Dutch chemical group DSM has acquired Polymer Technology Group (PTG) and predicted its best financial year to date following organic sales growth of 14 per cent for the first quarter.
Results were broadly positive although the companies' pharma operating profit remained the same. However, pharma sales were up by 5 per cent, despite the weak dollar. Operating profit from DSM's Anti-Infectives department increased but this was offset by a challenging year for DSM Pharmaceutical Products.
This is a consequence of Roche contracts ending and what the company described as "temporarily low sales". The phasing out of the Roche contracts has resulted in a loss of revenue but this is expected to recover. Feike Sijbesma, chairman of the DSM Managing Board, said: "The company's strong business performance confirms our belief in DSM's Vision 2010 strategy to focus on Life Sciences and Materials Sciences.
"The roll-out of the strategy remains firmly on track, as illustrated by the recent acquisition of the leading US biomedical materials company, PTG, and the major capital expenditure plans for DSM Dyneema. We are confident that DSM is well-placed to exploit the opportunities the markets are offering us." The acquisition of PTG will expand DSM's biomedical materials business. PTG is expected to make approximately $40m in net sales for 2008, with an above average operating profit.
Annual growth of over 20 per cent is predicted for PTG which should enable DSM to realise the ambitions of its Biomedical Materials division. In addition to the purchase of PTG, DSM has also acquired a "significant minority stake" in biopharmaceutical company IQ Therapeutics. This gains DSM entry to the market for antibodies for treatment and prevention of infectious diseases.
There has been considerable change at DSM as the company makes acquisitions and adapts it operations in response to market conditions. The Pharmaceutical Products department has undergone a restructuring process, with the company opting not to compete directly with India or China for the early stage (non-registered) intermediates and generic APIs market.
Instead the company now focuses on advanced and registered intermediates, APIs and more specialized generic APIs. Its early stage intermediates are to be sourced from China and India, with the company the utilising its experience in chemical and biochemical processes to add value to the products. Following this restructuring Pharmaceutical Products had a tricky year in 2006, with operating profits falling by 33 per cent.
However, the department appears to have recovered from this blip and looks to be in a strong position for the coming year.