BASF selling some APIs, three plants to Siegfried

BASF has decided it needs to slim down its active pharmaceutical ingredient (API) business and so will sell a big piece of it, and three manufacturing plants, to Swiss contract manufacturer Siegfried Holding so that the German chemical giant can focus on higher margin ingredients.

Siegfried will pay €270 million ($306 million) for BASF's ephedrine, pseudoephedrine and caffeine API business, as well as its custom drug manufacturing operation. With the deal, it gets plants in Minden, Germany; Evionnaz, Switzerland; and Saint-Vulbas, France, that employ about 850, BASF said in a statement.

BASF director Michael Heinz said the "competitive plants for active pharmaceutical ingredients and custom synthesis" will provide the Swiss company with a strong market position, while the sale fits in with BASF's strategy to focus on its "growth and high margin core businesses."

For BASF, the core API markets are its polyethylenglycol (PEG) business, where it says it has a "leading market position," as well as ibuprofen and omega-3. Two years ago BASF made a big investment, nearly $1 billion on ultrapure omega-3, an investment that has not panned out that well, Bloomberg points out. It paid €684 million ($910 million) for Pronova BioPharma in Norway. It also spent another €22m ($29.2 million) to expand a plant in Isle of Lewis in the Hebrides, west Scotland, that it acquired from Equataq.

Pronova makes the active ingredient for GlaxoSmithKline's ($GSK) omega-3 drug, Lovaza, at one time a blockbuster but which returned only £240 million ($365 million) last year after Teva launched a generic. BASF also was selected by Amarin ($AMRN) to make the API for its ultrapure omega-3 fatty acid heart pill Vascepa, but FDA issues, and a rethinking of the value of fish-oil drugs have kept that drug from doing much.

According to Bloomberg, BASF noted its struggles in the fish oil market in its annual report. Today's news of the sale also comes a week after BASF released Q1 earnings, where sales were up slightly but earnings per share were off nearly 20%.

- here's the announcement
- more from Bloomberg