s standard of improved security and ac counting that would be applied to all fis sile materials worldwide/' Panofsky says. Excess weapons plutonium is only a small part of the global plutonium stock. The panel recommends that the U.S. government give higher priority to these issues because of the danger. It urges a new interagency approach, with Presi dential leadership. DOE Secretary Hazel O'Leary calls the report "serious and thoughtful/, and has created a departmentwide project to implement the pan el's recommendations. Frank Von Hippel, assistant director for national security at the White House Of Panofsky: urgent action must be taken fice of Science & Technology Policy, says the NAS report is helping to focus more For these reasons, in the long run, secu attention on this issue. The U.S. has not rity of weapons plutonium cannot be con yet tried to negotiate a bilateral agreement sidered apart from security of all fissile with Russia for cooperative monitoring of materials. "We recommend using the im weapons dismantlement and storage of mediate need to deal with excess weap fissile materials, he notes. ons materials as an opportunity to set a Bette Hileman
Chemical earnings up strongly in fourth quarter Early reports of fourth-quarter 1993 earn ings by U.S. chemical companies show significant overall earnings growth. The latest quarter's growth is part of a continuing trend for the chemical indus try—one that started with a turnaround in the second quarter of 1993. However, generally higher earnings were achieved with no overall improvement in sales compared with the same quarter in 1992. For the three months ending Dec. 31, 1993, strong overall growth in earnings was shown by most of the 13 companies reporting by press time. Compared with the same period in 1992, combined earn ings rose 69% to $864 million—due largely to triple-digit increases at Dow Chemical, DuPont, Monsanto, and Union Carbide. In addition to these four, six other firms reported sizable double-digit increases. The earnings are from continu ing operations, excluding significant nonreauring and extraordinary items. The increase in earnings along with no change in sales led to a higher over all quarterly profit margin of 4.0% for the 13 companies, compared with 2.4% in 1992. But as in previous quarters, the combination of earnings growth with out sales growth once again raises the question of whether companies are see ing real economic improvement or just the results of cost-cutting and other moves to improve profitability.
Based on fourth-quarter 1993 results, the answer seems clear. Chemical com panies generally attribute much of their earnings increases to cutbacks, reorga nizations, streamlining, and increased efficiencies—rather than to recovery in the economy, price margins, or overall volume growth. Although economic recovery and volume growth are ap parent in U.S. markets, slow economies in Europe and Japan, along with com
petition and price pressures, are keep ing down sales. For example, notes Union Carbide chairman Robert D. Kennedy, Urnings benefited from our cost reduction efforts, despite the continued worldwide down turn in the chemical industry." Carbide's earnings rose 163% to $42 million in the fourth quarter, on sales that dropped 10% to $1.1 billion. Similarly, DuPont and Monsanto both reaped the benefits of their profitability and productivity improvement programs. DuPont's quarterly earnings increased 110% to $339 million. Much of its earnings growth came from its petroleum seg ment—through aggressive cost reduction and restmcturing programs—but chem ical and specialty businesses also gained from lower costs. Monsanto's fourth-quarter earnings grew 283%, to $46 million. It says its strength when compared with very low earnings reported in 1992 (C&EN, Feb 15, 1993, page 14) reflects the "success of its cost reduction initiatives," as well as aggressive actions to expand product markets. Dow Chemical's earnings rose 203% to $82 million for the quarter, excluding charges related to restructuring and to Dow Coming's breast implant litigation. Here, too, improved productivity and cost-cutting moves compensated for low er sales revenues—which were hit by lower prices and volumes, global overca pacity in basic chemicals and plastics, and extremely difficult economic conditions in the major markets of Europe and Japan.
Earnings rise dramatically for many chemical companies FOURTH-QUARTER 1993 Sales
Earnings3
($ millions)
Air Products Arco Chemical Dow Chemical DuPont
Change from 1992 Sales
Earnings
Profit margin" 1993
1992
2% 8 -5 1
12% 42 203 110
8.8% 8.1 1.8 3.7
8.0% 6.2 0.6 1.8
6.9 10.5 36.7 46.0
1 -3 6 1
-25 17 17 283
2.8 5.5 7.9 2.4
3.7 4.6 7.1 0.6
53.7 40.8 40.0 26.0 42.0
27 -3 -4 1 -10
57 0 33 -2 163
7.8 11.7 6.5 3.4 3.9
6.3 11.4 4.7 3.8 1.3
$ 827.3 840.0 4,505.0 9,251.0
$ 72.8 68.0 82.3 338.5
Η. Β. Fuller Georgia Gulf Imcera Monsanto
247.8 192.2 466.3 1,882.0
Morton International Nalco Chemical Praxair Rohm and Haas Union Carbide
690.9 348.9 613.0 760.0 1,073.0
a After-tax earnings from continuing operations, excluding significant nonrecurring and extraordinary items, b After-tax earnings as a percentage of sales.
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JANUARY 31,1994 C&EN
7
NEWS OF THE
WEEK
The trend of improved earnings through cost-cutting and reorganization is echoed in quarterly earnings statements of nearly all companies reporting so far. But there is also a note of optimism about recovering markets, prices, and volumes. For instance, stresses Dow chairman and chief executive officer Frank Popoff, "While many of the challenges facing us will persist in 1994, Dow expects earnings to improve because of the company's ongoing efforts to enhance productivity, and as a result of recovering world economies and improved industry fundamentals.,, Ann Thayer
Inexpensive path makes key sugar intermediate Chemists at the Technical University of Berlin, Germany, have developed a simple method for making dihydroxyacetone phosphate (DHAP) from inexpensive starting materials, and reacting it at once in the same pot with aldehydes to make unusual sugar derivatives. Their technique for preparing and immediately using this key sugar intermediate may lead to progress in carbohydrate research—enabling preparation of new kinds of sugars, for example—and to advances in syntheses of single enantiomers of chiral drugs. Such advances are possible because there are four readily available aldolase enzymes that catalyze aldehyde condensations with DHAP to yield four different diastereoisomeric sugar configurations. Those four aldolases condense DHAP with D-glyceraldehyde or L-lactaldehyde to form D-fructose and the relatively rare D-tagatose, L-rhamnulose, and L-fuculose. These aldolases are efficient on a preparative scale, show a high degree of asymmetric induction in assembling two chiral centers at once, and have a wide tolerance of aldehyde substrate structures. This gives chemists a wide choice of configuration and aldehydes. Furthermore, the makeand-use feature of DHAP production avoids waste of stored DHAP, which is easily hydrolyzed. Indeed, the instability and high cost of DHAP have long been stumbling blocks to its use. For example, laboratory chemical supply houses price DHAFs diKthium salt at $240 per millimole. Organic chemistry professor Wolf-Dieter Fessner and graduate student Gudrun 8
JANUARY 31, 1994 C&EN
Sinerius report their work in the February issue of Angewandte Chemie [106, 217 (1994)]. They base their technique on the known oxidation of [.-glycerol 3-phosphate to DHAP by glycerol-3-phosphate oxidase (GPO). These materials are readily available at relatively low cost. Ordinarily, regeneration of a redox cofactor is a problem in redox reactions. Oxidases generally use as an oxidizing agent a small, dissociable redox molecule that is reduced in the process. But GPO uses as cofactor flavine-adenine dinucleotide, which is nondissociable and readily reoxidized by oxygen. Hydrogen peroxide is a coproduct. The Berlin team uses catalase to convert hydrogen peroxide to oxygen and water. So in their technique, Fessner and Sinerius combine L-glycerol 3-phosphate, an aldehyde, an aldolase, catalase, and GPO in oxygen-saturated water. They seal the flask under an oxygen atmosphere and put it on an automatic shaker. Besides making the four sugar diastereoisomers, they use glycerol phosphate analogs to make sugar analogs. Such analogs might function as enzyme inhibitors to treat disease. For example, substitution of glycerol phosphate by 3,4-dihydroxybutane-1 -phosphonate, N-2,3-dihydroxypropylphosphoramide, or 2,3-dihydroxypropane-1-thiol replaces the -OP03*"~ phosphate group with -CH2P032~, -NHP032~, or -SP03 , respectively. Stephen Stinson
Four configurations accessible via aldolases CH 2 OP0 3 2 -
CH 2 OP0 3 2 C=0 HO-OH -OH CH2OH D-Fructose 1-phosphate
C=0 HOHO-OH CH2OH D-Tagatose 1-phosphate
CH 2 OP0 3 2 -
CH 2 OP0 3 2 -
I
c=o
I
-OH -OH
-OH HOHOCH3 L-Rhamnulose 1-phosphate
HOCH3 L-Fuculose 1-phosphate
NIH seeks rules for indiistry-academia R&D Spurred by Congressional concern that U.S. taxpayers may not be reaping enough benefits from federally supported research, the National Institutes of Health has begun drafting guidelines for agreements between industry and universities that receive NIH funds. Last week in Bethesda, Md., NIH brought together officials from industry, research institutions, and NIH to hash over the complex issues at a forum on sponsored research agreements. NIH plans to draft guidelines based on the two-day forum's recommendations, and to present them to Congress by June, according to NIH director Harold E. Varmus. NIH's decision to develop guidelines was sparked by Congressional ire last year over a proposed agreement between Scripps Research Institute and Swiss-based Sandoz Pharmaceuticals Corp. Scripps, located in La Jolla, Calif., receives about $100 million a year in grants from NIH. In return for Sandoz funding of $300 million over 10 years, Scripps initially agreed to give the pharmaceutical company patent rights to all Scripps researchers' discoveries. The agreement was revised substantially after Rep. Ron Wyden (D.-Ore.) charged that Scripps was becoming a federally funded Sandoz laboratory. However, both Scripps and Sandoz still maintain that their original agreement was in keeping with the goals of the Bayh-Dole Act. That 1980 law aims to boost U.S. competitiveness by making it easier to commercialize federally funded inventions. It gives universities the right to patent the results of federally funded research and to license those patents to private companies. At last week's forum, Varmus explained that NIH convened the meeting to seek help in formulating criteria by which it can judge agreements between its grantees and industry. The discussion— enlivened by presentation of four fictional case studies—focused on a few key issues, including the scope and size of research agreements and research freedom. Tensions arise, notes Daryl A. (Sandy) Chamblee, NIH's acting deputy director for science policy and technology transfer, because of the need to encourage technology transfer, "while protecting the tax-
