This week’s news has been dominated by the continuing cuts to R&D budgets in the pharmaceutical industry that may lead to thousands more researchers losing their jobs. Meanwhile Shell has responded to seeing its sales slump 75 per cent to $1.2 billion (£767 million) by slashing another 1000 from its workforce due to the challenging outlook for the refining sector. The cuts are on top of the 5000 jobs the company shed last year.

‘Our fourth quarter 2009 results were impacted by the weak global economy,’said Peter Voser, the company’s chief executive. ‘Oil prices have increased compared to a year ago, but gas prices and refining margins have declined sharply, because of weaker demand and high industry inventory levels. We are not assuming that there will be a quick recovery, and the outlook for 2010 is uncertain.’

PHARMACEUTICAL

Roche and Baxter buoyed by swine flu sales

Swiss pharmaceutical company Roche reported 8 per cent growth for the full year relative to 2008 for both sales and operating profits. Sales rose to CHF49 billion (£29 billion) and operating profits to CHF15 billion.

A significant chunk of that can be attributed to a 435 per cent increase in sales of its swine flu antiviral Tamiflu (oseltamivir), totalling CHF3.2 billion. However, the company is forecasting significantly lower Tamiflu sales for 2010 as the swine flu pandemic abates.

Several biological treatments – now fully under Roche’s control since it completed its takeover of Genentech in March 2009 – also contributed to the strong sales performance, with cancer therapies Avastin (bevacizumab) and Herceptin (trastuzumab) contributing CHF6.2 billion (up 21 per cent) and CHF5.3 billion (up 8 per cent) respectively.

Baxter, one of the producers of H1N1 vaccines, has also reported healthy financial results for 2009, with sales increasing to $3.4 billion in the fourth quarter, up  11 per cent  compared to the same period in 2008, and operating profits for the quarter were up 4 per cent to $715 million.

For the full year, sales rose 2 per cent to $12.5 billion and operating profits climbed 11 per cent year on year to $2.7 billion.

INDUSTRY

Ineos sells fluorochem biz

Petrochemical giant Ineos, the UK’s largest private company, has sold, for an undisclosed amount, its fluorochemical business Ineos Fluor to Mexico-based PVC, chloralkali, hydrofluoric acid and fluorspar (CaF₂) producer Mexichem. The deal will bring together the world’s fifth largest maker of fluorocarbons with the world’s largest supplier of fluorspar - the mineral used as a starting material to make nearly all fluorochemicals.

According to David Price, chief executive of Ineos Fluor, the unit had been performing well, but no longer fits within the Ineos group ‘as it focuses its attention on its large scale petrochemical business’. Richard Longden, a spokesperson for the Ineos Group , told Chemistry World the decision to divest the unit was not part of the five-year plan that was agreed with the company’s creditors after it fell foul of some of the commitments on its loans.

Price told Chemistry World that the move would create a more vertically integrated company and expand Mexichem’s access to ‘added value’ goods - including the refrigerant HFC-134a, which Ineos Fluor is the world’s largest supplier of.

Braskem continues its shopping spree

With the dust still settling after the announcement that Braskem was merging with its Brazilian rival Quattor Petroquimica, the Brazilian petrochemical giant has said it is buying the US-based petrochemical business Sunoco Chemicals.

The deal is worth some $350 million and will add 950,000 tonnes of polypropylene production capacity (which amounts to 13 per cent of US capacity) to Braskem’s operations.

‘The acquisition of Sunoco Chemicals provides Braskem with a solid and competitive platform for growth in the world’s biggest market, which will complement its ongoing internationalisation strategy through important greenfield projects under development in Mexico, Venezuela and Peru,’ said Braskem’s chief executive Bernardo Gradin.

Dow back on track

Strength in emerging markets and gains from its acquisition of Rohm and Haas has helped push Dow Chemical back on track with sales for the quarter up 14 per cent to $12.4 billion compared to the same period last year. Dow’s operating profits have recovered from the $1.6 billion loss it made in the fourth quarter of 2008, with the company recording operating profits of $150 million.

Sales for the year were still 22 per cent down at $44.8 billion, compared to last year’s $57.4 billion, with operating profits of $469 million a mere 37 per cent of the $1.3 billion the company recorded in 2008. However, the company was positive that the quarterly results showed it was back on track. Andrew Liveris, Dow’s chief executive, said the company was expecting to see continuing strong demand from the emerging markets, but that ‘growth will continue to lag in the US and Europe, as high unemployment persists and questions about the sustainability of government stimulus spending remain.’

Dow Corning bounces back

Silicones expert Dow Corning has seen sales rebound 12 per cent, hitting $1.5 billion for the quarter. However, despite the upturn during the latter half of the year, the company’s full year sales of $5.1 billion were still 7 per cent down compared to the same period last year.

‘Dow Corning saw a significant recovery in its silicones business in the second half of the year, as our two-brand strategy allowed us to get the right products and solutions into the hands of our customers,’ said Donald Sheets, chief executive of Dow Corning. ‘Our polycrystalline silicon business through Hemlock Semiconductor Group had another solid year, operating at expected manufacturing rates while supplying all contracted volumes to both solar and semiconductor customers.’

LABORATORY

A mixed bag for instrument makers

While Thermo Fisher Scientific reported record revenues of $2.8 billion in the fourth quarter of 2009 (up 7 per cent on 2008), the picture for the year as a whole was significantly less rosy. Decreased demand for instruments and services resulting from the economic downturn led to an overall decline in revenues – down 4 per cent on 2008 to $246 million – and operating profit, which dropped 5 per cent to $10.1 billion.

Waters is in the same boat, posting a modest increase in sales for the final quarter (up 3 per cent on 2008 to $429 million), but overall sales for the year slipped 5 per cent to $1.5 billion. However, the company’s spending plan (including a 5 per cent drop in R&D spending to $82 million) mitigated the decrease in sales - ending up with operating profits of $390 billion, representing 1 per cent growth relative to 2008.

Douglas Berthiaume, Water’s chief executive, said that demand from pharmaceutical customers improved modestly in the fourth quarter with a rebound in sales in India and small improvements in demand from contract research organisations (CRO) and generic firms. Although sales to the company’s larger pharmaceutical customers declined modestly in the quarter.

‘Interestingly, our orders and sales in the quarter did not include meaningful activity from US governmental stimulus money. From our perspective, the funding of these programmes has been delayed and will likely influence our business by mid 2010,’ he said.

On the other hand, Life Technologies has emerged from the merger of Applied Biosystems and Invitrogen in great financial shape, with fourth quarter revenues of $874 million - up 14 per cent  compared to pro forma values for the two individual companies in 2008. The company posted a massive 30 per cent increase in fourth quarter operating profits of $225 million, despite upping its R&D spend for the quarter by 15 per cent to $91 million.

Greg Lucier, chief executive of Life Technologies, said ‘Our results demonstrate the value we have been able to bring to our shareholders by combining the best of Invitrogen and Applied Biosystems.’

However, figures for the year as a whole were impacted by merger-associated costs with operating profits dropping almost 50 per cent to $385 million.

Meanwhile, Danaher, has completed its acquisition of the AB Sciex mass spectrometry joint venture from Life Technologies and MDS. Andy Boorn, president of AB Sciex division has said that it is preparing for a major launch later this year.

He also emphasised that the footprint of the company was not about to change, and that the change in ownership meant it had more capital to invest in acquisitions and R&D.

More pores for thought

Oxford Nanopore has secured £17.4 million in new funding to develop its label-free single molecule DNA sequencing platform based on protein nanopores (see this Chemistry World article for more details), as well as related projects on protein analysis.

The cash came from a mixture of existing and new investors including the company’s marketing partner, Illumina, which has already invested £11.8 million in the company.

Phillip Broadwith and Matt Wilkinson

Well its financial reporting season again and I had thought the news that Daniel Vasella - Novartis’s chief executive and chairman of the board - had decided to relinquish part of his control of the company, with current head of pharmaceuticals Joe Jimenez  taking up the mantle of chief executive, would steal the show.

However, this news was overshadowed by AstraZeneca’s announcement that it was to cut a further 8000 jobs - 1800 of which will be from R&D positions, see Chemistry World’s full report here. (more…)

Many of the blog’s readers will no doubt have heard of the US Chemical Safety Board (CSB), which is an independent federal agency charged with investigating industrial chemical accidents. However, this week they moved into a new realm and decided to investigate a laboratory explosion at Texas Tech University in Lubbock, Texas. The explosion occurred in the university’s chemistry department on 7 January 2010, and left a graduate student severely injured.

University officials told the CSB the accident occurred during the handling of a high-energy metal compound, which suddenly detonated.

‘We see serious accidents in high school and university labs every year, including a tragic fatality a year ago at UCLA (University of California, Los Angeles), said CSB chairman John Bresland. ‘I believe it is time to begin examining these accidents to see if they can be prevented through the kind of rigorous safety management systems that we and others have advocated in industrial settings.’ (more…)

This week has seen the island of Haiti fall victim to a horrendous magnitude 7.0 earthquake. It has destroyed roads and buildings and claimed thousands of lives - the Red Cross has estimated that at least 50,000 people have lost their lives to the quake and that at least 3 million have either lost their homes or been injured.

Amgen, Abbott Laboratories and Eli Lilly are leading the efforts of pharmaceutical companies to provide cash as well as medicines. Amgen has said it will donate $2 million (£1.2 million) through its disaster relief programme, Abbott has said it will provide $1 million in initial humanitarian aid in response to the quake, while Lilly has pledged an initial cash donation of $250,000.

‘The current situation in Haiti is a profound human tragedy,’ said Robert Smith, president of the Lilly Foundation. ‘The significant number of casualties and widespread property damage require an urgent and compassionate response. We hope Lilly’s contributions will help ease some of the suffering, and aid in the recovery efforts.’

‘The recent earthquake has had a devastating impact on Haiti’s limited health care system, which was already facing significant challenges,’ said Catherine Babington, president of the Abbott Fund. ‘Building on our existing partnerships with humanitarian organisations in Haiti, we are providing funding and product donations to help address the immense and immediate health needs.’

Many other companies are donating to the efforts , including US conglomerate General Electric (GE) that has said its GE Foundation will donate $2.5 million in aid.

(more…)

Happy new year to one and all. While many have greeted the news that the swine flu (H1N1) pandemic is abating, those in the vaccine industry won’t have appreciated the news that France has decided to join Germany and the Netherlands in saying that they had ordered too many doses of vaccine against the H1N1 swine flu virus and would be cancelling orders and trying to sell surplus doses.

The French government made the decision after the European Medicines Agency (EMEA) said that most people would need only one dose, rather than two, to gain immunity. So far, the French government has used less than 10 per cent of the 94 million doses it ordered at a cost of around €869 million (£777 million) causing the French opposition party to call for an inquiry into the ‘fiasco’.

Meanwhile, the Parliamentary Assembly of the Council of Europe (PACE) is to hold an emergency debate into the ‘influence’ exerted by drugmakers on the World Health Organisations (WHO) global H1N1 flu campaign. The motion for the debate, led by Wolfgang Wodarg, chairman of the PACE health committee, states that: ‘in order to promote their patented drugs and vaccines against flu, pharmaceutical companies have influenced scientists and official agencies, responsible for public health standards, to alarm governments worldwide.’

‘They have made them squander tight health care resources for inefficient vaccine strategies and needlessly exposed millions of healthy people to the risk of unknown side-effects of insufficiently tested vaccines.’ (more…)

Well it seems that big pharma has really got into the festive season this week with a large flurry of licensing deals and purchases being announced before everybody leaves for their Christmas holidays.

PHARMACEUTICALS

Sanofi snaps up Chattem

French pharma giant Sanofi-Aventis has agreed to buy US consumer healthcare company Chattem in a $1.9 billion (£1.2 billion) cash deal to strengthen its presence outside of its core prescription medicine portfolio and buffer the company from the impending patent cliff.

The purchase will create the world’s fifth-largest consumer healthcare company measured by product revenues, pushing Sanofi from sixth to fifth.

‘The acquisition of Chattem will be a significant milestone in Sanofi-Aventis’ transformation strategy and
will provide us with the ideal platform in the US consumer healthcare market, which represents
25 per cent of the current worldwide opportunity,’ said Christopher Viehbacher, Sanofi’s chief executive.

Zan Guerry, Chattem’s chief executive, and other members of the senior leadership team at Chattem have agreed to lead Sanofi-Aventis’ US consumer health division following the close of the transaction. (more…)

This week has seen pharma’s merger mania spread even deeper into the sector, with Silence merging with Intradigm to form a leader in the RNAi field, Cubist buying Calixa to bolster its position in the antibiotic market, and GSK buying into Intercel to gain access to its patch-based vaccine technologies. Meanwhile, German conglomerate Evonik is reinventing itself as a pure-play speciality chemicals company and Dow is spinning-out its Pfenex business. (more…)

This week saw the release of UK chancellor Alistair Darling’s pre-budget report, which held a double-edged sword for science-based industries. On the one hand, Darling has cut £600 million from the higher education, science and research budget (see Chemistry World story here), but on the other hand he has created a ‘patent box’.

This means that income generated from UK patents will be subject to a lower rate of corporation tax – 10 per cent instead of the usual 21 to 28 per cent. The plan is aimed at providing an incentive for companies to maintain investment in high technology and manufacturing capability within the UK rather than moving abroad.

Andrew Witty, chief executive of GSK – the UK’s biggest pharmaceutical company – applauded the move, saying: ‘The patent box is exactly the sort of active, long-term and creative support that we need from the Government to ensure that the UK remains an attractive place for highly skilled sectors such as pharmaceuticals.’ (more…)

This week has seen the International Antimony Association (I2A) take up arms against a European Union proposal that antimony trioxide should be banned from all electrical and electronic equipment. The proposals, made  by Jill Evans, a UK Member of the European Parliament (MEP), would curtail the production of the fire retardant, which has sales of $100 million (£60.5 milllion) a year in the US.

I2A believes that despite antimony being classified as a category III carcinogen by the EU ‘there is no risk for consumers if antimony trioxide is used in consumer goods such as mobile phones or in any other electrical and electronic application.’ (more…)

This week has seen the Chinese authorities execute two people convicted of being involved in the sale of infant milk powder adulterated with melamine last year. The contaminated milk has been linked with the death of six infants and more than 300,000 cases of illness. The melamine was added to the milk to boost its apparent protein content.

According to the Shijiazhuang Municipal Intermediate People’s Court, Zhang Yujun was executed for the crime of endangering public safety by dangerous means, and Geng Jinping was put to death after being convicted of producing and selling toxic food.

The melamine scandal led the US Food and Drug Administration (FDA) to recommend that pharmaceutical products from China should be tested for melamine. (more…)