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AKZO TO SLASH CAPACITY FOR DRUG CHEMICALS
Akzo Nobel's Diosynth pharmaceutical ingredients manufacturing unit is embarking on a major downsizing in the face of declining demand for its products.
Diosynth will reduce global chemical synthesis capacity by closing its site in Mexico City and scaling back facilities in the Netherlands. Last month, it reduced capacity at its Buckhaven, Scotland, site. The Mexican closure will affect almost all 175 employees there, and the cutbacks in the Netherlands and Scotland will eliminate 100 and 75 positions, respectively. Diosynth employs about 3,500 overall.
The business says it is facing a significant rise in overcapacity as a result of a severe decline in demand for active pharmaceutical ingredients (APIs) from its customers due to destocking and overcapacity. Captive API demand from Akzo Nobel's Organon unit is also shrinking, Diosynth says, because of destocking and lower sales of some products.
"Overcapacity in our chemical synthesis operations is too high to ignore," says Johan Evers, general manager of Diosynth. He says the firm is reducing capacity at sites such as Mexico City and Buckhaven that focus on pharmaceutical starting materials or intermediates. Some products will be transferred to plants in Apeldoorn and Oss in the Netherlands. However, overcapacity will remain a problem at the Dutch sites, the company says; hence the 100-employee reduction.
Diosynth is the latest in a string of pharmaceutical chemical makers to scale back capacity. In 2003, major players such as Lonza, DSM, Degussa, and Clariant announced facility closures.
Interestingly, in December 2002, Diosynth was on the verge of increasing its capacity with an agreement to acquire GlaxoSmithKline's API plant in Montrose, Scotland. However, the company backed out of the deal in March of last year, citing "changed economic circumstances in the pharmaceutical sector." |
