BASF to take on Asian PVP producers and target generics firms with new capacity in China

BASF will spend €56m ($62m) to increase production capacity for the excipient PVP by expanding existing plants and introducing manufacturing capabilities at its facility in Shanghai, China.

The German chemical firm said the expansion – which will also see it revamp plants in Ludwigshafen, Germany and Geismar, Louisana in the US –will increase its polyvinylpyrrolidone (PVP) by 6,000 metric tons over the next four years.

Spokeswoman Tonia Theiss told in-Pharmatechnologist.com the investment was prompted by increasing demand from BASF’s customers in the pharmaceutical industry, particularly the generic drug sector.

In the overall PVP market we have been observing an increasing demand and strong market growth in the last couple of years, particularly in the generics segment within the pharmaceutical industry. The investment will allow us to further participate in this growth trend” she said.

BASF declined to say how much PVP it makes a year. However, analysis by rival supplier Huafu Chemical suggests its output combined with that of ISP was 2m tons in 2003, which would mean the expansion is only a relatively small increase.

Market share and Asian competition

The impact of the expansion on BASF's share of the PVP market share is difficult to estimate.

According to a European Competition Commission review of Ashland’s acquisition of ISP in 2011, BASF held 10-20% of the global PVP market for binders, a similar share for binders used in wet granulation and a 20-30% share of the PVP immediate release excipients market.

PVP is produced either by using acetylenic polymers or cellulose ethers, with the former method being the one favoured by BASF. The German firm uses natural gas and ammonia to make the precursor chemical N-vinylpyrrolidone (NVP), at the Ludwigshafen and Geismar sites.

According to the Commission review document BASF's main competitors in the PVP sectors as Ashland-ISP and “Asian producers,” with the cellulose ether derived PVP market being fought over by Ashland-ISP, Dow, Shin-Etsu and Nippon.

The expansion in Shanghai suggests BASF is keen to taken on the “Asian producers,” although again Theiss cited rising demand for PVP in China and the wider region as the most important factor.

She said: “We are seeing an increasing demand for PVP in the Asian Pacific region, especially due to the market growth of PVP in the pharmaceutical generic segment.”