro 1.4 billion). It is also
seeking a partner for its Citric
acid business. The company hopes to
complete the divestments by 2010 as
part of its Vision 2010 strategy.
Sigma-Aldrich Fine Chemicals
announced that it will invest
approximately $25 million to build
its first manufacturing plant in
China, a large-scale non-GMP
facility in Wuxi. The plant is
expected to start operations in the
fourth quarter of 2008. The company
then expects to double its initial
investment with expansions over the
next few years. Products will target
the pharmaceutical and electronics
markets. 
The bill renews for five years
programs to collect fees from drug
and medical device producers to fund
FDA product review programs and also
gives the agency the power to
require further safety studies by
drug makers and mandate label
warning changes when problems with
marketed drug products occur. The
FDA could also issue fines for
non-compliance with these
requirements and if companies do not
complete follow-up studies once
drugs receive approval. The agency
would itself be required to more
actively monitor drug safety of
commercial products. Clinical trial
results at some level will also be
made public.
McKinsey & Co. predicts that the
Indian pharmaceuticals market grow
from $6.3 billion in 2005 to $20
billion in 2015, at which point
India will be one of the top 10
global pharma markets. The rapid
growth is attributed to growing
disposable incomes and an expanding
middle class combined with greater
access to health care and health
insurance and an increase in chronic
diseases. Small and medium-sized
Indian pharma companies are reaping
the largest benefits and achieving
excellent market penetration.
PPG Industries announced the sale of
its fine chemicals and auto glass
businesses. ZaCh System, a
subsidiary of Zambon, has agreed to
pay $65 million (Euro 47 million)
for the fine chemicals business,
while Platinum Equity will pay $500
million (Euro 360 million) for the
glass operations. The transactions
are expected to be complete by the
end of the fourth quarter of 2007.
With these divestments, PPG has
taken the necessary steps to focus
on becoming a leading coatings and
specialty products and services
company, according CEO Charles
Bunch.
Rising prices and tighter supplies
of Monoethylene glycol (MEG) could
impact downstream Polyester and
antifreeze customers in Europe.
Availability is short due to both
planned and unplanned European
shutdowns and lack of material for
import. There is very little spot
material available, and record high
prices are expected in October.
Diethylene glycol (DEG) spot prices
are also climbing due to low
producer stocks and limit
availability of import material. 
Slower demand in the face of
plentiful supply has affected
pricing for polymers in China.
Various grades of domestic low
density Polyethylene (LDPE), linear
low density Polyethylene (LLDPE) and
Polypropylene (PP) yarn and block
co-polymer will likely experience
pricing declines. High density
Polyethylene (HDPE) film and blow
molding grades, however, will remain
stable due to tighter supplies and
better demand. The market has been
hit by the recent export rebate cut,
reduced operating rates at
downstream customers due to
electricity restrictions and
rainstorms and slower demand. Recent
capacity expansions have exacerbated
the situation.
