February 2009



In this week’s business round up, we cover more woe for the petrochemicals industry as BASF posts its first quarterly loss in seven years and Nova gets bought up, while the pharma industry is watching the Roche – Genentech merger talk heat up.

INDUSTRY

Ipic makes a bang with Nova buy-out

Abu Dhabi-owned energy company Ipic (International Petroleum Investment Company) has offered to buy Canadian troubled petrochemicals company Nova in a deal worth over $2.3 billion (£1.6 billion) – including the assumption of debt. Ipic has offered to pay $6 per share – a 348 per cent premium over the 20 February 2009 closing price of the shares on the New York Stock Exchange. While the company’s board of directors has said that accepting the deal is in the best interests of both the company and its shareholders, many shareholders will be upset as the company’s stock price has plummeted 95 per cent since September 2008.

Nova was caught off guard by the severity of the downturn, and saw sales tumble 36 per cent as demand for plastic resins such as polyethylene and polystyrene fell – which caused prices to plummet. This led to the company making a fourth quarter loss of $214 million, triggering a fall in the company’s credit rating and concern among investors that the company would be unable to gain the financing it needed to see it through the downturn – especially as it was already in a sizable amount of debt.

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BASF to close plants and cut 1500 jobs as it slides to Q4 loss

German chemicals manufacturer BASF slumped to its first quarterly loss in seven years during the last three months of 2008, and has decided to accelerate its efficiency and restructuring programme that will see it close less profitable plants and also sites throughout the BASF Group.

Coatings sites in the United States, Asia and Europe, and plastics precursor plants in Asia are to be axed – leading to at least 1500 jobs being cut in 2009.

Despite making a loss of €313 million (£279 million) in the fourth quarter of 2008, the company still saw full-year sales rise by 8 per cent to €62.3 billion compared to 2007. Despite operating profits for the year falling 10 per cent to €6.9 billion, the company still decided to give shareholders a dividend of €1.95 per share- a similar amount to last year. The company is predicting that sales and profits will further fall during 2009, as demand for plastics and chemicals will remain weak due to the recession.

Meanwhile, the European Commission has said it has extended its review of BASF’s bid to buy its Swiss counterpart Ciba from 26 February to 12 March to consider commitments aimed at remedying anti-competitive concerns.

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AkzoNobel restructuring to be deeper and faster

Dutch chemical company AkzoNobel has posted a full year loss of €1.1 billion, despite revenues increasing 1 per cent to €15.4 billion. Price rises failed to make up for falling demand in the fourth quarter and the company expects 2009 to be equally challenging. To mitigate the effects of the global downturn, the company is planning more cost cutting measures – particularly in its European Decorative Paints division.

Dow holds fire on Kuwaiti lawsuit

Dow Chemical has entered into arbitration proceedings with the state-owned Kuwaiti Petroleum Company (KPC) to try to settle its dispute with the company amicably after KPC pulled out of a $17.4 billion joint venture deal at the turn of the year. This failure to close the KPC deal has put Dow’s purchase of Rohm & Haas into doubt and those two firms are now embroiled in a court case as Rohm & Haas try to ensure Dow sticks to the merger agreement.

PHARMACEUTICALS

Roche raises $30 billion war chest

Swiss pharmaceutical firm Roche is a step closer to buying the 44 per cent of Genentech that it doesn’t already own, after selling more than $30 billion of bonds in a week. Rather than turn to the banking sector like Pfizer did for its Wyeth buyout, Roche has gone directly to investors to sell bonds – essentially ‘I owe yous’ that pay interest at a stipulated rate and have to be repaid at an agreed time. These are often seen by investors as safe bets, as famous companies with good finances are unlikely to go bankrupt and default on them – and in the current uncertain economic climate, investors have been keen to snap them up.

However, Genentech continues to rebuff Roche’s advances, and advised its shareholders to do the same, describing the Swiss firm’s latest offer as ‘inadequate’.

Novartis pulls vaccines after contamination scare

Swiss pharma firm Novartis has recalled 2 batches, or 17000 shots, of its Menjugate meningitis C vaccines due to fears they could be contaminated with Staphylococcus aureus. The contaminated samples were among a small number being used to study transportation of the vaccine by air – Novartis suggest these few samples could have become contaminated after rupturing in-flight, but the company has taken the precaution of fully recalling both batches.

‘Further investigations into the cause of the failure are under way by the company. There is currently no evidence to show that there is any risk to children,’ said a spokesperson for the UK’s Medicines and Healthcare products Regulatory Agency (MHRA).

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Merck fights generic competition

Merck & Co. has told a US court of the ‘tortured path’ the company walked to develop its $4 billion a year asthma drug Singulair, in an effort to prevent Israeli generics giant Teva from being able to introduce a generic version of the drug. The drug accounted for 18 per cent of the company’s revenues last year and it is keen to ensure its patent protection remains in place until 2012.

King feels the pain after Alpharma buy

US-based pharma firm King Pharmaceuticals has recorded a $333 million loss for 2008 after incurring a $590 million charge in the fourth quarter related to its $1.3 billion acquisition of US pain drug developer Alpharma. Sales for the year slipped 26 per cent to $1.57 billion as generic competitors for its blood-pressure drug Altace (ramipril) entered the market.

‘2008 was a transformational year for King Pharmaceuticals and we are now a stronger, more efficient and competitive company, with an enhanced ability to deliver superior value to our stockholders,’ said King’s chief executive, Brian Markison.

‘Our acquisition of Alpharma was particularly significant, as it further diversifies the company, while strengthening our portfolio and development pipeline of pain management products, and increases our capabilities and expertise in this important market.’

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Paracelsus, alchemy and the birth of medicine

Paracelsus

On 28 February, Shifting Sands Theatre Company begin a two-month national tour of The Devil’s Doctor, a play based on the life of the sixteenth-century Swiss alchemist and physician Paracelsus.
 
Paracelsus is one of the most controversial figures in the history of science and medicine, who has divided opinion ever since he wandered throughout Europe as a travelling doctor. Was he a champion of scientific rationalism who overturned the dogmatic, useless practices that doctors had used since antiquity? Or a charlatan who peddled snake-oil cures while chasing the alchemists’ futile dream of making gold from dross?
 
The Devil’s Doctor asks the audience to make up its own mind as it offers a glimpse of the riotous life of this mercurial Renaissance man, weaving his fractious, meandering and decidedly tipsy path through the social, intellectual and religious upheavals of his time. From the Arctic wastes to the steamy Nile, as an army surgeon, mystic, and religious heretic, Paracelsus cheats death, works miracle cures, quarrels with his conservative rivals, and attracts legends galore. One of the prototypes of Goethe’s Faust and a hero to Mary Shelley’s Victor Frankenstein, Paracelsus claimed that alchemy held the key to life, the universe, and the soul of humanity.
 
Shifting Sands tell the story of Paracelsus using the distinctive blend of physical and visual theatre, comedy and pathos that they brought previously to their own retelling of the Faust legend and to Dickens’ Great Expectations. A rich blend of words and images, sound and chemical magic, The Devil’s Doctor captures the contradictory essence of a most extraordinary man.
 
The play has been devised from a mixture of improvisation and text, developed in collaboration with Paracelsus’s most recent biographer, the science writer Philip Ball.
 
Funded by the Wellcome Trust.
 
For further information: www.shiftingsands.co.uk. Tel. 01629 55795 

Tour schedule

 

Feb 28th Matlock Bath Youth Centre, Derbyshire. 8pm. 01629 55795

 

March 3rd Arena Theatre Wolverhampton. 01902 321321

March 5th Rose Theatre, Edge Hill University, Ormskirk, Lancs. 01695 584480

March 6th Glasshouse College, Stourbridge. 7.30pm. 01384 399430

 

March 10th Norden Farm Arts Centre, Maidenhead. 7.30pm. 01628 788997

March 11th Bradon Forest School, Swindon. 7.30pm. 01793 770570

March 12, Hamsterley Vilage Hall, Rural touring Cumbria. 7.30pm. 01388 488323

March 13th Kirkoswald Village Hall, Rural touring Cumbria. 7.30pm. 01768 898187

 

March 18th Riverhead Theatre, Louth, Lincs. 7.30pm. 01507 600350

March 19th Great Budworth Village Hall, Cheshire. 7.30pm. 01606 891019

March 20th Gawsworth Village Hall, Cheshire. 7.30pm. 01260 223352

March 21st Square Chapel Arts Centre, Halifax. 7.30pm. 01442 349422

 

March 23rd Highfields School Matlock. Two shows, morning & afternoon.

March 24th Drill Hall, Lincoln. 7.30pm. 01502 873894

 

March 31st Dana Centre, Science Museum, London. 7pm

April 1st South Hill Park Arts Centre, Bracknell. 8pm. 01344 416241

 

April 17th Borough Theatre, Abergavenny. 7.30pm. 01873 850805

 

April 22nd South Street Arts Centre, Reading.

April 23rd South Street Arts Centre, Reading.

April 24th Christ’s Hospital College, Horsham.

 

May 2nd Redbridge Drama Centre. 8pm. 0208 504 5451

May 3rd Darwin Suite, Assembly Rooms, Derby.

 

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Today saw the long awaited launch of NASA’s Orbiting Carbon Observatory – designed to study human and natural sources carbon dioxide from space. Taking off just before 10 am (GMT) today from California’s Vandenberg air force base – the rocket failed to reach orbit and crash landed into the ocean near Antarctica.

Orbital Sciences Taurus launches OCO Feb. 24th , 2009

During a press conference just three hours later John Brunschwyler, programme manager for the rocket, said that ‘our whole team are disappointed in the events of this morning.’ Chuck Dovale, NASA launch director, also acknowledged that this is ‘a huge disappointment for the science community, after the anticipation of the ground breaking spacecraft to measure what is being discussed in every newspaper.’

Dovale said that ‘preliminary indications are that the fairing on the launch vehicle failed to separate’. The fairing is a clamshell structure that encapsulates the satellite as it travels through the atmosphere, and needs to separate for the spacecraft to reach sufficient speed to reach orbit. ‘The fairing has considerable weight relative to the vehicle that is flying and when is separates off you get a jump in acceleration. We did not have that jump in acceleration, and as a direct result of carrying that extra weight we could not make orbit,’ explained Brunschwyler.

Doyle confirmed that ‘A crash investigation board is being convened to determine the cause of the launch failure.’  ‘Over the next days, weeks, and months, we are going to evaluate how to move forward as rapidly as possible to advance earth systems science,’ added Michael Freilch, director NASA earth science division.

And I for one certainly hope progress is swift, with the mission offering to help us understand the processes that regulate atmospheric carbon dioxide and its role in Earth’s climate and carbon cycle. It will (once successful) map geographic distributions of carbon dioxide sources and sinks (the places where carbon dioxide is stored), and will also study changes over time.

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In this week’s edition of Chemistry World’s business round-up we cover GSK’s call for pharma to open up  patents for neglected tropical diseases, and mixed results from the chemical and laboratory industries.

PHARMACEUTICAL

GSK leads calls for open patent access

Andrew Witty, chief executive of UK pharma giant GlaxoSmithKline (GSK), has said the company will share its patent data with other drug companies and research organisations, in the hope of speeding the development of medicines for neglected tropical diseases such as malaria and tuberculosis. Witty challenged rival drugmakers to follow GSK’s lead. He also said the firm will slash the prices of all its medicines in the poorest countries, give back profits to be spent on hospitals and clinics.

Genzyme grows

US biopharmaceutical firm Genzyme saw revenues increase 21 per cent in 2008 to $4.6 billion (£3.2 billion), driven by sales of its Pompe biologic drug Movozyme (alglucosidase alfa). During the year the company said it generated around $1.5 billion in cash, which it was used to eliminate substantially all of the company’s debt.

The company is also waiting for two key regulatory approvals that will significantly increase its ability to manufacture Movozyme on a 4000l and 2000l scale. The company is expecting imminent approval by the US Food and Drug Administration (FDA) for its 2000l bioreactor – although it will have to change the name of the drug produced this way to Lumizyme, because the FDA believes the glycosylation of the protein is substantially different from the original version made on a 160l scale.

Roche a step closer to Genentech buyout

Swiss pharmaceutical giant Roche has got a step closer to buying the 44 per cent of biopharmaceutical firm Genentech that it doesn’t already own by selling a record $16 billion of debt to investors hungry for high quality bonds. Once it raises the funds, Roche will still have to convince Genentech shareholders to part with the $42 billion of shares they own.

Cymbalta and fries? Eli Lilly looks for fast food fix

US pharma firm Eli Lilly has elected Ralph Alvarez, the president and chief operating officer of McDonald’s, to its board of directors. Alvarez, who has worked in the fast food industry for over 30 years, will serve on the finance committee and public policy and compliance committee.

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Sandoz gets biosimilar approval

Novartis’ generics unit, Sandoz, has gained EU approval for its biosimilar version of Amgen’s neutropenia treatment, Neupogen. Sandoz’ version, Fligrastim, has been approved for the same range of haematological conditions as Neupogen, which are characterised by a deficiency of white blood cells often associated with chemotherapy, bone marrow transplants or advanced HIV infection.

Curagen considers its options

US biopharmaceutical firm CuraGen has joined the list of smaller pharma firms considering their ‘strategic options’. In CuraGen’s case this could involve selling or licensing its lead breast cancer drug candidate CR011, acquiring assets or business lines, or selling the company.

Neuropharm share price melts

UK-based speciality pharmaceutical firm Neuropharm has seen its share price plummet over 80 per cent after results of a critical Phase III trial showed that its melt-on-the-tongue Prozac formulation was no more effective than a placebo. The company’s chief executive, Robert Mansfield, said the results were ‘unexpected and disappointing’.

INDUSTRY

Mixed results for chemical companies

Despite the recession, Dutch speciality chemicals maker DSM celebrated the twentieth anniversary of its listing on the Euronext Amsterdam stock exchange by recording record results for the year, with sales rising 6 per cent to €9.29 billion (£8.23 billion) and operating profits increasing 10 per cent to €0.9 billion.

The year would have been even better for the company had the economic downturn not caused its fourth quarter sales to fall 6 per cent to €2.09 billion, and its operating profits to plummet 35 per cent to €123 million – largely caused by plummeting sales form its Polymer Intermediates and Performance Materials divisions.

Meanwhile, Total‘s chemicals business has seen a 113 per cent increase in fourth quarter operating profits, which reached €254 million, despite sales for the quarter falling 18 per cent to €4 billion compared to the same period last year. According to the company, while the fourth quarter of 2008 the economic slowdown had an effect on its Base chemical division, margins remained ‘satisfactory’ – unlike in the fourth quarter of 2007. Results from its speciality chemicals division were not so positive with sales falling 11 per cent.

For the full year, Total saw operating profits fall 24 per cent to €873 million despite sales growing 2 per cent to €20.1 billion.

Swiss speciality chemical company Clariant improved its operating margin to 6.6 per cent, despite sales remaining essentially flat at CHF 8.1 billion (£4.8 billion). However, due to ‘exceptional’ charges, the company’s net loss increased to CHF 37 million.

‘Our company achieved an improved operating margin and a solid cash flow from operations in 2008 against the backdrop of a steep decline in demand in the last quarter… [although] we need to accelerate our restructuring efforts in order to catch up with our competitors,’ said Clariant’s chief executive Hariolf Kottmann.

Lyondell aims to exit bankruptcy by year end

Lyondell Chemical, the US-subsidiary of LyondellBasell, has said it aims to come out of bankruptcy by the end of the year. It has also been granted an extension of the restraining order that prevents creditors claiming on the European parent company, although creditors are challenging this injunction.

BP and Verenium venture forth for next-gen bioethanol

UK oil giant BP and cellulosic ethanol expert Verenium have formed a $45 million 50:50 joint venture to develop and commercialise cellulosic ethanol from non-food feedstocks. The venture builds on the collaboration between the two companies that was announced in August 2008 and aims to develop one of the first commercial-scale cellulosic ethanol facilities in the US.

LABORATORY

More woe for instrument makers

As companies cut back their spending plans, many analytical instrument makers have started to feel to pinch. Agilent has said it is cutting 600 jobs, around 3 per cent of its workforce, after seeing sales fall 20 per cent to $1.1 billion in the three months ended January 31 2009. The job cuts are in addition to the 800 job losses it announced in December 2008. While sales from its bioanalytical measurement unit fell nearly 2 per cent to $532 million, revenues from the unit increased 16 per cent to reach $101 million.

However, its electronic measurement and semiconductor and board test units didn’t fare so well – indicating that pharmaceutical and academic life science research hasn’t been hit as badly as the electronics sector.

Meanwhile, Life Technologies has recorded a fourth quarter net loss of $106.9 million due to charges relating to the merger of Invitrogen and Applied Biosystems that formed the company. The merged firm brought in revenues of $540 million in the three month period ended December 31, 2008, compared to revenues of $336 million for Invitrogen alone in the same period in 2007.

Biotage to enter peptide synthesis biz

Swedish instrument maker Biotage has joined forces with German robotic synthesiser experts MultiSynTech in a bid to enter the peptide synthesis business. The agreement grants Biotage distribution rights on all current MultiSynTech peptide synthesis systems and initiates a joint project to develop and market a new microwave-aided peptide synthesis system.

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New research has smashed the current trend of thinking that eating fried eggs is bad for your heart. So does this signal a revival of the fried breakfast at the weekend…………I for one certainly hope so!

In recent years, egg consumption has declined due to the perception that they increase levels of cholesterol in our bodies, and therefore our risk of heart disease. Recent studies have found that eating eggs may actually decrease the risk of heart disease by helping to reduce blood pressure, and even more ironically Canadian researchers have now found that fried eggs are more effective than boiled ones.

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The team led by Jianping Wu at the University of Alberta, studied the effects of different cooking methods – boiled and fried – on an egg’s ability to produce angiotensin converting enzyme (ACE) inhibitory peptides during digestion. Recently it has been reported that these peptides derived from egg proteins can significantly reduce blood pressure in hypertensive humans. And Wu wanted to investigate how the cooking method effects the production of these ‘good’ peptides.

So they put both egg types through a model system that simulated human digestion, and characterised the ACE inhibitory peptides in the digested egg samples – finding that fried eggs had the highest ACE inhibitory activity.

The researchers say that studies will need to be conducted in humans before they can confirm that fried eggs do actually lower blood pressure…………..any volunteers!

K Majumder and J Wu, J. Agric. Food Chem. 2009, 57, 471

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This week’s Chemistry in its element podcast is now available online. In this episode UCL’s Andrea Sella tells us about talks about licking the M & M element gallium – something we would not recommend you try at home!

 

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In this week’s edition of Chemistry World’s business round-up we cover more accusations of anti-competitive behaviour by the pharma industry, job cuts at generic drug giant Teva and record financial results for agrochemical company Syngenta.

PHARMACEUTICAL

The Swiss Competition Commission has charged Pfizer, Bayer and Eli Lilly with anticompetitive behaviour after an inquiry launched in 2006 found the firms ahd been working together to inflate the price of their male impotence drugs (Viagra, Levitra and Cialis, respectively). The commission said the firms had made ‘inadmissible vertical competition agreements’ and that penalties would be considered after the firms had had chance to respond to the claims.

Merck follows up on biologics promise

US-based Merck & Co. is set to pay Insemed $130 million (£90 million) to buy its portfolio of ‘follow-on’ biologics (known as biosimilars in Europe) as well as the smaller company’s manufacturing plant. The deal will see Merck gain INS-19 – an experimental biologic that will soon be entering Phase III trials to assess its ability to prevent infections in cancer patients receiving chemotherapy, as well as a PEGylated version, currently in Phase I trials, designed to allow for less frequent dosing.

Meanwhile, Spain’s health ministry has ordered hospitals and chemists to halt the use of a batch of Merck’s cervical cancer vaccine Gardasil, after two girls became ill after receiving it. The use of other batches of the vaccine will not be stopped, but the news is not good for the firm which has seen GSK’s rival Cervarix shot chosen in about 80 per cent of recent deals.

Teva sheds ‘duplicates’

Israeli generic drugs giant, Teva, has announced plans to lay off 1100 workers as it looks to remove corporate duplicates and increase efficiency. 790 Croatian workers at its Pliva unit are set to lose their jobs as the firm attempts to boost the unit’s profitability in line with the company average.

GSK buys rights to HIV drug

GlaxoSmithKline (GSK) will pay US-firm Idenix up to $450 million to gain access to its non-nucleoside reverse transcriptase inhibitor (NNRTI) HIV drug candidate IDX899. Following the pattern of many of GSK’s recent deals, the initial payment is only small, in this case some $34 million – half in cash and half as a stock purchase in the firm.

If IDX899 successfully navigates its way from Phase II trials onto the market, it will join GSK’s stable of HIV drugs, which includes Epzicom, Combivir and Trivir and had combined sales of $1.6 billion in 2008.

INDUSTRY

Dow cuts dividend for first time since 1912

US chemical giant Dow has cut its dividend for the first time in 97 years as it looks for a way to fund its takeover of Rohm and Haas amidst the financial meltdown. As reported in Chemistry World, the Rohm and Haas purchase was left hanging in the balance after the Kuwait Petroleum Company pulled out of the K-Dow joint venture deal and left Dow looking for ways to raise the $9.5 billion it was set to gain from the deal.

DuPont hails R&D pipeline

DuPont‘s senior vice president and chief science and technology officer Uma Chowdhry has hailed the strength of the company’s R&D department after products launched in the last five years accounted for 35 per cent of the company’s 2008 revenues, or some $10 billion. Chowdhry was keen to stress the number of patents filed by the firm each year had more than doubled since 2001 – with 495 patents being granted last year and 1900 new applications made.

chowdhry

Lyondell Bassell’s creditors get restraining order

US Bankruptcy courts have filed a temporary restraining order against the creditors of the Lyondell Chemical Company to prevent them from seeking to regain money from the company’s European parent company LyondellBassell. The company put its US business units into bankruptcy protection at the start of the year, after the recession caused sales to plummet so far that the company could not maintain its loan repayments.

AGROCHEMICALS

Syngenta records strong sales growth

While the majority of industries are having to tighten their belts to weather the economic storm, growth in the agrochemicals industry seems to be continuing unabated. Syngenta’s sales increased 26 per cent in 2008 to $11.6 billion, while net income increased 25 per cent to $1.38 billion. ‘2008 was an extraordinary year for agriculture in which acreage expanded and technology adoption accelerated. Growers worldwide increased usage intensity for crop protection and planted higher value seeds, resulting in excellent crop yields globally,’ said Syngenta’s chief executive, Mike Mack.

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Women of Finland and Sweden are rejoicing as the first premature ejaculation (PE) drug that can be taken as a tablet has been approved for use in men aged between 18 and 64. The drug, Johnson & Johnson’s Priligy, dapoxetine, was rejected by US regulators three years ago, but J&J are confident that it will gain clearance to market the drug in five more European countries.

According to J&J, surveys suggest that PE affects anywhere between 4 and 30 per cent of men – with the wild variation being ascribed to the reluctance of men to admit to the condition.

The pills need to be taken a few hours before intercourse and and work by neutralising the neurotransmitter serotonin. Whether the drug will be a commercial success is uncertain as antidepressants that target the same neurochemical pathways, such as Eli Lilly’s Prozac, may prove to be as effective. However, serotonin targeting drugs have been the subject of thousands of lawsuits that claim the drugs increase the risk of suicide.

J&J conducted five clinical trials involving some 6,000 men and found no evidence of increased suicidal thoughts – perhaps because the drug is only taken ‘as needed’ and not on a regular basis.

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This week’s Chemistry in its element podcast is now available online. In this episode UCL’s Andrea Sella tells us about didymium, the twin element containing praseodymium and neodymium, that is used in glass blower’s safety glasses due to its ability to filter out the yellow light emitted by the sodium in glass.

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In this week’s edition of Chemistry World’s business round-up we cover more of the general malaise sweeping the chemical and pharmaceutical industries, with job cuts at GSK and Sumitomo; the ongoing Dow – Rohm & Haas saga; and instrument maker Waters buying Thar.

PHARMACEUTICAL

US senators move to stop generic drug delays

2 senior US senators, Herb Kohl and Chuck Grassley, have introduced a bill that, if passed, would stop pharmaceutical companies paying competitors to keep their cheaper generic drugs off the market.

Senator Herb Kohl

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senator Chuck Grassley

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‘It’s time to stop these drug company pay-for-delay deals that only serve the profits of the companies involved and deny consumers access to affordable generic drugs,’ said Senator Herb Kohl, a Wisconsin Democrat, who unveiled the legislation along with Senator Chuck Grassley, an Iowa Republican.

On 2 February the US Federal Trade Commision accused Brussels-based Solvay Pharmaceuticals of conspiring with three generic drug makers to illegally keep cheaper generic versions of its testosterone-replacement therapy AndroGel off the market.

Last November, Chemistry World reported that the EU competition commission believed that such delaying tactics cost EU taxpayers €3 billion between 2000 and 2007.

GSK to cut costs and jobs as generic losses near

The UK’s largest drug maker, GSK, has said it is increasing its cost-cutting plans from £0.7 billion to £1.7 billion – but would not be drawn on the number of job cuts the plans would entail. Nevertheless, analysts are expecting thousands of positions to be cut – with some newspapers reporting the toll to be as high as 10,000. GSK’s last restructuring plan, aimed at cutting £700 million from its cost structure, saw around 10,000 employees lose their jobs.

The company’s revenues for the year rose 6 per cent to £24.3 billion – flattered somewhat by the weakness in the British pound. However, operating profits fell 6 per cent to £7.1 billion and restructuring charges of £1.1 billion and legal charges dented an otherwise impressive set of results.

Andrew Witty, GSK’s chief executive, was keen to stress that he believed the company was in a strong position. ‘GSK secured 17 per cent of FDA approvals for new NCEs [new chemical entities] and vaccines, last year. In an environment where declining R&D productivity for pharmaceutical companies is of increasing concern, I believe that this level of innovation is very promising,’ he said.

He was also keen to rule out speculation of a GSK mega-merger along the lines of the Pfizer-Wyeth deal, reiterating his view that small- to mid-sized acquisitions in emerging markets and consumer healthcare would be the most likely to add value.

Schering-Plough hits the pipeline ‘sweet spot’

Schering-Plough‘s chief executive, Fred Hassan, believes the company has hit ‘the sweet spot on product flow and exclusivity,’ after the company recorded sales (including the sales from its cholesterol joint venture with Merck) of $20.7 billion (£14.1 billion) – a 36 per cent increase in revenues compared with the previous year. The company recorded operating profits of $2 billion, compared to an operating loss of $1.2 billion during the previous year – which was mainly due to charges relating to its acquisition of Organon.

Roche’s growth slows

Due to a decline in sales of its pandemic flu drug Tamiflu, as well as the strength of the Swiss franc, Roche‘s sales decreased 1 per cent to CHF 45.6 billion (£26 billion) for the year, with operating profits dropping four per cent to CHF 13.9 billion. However, the company was keen to highlight that sales of its cancer drugs increased by 15 per cent to CHF 19.7 billion.

Swings and roundabouts for Pfizer’s cancer drugs

The UK’s National Institute for Health and Clinical Excellence (NICE) has approved Pfizer’s kidney cancer drug Sutent (sutinib) after the pharma giant reduced the cost of the drug. Sutent normally costs over £3000, but will be given to the NHS free of charge for the first six weeks of treatment, after which the NHS will pay if the drug seems to be working.

Meanwhile, the company has shuttered a late-stage trial of its pancreatic cancer drug candidate axitinib after it failed to extend patient’s survival time – although the company has said it will continue to study the drug’s ability to treat kidney cancer. This is just the latest in a string of promising drug candidates that Pfizer has failed to get onto the market – the biggest of those being the spectacular late stage failure of its cholesterol drug candidate torcetrapib.

Proctor and Gamble to exit pharmaceuticals

Consumer goods group Proctor and Gamble has hired Goldman Sachs to help identify buyers for its pharmaceuticals business unit, which has sales of around $2 billion a year. The company’s chief executive, Alan Lafley, told investors in December that the R&D expense, regulatory obstacles and competition from generics firms made pharmaceuticals less profitable than over-the-counter products.

INDUSTRY

EU carbon prices fall to record low

Falling industrial output has caused many companies to sell their surplus carbon credits, causing the price of the permits to drop to a record low of €10.8 per tonne earlier this week. With companies receiving their allocations for 2009 this month, traders are fleeing the carbon-trading market fearing that prices will fall further as demand plummets and so factory carbon emissions drop.

US polyethylene prices hiked

US polyethylene (PE) producers have increased the price of plastic for the thrid time this year – totalling 18 cents / pound during the quarter. The price rises come on the back of US producers taking more than 20 per cent of their production capacity offline.

Sumitomo to axe 2,500 jobs as recession bites

Japan’s Sumitomo Chemical is facing the prospect of recording a yearly net loss for the first time in 26 years due to the slump in demand caused by the global downturn. The company has been cutting back production to reduce its inventories but this hasn’t been enough to compensate for the projected loss of JPY 15 billion (£112 million) and is now being forced to reduce its workforce by 2,500 – 2,000 of these by the end of the month.

‘We still don’t see a recovery in demand, [and] we’ll continue reducing production to further minimise our inventories’ said Hiroshi Hirose, Sumitomo’s executive vice president.

DSM Special Products sale ‘will not be completed’

Dutch chemical company DSM has said that the sale of its DSM Special Products unit to US-based Arsenal Capital Partners will not complete, after the European Commission imposed ‘conditions’ (details of which were not disclosed) which DSM claims meant the sale was no longer feasible.

The Dow and Rohm & Haas saga continues

The will-they-won’t-they merger between US chemical giant Dow and Rohm & Haas has continued to rumble on, with Dow filing a 62 page response to Rohm & Haas’ lawsuit trying to force the company to complete the much talked about merger.

As reported in last week’s Commercial Chemist, Andrew Liveris, Dow’s CEO, said the deal was ‘untenable at this time’ due to ‘unacceptable uncertainties on the funding and economics of the combined enterprise’. Dow’s problems started with the sudden onset of the recession, which was then followed by the Kuwait Petroleum Company’s last minute decision to pull out of the K-Dow joint-venture deal – a deal which would have given Dow access to $9 billion of the $15.3 billion it needs to complete the purchase of Rohm & Haas.

Since then, Rohm & Haas has announced it made a fourth quarter operating loss of $12 million and had seen sales slip 13 per cent from $2.3 billion in 2007 to $2.0 billion in 2008. The company has also responded to Dow’s letter with one of its own, defending its decision to sue Dow stating that: ‘when we embarked on this transaction, we certainly did not anticipate being a plaintiff in a massive litigation. That is certainly not the Rohm and Haas way.’

DuPont puts its Kevlar patents to the test

US chemical maker DuPont is suing South Korea’s Kolon industries, accusing it of scheming to steal trade secrets about its high-strength Kevlar aramid fibre technology. ‘We are pursuing all available legal remedies regarding this issue, including damages and injunctive relief, to prevent further misappropriation of DuPont proprietary information,’ said the company’s senior vice president Thomas Sanger.

‘The company’s previously announced $500 million investment in a new Kevlar plant in South Carolina and its expansion in Richmond, Va., reflect our confidence in this technology and business. With our current and future Kevlar offerings, we will continue to safeguard first responders and military personnel around the world.’

kevlar armour

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LABORATORY

Waters buys into a greener future

US-based analytical instrument maker Waters has bought the world’s largest supercritical fluid (SFC) chromatography manufacturer for an undisclosed amount. Thar’s SFC and extraction systems are used to separate and isolate compounds for analysis and the two companies have been collaborating since September 2007 to combine Thar’s strengths in SFC expertise and Water’s mass spectrometry expertise.

Meanwhile, the firm reported fourth quarter sales of $418 million – a 4 per cent drop in sales compared to the same period last year – due to a ‘tougher economic climate’. Despite being hampered by the global downturn in the fourth quarter, the company’s sales for the year grew 7 per cent to $1.58 billion.

Shining lights in the gloom

While the majority of laboratory and instrument suppliers have been adversely affected by the global downturn, at least two life science companies have managed to side step the recession: Thermo Fisher Scientific and Illumina.

Thermo Fisher Scientific reported record results during the fourth quarter, with revenues increasing 1 per cent to $2.65 billion and operating profits up 13 per cent to $322.5 million. For the full year, revenues reached $10.5 billion and operating profits $1.2 billion.

‘We are pleased to report very solid financial results for both the fourth quarter and the full year in spite of the economic headwinds that continue to put pressure on capital spending in some of our end markets,’ said Marijn Dekkers, Thermo Fisher Scientific’s chief executive.

‘Our performance is largely the result of our favorable product mix, with two-thirds of our revenues coming from recurring sales of consumables and services that tend to hold up better in an uncertain environment.’

Illumina‘s results were perhaps even more impressive, with fourth quarter revenues increasing 43 per cent to $160 million and operating profits reaching $36 million – a turnaround from the loss of $32 million the company made during the fourth quarter last year. For the year, Illumina’s revenues increased 63 per cent to $573 million with operating profits reaching $80 million – compared to a loss of $301 million in 2007.

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