Business roundup: April 2008

Declining dollar yet to bite

The chemicals industry has yet to feel the impact of the slowing US economy, and rising costs of energy and feedstocks (see Chemistry World, March 2008, p19). Some of the biggest players in the industry, including the world’s largest chemical company BASF, have now added their scores to a relatively impressive overall performance, delivering 2007 full year financial reports that were on target, and in some cases, slightly better than expected. But analysts are predicting that the weak US dollar will have an inevitable impact on the industry during 2008. 

German chemicals firm BASF reported 2007 sales of almost €58 billion (£44.5 billion), up 10 per cent on 2006, and a 5 per cent jump in annual profits to over €7.6 billion. But the world’s biggest chemical company by sales reported a drop in its fourth quarter income of over 3 per cent. The company primarily attributed this fall to over-running maintenance shutdowns, and predicts that business will ’develop positively’ in 2008. 

Bayer’s 2007 sales also remained on target, reaching €32.4 billion, an 11.8 per cent rise on 2006. CEO Werner Wenning described 2007 as the company’s ’best year ever’. The company’s net earnings also rose, to €4.7 billion. Bayer says it expects sales to grow by 5 per cent during 2008. 

Netherlands-based Akzo Nobel described fourth quarter earnings as better than expected, after a ’transformational year’ moved the company ’from a conglomerate into a focused . leader in coatings and speciality chemicals’. Revenue for 2007 was €10.2 billion, a 2 per cent rise on 2006. Akzo’s sale of its pharmaceuticals business, Organon Biosciences, to Schering-Plough last March, was followed by its completed purchase of British chemicals group ICI in January. 

Vincent Neefs, a business analyst at ABN Amro’s Antwerp office in Belgium points out that by entering emerging markets, the companies diminished their direct exposure to the problems in the US economy, but that a troubled dollar would eventually bite. ’Estimates for chemical companies’ results are more prudent for the future, given the impact of the US slowdown,’ he says. ’The biggest challenge for the industry, especially for the European players, is the currency evolution - the depreciation of the dollar [will have] negative competitive consequences.’ 
Victoria Gill

Business news in brief

Explosive agreement 

Australian fertiliser company Incitec Pivot has agreed to buy Dyno Nobel, the world’s second-largest explosives manufacturer, for Aus$3.3 billion (?1.5 billion). Both companies rely on the production of ammonia, and the two sectors are growing rapidly due to global rises in food prices and the mining boom. 

Greater gas supply

French industrial gas producer Air Liquide is to triple production of ultra-pure silane, used to manufacture semiconductors, flat panel displays and photovoltaic cells, at its Omi, Japan site. The new unit, to be operated as a joint venture with Denka group, will begin operation in 2010, and will increase silane capacity from 500 tonnes to over 2000 tonnes per year. 

Sinopec calls for VAT relief

China’s Sinopec has asked the Chinese government to waive the 17 per cent value added tax for its exports of polyolefins, as the company struggles with tightening margins. Sinopec has been squeezed harder by the increase in crude oil prices than petrochemical companies in other countries, as the Chinese government artificially fixes domestic petrol and diesel at prices below market levels. 

Sugar explosion findings

A preliminary report by the US Chemical Safety Board (CSB) into the Georgia, US, sugar refinery explosion that killed 12 people and injured dozens more has confirmed that the multiple secondary blasts that propagated through large parts of the plant were due to combustion of accumulated dust, blown into the air by the initial explosion. Interim CSB executive William Wright urged regulators to quickly enact new safety standards to prevent further such incidents. 

Unilever opens emulsions centre

The R&D arm of Anglo-Dutch food and healthcare giant Unilever has opened a centre of excellence in structured emulsions in Vlaardingen, the Netherlands. The three-site centre will employ 225 workers in Vlaardingen; Dijon, France; and Englewood Cliffs, US. A total of six R&D food centres will be opened in 2008-09. 

Playing tag

German chemical companies BASF and Evonik are among a consortium of firms who have joined a German government-backed project to develop printable radio frequency identification (RFID) tags. Developing printed electronic technology is expected to reduce the cost of the tags, which work like a radio frequency bar code, to a price level at which they could be incorporated into cheaper consumer goods. 

Lanxess rubber expansion

German speciality chemicals group Lanxess is to build a 100,000 tonne-per-year butyl rubber plant in Singapore, to be commissioned in 2011. The 400 million (?306 million) plant, the largest in the company’s history, will be directly connected to a neighbouring Shell refinery, which will supply raw materials. 

Catalysis centre opens

A research centre intended to develop new catalytic processes has been opened in Aachen, Germany. The Catalysis Center Aachen will be the home of a research collaboration between local university RWTH Aachen and chemicals giant Bayer, the latter having invested over €7 million in the project. 

Pharma sales slow

The US pharmaceutical industry’s growth in 2007 was its weakest since 1961, according to market analysts IMS Health. Last year the US prescription drug market grew by just 3.8 per cent to $286.5 billion (?140.7 billion), whereas growth had been over 8 per cent in 2006. IMS blamed the slowdown on loss of patent protection of key drugs, safety scares, and slow take-up of new drugs - but predicts an upturn in growth in 2008, as new products reach the market. 

Life after Lipitor

US pharmaceuticals giant Pfizer has outlined its strategy for coping with an expected loss of about $13 billion (?6.4 billion) of annual revenue when it loses patent protection for its cholesterol-fighting blockbuster, Lipitor, from 2010. The company has already announced significant cuts to its workforce and manufacturing base, and CEO Jeffrey Kindler has now told investors that 24 clinical and preclinical programmes will be shed. With no clear blockbuster candidate following Lipitor’s patent-loss, Pfizer will concentrate on programmes in arthritis, pain and diabetes, while a new business unit will focus exclusively on cancer medicines.

Kindler said it was unlikely that the company would use cash reserves to buy into a more promising pipeline - although in February Pfizer agreed to buy US-based Encysive Pharmaceuticals for $195 million. The deal sees Pfizer acquire the rights to Encysive’s pulmonary arterial hypertension drug Thelin, which has gained regulatory approval in the EU but has failed to win approval from the FDA. Pfizer says it plans to conduct a further Phase III trial to support US registration. 

Kindler added that there was an opportunity to become a major player in the generic biotech business, should regulators create a clear legislative pathway for so-called ’biosimilars’. 

Amgen buy inflammation/cancer drug

Biotech company Amgen will pay Kyowa Hakko Kogyo (the Tokyo-based drugs unit of Kirin Holdings) up to $520 million for rights to an experimental monoclonal antibody for inflammation and cancer. The drug has completed Phase I safety and anti-allergy trials in the UK, and is undergoing lymphoma trials. It targets the immune system protein chemokine receptor 4 (CCR4), 

Medicine makers delay generics

Reckitt Benckiser, maker of indigestion treatment Gaviscon, has been accused of delaying the market entry of generic equivalents after its medicine came off patent, therefore costing the UK National Health Service millions of pounds. Following the publication of leaked memos, the company has launched an internal investigation. 

Bayer loses patent trial

German chemical company Bayer has had the patent on its oral contraceptive, Yasmin, overturned by a New Jersey court. The ruling paves the way for US generic drug manufacturer Barr Pharmaceuticals, who launched the patent challenge, to introduce a cheaper version. It is not clear how much Bayer’s newer version of the pill, Yaz, which is protected under the same patent, is affected. 

Anti-scar drug fails second trial

Renovo’s scar-prevention drug Juvista hit a second hiccup as it failed trials to prevent scarring in breast augmentation surgery. The announcement, which saw share prices halve, follows an unsuccessful mole removal trial in December 2007. CEO Mark Ferguson says trials on other parts of the body have proved successful and he expects Phase III tests in the second half of 2008. 

Regulator backing for GSK vaccines 

The FDA external panel of vaccine experts has recommended that the regulator approve GSK’s infant rotavirus vaccine, Rotarix. US drugmaker Merck’s rival product, RotaTeq, launched in 2006, made $525 million in sales in 2007. Meanwhile, GSK’s flu vaccine Prepandrix, intended to give protection against the H5N1 ’bird-flu’ virus, has received preliminary approval from the European Medicines Agency (EMEA). GSK plans to submit the vaccine, which is designed to be used before an outbreak occurs, for FDA approval before the end of the year.

Lung cancer trials halted

Anglo-Swedish pharmaceutical firm AstraZeneca has stopped clinical trials for lung cancer drug Recetin just a week after Bayer and Onyx stopped its own lung cancer trial for Nexavar. In Recentin’s case, the Phase II trial was stopped due to toxicity problems - the drug did appear to have clinical activity. Analysts have said the toxicity issues may be overcome by changing dosage, and AZ says it remains committed to developing the drug for lung cancer. 

In contrast, Nexavar’s Phase III trial was halted because of an increased rate of death in patients taking the drug. The medicine is already approved for liver cancer, but Bayer and Onyx had been hoping to expand the drug’s approval to the larger lung cancer market. 

Nexavar, like Recetin, is a small molecule-based anti-angiogenic drug. ’The scientific community is still waiting to see if this approach will work on lung cancer,’ said Siow-Ming Lee, Cancer Research UK’s consultant medical oncologist. 

Heparin reaction 

US firm Baxter Healthcare has withdrawn its supplies of heparin - a blood thinner used to prevent clots during surgery - after at least 19 people died and hundreds more suffered an allergic-type reaction to the treatment. The FDA had failed to carry out safety inspections on the Chinese company who supplied the active ingredient, but a subsequent inspection failed to identify the cause of patients’ adverse reactions. On 7 March the FDA revealed it had found a contaminant in the recalled blood thinner, similar in structure to heparin itself. However, the exact structure, and source, of the material remains unknown. 

Blood thinner approval

Germany’s Boehringer Ingelheim is set to receive UK approval for Pradaxa, the first new blood thinner for over 50 years, in April. The oral drug could replace pre-surgery heparin injections, and eventually be used for other patients at high risk of stroke and certain heart conditions. Boehringer received a positive Committee for Medicinal Products in Human Use (CHMP) recommendation in January 2008. 

Wyeth and Pfizer lose HRT case

Jurors in an Arkansas, US, trial have found that a local woman’s breast cancer was caused by a combination of Provera (made by Pharmacia, now owned by Pfizer) and Wyeth’s Premarin. The companies have been ordered to pay $2.75 million in damages, and a $27 million punitive charge. Wyeth currently faces over 5000 such cases, and has lost four of the seven trials that have come to court so far. 

RNAi human proof of concept

Cambridge, Massachusetts-based Alnylam Pharmaceuticals says it has completed the world’s first successful human trial of an effective therapeutic based on RNA interference. During the Phase II trial, volunteers were deliberately exposed to a respiratory virus; 67 per cent of the participants given the RNAi drug contracted the virus, compared to 88 per cent of those who received a placebo. 

Novartis trial success

Novartis has stopped its Phase III clinical trial for experimental kidney cancer drug everolimus early, after an independent committee found the drug successfully prevents cancer progression. Those patients receiving placebo during the trail will now be switched to the active drug. Novartis plans to file for regulatory approval for the drug in the second half of 2008. Analysts predict the drug, one of a new generation of target cancer therapies (see Chemistry World, January 2008, p9), could become a blockbuster. 

Abbott approval

US drug firm Abbott has received FDA approval for its combination cholesterol drug Simcor. The drug raises levels of HDL - good cholesterol - but lowers levels of LDL and triglycerides. However, trials to establish whether these effects actually reduce heart attacks and death more than basic statins - which recently tripped up Merck and Schering-Plough’s Vytorin - will not be completed until 2011, Abbott says. 

FDA off-label drug use proposal

The FDA has proposed that pharmaceutical companies be allowed to provide doctors with information on prescribing their drugs for unapproved uses. Under the proposal, companies would be allowed to provide doctors with relevant peer-reviewed journal articles. Companies are currently not allowed to promote such ’off-label’ use since a law allowing certain articles to be distributed lapsed in 2006 - and can be heavily fined for doing so. 

GM seed gets out 

Dow AgroSciences has informed the US Environmental Protection Agency (EPA) and FDA that during 2006 and 2007 it sold a corn seed mix inadvertently contaminated with unregistered genetically modified corn seeds. The EPA has established that the proteins produced by the GM seed are identical to those produced by a registered seed, which already has food safety clearance. In 2005, Switzerland’s Syngenta was fined $375,000 for accidentally mislabelling and then selling an unapproved seed.

Obesity drug race

Imperial College London, UK, spin-out company Thiakis has started human trials of a novel treatment for obesity. Thiakis uses a therapeutic based on oxyntomodulin, the gut hormone that regulates feelings of hunger and satiety. As the drug works on the gut, rather than blocking cannabinoid receptors in the brain, Thiakis’s treatment is predicted to avoid the psychiatric side effects that have blighted sales of current drugs, such as Sanofi-Aventis’s Acomplia. US-based Merck’s experimental obesity drug, taranabant, which like Acomplia targets cannabinoid receptors, failed to produce the target 5 per cent weight loss during Phase III clinical trials, results reported in March revealed. Prior to Merck’s recent setback, analysts had predicted taranabant could have been worth up to $1 billion in annual sales. 

Frugal crops deal

DuPont has announced an exclusive agreement to use Arcadia Biosciences’ proprietary ’improved nitrogen use efficiency’ technology in its corn. Arcadia’s GM technology improves the efficiency with which plants absorb nitrogen, meaning less fertiliser can be used to achieve the same crop yield, saving costs and reducing fertiliser run-off. 

Syngenta DuPont licensing deal

Switzerland-based agrochemicals company Syngenta has agreed to license its MIR162 insect control corn gene sequences to DuPont. The US firm will include the trait in its GM corn strains. MIR162, introduced from Bacillus bacteria which naturally produce insecticidal proteins, can control above-ground lepidopteran pests such as corn ear worms and borers. Financial details of the deal were not disclosed. 

DOE/USDA biofuels investment

The US Departments of Energy and Agriculture (DOE and USDA) have announced they will invest $18.4 million over three years into 21 biomass-to-fuel R&D and demonstration projects. A $1 million slice went to the University of Colorado, Boulder, to develop a solar-thermal system to heat biomass directly into hydrogen and carbon monoxide syngas. The announcement follows last week’s $33.8 million investment over four years into four cellulosic biomass projects, headed by DSM, Genencor, Novozymes and Verenium. 

BP green business

BP is to spend $1.5 billion on its Alternative Energy business this year, which encompasses wind power, solar and biofuels. The company says the investment is an acceleration of its long term, $8 billion plan for the company, and that it is looking to grow the business primarily for its equity. However, BP says it has no immediate plans to sell the business. 

Novartis vaccine centre 

The not-for-profit Novartis Vaccines Institute for Global Health has opened in Siena, Italy. The Swiss firm says the institute will focus on developing vaccines for neglected diseases of the developing world. 

Inhaled insulin dropped

US-based Eli Lilly has become the latest drug maker to stop developing inhaled insulin, after Pfizer pulled Exubera in October 2007 following poor sales. Lilly says it will halt ongoing Phase III trials. Mannkind Corporation of California is the last large company still developing inhaled insulin, its experimental treatment is currently in Phase III trials. 

Progress on Merck Vioxx settlement

US firm Merck has announced that more than 93 per cent of US Vioxx claimants have accepted a share of the proposed $4.85 billion compensation settlement - enough claimants to keep the deal moving forward. Painkiller Vioxx was withdrawn in 2004 following links to heart attacks and strokes. 

Smaller chips

Computing giant IBM has announced it will partner with US speciality chemicals firm Rohm and Haas to develop technologies for 32nm and smaller circuitry. The partners will investigate chemical mechanical planarisation and ion implantation. 

Ineos Seal Sands purchase

UK chemicals group Ineos has agreed to buy the Seal Sands site on Teesside, UK, from BASF. 
Large-scale plants at the site produce acrylonitrile, adipodinitrile and hexamethylenediamine. The site will become part of Ineos’s nitriles business. 

AstraZeneca appeal

UK-based pharma firm AstraZeneca has been fined $215 million by the state of Alabama for overcharging the Medicaid programme for its drugs. AZ, which says it will appeal, was one of 73 drugmakers accused by the state in 2005 of overstating the average wholesale price of its medicines. The other trials are scheduled for this month. 

Direct detector

Kent, UK-based diagnostics company Vivacta has raised ?6 million in second-stage funding to run clinical trials to bring its blood test device to market. The company says its device will provide instant, lab-quality blood analysis within doctors’ surgeries. 

Fuel cell commercialisation

Australia’s Ceramic Fuel Cells has won an order for 50,000 of its domestic combined heat and power (CHP) units from Dutch energy company Nuon. To meet the demand, Ceramic Fuel intends to build a €12.4 million manufacturing plant in Germany, with capacity to build 160,000 units per year. 

Eli Lilly sued

Connecticut Attorney General Richard Blumenthal has sued Eli Lilly, accusing the US drugmaker of illegally marketing antipsychotic drug Zyprexa for unapproved uses, and concealing serious side-effects. Lilly says it strongly disagrees with the accusations. 

Thailand patent denial continues

Thailand’s new health minister, Chaiya Sasomsup, has announced he will continue the policy of issuing compulsory licenses - buying generic versions of key patent-protected drugs. Thai health officials say India’s Dabur Pharma will make copies of Sanofi-Aventis’s Taxotere. 

Biofuel value added

China Biodiesel has announced an increase in production of higher-value plastics feedstocks, as profit margins on biodiesel shrink due to the rising costs of feedstock and the Chinese government’s regulation of fuel prices 

FDA panel anaemia drug curbs

An FDA advisory panel has called for limits on the use of anaemia drugs - blockbusters for Johnson & Johnson and Amgen - due to safety concerns. The panel said certain cancer patients should no longer take the drugs, which could significantly shrink the market.