Akzo Nobel Integrates Diosynth And Organon To Reinforce Its Human Pharmaceutical Business

Akzo Nobel announced today the intention to integrate its two human pharmaceutical businesses, Diosynth and Organon, into one operating business unit. The integration combines key competences of Diosynth and Organon in order to provide a targeted approach for the Company's human pharmaceutical activities. To support this development, Akzo Nobel intends to invest EUR 60 million in Oss, the Netherlands, to build a state-of-the-art parenteral production facility. A new biotechnology research facility in Cambridge, Massachusetts, United States, will also be created.

"The integration and investments are an exciting next step in the strategy to ‘fix pharma' and represent the new way forward," said Toon Wilderbeek, Member of Akzo Nobel's Board of Management. "This is a logical move, following initiatives to improve profitability and a strategic shift to actively seek partnerships. This is not primarily about costs. It is much more aimed at building the business in a way that will move us forward."

The integration of the key competences of Diosynth and Organon offers clear benefits. The new organization will leverage its combined know-how, technologies, people and facilities to capitalize on market opportunities. The integration will also reduce complexity and thus support the strategy of partnerships in development and marketing and sales. Bundling of forces will bring optimized investment decisions and strengthen management of the entire supply chain. It also allows the Company to combine biotechnology activities in Organon and Diosynth into one platform.

The Cambridge location has been chosen to create the new biotechnology research facility because of its high concentration of medical research institutes, universities, and hospitals. The biotechnology industry is also well established in the area. The investment in the new parenteral facility confirms Akzo Nobel's commitment to its pharmaceutical activities and the importance of the production site in Oss. Construction of the facility is expected to start early in 2005. It will be operational in 2007.

It is expected that the integration will result in some overlap of functions. This will lead to redundancies involving some 60 full time positions, roughly 50 of which will be in Oss and the remainder in Roseland, New Jersey, United States. Employee representative bodies and unions have been informed and consultation procedures will commence shortly, where applicable.

As of January 2005, the two entities will operate as a single business unit called Organon. Diosynth's third party business will remain a reliable partner for its customers and will continue to trade under the name Diosynth.

To mark the importance of this integration and the opportunities it will provide, the management team will be extended, with offices based in the United States (Roseland, New Jersey) and the Netherlands (Oss).