Laporte integration moving ahead quickly at Degussa
With the acquisition of the British specialty chemicals company Laporte plc., Degussa AG has advanced to the position of the second-largest fine chemicals manufacturer in the world. The sales revenues of Degussa's Fine Chemicals Business Unit increased from Euro 785 million to approximately Euro 1 billion after the integration of Laporte`s Fine Chemicals unit. The number of employees rose to 4,000. The business unit now maintains a total of 14 production sites in Europe, one in Asia and three in North America. Laporte is contributing six production sites located in Seal Sands and Knottingley, England; Edmonton, Alberta, Canada; Jayhawk, Kansas, USA; San Celoni, Spain; and Heidelberg, Germany.
Degussa took over Laporte in April of 2001 after shareholders approved a cash settlement offer. "The fine chemicals activities of Laporte are an ideal supplement to the current Degussa business in this field," said Dr. Peter Nagler, head of the Fine Chemicals Business Unit. This applies both to the available technologies, where there is very little overlap, and to the customer portfolio. The added value of Laporte in the "new" Fine Chemicals Business Unit is reflected in the significantly improved presence in the key North American market, in the even broader technological portfolio, and the additional market expertise, particularly in the high-growth area of custom manufacturing.
A boost for custom manufacturing
As an integrated producer of fine chemicals, the Fine Chemicals Business Unit combines product lines - the production and marketing of standard intermediates and active ingredients - with custom manufacturing. The latter includes the development of customized syntheses especially of new active ingredients for the pharmaceutical and agricultural industry, as well as their transfer to full-scale production. The addition of Laporte fortifies especially the high-growth area of custom manufacturing, in which the British specialty chemicals company had successfully established itself.
Custom manufacturing has gained greatly in importance, since pharmaceutical and agricultural companies increasingly source out the process development and production of intermediates and active ingredients to fine chemicals producers. In addition, as the main buyer, the pharmaceutical industry has shown above-average growth rates of up to 10 percent a year. With a share of more than 50 percent this is the largest segment in the global fine chemicals market, which Degussa estimates at Euro 40 billion.
At the end of the past year, Degussa had strengthened its activities in the area of custom manufacturing by forging a strategic alliance with MediChem Life Sciences Inc., Chicago, IL, USA. This alliance provides a bridge between the earliest phase of drug discovery and scale up for pharmaceutical customers.
The Laporte subsidiary Raylo, Edmonton, Canada, is an ideal supplement to this cooperation with its production capacities in the multi-kilogram range, including high potency actives. While MediChem concentrates on finding new guiding structures for active ingredients (genomic, proteomics) and laboratory-scale synthesis, Raylo offers synthesis at a multi-kilogram scale, and Degussa has the expertise for scaling up and owns production capacities in multiple metric tons. In this context, the strictest quality requirements, such as the cGMP regulations, are observed. "Our customers and international auditing authorities help us to continue developing our high standards, including safety and environmental issues," Dr. Nagler added.
Stronger presence in North America
"Together with Laporte, Degussa is the ideal partner for 'one-stop shopping.' We offer our life sciences customers seamless service from the development of an active ingredient all the way to large-scale industrial production," said Dr. Nagler. This is particularly true for North America, the most important regional market for fine chemicals with a total market volume of more than Euro 20 billion. In addition to production in Mobile, Alabama, and R&D in New Jersey, Degussa now also owns cGMP-certified production capacities and a significantly increased research base in the US and Canada.
Excellent technological platform
Together with Laporte, the Fine Chemicals Business Unit has broadened its technological portfolio further and improved its technological leadership position. New additions include oxidation, reduction and low-temperature technologies as well as thiophosgenation. This additional expertise will benefit the new and continuing development of product families in the product line business as well as process development in custom manufacturing.
Outlook: Fine Chemicals on course for further growth
The primary tasks, according to Dr. Nagler, are the quick conclusion of the integration process and the joint development of a strategy that is optimally suited for the merged business. "Due to our excellent market position we are enthusiastic about shaping our future together," said Dr. Clive T. Rankin, who took over as head of the Custom Manufacturing department on April 1. Before that, he had been divisional chairman for fine chemicals activities at Laporte and had been responsible for business development.
The cornerstones for the common strategy will be further expansion in North America and especially in Asia, in accordance with the overall strategy of the Degussa Group. In the mid-term, Degussa plans to increase its revenues in the high-growth Asia-Pacific region from the current 12 percent to approximately 25 percent.
The Fine Chemicals Business Unit has very successfully promoted its expansion in North America and Asia during the past months. Examples include the cooperation with the US-company MediChem and the joint venture agreed upon in April 2001 with the Southern Chinese company Nanning Only Time Pharmaceuticals Co. Ltd. in Nanning, China, for the production of pharmaceutical amino acids, such as for infusion solutions.
In future, the main topics of research and development will include biocatalysis as well as chiral substances. Since more than three quarters of all new developments for the pharmaceutical industry are chiral compounds, this market has experienced above-average growth rates. Degussa has significantly expanded its research activities in these areas through the Group's own Project House Biotechnology as well as through the acquisition of Chiral Technology from the Aventis Research & Technology GmbH & Co. KG, Frankfurt as of June 1, 2001.
Other research projects aimed at the more efficient production of fine chemicals include the use of microreactors. According to Dr. Nagler, one of the strengths of research and development will continue to be the cooperation with international universities and research institutes, such as the California Institute of Technology (CalTech). "A top position in fine chemicals can be achieved and defended only if we integrate our own high-quality research in a network of both university partners and technology companies."
Source: Degussa
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