Gilead Sciences to Acquire Degussa subsidiary Raylo Chemicals

June 8, 2006
Patricia Van Arnum

Patricia Van Arnum was executive editor of Pharmaceutical Technology.

ePT--the Electronic Newsletter of Pharmaceutical Technology

Gilead Sciences, Inc. (Foster City, CA) signed a definitive agreement to acquire the Canadian subsidiary Raylo Chemicals and most of its assets from Degussa AG (D?sseldorf, Germany) for 115.2 million euros ($147 million).

Gilead Sciences, Inc. (Foster City, CA, www.gilead.com) signed a definitive agreement toacquire the Canadian subsidiary Raylo Chemicals and most of its assetsfrom Degussa AG (Düsseldorf, Germany, www.degussa.com) for115.2 million euros ($147 million).

In addition, Degussa entered into long-term agreements with Gilead forthe supply of raw materials and the manufacture of certain activepharmaceutical ingredients (APIs) for Gilead products.

Raylo Chemicals, located in Edmonton, Canada, is a custom manufacturerof APIs and advanced pharmaceutical intermediates and is part ofDegussa's exclusive synthesis and catalysts business unit. It hasroughly 200 employees at two sites, Clover Bar and Argyll Road. TheRaylo name and the Argyll Road site will remain assets of Degussa.Degussa will ensure the business and supply relationships with Raylo'sexisting customers other than Gilead.

Gilead intends to use the Raylo site primarily for manufacturingdevelopment of investigational products, supplying APIs for clinicalresearch programs, and for new product launch supplies.

Degussa's sale of Raylo follows Degussa's move to form a joint venturefor exclusive synthesis in China with Lynchem Co., Ltd. (Dalian,Liaoning Province, China, www.lynchem.com).

"The sale of Raylo is a key step in our strategy to shift productioncapacity from the Western Hemisphere to Asia," said Klaus Engel,chairman of Degussa's management board in a company release.

Degussa says it will focus its European custom manufacturing sites toproduce high-value regulated intermediates and on-patent APIs from nowon. In executing its Asian strategy, Degussa will concentrate theproduction of pharmaceutical raw materials, certain intermediates, andoff-patent APIs in the newly formed Degussa Lynchem joint venture (seerelated ePT story, "Degussa Forms Fine Chemicals Joint Venture in China").