DSM-Gist signs Chinese deal

Gist, a unit of Dutch chemicals and pharmaceuticals group DSM, has entered into an agreement with China's Guangzhou Baiyunshan General Pharma for the supply and development of antibiotics.

Initially, Gist will supply antibiotic intermediates and bulk drugs to Baiyunshan, according to a report in Chinese Medical News. The Dutch company will provide 200-300 tonnes of amoxicillin in the first instance, which is expected to result in $18 million (€15.8m) in sales to Baiyunshan. The Chinese firm achieved turnover of $62.6 million last year.

In the second stage of the cooperation, the two companies will work together to upgrade product quality and tackle bottlenecks in production (such as the purity of the drugs and their formulations) while, in the third phase, the target is to work on the development of novel antibiotic products.

The new agreement holds up a mirror to DSM's strategy in bulk generic antibiotics, set out after it acquired Gist-brocades in 1998. The first pillar of this strategy has been to set up plants for the production of antibiotics in low-cost countries, and it remains to be seen whether the link with Baiyunshan will develop in this direction.

The remaining pillars are the use of biotechnology to improve production processes and a switch to higher-margin products, both of which are covered under this latest deal.