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News release
SaltigoLANXESS Deutschland GmbHContact: Ilona BolzCorporate CommunicationsTrade & Technical Press51369 LeverkusenGermany
Phone +49 214 30-61684Fax +49 214 [email protected]
Saltigo is ready to go
Address by
Dr. Axel Westerhaus,
Head of the Fine Chemicals Business Unit of LANXESS Deutschland GmbH and
designated Managing Director of the future Saltigo GmbH
(Please check against delivery)
(2006-1500e)
News release
Ladies and gentlemen,The future is about to begin for Saltigo. After finalizing the separation, which we expect for April this year, we'llbegin trading with retroactive economic effect from January 1, 2006. In today's presentation, I'm going to showyou how we, as a legally independent wholly owned subsidiary of LANXESS, are going to position ourselveson the market. I'll look at what we've achieved thus far and our plans for the immediate future.
(2006-1500e-1)
I outlined our strategic realignment at the beginning of November 2005 at the CPhl in Madrid. Today, I'd like togive you some more details.
But first, I'd like to present a brief portrait of the new company.Saltigo will operate globally and as a custom manufacturing specialist, providing services in three lines of busi-ness - Pharmaceutical, Agricultural and Specialty Chemicals.
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In recent years, sales figures for LANXESS's and, going further back, Bayer's Fine Chemicals business unithave always amounted to almost US$ 500 million, 90 percent of which resulted from custom manufacturingservices. On the back of these figures, Saltigo is aiming for a strong market position in all three lines of business.We're already a "top player" in the agricultural chemicals sector, which accounts for around half of our sales.
We intend to systematically develop our Specialty and Pharmaceutical Chemical lines, each of which accountfor around 25 percent of sales at present. We see ourselves first and foremost as a partner for high-innovation,technology-driven, research-based companies. This is a sector which has remained largely unharmed by thedamaging price wars with low-cost suppliers, particularly from Asia.
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We're keeping a keen eye on the highly lucrative pharmaceuticals market, which boasted a total sales volumeof close to US$ 470 billion in 2004. If we look at research spending in this sector by region, the huge significanceof the USA becomes clear. It accounted for almost half of all R&D investment in 2003 - almost US$ 30 billion.
With this in mind, Saltigo will strengthen its commitment to the US market considerably in order to achieve itsgrowth targets in the pharmaceuticals sector.
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Saltigo regards itself as a "full-service" provider that offers its customers comprehensive solutions rather thanmere products. Clearly, our primary aim is therefore to meet the requirements of our customers. We will neverbe the kind of company that offers a static product portfolio or a mere order list.
What's more, we're no longer going to be an internal service-provider for a large chemicals company. Goneare the days when we were its strategic reserve for technology development and production, as in Bayertimes. Now, we're going to act flexibly to constantly align our resources to market requirements. Our serviceportfolio, our plant structure and our investment plans will be shaped by customer requirements as part of anongoing, dynamic process.
That's why we can no longer be considered in the same light as the Fine Chemicals business units that existed atLANXESS and, even more so, Bayer.
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A transition of this kind necessitates a wide range of structural and organizational changes. I mentioned thesebriefly in Madrid, when I spoke of how plant and staffing structures would have to be aligned fully to marketrequirements if we wanted to rapidly achieve the kind of earnings enjoyed by many of our competitors.
Since then, we've already made important steps towards a substantially improved cost structure. In particular,Saltigo will no longer have to bear the financial burden of restructuring. What's more, thanks to the constructiveinput of the works council and the solidarity shown by LANXESS employees, we've already been able to resolvestaffing issues. It has long been clear which positions will be filled by whom at Saltigo. The people in chargehave also reached agreement about the new opportunities to be offered to other LANXESS Fine Chemicalsemployees, for example, through the new jobcenter at LANXESS, outplacement and severance packages.
We've also made great strides with our business structure. We have closed inefficient plants and facilities andcreated a number of new, clearly structured operating units that can be managed more efficiently and thusmore profitably.
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Let me give you some concrete examples of our future course by referring to four strategic objectives:
- Increased efficiency- Market profile- Utilization of our huge innovation potential- Investments that meet specific customer and market requirements.
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Firstly, we want to increase the efficiency and speed of process development in future, even in "difficult" casesinvolving reactions at high pressure or hazardous substances such as chlorine or phosgene. To achieve this,we intend to use the automated parallel reactions that are already common practice in other fields. In somecases, the equipment needed for this has not been commercially available. However, we've managed to closethese gaps with our own developments.
These include KASPAR, "catalyst screening for phosgene reactions with automatic reactor systems", and alsoparallel hydrogenation, which enables the development and testing of hydrogenation catalysts in mini autoclaves.These two technologies have already come through testing and are now being used in development work forour customers. "Miniature reactions" of this kind can be performed very safely and involve less waste disposalthan standard reactions.
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Saltigo offers its customers competitive advantages arising from innovation - not only in process developmentbut also in chemical research.
One of our specialist areas is organic fluorochemistry. Our experts can boast around 40 years' experience inthis field, and have immediate access to thousands of substances. Our portfolio of synthesis regulations currentlysupports the production of approximately 24,000 fluorine organic compounds - and this figure is on the rise.
In future, our "Fluorine Team" will provide even more know-how to customers looking for a high-performancecustom research partner. Nowadays, around half of all pharmaceutical and agrochemical intermediates and activeingredients contain fluorine. We will help our customers meet these challenges - from the R&D phase onwards.The "Fluorine Team" offers individual services - covering everything from consulting and custom synthesis ofresearch quantities to R&D partnerships and the generation of complete substance libraries on behalf of thecustomer.
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A recently concluded investment project has allowed us to increase efficiency and expand one of our key areasof expertise. At a cost of some 1.5 million euros, we've integrated our small-volume production plants in termsof location and organization and upgraded these units throughout. With the introduction of "Plant 5", whichcomprises these upgraded units and parts of our Central Organics Pilot Plant (ZeTO™), we're even betterequipped to handle more than 5,000 jobs a year for more than 300 custom products - flexibly, reliably and onschedule.
The new network includes the high-pressure laboratory, custom manufacturing on a scale of 10-100 kilograms,batch piloting, and mini-plants for scaling up continuous reactions.
Small-volume production, from 100 ml flasks to 400 liter reactors, is essential for our customers in the pharma-ceutical industry who require substances for the preclinical and early stages of clinical examination - quickly,reliably and in some cases also compliant with GMP standards.
We're already highly satisfied with the level of business in this sector. I'm convinced, however, that we'll becomeeven more of an attraction for customers in future.
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To enable the plants to react more dynamically, we've made specific investments geared towards customersand market requirements. One example is the new liquid nitrogen low-temperature unit that we've recently startedto install. For around 500,000 euros, we'll equip the ZeTO™ to perform syntheses in production volumes acrossthe whole range of temperatures from +120 °C to -120 °C.
From mid 2006 onwards, we'll therefore be better equipped to meet the growing demand for complex synthesesat very low temperatures - for new products, improved yields or higher purities.
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Also in terms of expanding GMP capacities, we will take measures that allow us to meet market requirementsat short notice. Here too, we will flexibly adjust ourselves to the demands of our customers. We're currently inthe process of analyzing and evaluating different options and will reach a decision in the next few months. Idon't want to announce any details at this stage. Suffice to say that the GMP market offers great potential forus to increase our pharmaceuticals business in the long term.
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Ladies and gentlemen,Saltigo is on the right path to meeting its objectives and fulfilling the expectations of our customers and ourparent company LANXESS. Hopefully, my presentation has demonstrated that:
- We are a fast-moving, innovative company operating in profitable markets. - We have access to a global customer base. - We have many years' experience in custom manufacturing and custom synthesis, including the develop-
ment of technologies and processes.- Our employees are highly skilled, familiar with our customers' requirements, creative and highly motivated. - We have a broad technology base that supports many complex syntheses.- The majority of our plants are located on a single site, where we benefit from an excellent infrastructure.
When Saltigo begins operations, it won't carry any past burden. We'll be able to capitalize on our new potentialfor efficiency, profitability and market success from the word go.
Saltigo is more than merely the upshot of restructuring. We're going to be a reliable, forward-looking and com-mitted partner for our customers around the world. I'm sure Saltigo is going to be a great success.
Many thanks for your attention.
Forward-looking Statements This news release contains forward-looking statements based on current assumptions and forecasts made by LANXESS AG management.Various known and unknown risks, uncertainties and other factors could lead to material differences between the actual future results,financial situation, development or performance of the company and the estimates given here. The company assumes no liability whatsoeverto update these forward-looking statements or to conform them to future events or developments.
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