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ACS 125 years

April 30, 2001
Volume 79, Number 18
CENEAR 79 18 pp. 12
ISSN 0009-2347
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Purchase of Covance expands firm's stake in protein manufacturing


Akzo Nobel is acquiring Covance's biotechnology services unit, a U.S. leader in biopharmaceutical production. With the purchase, for $190 million, Akzo becomes the latest chemical company to beef up in this fast-growing field.

CHANGING OWNERS Akzo will soon own Covance's 2,000-L fermenter in North Carolina.
Covance Biotechnology will become part of Diosynth, an Akzo Nobel unit that makes active pharmaceutical ingredients for Akzo and for third-party customers. Diosynth had 2000 sales of $350 million, about $90 million of which were in biopharmaceuticals; Covance Biotechnology had $60 million in sales last year and expects to reach $110 million in 2001.

Diosynth already produces biopharmaceuticals in Oss, the Netherlands. Last fall it launched a $65 million project to build a larger plant at the site by the end of 2002. Covance will bring Akzo yet more capacity at its complex in Research Triangle Park, N.C., and help it establish a beachhead in the U.S.

Akzo Nobel hopes to capture business from biotechnology companies that contract with third parties for production of their monoclonal antibodies and other therapeutic proteins. Some of the biotech industry's best selling products, such as Immunex's Enbrel rheumatoid arthritis treatment, are actually made by such contractors.

Although potentially lucrative, biopharmaceutical production is an expensive endeavor. Indeed, Covance, a drug development services company, exited in part because it wasn't prepared to make the substantial investments required to scale up the business.

Several chemical firms are investing, however. Boehringer Ingelheim, the industry leader and maker of Enbrel, is putting $200 million into its German biopharmaceutical plant. Lonza said in January that it will spend $180 million to quadruple capacity in Portsmouth, N.H., and Slough, England. And Dow Chemical bought into the business in November with the purchase of Collaborative BioAlliance, a midsized biopharmaceutical producer in Smithfield, R.I.

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