C&EN: TODAY'S HEADLINES - AKZO NOBEL BUYS MORE DRUG CAPACITY

PATRICIA SHORT

Akzo Nobel will buy, for an undisclosed sum, a GlaxoSmithKline (GSK) plant in Montrose, Scotland. The plant, which has current Good Manufacturing Practice certification from the U.S. Food & Drug Administration, will become part of Akzo Nobel’s Diosynth unit, a maker of active pharmaceutical ingredients for Akzo and third parties.

Diosynth will continue to toll-produce eight active ingredients for Glaxo. Other Glaxo products will continue to be made at Montrose until they can be transferred to other Glaxo sites.

According to Johan Evers, general manager of Diosynth, the plant “will significantly increase our production capacity for active pharmaceutical ingredients by complex organic chemical synthesis.” Diosynth has seen 13% sales growth this year through early November, the company says, with 60% of its sales going to third-party drug firms.

However, the acquisition also reflects growing captive demand by Akzo Nobel’s own pharmaceutical business, which now has a single active-ingredient production site in Oss, the Netherlands. “Instead of having only one site with cGMP certification, we will have two plants,” a spokesman says. “That is a much more comfortable position, both for our captive use and for third-party manufacturing.”

This is Akzo’s second deal aimed at building up contract manufacturing. In June 2001, Diosynth acquired North Carolina-based Covance Biotechnology Services for $190 million. Later that year, it invested $18 million to increase biopharmaceutical capacity at its headquarters site in Oss. That expansion, in turn, followed the completion in late 2000 of a new purification and isolation unit in Oss.

For GSK, the sale will help rationalize overcapacity in pharmaceutical production that has existed since Glaxo and SmithKline merged in 2000.

The deal should safeguard some 500 jobs at the plant, with the remaining 200 to be lost largely through voluntary departures.