DSM looking for new Chinese ingredient partners

pharmafile | November 4, 2009 | News story | Manufacturing and Production CMO, DSM 

Dutch fine chemicals company DSM has said it will look for new partners in China after dissolving a joint venture with North China Pharmaceutical Group Corp (NCPC) for the manufacture of anti-infective and nutritional ingredients.

Like many ingredients suppliers serving the pharmaceutical sector, DSM has been trying to transfer production of some ingredients to lower-cost Asian companies, particularly for commodity products which rely heavily on competitive pricing to command market share.

DSM also has the stated aim of growing its own sales in China to a level of $1.5 billion in 2010, up from $1.1 billion – 8% of group sales – in 2008.

The Dutch group signed contracts with NCPC back in March for the production of vitamin C and various active pharmaceutical ingredients (APIs) and intermediates (such as amino penicillanic acid (6-APA) that are used in the manufacture of beta lactam anti-infective products.

The two companies had been in discussions since 2004, and in 2005 signed an agreement to allow DSM to make use of NCPC's one-step fermentation process for vitamin C manufacture.

As part of the 2009 agreement DSM took a 10% stake in the Chinese firm and said it would commit $110 million to the joint ventures in return for a 51% stake in the anti-infectives alliance and 30% share for vitamin C.

Now, DSM said the deal with NCPC has been called off because of further delays to implementing the joint ventures resulting from a change of ownership for the Chinese firm. Specifically, Hebei SASAC's stake in NCPC has been taken over by JiZhong Energy Co.

"DSM will continue to explore other opportunities for further growth in China through strategic cooperation, also in the areas of nutritional products and anti-infectives," said the Dutch firm in a statement.

Meanwhile, DSM has announced the retirement of Jan Zuidam, deputy chairman of the company's board, on January 1, 2010. Zuidam has been with the company for 36 years, including 12 years at board level.

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