Flexing its muscles

05 June 2000 00:00  [Source: ICB]

Rhodia's life-science chemicals business believes it can be one of the heavyweights in the market, thanks to a series of new investments. Helen Carmichael reports

Rhodia is working hard to put on weight in the life-science chemicals arena. A year ago the company bought pharmaceutical production units in Dagenham and Holmes Chapel in the UK from Rhône-Poulenc Rorer, which is now part of Aventis. And in March this year the company announced plans to plough E30m ($27m) into its facilities for synthesis of advanced intermediates and active molecules for the pharmaceutical industry.

Rhodia plans to use its investment to extend production capacity at the Holmes Chapel site, and to introduce new technologies. These improvements are due to be completed early next year. 'We are investing to transform this plant into a multi-purpose, high quality cGMP plant,' says Jean Claude Bravard, Rhodia's deputy president and president of the fine organics division. 'It will be very flexible, and we believe that with this investment we can generate at least E50m/year more turnover from this plant.'

Another beneficiary of Rhodia's cash injection is the group's R&D centre at Lyon, France. A cGMP pilot plant is due to be built at the centre to supply pre-clinical samples to pharmaceutical industry customers. 'The strategy is to service the whole chain from the initial request from the customer, which will be done in the cGMP kilo lab in Lyon. Scale up and large-scale production will be done in the UK,' Bravard explains.

Rhodia's fine organics division is organised into three distinct fine chemicals businesses. These are life-science chemicals, pharmaceutical ingredients and diphenols and aromas. Of these three, Rhodia has stressed its commitment to developing the life-science chemicals business. This business has expertise in chlorination, nitration, fluorination, oxidation and hydrogenation, and makes customised molecules and fine intermediates.

The pharmaceutical ingredients business is the world's leading player in acetylsalicylic acid and calcium phosphates and number two in paracetamol, whilst the diphenols and aromas business manufactures base aromas and fragrances such as catechol, vanillin and cyclopentanone along with hydroquinone polymerisation inhibitors for transportation and storage.

This year's second quarter has seen the startup of the life-science chemicals business' newly modernised Dagenham, UK, plant. 'Here we have made a smaller investment to adapt it to multipurpose cGMP,' says Bravard. This site will focus especially on ingredients for a major anti-cholesterol drug, as well as for veterinary markets.

These investments follow hard on the heels of a previous round of spending on life-science intermediates. Last year Rhodia also invested E30m, predominantly on fine nitration facilities at Mulhouse, France, and also on anaesthetics production at Avonmouth, UK.

'Life-science chemicals is a E300m business for Rhodia. Nitration is one of the critical points we are reinforcing,' Bravard says. 'There is significant nitration capacity in Mulhouse already. We are investing a further FF70m ($10m) to enlarge nitration, this will significantly reinforce our abilities.' The facility will be cGMP compatible to cater for customers such as pharma companies.

Rhodia's anaesthetics business at Avonmouth is linked to its core competence in fine fluorination. This includes HF and KF processes for agrochemical and pharmaceutical customers. 'This is a growing business,' says Bravard, 'and so we have invested in a 50% increase in capacity, which is already operating'.

R&D resources have also been given a 30% boost. The extra cash will be spent on developing technology, for example in chiral chemistry, enzymatic catalysis, carbanions and organometallic chemistry.

There are signs that Rhodia is moving to fill in some of the gaps in its offering, to provide more of a 'one stop' service to its customers. 'Our aim is to provide a global offering for all our partners in the pharmaceutical industry, ranging from pre-clinical samples to commercial batches,' says Bravard.

'This multi-service approach will enable us to accompany our customers even more closely in the different phases of their products' lives - development, industrialisation and market launch - while significantly reducing the time between each of these phases,' he adds. The new sites at Dagenham and Holmes Chapel and the Lyon investment have made this approach possible. 'The product will be born in Lyon and finished in the UK,' says Bravard.

The fine organics division was responsible for some 17% of Rhodia's E5.5bn sales in 1999. This was an improvement of 21% compared with 1998 results, and was down to improved phenol prices as well as volume growth in fragrance and pharmaceutical ingredients operations. The division's earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 39%.

The division has come to the fore following the group's restructuring to become sharply focused on activities that generate higher value added, that are more immune to economic cycles and that create value for customers and shareholders.

Rhodia has experience in the pharmaceutical market with products such as aspirin and anaesthetics. The next step is the addition of multi-purpose units with the acquisition and development of the Holmes Chapel and Dagenham sites. 'Last year, we launched a total of 24 new products for the life-science chemicals business. Since 1993 we have added a total of 87 new products, and the number launched is escalating every year,' says Bravard.

'With our experience in pharma, our technology, and the development of our multi-purpose plants, we believe Rhodia to be significant,' says Bravard. 'We believe we can be one of the leading players in the market.'

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