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Extracts from Nandini Chemical Journal, Jan 2010

Sorbitol|Soya Lecithin|Alcohol blended petrol|ayurvedic firms
Highlights of Some of the Articles

TALK OF THE MONTH : ACQUISITIONS AND MERGERS – MORE PANIC THAN LOGIC
564 POLLUTING ENTERPRISES FORCED TO CLOSE IN CHINA IN 2009
DATA EXCLUSIVITY STUDY IN INDIA
INDIAN PHARMA INDUSTRY – FINDINGS OF THE STUDY
SORBITOL - INVESTMENT OPPORTUNITY
SOYA LECITHIN – PRODUCT PROFILE
SHORTAGE OF MOLASSES HITS ALCOHOL BASED CHEMICAL UNITS IN INDIA
ALCOHOL BLENDED PETROL PROGRAMME IN DISARRAY IN INDIA
IMPORT OF SUPER CRITICAL POWER PLANTS INDIAN GOVERNMENT’S POLICY
SEVERAL INDIAN AYURVEDIC DRUG FIRMS DO NOT CONFORM TO STANDARDS
SOLAR POWERED AIRCRAFT – DEVELOPMENT EFFORTS
OTHER FEATURES
OTHER ARTICLES

TALK OF THE MONTH

MERGERS AND ACQUISITIONS - MORE PANIC THAN LOGIC

In recent times, due to the so called melt down of global economy, there have been sort of unrest amongst the chemical industry all over the world.

This has resulted in situation, where the companies have resorted to closing some plants on short term or long term basis on the basis of their economic and technological feasibility or trying to find if the fortunes of the units can be improved by resorting to the process of merger and acquisition (M&A).

Careful study of several global mergers and acquisitions in recent times would indicate that there could be more panic than logic in taking such decisions.

There are many cases where the companies which have been competing with each other until recently have merged or  have been acquired by one of the competitors. This appear to be the case of foe turning to be a friend all of a sudden! The employees in the merged companies often find it difficult to adjust themselves to the new situation due to structural problems and they have to  change loyalty all of a sudden and devote themselves to work for the company with whom they have been competing until recently. Many employees have lost their jobs in the process.

It is not that all merger and acquisition moves have proved to be successful. In several cases, there have been serious compatibility problems, change of priorities and have even resulted in selective closure of units. An element of confusion and uncertainty in such scenario is clearly evident.

One curious aspect is that most of such acquisitions and mergers have been internationally taking place in pharmaceutical sector. This makes one wonder whether they could be a basic element of instability in the structure and functioning style  of pharmaceutical industries.

In recent times, in India, two incidents of merger and acquisition have raised considerable interest. One is that of Orchid Chemicals and the other is Wockhardt. The mergers and acquisitions of these companies have largely taken place due to high debt burden and this may be viewed as panicky move in the long term by the analysts.

US pharma company Hospira’s $400 million (around Rs 18,800 million) acquisition of Chennai-based Orchid Chemicals and Pharmaceuticals’ injectables business deserve critical analysis. Orchid appears to have decided that this move would strengthen the balance sheet of Orchid.

Injectables could have been the key growth driver for Orchid in future. But now, after the acquisition, Orchid is only left with the relatively low-margin and commoditised business of non-antibiotics and bulk APIs. Without the injectables 
business, Orchid stands to lose about Rs 4700 million in revenues, but still Orchid has thought that it should sell away the injectable businesses. If this is not a panicky move, what else can be so?

Hospira’s acquisition includes Orchid’s beta lactam antibiotics manufacturing complex (comprising cephalosporin, penicillin and carbapenem facilities) and R&D facility near Chennai, as well as its generic injectables product portfolio in pipeline. Beta-lactam antibiotics represent a class of drugs with a wide spectrum of antibacterial activity. The two companies also signed a long term exclusive agreement by which Orchid will supply active pharmaceutical ingredients (APIs) for the acquired business, which may help Hospira more than Orchid.
Similarities can be drawn between Orchid’s case with that of Wockhardt, which is restructuring its debt and has started selling some of it’s businesses. Wockhardt, which had a debt of Rs 37,770 million on December 31, 2008, has already sold its veterinary division to France’s Vetiquinol and its nutritional foods business to Abbott Labs. It is also said to be scouting for a buyer for its biotech business. 
Other Indian companies like Ranbaxy and Dabur Pharma have sold their businesses to multi national drug companies Daiichi Sankyo and Fresenius Kabi in the recent past. 
Major pharma companies acquired in India by overseas companies

Acquirer

Acquired Co

Deal size

Daiichi Sankyo

Ranbaxy Labs

$4.6 bn

Mylan

Matrix Labs

$763 mn

Abbott Labs

Wockhardt’s nutritional foods division

$130 mn

Vetiquinol

Wockhardt’s veterinary division

-

Fresenius Kabi (Singapore) Pte

Dabur Pharma

-

Major pharma companies acquired outside by Indian companies

Acquirer

Acquired Co

Deal size

Dr.Reddy’s Labs

Betapharm (Germany)

$570 mn

Ranbaxy

Terapia (Romania)

$324 mn

Matrix Labs

Docpharma (Belgium

$263 mn

Dr Reddy’s

Roche’s API biz (Mexico)

$59 mn

Jubilant Organosys

Target Research Associates (US)

$33.5 mn

Sun Pharma

Able Laboratories Inc (US)

$23.15 mn

Aurobindo

Italian unit to TAD

-

It appears that this trend will continue and the year 2010 will see more action in the M&A space, with more panic than logic influencing the decision.

564 POLLUTING ENTERPRISES FORCED TO CLOSE IN CHINA IN 2009

On November 19th, deputy director of Hunan Provincial Science & Technology Department, said that the provincial government will make a financial investment of RMB70 billion into the comprehensive pollution treatment of the Xiangjiang River Valley by the end of 2010 and financial investment of RMB300 billion till 2015.

Five hundred and sixty four polluting enterprises in the Xiangjiang River Valley, in industries including smelting, chemical and light, have been  forced to shut down since the beginning of 2009.

And the number of paper making enterprises quickly shrank to 207 from the initial 660.

DATA EXCLUSIVITY STUDY IN INDIA

Data exclusivity is the exclusivity given to clinical study reports of innovator companies submitted by them to government regulators at the time of getting marketing approval.  This means, Indian generic companies cannot use or rely upon the research reports to launch their generic versions.  Generic companies and social groups say data exclusivity would restrict generic companies and affect public health.

The Satwant Committee, formed by the government to look into the matter, in its report submitted in 2006 has said that data protection should be given but in a calibrated approach.

The Indian drug industry has protested against a study being conducted jointly by the World Health Organisation (WHO) and the Indian health ministry to examine whether providing a legal provision for data exclusivity serves India’s interest and its effects on public health, domestic companies and whether India is required to introduce  the legislation to fulfil its international obligations, among others.

INDIAN PHARMA INDUSTRY – FINDINGS OF THE STUDY

A recent paper by the Research and Information System for Developing Countries highlights major gains in export of drugs and pharma products. 

It notes a greater focus on the value-added segments formulations.  The share of this category has increased from about one-third in early 1990s to two-thirds in 2007-08. 

And to keep their ‘high volume-low value’ markets safe, the largest of Indian generic firms have concurrently entered the highly regulated and at the same time highly profitable markets of Western Europe and North America.  In contrast, smaller firms have largely focused on the less regulated and ‘high volume-low value’ markets of Asia and Africa.

The share of export earnings of the largest firms has grown from about one-fifth in early nineties to about two-thirds by 2007-08, while that of the industry as a whole has increased from less than 10% in 1990-91 to 35% in 2007-08. 

The study also noted that the Indian pharma sector has a growing trade deficit, mainly because of the larger imports of intermediates and bulk drugs.  This may indicate a change in strategies to favour of import of raw materials and intermediates to process them into formulations.  A reason for this may be the abolition of the ratio parameter linking production of intermediates and bulk drugs to production of formulations.  Also, the increase of exports has been restrained by factors like growing competition from China, anti-counterfeit drives and applications of non-tariff barriers.

The expansion of formulations’ exports is contrary to expectation as the industry is believed to be focusing more on the export of intermediates and bulk drugs.

Surprisingly, there seems to be no sharp  increase in import of formulations.  This is because the patent law has limited the number of patented medicines, which has reduced the scope of import of formulations.  However, there has been no substantial change in the structure of imports.  As much as 90% of imports are that of intermediates and bulk drugs, and most of these are from China, which at times supply 60 to 70% of the requirement of intermediates. 

Consequently, India has a huge trade deficit with China in intermediates and bulk drugs.  Such an excessive dependence on China puts the industry at risk in case of any disruptions in supply

SORBITOL  - INVESTMENT OPPORTUNITY

Appearance

White crystalline solid or light viscous syrup

Molecular formula          

C6H14O6

CAS No

50-7-4

Form                              

Solution 70%

Powder 99.5%

Specification – Sorbitol 70% solution

Assay

68.0 to 72.0%

Sp. Gravity, 25 deg.C

1.285


Ref.Index @ 20 deg.C.

1.455

Water                            

29.0 to 31.0%

Chloride max.

To pass the test

Sulphate max.

To pass the test

Arsenic Max                   

To pass the test


Heavy metals max          

To pass the test


Nickel max                     

To pass the test


Reducing sugar              

To pass the test

Sulphated ash

max.       0.1%

The principal advantages which sorbitol exhibits over other polyols are:

  • Sorbitol gives up water very slowly to dry atmosphere
  • Sorbitol takes up water very slowly from a humid atmosphere

This article discusses the following :

  • Product application
  • Substitution possibilities
  • Indian Imports
    • Annual imports
    • Pattern of Countrywise imports
  • Indian Exports
    • Annual exports
    • Pattern of Countrywise exports
  • CIF Price of imported product in India
  • Indian manufacturers
  • Indian Demand
  • Pattern of application sectorwise demand-in India
  • Projected demand supply gap – in India
  • Global scenario
    • Global demand
    • Growth rate in demand
    • Global consumption pattern
    • Consumption pattern in developed countries
    • Global manufacturers
  • Process
  • Raw material requirements
  • Prognosis
SOYA LECITHIN – PRODUCT PROFILE

Appearance

Mass. Pourable thick fluid when the acid value is around 80.

Colour

Colour is nearly white when freshly made, but rapidly becomes yellow to brown in air

Odour / taste

Bland

Consistency

Free flowing

Iodine value              

95

Saponification value

196

Soybean lecithin comprises of phospholipids and triglycerides with minor amounts of phytoglycolipids, phytosterols, tocopherols and fatty acids.

Application

Lecithin is anti-oxidant and emulsifying agent

This article discusses the following :

  • Sectorwise application
  • Specification
  • Indian manufacturers
  • Indian Imports
  • Indian Exports
  • Demand driver
  • Indian demand
  • Process
    • Process outline
    • Process flow
    • Process developed by IICT, Hyderabad
  • Global scenario
    • Global production capacity
    • Global demand
    • Global demand pattern
    • Share of lecithin in the global emulsifier market
    • Global producers
    • GMO Issues
  • Prognosis
SHORTAGE OF MOLASSES HITS ALCOHOL BASED CHEMICAL UNITS IN INDIA

A huge domestic molasses shortfall, combined with high global spirit prices, has rendered the operations of alcohol-based chemical manufacturers unviable in India

The article further discusses the various issues faced by the Indian molasses/alcohol industry.

ALCOHOL  BLENDED PETROL PROGRAMME IN DISARRAY IN INDIA

Alcohol-based chemical manufacturers have questioned the rationale for implementing the five per cent ethanol blended petrol (EPB) programme during the current sugar season in view of the restricted availability of molasses/alcohol.

The article further discusses the view points of the alcohol industry.

IMPORT OF SUPER CRITICAL POWER PLANTS INDIAN GOVERNMENT’S POLICY

India needs to add power generation at the rate of around 10 to 12% if it is to sustain 8 to 10% of economic growth rate.

In a bid to overcome the power supply shortfalls, the power ministry has envisaged adding 100 gigawatt of power generation capacity under the Twelfth Plan Programme. And given the growing concern about carbon emissions, the ministry has put in place measures to encourage usage of super-critical technology, which is more energy-efficient and environment-friendly than sub-critical units.

The article critically examines the Indian government policies.

SEVERAL INDIAN AYURVEDIC DRUG FIRMS DO NOT CONFORM TO STANDARDS

According to the healthy Ministry of Government of India, over half of the companies in the Rs 80,000 million Indian Ayurveda industry default when it comes to compliance with the regulatory requirements of domestic manufacturing standards. The data was compiled in collaboration with state drug regulators of India.

The article discusses the regulatory issues facing the Indian Ayurvedic drug industry.

SOLAR POWERED AIRCRAFT – DEVELOPMENT EFFORTS

Aviation history is being created in Zurich by  developing an aircraft that is expected to fly around the world without fuel and without polluting the environment.  Once fully developed, the aircraft is expected to remain airborne, propelled by solar energy both during the day and at night.

70 member team is working on making the Solar Impulse project a reality. 

The aircraft is expected to take to the skies in 2012 and cover the globe in five stages.

The article discusses the recent developments.

OTHER FEATURES

PLANT CLOSURES

The article discusses the plans for closure of selected units by the following players

  • Clariant plans site closures
  • Solutia to  stop plant operations at Cologne
  • BASF to close paper coating binder facilities  in Europe
  • Thai court upholds suspension of 65 plants
  • Dystar shuts four German plants
  • Tessenderlo exit glycine
  • LyondellBasell closes PP
  • Eastman abandons Texas Gasification project
  • Shell pulls out of China Petchem JV talks
  • Tronox moves auction for TiO2 plants
  • BASF to shut three paper units in Europe

SAFETY AND ACCIDENT PAGE

Following safety and accident details are discussed:

  • Turkish mine blast kills 19 workers
  • Blasts rock Texas plants
  • Explosion in refinery in USA
  • Hydrogen plant explodes in Texas,USA
  • Two  scientists killed in BARC at Trombay, India

ANTI DUMPING PAGE

The antidumping measures introduced in  the various countries in the last few weeks on the following products are discussed:

  • Turkish mine blast kills 19 workers
  • Blasts rock Texas plants
  • Explosion in refinery in USA
  • Hydrogen plant explodes in Texas,USA
  • Two  scientists killed in BARC at Trombay, India

UPDATE ON BIOFUEL

The following recent developments on biofuel industry are discussed:

  • EU Legislation on Biofuels
  • Biorefinery Assistance programme in USA
  • Bayer And Dow Agree on Biodiesel Technology Deal
  • Blow to US biodiesel industry

NEWS ROUND UP

The recent developments on the following products/events are discussed:

INTERNATIONAL

  • Isocyanates
  • Calcium carbide
  • Cyclopentanone / cyclododecanone
  • Formosa declares force majeure at Texas site
  • Polymer from plant material
  • Morpholine and Diglycolamine  plants in Saudi Arabia
  • Recombinant Proteins
  • Polyols
  • Chloromethane
  • Wax
  • Polyols projects
  • Ethylene glycol
  • Plant-based PET bottles

INDIA

  • Mosquito repellent cream
  • BASF sells India site
  • Nuclear Power Corpn’s uranium demand
  • Business potential for logistic hub for oil and gas in India
  • Dow forms alliance with Tata Consultancy Services
  • ONGC draws a blank in Kerala-Konkan

TECHNOLOGY DEVELOPMENTS

The recent developments on the following technology efforts are highlighted

INTERNATIONAL

  • Biological Process For Ethylene Oxide From Ethanol
  • New Materials may aid in capturing carbon
  • New oil sands production technology
  • US and China ink cleaner coal technology transfer
  • Propylene pilot Plant
  • New nylon cuts carbon footprint
  • Fullerene patents for use in solar cells
  • Lithium to be extracted from geothermal waste
  • Extrusion coatings LDPE technology
  • Glycerine-to-acrylic acid process

INDIA

  • Biodiesel from corn slops oil
  • Lignocellulose to ethanol
  • New technology for mango kernel oil

CHINA NEWS

The recent developments on the following products/events are updated :

  • China to control overcapacity in some industries
  • China to curb overcapacity of plate glass
  • Iron oxide pigment
  • Integrated Chemicals Complex in Shaanxi
  • Purified terephthalic acid
  • Pilot production for thin film solar project
  • Use of waste carbon dioxide
  • Mitsui Chemicals to invest $7.5 million in PU plant
  • DSM’s cephalexin project
  • Polysilicon plant
  • Potassium nitrate
  • Phosphorus fertilizer
  • Calcium carbonate
  • 1,6-Hexanediol
  • Purified terephthalic acid
  • N-Propyl Acetate
  • Methacrylate
  • Enalapril folic acid capsule

AGROCHEMICAL PAGE                

The recent developments on the following products/events are discussed:

  • Endosulfan
  • Tomatoes, an alternative to aspirin

ENERGY PAGE

The recent developments on the following products/events are discussed:

  • Wind potential - near Dhanushkodi Coast in Tamil Nadu in India
  • Sop to boost wind power capacity
  • Wind power project of NPCIL
  • Largest working hydro-electric wave energy device in the world
  • Osmosis power plant
  • Solar power plant in Pune

ENVIRONMENTAL PAGE

The recent developments on the following products/events are discussed:

  • Nitrous oxide issues in biofuels
  • Air quality standards revised
  • Plastic use in packaging to lower Co2 emission: study
  • Rules on e-waste management in India
  • Use of plastic waste to bridge coal deficit

PRICE DETAILS - INTERNATIONAL

Global price trends on the following products are provided :

  • Vinyl acetate monomer
  • Acrylonitrile
  • Epichlorohydrin
  • Benzene
  • Mixed xylenes
  • Paraxlene
  • Melamine
  • Hydrocarbon Resins
  • Bulk chemical prices
  • Vanilla price in India
OTHER ARTICLES
  • ICRISAT’s Agri-Business Incubator
  • Benefits Of Probiotic Food
  • Over capacity for Vitamin C in China
  • New Projects - International
  • Tender
  • Chemicals Imported At The Chennai Port During The Month Of  November 2009
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