NEWS OF THE WEEK FINE
CHEMICALS
DEGUSSA GOES EAST German firm sells North American plant, forms joint venture in China
NEW ASSET Degussa will have access to this Lynchem facility in China as part of a new joint venture.
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EGUSSA HAS AGREED TO SELL
Edmonton, Alberta-based Raylo Chemicals, its only N o r t h American pharmaceutical c h e m i c a l s facility, to t h e California biopharmaceutical company Gilead Sciences for $146 million. Degussa also announced a new long-term contract to supply Gilead with raw materials and certain active pharmaceutical ingredients (APIs) manufactured in Europe. At the same time, the German firm has formed a manufacturG O V E R N M E N T
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ing agreement with Lynchem, a pharmaceutical chemicals company based in Dalian, China. Degussa will take a 51% stake in the Chinese firm, forming a joint venture called Degussa Lynchem. Lynchem had sales last year of $45 million. Earlier this year, Degussa announced a similar partnership with India's Hikal, although that deal didn't involve an investment. Industry analyst Howard Foote of Meadowbrook Associates tells C & E N the deals make sense in that Degussa is off-loading an expensive N o r t h American asset while it expands in Asia. He notes that Gilead, on the other hand, enhances its position as a biotech firm with a manufacturing base. "Gilead is carefully POLICY
INDUSTRY BACKS ASBESTOS FUND Manufacturers support Senate bill to end litigation over compensation
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N INDUSTRY COALITION
voiced strong support last week for revised legislation that would take asbestos injury claims out of the court system and compensate victims from a $140 billion, privately financed, no-fault trust fund. "The trust fund will ensure fair, fast, and certain compensation to victims. It will also boost our economy," National Association of Manufacturers President John Engler told the Senate Judiciary Committee at aJune 7 hearing. T h e Senate blocked action on the bill, S. 3274, in February
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when supporters failed by one vote to muster the support of the 60 senators needed to override an objection that the measure would violate the Budget Act by adding to the federal deficit. In an attempt to gain the support of fiscal conservatives, Judiciary Committee Chairman Arlen Specter (R-Pa.) proposed a modified version designed to clarify that the trust fund will not increase the deficit or create any taxpayer obligation. "If this amended bill is rejected, I do not see the committee revisiting this issue," Specter warned. "Let me make clear
and methodically becoming an integrated pharmaceutical company," he says. Ernie Prisbe, vice president for chemical development at Gilead, says the Edmonton facility, Gilead's first API manufacturing plant, will be used as a process development and pilot-scale "launch site." Gilead will continue to use contract manufacturing as its key source of large-scale supply, according to Prisbe. Rudolf Hanko, head of exclusive synthesis at Degussa, says the new custom manufacturing contract with Gilead indicates that North American customers are comfortable with supply from Europe, where Degussa's primary process development and manufacturing assets reside. He says customers are also interested in Degussa's expansion into Asia with lower cost, FDA-approved manufacturing. "Customers have been waiting for the opportunity to get the best of both regions from a single supplier," Hanko says.-RICKMULLIN
that this is the last, best chance." The legislation would end asbestos litigation that has already forced almost 80 companies into bankruptcy. Companies facing asbestos-related lawsuits and the companies' insurers would finance the trust fund over a 30year period. Engler, who testified on behalf of the industry umbrella group, the Asbestos Alliance, said the bill would give companies certainty about their financial obligations and prevent future asbestos bankruptcies. But opponents doubted there would be enough money in the fund to pay all future asbestos injury claims. "The bill before us still contains serious flaws, which make it both unfair and unworkable," said Sen. Edward M. Kennedy CDMass.). "It does not provide a reliable guarantee ofjust compensation to the enormous number ofworkers who are suffering from asbestosinduced disease."-GLENN HESS WWW.CEN-0NLINE.ORG
