Acetaminophen Market Sees Moderate Price Hike

10 August 1998 00:00  [Source: ICB Americas]

By Feliza Mirasol

Acetaminophen producers are raising prices for the first time in more than four years, reflecting a tightening of the market after several years of oversupply. Producers say the increases are modest and are within a range of 3 to 4 percent.

Mallinckrodt Chemical Inc., the largest acetaminophen producer, raised its US price early this year and its European price on July 1. The company quotes a price of $8.55 per kilo for truckload quantities of pure powder acetaminophen.

Rhodia Inc., another leading supplier, increased its list price for bulk acetaminophen powder to a range of $8.15 to $8.45 per kilo, a 30-cent increase. Peter Stevenson, senior vice-president and general manager for pharmaceutical ingredients at Rhodia, says the company is raising prices to cover increased costs for labor and raw materials during the last few years.

US demand for bulk acetaminophen is estimated at 30,000 to 35,000 metric tons, more than half of worldwide consumption, according to a December 1997 study by the Dutch banking company ABN-AMRO Bank N.V. Demand has been fairly flat, producers concede. They expect sales to grow 2 percent annually in the US and 2 to 4 percent on a global basis.

However, Rhodia notes that demand is growing more rapidly in Africa and Asia. It also sees some growth in South America and Eastern Europe, though sales are flat in Western Europe.

Similarly, Mallinckrodt is seeing better growth in the southern hemisphere, including Latin America, South America, Africa and the Middle East. The company had a setback in Asia because of the currency crisis in that region.

"There's been a fairly significant reduction in inventories because of the rapid changes in currency in that part of the world, but we've seen some indication that we're bouncing out of that," says John Steitz, vice-president and general manager of Mallinckrodt's PAP/APAP business. "We hope we continue to see some renewed growth in that part of the world."

Mallinckrodt leads with roughly one-third of the global market and half of the US market. Its acetaminophen plant in Raleigh, N.C., is the largest in the world. The company has an annual capacity of 30,000 metric tons, about twice the capacity of its nearest competitor.

The acetaminophen market is highly capital-intensive, Mr. Steitz says. During the last five years, Mallinckrodt reinvested more than $50 million into its aceta-minophen business for general debottlenecking, quality improvements, yield improvements and attempts to reduce non-value-added costs. The company continues to reinvest at this rate.

From a commodity standpoint, Rhodia's purchase of ChiRex Inc.'s Dudley, Northumberland, UK-based acetamino-phen business (CMR, 4/24/97, pg.3) has helped balance supply and demand.

Rhodia is able to use more of its capacity and improve its on stream time by making additional investments in its sites in Luling, La., and Rousillon, France, following the ChiRex acquisition, which did not include any manufacturing operations.

"We are improving our processes to meet or exceed evolving Good Manufacturing Practices standards, and increase safety performance and plant economics," says Mr. Stevenson.

A spokesperson at Celanese says Hoechst is moving out of industrial chemicals and focusing on life sciences. "Hoechst still produces and sells acetaminophen, but it's not consistent with their long-term strategy," he says. "It will ultimately be one of the businesses they exit."

Acetaminophen faces competition from aspirin, ibuprofen, naproxen and other over-the-counter analgesics, but new studies may improve acetaminophen's popularity.

Preliminary results show that it may reduce the risk of ovarian cancer and protect against heart disease by acting as an antioxidant.

ARQULE INC. has broken ground for a new 130,000-square-foot headquarters, research and development facility in Woburn, Mass. Arqule expects to complete construction in 1999. Developed and owned by National Development of New England, the new headquarters will house 300 employees.

Arqule's second quarter revenues rose 84 percent to $6 million, although it reported a net loss of $638,000 (5 cents per share) compared to a net loss of $435,000 (4 cents per share) for the same period last year.

BIRICODAR DICITRATE--Vertex Pharmaceuticals Inc. has begun a Phase II clinical trial with Incel (biricodar dicitrate) for the treatment of advanced hormone-refractory prostate cancer.

Vertex's second quarter revenues totaled approximately $7 million. The company's net loss was $9.8 million (39 cents per share), compared to $1.4 million (60 cents per share) in the same period last year.

CHIRON CORPORATION has filed suit against Eli Lilly & Co. and Vertex Pharmaceuticals Inc. for patent infringement on methodology and composition regarding Hepatitis C virus (HCV) protease inhibitor drugs. Lilly and Vertex are among several companies developing such drugs, which fall within the scope of Chiron's HCV protease patents. Chiron filed the suit in the US District Court for the Northern District of California.

FLAVONES--Lemont, Ill.-based Medi-Chem Research Inc. has received a patent for the preparation of its robustaflavone antiviral agent, as well as seven other biflavanoid compounds. Under the patent, robustaflavone and the other biflavanoids may be used to treat and prevent viral infections, including influenza A and B, hepatitis B, HIV-1, herpes viruses (HSV-1 and HSV-2), varicella zoster virus and measles.

PAREXEL INTERNATIONAL Corporation's subsidiary, KMI/Parexel Inc., is working with officials of the Russian Federation Ministry of Health to establish a good manufacturing practice (GMP) program for their drug manufacturing process. KMI/Parexel will help Russian officials develop and update Russian drug manufacturing standards, as well as ensure consistency with US, European and other international regulatory requirements and manufacturing standards.

WARNER-LAMBERT COMPANY is ending its joint venture with Glaxo Wellcome PLC for its over-the-counter (OTC) business. Warner-Lambert expects to complete the transaction by the end of December.

Following dissolution, Warner-Lambert will acquire exclusive rights to OTC Zantac products in the US and Canada. Glaxo Wellcome will receive Warner-Lambert's rights to OTC Zantac in all other markets.

Glaxo Wellcome will also receive worldwide rights to OTC products Zovirax cold sore cream and Beconase hayfever remedy, as well as future Glaxo Wellcome prescription products that switch to OTC. These products are currently marketed through the joint venture partnership between the two companies, which operates in Western Europe, North America, Australia and New Zealand.

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