Business Concentrates PHARMACEUTICALS
Utility sues chemical makers for colluding Maryland water supplier says firms fixed water treatment chemical prices A Maryland water utility is suing an alleged cartel of chemical makers for supposedly conspiring to fix prices of the water treatment chemical aluminum sulfate, costing it millions of dollars. Aluminum sulfate, also known as alum, is a flocculant, meaning it is added to drinking water and wastewater to make
Aluminum sulfate is used to clarify water.
minute particles stick together so they can be filtered out. Washington Suburban Sanitary Commission (WSSC), which serves 475,000 Maryland customers just outside of Washington, D.C., filed suit on Oct. 19 in U.S. District Court for the District of Maryland, charging that seven alum makers—including General Chemical, Chemtrade Chemicals, Geo Specialty Chemicals, and Kemira—rigged bids and allocated customers among themselves between 1997 and 2011. WSSC says the scheme raised prices it and other U.S. utilities paid for alum
through 2016. At least 68 other civil suits based on alum price-rigging allegations have been filed in federal court to recoup costs, WSSC says. Others suing alum makers include the Illinois-American Water Co., which filed its suit in April. In June, the cities of Baltimore and Richmond, Va., which supply water to their residents, also filed suits. WSSC is asking the firms named in its suit for $5 million in compensatory damages and additional damage to be determined in a trial. The WSSC and other suits follow the U.S. Department of Justice revelation in late 2015 of the price-fixing scheme. At that time, DOJ announced that Frank A. Reichl, a General Chemical sales executive, had pleaded guilty for his role in the scheme. As part of a deal with the government, he agreed to cooperate with prosecutors investigating the conspiracy. In early 2016, federal prosecutors indicted another General Chemical sales executive, Vincent Opalewski, and a high-ranking Geo Specialty Chemicals executive, Brian C. Steppig, for their alleged roles in the scheme. In June 2016, Geo pleaded guilty and was ordered to pay a $5 million fine for fixing prices of alum. By violating the competitive process, “Geo and others defrauded municipalities as well as pulp and paper companies out of millions of dollars,” said Timothy Gallagher, the FBI agent in charge of the Geo investigation at the time.—MARC REISCH
OVERHEARD
“We have surveyed firms and can anecdotally relate that reports of manufacturing running below 50% are common, with many firms operating around 20% capacity, and some even less. We have found no firm operating above 70% of their normal operation.” —Scott Gottlieb, commissioner of the U.S. FDA, testifying on Oct. 24 about Hurricane Irma’s damage to Puerto Rico’s drug manufacturing. He gave his comments to members of the U.S. House of Representatives Committee on Energy & Commerce
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C&EN | CEN.ACS.ORG | OCTOBER 30, 2017
Lilly mulls animal health sale Eli Lilly & Co. is mulling the future of its Elanco animal health unit, which is on track to have sales this year of roughly $3 billion. Stock analysts think the unit, which could be spun off, sold, or kept by Lilly, is worth between $12 billion and $15 billion. Lilly will decide the unit’s fate by mid-2018. The animal health business played a critical role in buttressing Lilly’s bottom line during a rocky few years of patent losses on many of its best-selling pharmaceutical products. But the unit has recently faced challenges at a time when the human health business is improving. In the third quarter, new medicines accounted for nearly all Lilly’s revenue growth. In a call with analysts to discuss Lilly’s third-quarter earnings, Lilly’s CEO, David Ricks, acknowledged that investors have for years questioned whether the animal health unit should stand alone. He said the timing is finally right to contemplate a spin-off or sale because the unit has since 2015 digested two key acquisitions: the $5.4 billion purchase of Novartis’s animal health business and the $885 million acquisition of Boehringer Ingelheim’s pet vaccines unit, Vetmedica. With those additions, “we now have a global business that is highly competitive,” Ricks said, noting that Elanco is among the top five global animal health companies. The review of the animal health unit is the latest shake-up at Lilly, which has been revamping its business since Ricks took over as CEO in January. Last month, Lilly announced job cuts and plans to shut down two research sites and an animal health drug plant. And over the summer, its oncology unit underwent a mini-overhaul: Ten clinical-stage cancer treatments were earmarked for out-licensing or partnering.—LISA JARVIS
C R E D I T: S H UT T E RSTO CK
LITIGATION
