Business roundup: October 2007

UK pharma shifts manufacturing overseas  

Anglo-Swedish drug firm AstraZeneca has restated its intention to outsource drug manufacturing ’where there is a sound business case’. The statement follows the publication of an interview with David Smith, AstraZeneca’s executive vice-president of operations, in The Times on 17 September. The newspaper reported that the company would cease and fully outsource all drug manufacturing operations within the next 10 years. That claim was quickly refuted by AstraZeneca. But the firm did confirm that part of its global view was to look more seriously at outsourcing, and that it had particular interest in opportunities in India and China.  

The news is likely to be seen as ominous for UK manufacturing, coming shortly after the world’s largest pharmaceutical company, Pfizer, revealed on 11 September that it is to close its only remaining UK manufacturing plant at Sandwich in Kent - resulting in the loss of 420 jobs over the next two years. The company had already revealed in January that it expected to have just 48 manufacturing plants by 2008, down from 93 in 2003 (Chemistry World, March 2007).  

Earlier this year, AstraZeneca had announced its intention to cut 3300 manufacturing jobs worldwide (Chemistry World, September 2007). But Joan Pitt, an AstraZeneca spokeswoman, told Chemistry World  that this was not a signal that the company sought to move away from UK-based manufacturing.  

Richard Ley, a spokesman for the Association of the British Pharmaceutical Industry, acknowledged that there is increasing global competition for manufacturing. He warned that in the long term drug research might follow manufacturing out of the UK. ’A great deal of drug manufacturing is hi-tech, so it may make more sense for companies to relocate R&D to the same place in order to have scientists working alongside each other,’ Ley said.

Victoria Gill

NHS reforms successful 

The introduction of the UK National Health Service’s new research strategy, along with more funding, is helping the country to remain an attractive place for companies to carry out drug trails, the Association of the British Pharmaceutical Industry has said. The strategy, launched in January 2006, offers drug firms a single access point to the NHS’s large patient base. Before the reforms, companies had to negotiate separate contracts with every hospital trust involved in a trial. NHS research funding is also on the rise; set to increase from £659 million in 2006-7 to £850 million in 2009-10. 

Gas storage deal 

Gaz de France will invest £350 million in a 30-year deal with UK chemicals company Ineos to develop a natural gas storage facility in the salt caverns in Cheshire, UK. The 400 million cubic metre facility will be the second largest gas store in the UK, and will hold the equivalent of 12 per cent of the UKs average daily gas consumption. Ineos will create the caverns at its existing brine fields, and will use the brine it extracts to make chlorine and caustic soda. The UK’s current gas storage equates to only 4 per cent of annual consumption; by comparison, France can hold 24 per cent, and Germany 19 per cent. 

PET plant goes west 

Thai chemicals firm Indorama Polymers is to build what will be the largest polyethylene tetraphthalate (PET) plant in North America. Indorama will build the $140 million (£70 million) plant in Decatur, Alabama, US, where BP already makes terephthalic acid - a key PET ingredient. The facility will make 430 000 tonnes of the polymer, and will supply the growing US market for PET soft drink bottles and other containers.  

Pfizer drug warning 

Doctors in the US have been warned not to prescribe Viracept to pregnant women or children after Pfizer found traces of the carcinogen ethyl methanesulfonate (EMS) in the HIV drug. The detection of much higher levels of the compound prompted a recall of the drug in Europe, where it is made by Swiss firm Roche. On 20 September, the European Medicines Agency’s Committee for Medicinal Products for Human Use recommended that the suspension be lifted, following Roche’s corrective measures. 

Blackstone invests in China 

Blackstone, the world’s wealthiest private equity firm, has made its first investment in China with the agreement to buy a 20 per cent stake in chemicals maker China National BlueStar. Blackstone says it aims to help BlueStar, which makes products for electronics devices and building materials, to expand its overseas operations. The deal is expected to be the first of many for Blackstone. Rival equity firms have been investing in China for a decade.  

Supplier to China 

German chemicals firm Evonik Degussa is to build a new €250 million plant in Shanghai. The facility will make methacrylates in 100,000 tonne quantities, and is scheduled to start production in 2009. The company has also recently undergone a rebranding, to become the chemicals business arm of Evonik, a new company name created by parent firm RAG. 

Neighbours go nuclear 

French President Nicolas Sarkozy and German Chancellor Angela Merkel have clashed over French plans to privatise Areva, the world’s largest nuclear power plant builder.  

Sarkozy has asked officials to assess a merger of Areva with French engineering group Alstom to create a single, 
€40 billion (£28 billion) company. But Merkel is keen for German engineering group Siemens to maintain its 34 per cent stake in Areva subsidiary Areva Nuclear Power, which makes nuclear reactors. 

New HIV drug backed 

An FDA panel of external experts has unanimously agreed that the HIV drug Isentress should receive accelerated approval. The drug, made by the US pharmaceutical company Merck, works differently to the drugs already on the market, and will be given to patients who don’t respond to other medications. Accelerated approval is reserved for life-saving treatments. Clinical data collection continues after the drug goes on sale, and full approval is granted later. The FDA is expected to rule on Isentress by mid-October. 

Biotech in Africa 

A new biotechnology centre to tackle HIV/AIDS and other infectious diseases was opened by South African President Thabo Mbeki in Cape Town. The centre is the first African branch of the International Centre for Genetic Engineering and Biotechnology (ICGEB), which also has centres in Italy and India. The South African centre will focus on problems particularly relevant to Africa, including indigenous infectious and chronic diseases and staple crop development. The South African government will invest 40 million rand (£2.8 million) in the centre, which will be located at the University of Cape Town and eventually employ up to 100 scientists.

Sanofi settles 

French pharmaceuticals firm Sanofi-Aventis has agreed to pay $193 million (£96 million) to settle US lawsuits relating to anti-nausea drug Anzemet. Sanofi-Aventis predecessor Aventis Pharmaceuticals was accused of artificially inflating the average wholesale price for the drug between September 1997 and June 2004, leading the US government to overpay for the drug. The company has now reached a civil settlement with the US Department of Justice, but has not admitted any wrongdoing. 

Bone bonus 

Swiss drug maker Novartis will ask the US FDA and other regulatory authorities for approval to sell a version of a drug given to cancer patients with bone damage as a medicine to prevent repeat bone fractures in the elderly. A clinical trial has shown that Reclast, a version of the drug formulated to treat osteoporosis, successfully reduced the number of second fractures compared with patients given a placebo. Analysts say the drug’s annual sales could eventually approach $1 billion. 

EPA flexes clean air muscles 

The US Environmental Protection Agency (EPA) has imposed the biggest ever acid rain fine on a coal-fired power station in Clark County, Kentucky. The East Kentucky Power Cooperative, which runs the plant, agreed to pay 
$11.4 million (£5.7 million) over six years for violations of the US Clean Air Act. The settlement also requires the company to reduce emissions, including sulphur dioxide and nitrogen oxides, by approximately 400 tonnes per year. This aims to offset the estimated 20,000 tonnes released from the facility without an acid rain permit. 

Biogeneric drug approval 

Novartis has received EU approval to sell a generic version of Johnson & Johnson’s protein-based anaemia drug epoetin alfa, sold as Eprex in Europe and Procrit in the US. The EU leads the US on approving generics of drugs based on biomolecules because the US has yet to clarify its rules on licensing them. 

Silver spill 

Fujicolor Processing has been fined $200 000 (£100 000) for discharging excessive amounts of silver-based photo processing waste into a wastewater treatment plant in Terrell, Texas, US. The fine followed an internal investigation by the company which revealed that, between 1999 and 2002, employees were selectively reporting only test results that fell within permitted levels. 

Bayer avoids ban 

An FDA panel of external experts has voted overwhelmingly to keep Bayer drug Trasylol on the market. The drug, used to reduce bleeding during heart surgery, had been subject to review after concerns were raised over links with kidney failure. Panel members noted the absence of any approved alternatives to Trasylol, and recommended further safety studies. 

Epoxy expansion 

Dow Chemical’s Epoxy business is to acquire three of its competitors: UPPC of Germany, and POLY-Carb and GNS Technologies in the US. Dow has not disclosed financial details of the deal but said it would pave the way for faster growth and expansion. 

Smallpox vaccine approved

The US FDA has approved a single dose smallpox vaccine for people at a high risk of infection. While the disease has been eradicated in the wild, repositories in the US and Russia remain. The US Centres for Disease Control and Prevention contracted UK/US-based firm Acambis to develop the vaccine in light of a perceived bioterrorism risk.