DCSIMG
Partnerships - Annual Report 2015 - DSM

Partnerships

As part of its 2010-2015 strategy DSM in motion: driving focused growth, the company has established a number of partnerships for its Pharma and Bulk Chemicals activities over recent years in order to streamline and simplify its core portfolio around its more resilient, higher-value activities in Nutrition and Performance Materials, whilst at the same time maximizing the value of these businesses for its shareholders.

DSM Sinochem Pharmaceuticals

DSM Sinochem Pharmaceuticals (DSP) is a global leader in generic anti-infective molecules formed in 2011 as a 50/50 joint venture between DSM and Sinochem. DSP develops, produces and sells intermediates and active pharmaceutical ingredients (APIs) as well as finished dosage. It is at the forefront of technological and process developments for anti-infectives and cholesterol-lowering molecules, using environmentally-friendly production technologies based on biotechnology.

DSP is a market leader in enzymatic beta-lactam APIs, with nearly 300 patented innovations in this field. It is also a B2B provider of generic drug products. Full backward integration and control of its supply chain with the advantage of using its own high-quality APIs delivers unique quality and performance in the finished dosage formulation and sets DSP apart from its competition.

Sustainability is a key driver in DSP's antibiotics business. Nearly all of DSP’s high-quality APIs are manufactured using enzymatic processes, which allow the production of APIs with a much lower CO2 footprint versus comparable chemically manufactured products. DSP actively promotes the sustainable and responsible use of antibiotics throughout the value chain.

Table 1: DSM Sinochem Pharmaceuticals

DSM Sinochem Pharmaceuticals
x € million (100%)
2015
2014
     
Net sales
418
399
     
Operating profit plus depreciation and amortization (EBITDA)
57
23
Operating profit
28
9
Capital employed at 31 December
313
322

Patheon

Patheon (formerly reported as DPx Holdings) was formed in 2014 as part of a USD 2.6 billion transaction between JLL Partners and DSM, which combined the businesses of DSM Pharmaceutical Products and Patheon, Inc. The company is positioned to add scale, new value chain capabilities and technologies, as well as to expand its end-to-end service offerings as a comprehensive solution provider to the pharmaceutical industry. DSM has a 49% shareholding in Patheon.

Patheon’s strategy is built upon the collective reputations of quality, innovation, customer service and operational excellence. The same core commitments are at the center of each of the business units.

Patheon has continued to transform itself. Following various acquisitions in 2014, it acquired Irix Pharmaceuticals, Inc. and Agere Pharmaceuticals, Inc. in 2015. It has also divested its DPx Fine Chemicals division as well as operations in Capua (Italy) and Mexico City (Mexico). The Banner Life Sciences business was spun off to Patheon's investors during the year and is now positioned as a specialty pharma player.

In the summer of 2015, Patheon filed a registration statement (Form S-1) with the US Securities and Exchange Commission (SEC), preparing itself for a public offering. To date, neither the timing of such a public offering, nor the number of shares nor price have been confirmed.

Table 2: Patheon

Patheon1
x € million (100%)
2015
2014
     
Net sales
1,621
984
     
Operating profit plus depreciation and amortization (EBITDA)
366
177
Operating profit
191
92
Capital employed at 31 December
2,391
2,500
1 Book year 1 November until 31 October

ChemicaInvest

DSM completed its strategic actions for Polymer Intermediates and Composite Resins with the establishment of a new venture, ChemicaInvest, together with CVC Capital Partners. ChemicaInvest is a global leader in the production and supply of caprolactam and the leading European supplier of acrylonitrile and composite resins. DSM has a 35% shareholding in the company. As from 31 July, DSM reports ChemicaInvest as an associate in accordance with the equity method.

Caprolactam

Caprolactam is the raw material for polyamide 6 (PA6), also known as nylon 6. PA6 is used in diverse applications, ranging from carpets and textiles to car parts, electrical devices and packaging film. ChemicaInvest will continue to supply at least 80% of DSM Engineering Plastics' caprolactam needs in Europe and North America until 2030 via a drawing rights contract and in China via a continued supply agreement. This secures an ongoing strategic and competitive position for the PA6 business in which DSM is a global leader. The caprolactam business has been renamed Fibrant.

Acrylonitrile

ChemicaInvest is also the leading supplier in the European merchant acrylonitrile market. Acrylonitrile is a raw material for acrylic fibers, plastics, rubber, water treatment chemicals and a wide range of specialty products. This business now operates under the name AnQore.

Composite Resins

Composite Resins is a leading supplier in the European market and provides resins solutions for lightweight composites used in trucks and trains, bridges, building facades, wind-turbine blades and trenchless pipe renovation. The Composite Resins business is branded Aliancys.

Table 3: ChemicaInvest

ChemicaInvest
x € million (100%)
20151
2014
     
Net sales
756
-
     
Operating profit plus depreciation and amortization (EBITDA)
(3)
-
Operating profit
(32)
-
Capital employed at 31 December
566
-
1 Started 31 July 2015