As patents of several drugs are expanding in Europe and political pressure increases to bring the costs of medicines down, Schweizerhall has decided that its future lies in the generic drug business, developing products either for itself or to license them.
The management had said it views its chemicals unit as "a lean cash cow to milk as much as possible to finance entry into the pharma business," yet it appears the time is now ripe for the cow to go to slaughter.
With cash from the deal, Schweizerhall will finance the expansion of activities in generics, fuel the R&D pipeline of Novosis, reduce debt and settle the final payment for the acquisition of Novosis due in 2008.
Looking for an advantage in the high-value generics market and a boost to its contract development services for research-driven pharmaceutical companies, Schweizerhall bought German drug delivery firm Novosis in a deal worth up to €82.6m in March 2006.
Schweizerhall used to be exclusively a trader and distributor of chemical raw materials, intermediates, specialty chemicals and customised mixtures but moved into the European generic pharmaceutical industry last year with the acquisition of Cimex.
Cimex is a leading supplier of generics in solid form whereas Novosis specialises in the development and manufacturing of transdermal drug delivery systems - therapeutical patches and inserts.
Without its chemical division, Schweizerhall now aims to focus on its drug pipeline, which boasts 20 projects, and produce high value generics.
"When we have spent all the money allocated from this sale there will be some funds left for a possible future acquisition," Schweizerhall chairman Luzi Andreas von Bidder told In-PharmaTechnologist.com.
"As far as the chemical business is concerned, the people in the unit have a great future with Brenntag, and it was obviously a good time make such a deal when the chemical industry is undergoing consolidation."
Brenntag will initially operate Schweizerhall Chemie under the established Schweizerhall brand name and under the responsibility of the existing management team with the locations in Basel, Avenches and Lohn/Batterkinden retained. The Flawil facility was sold to a local company prior to the signing of the takeover agreement.
Looking ahead, Cimex plans to directly supply the Swiss market with its range of generics starting in the autumn of 2006.
The generic industry is expected to grow by roughly 13 per cent in 2006, with drug patents expiring this year valued at €18bn.
Schweizerhall supplies leading generics and pharmaceuticals companies throughout Europe and so hopes this latest move will strengthen its position in the region.