health and nutrition, based on leading-edge technologies such as combinatorial chemistry and biotechnology," said Dormann. The 1995 $7 billion purchase of Marion Following the recent lead of other chemi- Merrell Dow and the 1996 purchase for cal producers such as Monsanto, Novartis, $3.5 billion of the 43% interest in French and Rhône-Poulenc, Germany's Hoechst pharmaceuticals producer Roussel Uclaf said last week that it will become a life sci- that it did not already own were intended to ences company. Accordingly, its industrial build the human health sciences businesses. The other "cornerstone" of Hoechst's chemical operations, which make it the second largest chemical producer in the life sciences strategy is its AgrEvo joint venture with Schering of Berlin. AgrEvo is world, are on the way out the door. Since 1994, the company's priorities "determined" to compete globally in agriculhave shifted away from chemicals to the tural biotechnology against Novartis, Monlife sciences, Hoechst Chairman Jurgen santo, DuPont, and Dow with its own herDormann explained to investors in New bicide-resistant canola and corn, Dormann York on Sept. 24—the day the compa- said. "Hoechst will become a life science ny's shares began trading on the New leader and a value-creation heavyweight." York Stock Exchange. Marc Reisch If Hoechst and its chairman carry the latest plan through to completion, the company will ultimately distance itself from businesses that represented $22.8 billion of its 1996 sales to focus on life sciences businesses that accounted for only $11.1 billion in sales. The company plans to achieve a 20% operating profit from sales in life sciences by 1999, up from less than 5% for The man credited with slowing Chinese the total Hoechst Group in 1994. inflation over the past two years while In 1994, Dormann recounted for in- averting an economic recession, Vice vestors, Hoechst began a radical reforma- Premier Zhu Rongji, chose the World tion of its various chemical, gas, and Bank and International Monetary Fund pharmaceutical businesses, turning them annual meeting in Hong Kong last week into stand-alone units under a holding as his venue for a sneak preview of company. That action was intended to planned economic reforms. reduce the number of business units and Statistics show that foreign investments make each responsible for strategy and in China have dropped substantially over higher profits worldwide. the past year and a half. The reforms anThatfirstgesture and others taken since nounced by Zhu, who is expected to bewere "a precondition of our long-term goal come China's next premier after Li Peng of becoming a life sciences company and steps down next March, are aimed at reexiting the chemicals business," Dormann versing that trend. explained. Among major asset rearrangeSure to please international chemical inments made since 1994 were the 1995 sale vestors was Zhu's suggestion that compaof specialty chemical maker Riedel-de Haèn nies would not have to pay duties on the to AlliedSignal, the 1996 spinoff of specialty equipment they import. "China will reintrochemicals to Switzerland-based Clariant for duce certain policy incentives toward a 45% stake in Clariant, and the 1997 joint the import of equipment needed for venture of polypropylene operations with the foreign-invested projects that meet BASF in Targor, Germany. requirements," Zhu stated. "But these On the block now are basic chemicals projects must first of all conform to the manufacturer Celanese, which Hoechst industrial policies of China and bring bought in 1986; the fibers business; plas- about new technologies." Further details tics;films;Messer Group industrial gases; of the policy are to be announced later. and the paints and coatings business of When China announced in April 1996 its Herberts subsidiary. that it intended to tax foreign investors "We are open to various options, in- at rates of up to 50% on factory equipcluding initial public offerings [of stock], ment imported into China, it met with divestitures, mergers, asset swaps, and dismay and disbelief. In response, Beijing joint ventures" of the chemical operations, has been slow to start collecting the duties. Thus, Zhu's announcement is a reDormann told Wall Street investors. "We want to build life sciences business- lief, but an expected one. es comprising innovative products for "In my view it really wasn't a big sur-
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Hoechst to jettison its chemicals operations
Chinese vice premier promises investors a break
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