Discarding chemicals, picking up pharmaceuticals
In what is becoming a trend, the Belgian pharmaceuticals company UCB sold off a chemicals unit, in this case to US chemical company Cytec. The $1.85 deal gives UCB, a minor but significant player in the drug market, more cash to help it grow in that profitable area. On the pharma side, UCB earlier this year bought UK-based pharmaceutical company Celltech for around $2.6 billion.
Also recently, USB sold off its film extrusion business to venture-capital firm Candover Instruments for $390 million. UCB now will be a pure pharmaceutical company.
UCB's top drug is anti-hay fever medicine Zyrtec, though that drug has almost run out its patent. The company also makes Keppra, an anti-epileptic drug; Xyzal, another anti-hay fever drug; and Celltech's CDP870, which treats rheumatic arthritis.
The chemicals unit, Surface Specialties, specializes in coatings and resins. In 2003, UCB acquired US-based Solutia's adhesives operations for $500 million, and has created a major position that market. Cytec specializes in specialty chemicals and coatings. The purchase will almost double its gross income. It's indicative that UCB had such a quick turnaround, discarding so quickly the company it had just recently picked up. Was a stronger position for divestment in their mind all along, or did they realize they could never make any real profits in that business?
This is part of a trend. Both Bayer and Aventis have recently drop low-profit chemical divisions in favor of building their presence in the drug industry. This is yet another example of the gin rummy game of oligopoly, where big companies buy and sell to get what they think will be a better hand.
6:02:58 PM 
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