NEWS OF THE WEEK
LONZA LAUNCHES BID FOR PATHEON ACQUISITION: Deal would extend
the Swiss firm’s services to finished-dosage drugs
L
ONZA, A LEADER in the contract manufacture
of active pharmaceutical ingredients (APIs), has made a nonbinding bid to acquire Patheon, an Ontario-based contract manufacturer of drugs in their final-dosage form. The Swiss firm’s bid of $3.55 per restricted-voting share values Patheon at $460 million. “Our interest in Patheon is consistent with Lonza’s stated strategy of expanding our offering across the pharmaceutical manufacturing value chain,” Lonza CEO Stefan Borgas says. “An acquisition of Patheon would take us into the complementary activities of finished-dosage development and manufacturing for both small-molecule and biological active ingredients.” Lonza’s offer comes eight months into a contentious hostile takeover bid for Patheon by JLL Patheon Holdings, PATHEON
An operator at Patheon views product vials awaiting sterilization at the firm’s Swindon, England, facility.
CARBON COSTS GREENHOUSE GAS EMISSIONS: New study measures impact on industry
T
HE AVERAGE big U.S. chemical maker emits
6.6 million metric tons of carbon per year and is likely to take a 0.5 to 25% hit to earnings by 2019 if carbon trading comes to the U.S., according to a new CARBON FOOTPRINT study of U.S. companies. Average S&P 500 chemical company “Climate change repreemits 6.6 million metric tons of carbon sents serious challenges to the environment as well as Chemicals risks and opportunities to Food & beverage U.S. operations,” notes MalAutomobiles colm Fox, a vice president of Industrial goods Trucost, the company that Retail Personal goods prepared the study. Fox recHealth care ommends that companies strategize now to reduce their 0 2 4 6 8 future carbon emissions. Carbon emissions, millions of metric tons The study, “Carbon EmisNOTE: Data represent 2007 average emissions for sions—Measuring the Risks,” companies in each sector of the S&P 500 presented. analyzes companies’ current SOURCES: NSF International, Trucost operations and extrapolates WWW.CEN-ONLINE.ORG
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a group of investors that holds 39% of the Canadian firm. JLL is offering $2.00 per share. Paul W. Currie, chairman of a special committee of independent Patheon directors, says that although the committee favors Patheon continuing as an independent company over the JLL offer, it “also believes that the Lonza proposal would provide an excellent opportunity to secure the successful future development of Patheon and that it is in the best interest of all Patheon shareholders to explore the Lonza proposal further.” Patheon has agreed not to negotiate a transaction with any party other than Lonza until Sept. 30. Industry analyst Peter Pollak, who formerly headed Lonza’s fine chemicals division, says the addition of final-dosage formulation would likely be most beneficial to Lonza’s biologics business. He notes that Lonza is already working with most of Patheon’s major pharmaceutical customers, making small-molecule APIs and intermediates for firms that contract elsewhere for final-dosage formulation. “In biopharmaceuticals, the situation is different,” Pollak says. “If Lonza can offer a one-shot deal, this would attract new customers.” A deal with Patheon would mark a second giant step under Borgas away from Lonza’s traditional business of bulk pharmaceutical manufacturing. In 2007, the company acquired Cambrex’ research bioproducts and microbial biopharmaceutical businesses.— RICK MULLIN
their exposure to carbon emission costs. Trucost, a U.K.-based provider of environmental data and analysis, prepared the study for standards and certification organization NSF International. It examines greenhouse gas emissions of 230 firms grouped into seven categories in the Standard & Poor’s 500 list of public companies. The average S&P 500 chemical company—derived from a list that includes Air Products & Chemicals, DuPont, and Dow Chemical—emits 6.6 million metric tons of carbon annually from operations. Health care companies such as Abbott Laboratories and Merck & Co. emit just 218,000 tons of carbon. The study’s authors explain that “the high level of emissions in the chemical sector is partly due to energy-intensive manufacturing processes.” Carbon costs come not only from emissions of company operations but also from the indirect emissions of electricity and raw material suppliers. At $26 per ton, the projected cost of carbon in 2019, carbon costs would equate to nearly 10% of chemical company earnings on average. Costs could vary substantially from firm to firm depending on the intensity of carbon use. But companies that are not carbon intensive are not entirely off the hook. “The average company in the health care sector needs to prepare for the fact that almost 90% of its carbon emissions are embedded in its supply chain, representing a significant financial risk,” Fox says. By 2019, some health care firms could see carbon costs take a 2% bite out of earnings.—MARC REISCH
AUGUST 31, 2009
