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Rhodia said that at present its fine chemicals business still has no signs of improvement, so the company is considering adopting adjustment measures to ensure sustainable development.
Rhodia CEO Comdhi once served as the head of the company's pharmaceutical department. In the previous round of business adjustment, he was very optimistic about the prospects of the department. But now he said that the company may “swell up†the pharmaceutical sector, including selling or renovating its “major surgery,†except for the current profitable aspirin and paracetamol operations.
According to industry sources, the poor performance of Rhodia's pharmaceutical chemicals business stems from the acquisition of ChiRex in 2000. At that time, the amount involved in the acquisition was the largest in several mergers and acquisitions in the same period. The fine chemicals business of several other large companies has experienced the same problems: the structural adjustment issue has been difficult to solve. At present, the two companies LANXESS and Rhodia are beginning to take measures to deal with the imbalance between the supply of fine chemicals and the supply and demand of customized services that began in 2000. This spring, LANXESS has decided to spin off its unprofitable fine chemicals business.
According to industry insiders, the internationally renowned chemical companies have flocked to the custom industry for a period of time—customizing them to produce various active ingredients for the relevant pharmaceutical industries, and they believe that they can obtain substantial profits from pharmaceutical companies. However, in fact, pharmaceutical companies did not choose customized product manufacturers, but instead organized their own production. Some pharmaceutical companies have even increased their investment in equipment to increase production capacity. As a result, those fine chemical manufacturers who have their eyes on the pharmaceutical industry are suffering from overcapacity, and have suffered huge losses after a brutal price war.
In the past two years, with the changes in the market, some well-known chemical companies have successively adjusted their business. At present, the old European chemical manufacturer Rhodia Group is fully out of the financial difficulties faced by the fine chemical business. The loss of the French company's pharmaceutical sector alone was as high as US$125 million. Affected by this, Rhodia’s financial report for the second quarter of this year showed that its operating loss was US$85 million and the overall profit level was only about US$40 million.