FOSTER CITY, Calif.—Gilead Sciences announced recently the signing of a definitive agreement to purchase Edmonton-based Raylo Chemicals, the Canadian subsidiary of specialty chemicals company Degussa AG. Upon meeting specific closing conditions, Gilead will pay €115.2 million to the German company. As part of the deal, which is expected to close in Q4 2006, it has also entered into long-term agreements with Degussa for the supply of raw materials and manufacture of specific active pharmaceutical ingredients (APIs).

 

The deal largely fills Gilead's need for expanding chemical and manufacturing expertise and comes after a 14-year working relationship between Raylo and Gilead. The pharmaceutical company expects to use the Canadian facilities for manufacturing development of investigational products, as well as the supply of APIs and newly launched products. For Degussa, which will retain the Raylo name, the sale is part of the company's strategy to move its fine chemicals production from the Western Hemisphere to Asia.

 

"The long-term supply agreements with an innovative company such as Gilead prove Degussa's strong position in exclusive synthesis and are a landmark for the successful cooperation with a leading pharmaceutical company," says Dr. Klaus Engel, chairman of Degussa's management board. "For the Raylo employees, this transaction opens new and attractive opportunities within Gilead."