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Hovione and CKD announce joint collaboration to produce and market Simvastatin1 Hovione and CKD Bio Corporation (CKD Bio) have signed an agreement to produce and market simvastatin on a worldwide basis. The joint collaboration will offer the active pharmaceutical ingredient (API) for simvastatin under cGMP to FDA and ICH requirements as well as the registration dossiers for simvastatin tablets for the European and United States markets. Both companies will be offering the product for sale only in countries where such does not represent an infringement of third party patent rights. The collaboration guarantees an integrated supply chain for simvastatin – CKD Bio produces lovastatin that Hovione further transforms into simvastatin. Hovione has exclusive rights to use CKD Bio´s patented process (WO 01/45484 A2) for simvastatin manufacturing. The process validation batches of simvastatin (API) have been concluded, the filings will be ready in Spring 2003 and are suitable for worldwide registration. The joint collaboration offers the market with probably the most competitive integrated manufacturing platform for the reliable supply of simvastatin API for the generic industry. CKD Bio has dedicated a portion of its fermentation capacity to the production of lovastatin. The new complete automated manufacturing building inaugurated in November 2001 in Macao by Hovione is dedicated to the synthesis of simvastatin. This integrated supply assures the generic industry with a reliable supply of simvastatin as well as a competitive price. The two Companies enjoy a long and fruitful business relationship, having collaborated in several projects involving semi-synthesis active ingredients over the last 30 years. The simvastatin project demonstrates the unique synergies, which the two companies benefit from. One with an unparalleled excellence in fermentation and the other with a long history of success in building synthetically on natural products and scaling the processes to industrial manufacture. This strategic integration puts Hovione and CKD Bio in a unique position to guarantee reliability of supply, competitive terms and complete customer support – for both API supply and/or final formulations including all registration requirements. Simvastatin was developed by Merck and is currently marketed as Zocor®, by Merck & Co. and was the largest selling prescription drug in worldwide sales (USD 6.67bn) in 2001. The markets of United States, France, Germany, United Kingdom and Japan account for 58 tons of API annual consumption.   Hovione is an international Group dedicated to the process development and synthesis of APIs, serving exclusively the Pharma industry. With FDA inspected plants in Europe and Asia and a Technology Transfer Centre in New Jersey, Hovione is committed to the highest levels of service and quality. Hovione is a specialist in manufacturing difficult to make APIs and regulated intermediates under the most stringent controls of safety, quality and environmental protection. Hovione has more than 40 years of experience in chemical processes and, with 500 m3 of reactor capacity, has produced industrially more than 50 APIs. CKD Bio is a Korean company established in 1941, with extensive research and production capabilities in the fermentation of active pharmaceutical ingredients. CKD Bio has a fermentation plant in Korea with a total fermentation capacity of 1.200m3. This plant is FDA inspected for several products. CKD Bio exports 30-40% of its production to the United States and Europe. CKD Bio has a division of Pharmaceutical Technology and New Drug Development of the Research Institute, located in Korea.   1 This announcement is not to be construed as a representation or as an offer to sell in those countries where such would constitute an infringement of third parties’ patent rights

Press Release
Hovione and CKD Bio Corporation (CKD Bio) have signed an agreement to produce and market simvastatin on a worldwide basis.

Hovione and CKD announce joint collaboration to produce and market Simvastatin

Sep 03, 2003

Hovione announces that sales for the year ended 31st March 2003 amounted to US$70m. This represents a growth of 27% on the previous year, and accounts for the Company´s best sales performance ever. Guy Villax, CEO of Hovione noted that “Hovione has successfully delivered on the business plan approved two years ago. In addition to the good performance of the financial indicators a good management of the product portfolio was successfully managed – Hovione now has two distinct business areas – generics and exclusive manufacturing – accounting, respectively, for 2/3 and 1/3 of sales”. The company forecasts an average annual sales growth of around 15% from 2003 to 2006 through organic growth. Over the past 7 years the company’s sales grew at 13% pa, a growth that was financed by the company’s cash flow and bank loans. During 2002, Hovione pursued on schedule its 3 year US$56m investment programme due for completion in 2003. The investment programme addresses a growth strategy directed at strengthening Hovione’s leading world position in the supply of active pharmaceutical ingredients to Pharma Multinationals, the emerging Biotechs and the Generic houses. - The new Technology Transfer Center in New Jersey, USA was concluded on time and budget in September 2002, suitably qualified to enable it to start taking on customer projects in the last quarter of the year. This greenfield project includes a kilo-lab and a pilot plant and provides a permanent presence in the market that already provides over 60% of Hovione Group sales. - At the Loures plant the construction of a cGMP compliant pilot plant started in 2002. This shall provide Hovione with the necessary facilities to be able to continue expanding its process chemistry R&D resources. A first-phase will enter into service before year-end 2003. - In the Taipa facility in Macau manufacturing equipment and validation is now in place for production of injectable grade APIs. This plant has been regularly inspected by the US FDA since 1987 and Hovione is now well equipped to address the growing outsourcing needs of the NASDAQ quoted Biotechs that operate under the virtual company business model. Hovione is an international group dedicated to the process development and synthesis of APIs (active pharmaceutical ingredients) serving exclusively the pharmaceutical industry. With FDA inspected plants in Europe and the Far East and a Technology Transfer Centre in New Jersey, USA, Hovione is committed to the highest levels of service and quality. Hovione’s capabilities include process chemistry, worldwide regulatory affairs, kilo to multi-ton manufacture of complex multi-step chemistry of APIs under FDA and ICH cGMP quality standards.

Press Release
Hovione announces that sales for the year ended 31st March 2003 amounted to US$70m.

Hovione Group financial results for the year ended 31st March 2003

Jul 30, 2003

Ivan Villax was fond of saying he had left his country aged 23 with a toothbrush in one pocket, a chemical engineering diploma in the other and the Russians at his heels. Born in 1925 in Magyaóvár, a small town in Hungary just East of Vienna, his mother was of Austro-Hungarian landowner stock and his father a Hungarian scientist. In 1948, while the family was in a displaced persons camp in Salzburg, a letter from Professor Victoria Pires, then Secretary of State for Agriculture in the Portuguese government, invited Ivan's father to come to Portugal. Ödon Villax was to help establish an agronomy research center into plant genetics in Portugal such as those he had run in Hungary. Ivan arrived in Lisbon a little later to join his family after working at the Centre de Recherches Agronomiques de Clermont-Ferrand in France. He knew then that antibiotics were to be his future and while in France he had isolated from soil samples some tetracycline producing strains that he later named Streptomyces lusitanus. He joined the Instituto Pasteur de Lisboa in 1952, then one of the leading pharmaceutical laboratories in the country. His first inventions were in the area of chloramphenicol preparation and tetracycline and penicillin fermentation. During this period he made good use of Prof. Maia Loureiro’s equipment, the inventor of submerged aerobic fermentation. This Portuguese technology had been instrumental in solving the industrial challenges of penicillin fermentation during World War 2. In 1958 he wed Diane Du Boulay; and together with two other Hungarians, Nicholas de Horthy and Andrew Onody, they founded Hovione in 1959. During the first 10 years the company was a research laboratory located in the basement of the family house in Lisbon, not far from the American and British embassies. As Ivan made chemistry in test tubes, Diane typed out invoices and for the next 45 years they made an amazing team. A close collaboration developed with Fermentfarma Spa, Milan - a company also run by Hungarian refugees - Villax became the technical director and a minority shareholder. Technology for the fermentation and isolation of tetracyclines was licensed to Imperial Chemical Industries of the UK, National Fermentation of South Africa, and to International rectifier of El Segundo, California among others. In 1967 Rachelle Laboratories bought out Fermentfarma and the proceeds of Ivan Villax’s share were used to build the first Hovione plant in Loures, just outside Lisbon. Growing tired of the unpredictability of fermentation processes, he directed his research efforts to chemical synthesis. In the Loures plant he developed and industrialized an 18 consecutive step process to produce betamethasone and its derivatives, and throughout the 70s Hovione enjoyed a privileged position in Japan, thanks to Villax's independent process patents. As the business grew, and Portugal went through some troubled times after the 1974 revolution, Ivan sent his children to finish their studies in England and started looking for a location for further expansion. A Hong Kong office was established in 1978, and in the same year Hovione's first purchasing visit to the Canton fair took place. One after the other his four children spent a few years working in the Far East; it was all part of giving them the best possible education. By 1982 the Loures plant had expanded and got organised to supply the US generic market with semi-synthetic antibiotics; the Macau plant went on stream in 1985 to provide additional capacity. This was prior to the Roche-Bolar amendment, and at FDA for several years people remembered how samples of doxycycline were provided at 9am at their Fishers Lane Rockville, Maryland offices, and not a minute too early, or too late, before the innovator’s patent expired. In Europe this product generated extensive patent litigation with Pfizer suing a number of Hovione customers in 8 different countries. True to his beliefs, Villax volunteered as co-defendant in every suit. His tenaciousness in the face of such adversity meant he did not give up and eventually the matter was settled out of court in 1992. This dispute diverted Villax’s efforts from following other creative pursuits much to his disappointment; though throughout this time the industry recognized in Hovione a fighting spirit that was a characteristic of its founder. Today the generic industry worldwide benefits from Hovione's efficient processes in the production of many other active ingredients: minocycline, roxithromycin, are products where Hovione retains a leading role in several countries. Ivan Villax was always grateful to the country that welcomed him and allowed him to make a new life. He was happy that in providing generic contrast media Hovione was somehow celebrating Prof. Egas Moniz, a Portuguese Nobel Laureate, the father of angiography. After the fall of the Berlin wall he made frequent visits to Hungary. The Technical University of Budapest, his Alma Mater, awarded him a PhD in recognition for his 40 years of work in pharmaceutical chemistry and he was made a member of the University's Senate. By then he had authored over 100 patents and scientific articles. In 1995 his health started to weaken and he made arrangements for an organised hand-over of his responsibilities. With the business in the hands of a professional management team led by his son Guy, Ivan Villax still came to the Loures plant on a daily basis, keen on being kept informed on the new chemistries and on the performance of the business, and quick to point out any slack in the rigour, discipline or housekeeping in either the labs or the manufacturing facilities. Every year, together with Diane, he visited the Macau plant keen to encourage the younger generation and to acknowledge the service of long-standing staff. In his last years he saw Hovione becoming an important producer of HIV protease inhibitors, a key medicine in the fight against AIDS, and taking an active role in many drug development projects as the provider of the active ingredient. In 2002 Hovione established a pilot plant in New Jersey, not far from Rahway where in the 50s Villax had turned down an offer for a position at Merck's research laboratories. He and Diane traveled the world, whereby he was able to satisfy one of his other passions, collecting plants from exotic locations, planting and nurturing them in his quinta outside Lisbon. This May, after a severe deterioration of his lung condition, Ivan, ever the fighter, ever determined to control his own fate, realized that hospitals and science could do no more for him and asked to be taken home. At his quinta in Manique surrounded by his flowers and his trees, with his children, grand-children and his wife Diane, his life-long partner, he lived another two happy weeks - he died on Friday June 6th. Church services will be celebrated at the Igreja Matriz of Loures at noon, and at the Basilica da Estrela, in Lisbon, at 7pm on June 12th.

Press Release

Ivan Villax, 1925-2003

Jun 06, 2003

Dave Hoffman, President of Hovione’s U.S. Operations, is pleased to announce Wayne Davis has joined the staff of the Technology Transfer Centre (TTC) as Director of Technology Transfer. Dr. Davis comes to Hovione from Bristol-Myers Squibb Company, (formerly DuPont Pharmaceuticals), where he gained extensive experience in piloting NCE’s and managed their technical transfer to commercial facilities. As the focal point and coordinator for all technical transfers worldwide, Wayne will prove a strong asset to Hovione who once again raises the standard for API service providers. Hovione’s TTC opened in September 2002. The facility is now fully qualified and under normal activity. Hovione´s 3 sites, in New Jersey, Portugal and Macao, are now totally integrated in their ability to take customer projects from kilo-lab to pilot-plant through to industrial scale using a common, site independent, quality system. This common culture and the frequent rotation of staff between sites enables swift technology transfer along the life cycle of each project. Hovione is dedicated to the development and manufacture of pharmaceutical fine chemicals. Serving exclusively the Pharma industry, Hovione has FDA inspected plants in Europe and the Far East, and Technology Transfer Centre in New Jersey. Committed to the highest levels of service and quality, Hovione’s capabilities include process chemistry, worldwide regulatory affairs, kilo to multi-ton manufacture of complex multi-step APIs and regulated intermediates under FDA and ICH cGMP standards. In the past 5 years, Hovione has been the API manufacturer behind 4 successful product launches in the USA.

Press Release
Wayne Davis has joined the staff of the Technology Transfer Centre (TTC) as Director of Technology Transfer.

Hovione PRESS RELEASE for Informex 2003

Jan 24, 2003

The dust has now settled after the exciting but turbulent times 2 years ago that saw the chemical giants snapping up pharmaceutical fine chemical specialists for hundreds of millions. Almost 3 billion dollars were invested in three deals alone; the transactions listed in Table 1 add up to more than $14b (includes Gist at $6b and the recent Roche V&FC deal at $2.5). The drivers for outsourcing of APIs remain unchanged, yet the business model adopted by the various players seems to fall clearly into two very different types – with different offerings and different strategies. Yet for all exclusive manufacturing of NCE APIs remains a roller-coaster: approvals carry high rewards, product cancellations and withdrawals mean significant disappointments. The notable new entrants are the integrated chemical giants that have acquired or invested in GMP businesses (some of the businesses that got acquired were great brands: Archimica, ChiRex, Finorga, Gist-brocades, Laporte, Profarmaco, Raylo, Torcan…). Their original strategy was to bet on size and enter a high-margin non-cyclical business that had synergies with their existing businesses. Some articles emphasized that the acquisition of API capabilities was strategically aimed at giving them total control over the key building blocks, which could be sourced internally. BASF advertised with the slogan: "Backward integration is another form of forward thinking". On the other hand the traditional players have remained independent and have taken no part in the M&A frenzy (FIS, Hovione, Lonza, Omnichem, Orgamol, Siegfried, Sumika). In fact, they all probably see M&A as a strength-diluting exercise, as it debilitates one of their strongest asset, namely: their company culture. Their growth, which is consistently in double digits for the past 10 years, remains purely organic – and they enjoy a stable ownership, Table 2. The independents strongly disagree with the assumptions which formed the strategies of the new entrants: Why should size matter ? when most APIs are only a few tens of tons when there is a trend to more highly-active compounds when an API producer should be a generalist -able to do all technologies- and not the lowest-cost technology specialist when the early phase clinical materials requires service, service, and more service, which traditionally is not a characteristic of large, multi-site companies   Backward integrating only adds to an already risky business; whereas the Independents have the whole world -including India and China- to source low cost raw-materials.   Buying sites from Large Pharma with supply agreements often resulted in: a low-margin business, a single-customer dependence, an old plant, which was often not multi-purpose and certainly not designed for quick change-over and evolving compliance standards. Furthermore with their expansion into the API business the chemical giants risk antagonizing their traditional customers who now could perceive them as competitors and no longer as supplier/partners. As an example, Hovione would prefer to discuss its new catalyst needs with Engelhard rather than Degussa or Johnson Matthey, who are now perceived to be competitors. Neither the analysts, the board members nor the shareholders considered any of these matters – but management thought they saw opportunities for making a difference in their shareholder value and the stock-market supported them wholeheartedly. In our view the winning model appears to be a company big enough to: have the critical mass that will support the diversified portfolio necessary to mitigate risk support a large process chemistry group able to develop several dozen simultaneous projects have the depth and breath of know-how and technology that is necessary to support multiple process validation campaigns per year assure long-term capacity. And yet a company small enough to: take decisions and communicate them quickly provide extreme levels of service, flexibility and transparency We believe the entrepreneurial, single-minded company without share-price concerns or peripheral activities to serve as distractions is likely to be a step ahead of the competition. The constant need for large amounts of capital investment, the many years that projects take to mature from development phase to commercial scale, and the inherent risk of each project makes our business unfriendly to the stock-market. Therefore it should be no surprise that the key players have a reference shareholder able to look at the longer-term: whether it be Ajinomoto, a family or a foundation. Over the last 12 months Hovione’s normal growth has been further enhanced by: Satisfied customers that bring us repeat business Projects that have moved beyond validation to commercial phase Customers with projects in Phase III who are looking for a more reliable long-term supplier or for further capacity Our experience indicate that Phase III projects change suppliers because: They want a stable supplier for the long term, “one that does not shop itself around constantly” They want assurance of capacity and of compliance – and are fed up of “getting a different color batch every time” They want to be “in-the-loop”, and not be the last ones to know of problems or of process changes The key-buying factors for our customers seem to include: a company capable developing robust processes based on sound science that deliver “right-first-time, every time”, shareholders who are committed for the long-term and a track-record of rock-solid delivery as well as open and honest communications. Some European companies have continued to invest at a time when others are trying to sell. Orgamol is building a new pilot plant and synthesis unit in Switzerland, Siegfried has innovated dramatically in the GMP design of its own new facility. Rohner has started-up a new cGMP multipurpose plant. Hovione has just commissioned its new Technology Transfer Centre in New Jersey, USA. This is an investment in a green-field site with kilo-lab and pilot-plant facilities within a short drive of the largest cluster of API customers in the World. In the past few years exclusive manufacturing as an industry has been the object of far too much interest, and too many bets were placed with exaggerated expectations –and most are not pleased with their investments. The business however exists, the market continues to grow but it is just not as simple as many companies expected it to be. Fines for non-compliance of GMPs have reached a record $0.5b, and FDA’s most recent initiative “Pharmaceutical cGMPs for the 21st Century” are but two examples that indicate that the scope for differentiation has increased yet again; and that the role of a professional independent manufacturer of APIs has never been more relevant. Guy Villax Chief Executive Hovione Loures, 11th September 2002   Article published at Show Daily for CPhI 2002

Article

Outsourcing: The dust has now settled

Sep 10, 2002

Lisbon – 6th May, 2002 - Hovione announces that it has completed a $35m 7 year credit facility, involving a loan from the European Investment Bank and a syndicated commercial bank loan that together with the company’s generated cash-flow, will finance Hovione’s $56m investment programme expected to be completed in 2003. The investment programme addresses a growth strategy directed at strengthening Hovione’s leading world position in the supply of active pharmaceutical ingredients to Pharma Multinationals, the emerging Biotechs and the Generic houses. Investments will be carried out at the three Hovione sites located in USA, Macau and Portugal, and will include: - A new Technology Transfer Center in New Jersey, USA. This greenfield project includes a kilo-lab and a pilot plant and provides a permanent presence in the market that already provides over 60% of Hovione Group sales; - The doubling of the manufacturing capacity of the Taipa faciliy in Macau. This plant has been regularly inspected by the US FDA since 1987 and is geared to address the growing outsourcing needs of the NASDAQ quoted Biotechs that operate under the virtual company business model; - Adding pilot plant, research facilities and general infrastructure facilities in the Loures site (office space, IT facilities, R&D facilities and the renovations of several manufacturing buildings). The $20 million EIB loan was guaranteed by Banco Espirito Santo, Banco Comercial Português, Banco BPI and Caixa Geral de Depósitos. The Macau tranche which comprised a $15 million syndicated commercial bank loan was granted by Banco Espírito Santo do Oriente, Banco Nacional Ultramarino and Banco Comercial de Macau. The company forecasts an average annual sales growth of 16% from 2001 to 2008 through organic growth. Over the past 7 years the company’s sales grew at 13% pa, a growth that was financed by the company’s cashflow and the 1995 $14.5m syndicated loan by Banco Espírito Santo. Hovione is an international group dedicated to the synthesis of APIs (active pharmaceutical ingredients) serving exclusively the pharmaceutical industry. With FDA inspected plants in Europe and the Far East and sales offices in Hong Kong, Switzerland and New Jersey, Hovione is committed to the highest levels of service and quality. Hovione’s capabilities include process chemistry, worldwide regulatory affairs, kilo to multi-ton manufacture of complex multi-step chemistry of APIs under FDA and ICH cGMP quality standards.

Press Release

Hovione signs a $35m credit facility

May 06, 2002

Article published in the Informex Show Times Newsletter   Pharma Fine Chemicals - Nothing's changed! Since the summer there has been an avalanche of gloom in the industry magazines. Many articles reporting how much everything had changed since the last year; how fine chemicals are suffering by over-investment, by over-capacity, by a downturn in the cycle etc.. etc.. The reality is many companies made bets that the market perceived then as being excellent ones, but hindsight now tells us that too much optimism about the fine chemicals sector drove acquisitions and investment in plant expansion by companies inexperienced in the sector. The tough part is, though many are now hurting, the misunderstandings seem to persist: 1. "We are in a down-turn in the cycle". In pharma API there is no cycle - indeed some trends are up (more projects are coming out of the Biotech sector) others are down (more advanced stage projects are cancelled, more drugs have been withdrawn, pressures for better plant utilization at the merged large pharma drives less outsourcing) ) but overall they probably cancel each other out - the amount of work out there is still increasing and is finding outsourcing homes. It is probably now in smaller parcels, bought by more experienced decision-makers and there is certainly more competition. The only cycle at Hovione is the winter when more antibiotics are sold because of the US flu season. 2. "The complete tool box". Every company out there seems to agonize about the technologies they do not have. In making APIs you do not need to be a cost leader and a specialist in everything, you need to be a sound generalist able to address all the technologies, whether chemistry, engineering, analytical, etc... Technologies are therefore not a differentiator; if you are not a generalist, you are out of pharma APIs anyway. In the past 40 years Hovione has addressed every chemical reaction that has come its way, successfully. We have however some policy decisions such as: We do not use cyanides or other dangerous poisons and do not work with betalactams, penicilins or cephalosporins. 3. "Building a $500m business in 5 years". The wishful thinkers blame the failure of their plans on market changes. In fact nothing has changed: the $300b Pharma sales worldwide are still made up by about 4000 different APIs, 95% of the medicines in the pharmacy have sales of

Article
Informex Show Times Newsletter, 27 February 2002

Pharma Fine Chemicals - Nothing's changed!

Feb 27, 2002

Speech during the Chinese Banquet at the Hyatt Hotel to celebrate the inauguration of Building 2A in Macau on the 9th November 2001   Dear Friends, Today we had the visit of the Macau Chief executive to mark the opening of the new facilities. This was a major effort and an investment of over $14m, we are all very pleased, but let me tell you how it all started. An email dated 5th October, read as follows: This is to advise the results of the competition of ideas; the decision of the jury was made public at a celebratory dinner on the 2nd October 1998. This was held at the Grémio Literário Club in Lisbon, the prizes were presented by Noé Carreira, José Rato and Guy Villax - members of the jury (Ivan Villax and Carlos Costa, also members of the jury, were not present). The results were: Joint 1st Prize: Alfred Nobel - Jorge Pastilha Lavoisier - Alexandre Carvalho   Joint 3rd Prize: Baeyer Team - Terry, Eddy, Leong, Eric, Boli Pasteur - José Lisboa   The awarded prizes were: for each of the first prizes: about MOP45.000 in cash and a trip to Macau to see the new plant. for each of the third prizes: a trip to Macau to see the new plant for José Lisboa and a trip to Lisbon for each of the Baeyer team members to see chemical plants in Europe1. The 4 documents will be copied and made available internally - you can get a copy at the Human Resources Department. The Jury extends its thanks and congratulations to all participants; the ideas gathered during the competition were very valuable and are a great contribution to the design of new installations. Back in 1998 Hovione had just started up B15, its new automated plant in Loures with a technically challenging new project, which would turn into Hovione’s biggest ever product. We had just passed an FDA inspection; we could have decided to become complacent and pleased with ourselves – we did not. We felt that our plant design could be improved – we were looking for more flexibility, quicker change-over-time, better compliance by design – a plant that would give us better quality, better yields and better profits. So that summer we opened a competition for the best idea for a new API plant. The people at Hovione had another challenge. Today, this opening, is exclusively a tribute to Hovione people and to their sense of engineering and creativity, their ability to design, plan and implement, to work as a multidisciplinary team in a multicultural environment and to manage a project that is designed in Portugal and made reality in Macau. The achievement observed tough constraints: Full compliance with the toughest standards (FDA, ICH, ISPE); Strict concern for minimal expenditure. Let me tell you about the project: Building 2A: we doubled the plant’s manufacturing capacity by adding 40m3 of reactors and 2 finishing lines with centrifuges/driers and packing rooms (class 100.000). All equipment is modular (identically and fully equipped) and totally flexible with the ability of interconnection in all situations. Separate sets of vents and vacuum lines enable the running of two separate products simultaneously with impossibility of cross- contamination. All equipment is connected to a DCS automation system; Buildings 7A and 4: we doubled all the utilities (mono-fluid system for heating and cooling, solvent storage, etc.); Building 11: we doubled the office space, and maintenance workshops; Building 9: we renovated the old fire-cracker factory stone house and turned into our canteen and social area, this is set in a Chinese garden set in the middle of large, century old, banyan trees. Budgets and timelines: We have invested MOP120m investment (US$15m), overall we were 20% over budget; From License application to start-up 24 months elapsed. Lessons: Improve our planning and project management skills; Allow more time to plan, design and review design critically – this might increase slightly project time, but it will allow us to be in budget (better purchasing and better planning), do a better job right-first-time and have less pressure and stress; Allow for more resources in the planning, controlling and project information function. And to give glory, where glory is due, I must tell you that this project was the first one to be totally delegated to a project team of young in-house professionals. Noé Carreira, our Chief Engineer for 20 years was the project sponsor, and had an oversight role – otherwise the project team had “carte blanche” to design and implement what their training and career experience at Hovione told them was best: suited to our clients’ products, suited to difficult chemistries, flexible, compliant, engineered for quick-change-over and capable of earning profits while keeping our prices totally competitive, and our ability to being “always available” for the customer. I do mean “carte blanche”, both in terms of design and how the funds were spent. My control over this project consisted on: signoff of the project baseline requirements and of the initial budget, and three visits to Macau. Somehow I am amazed at the ambition and the high standards the Project Team set for the “ideal plant”, the high level of investment it decided upon, the degree of sophistication in the automation, the ventilation, the CIP and product containment systems – the extensive use of hastelloy and stainless steel – and yet I authorized it and I trust the best judgment of the team; and I am sure this is the ideal plant. Over the coming 2 years we shall confirm this, and use your knowledge and experience to build more plants. The stubbornness of the project team is to be commended! It may have led to some spurts of fury on my part, however on reflection no project manager could have achieved this exploit without the firmest belief in what he/she was doing the right thing. I can imagine there have been some difficult moments, great pressures and too much constant stress. Yet I know that being involved in such a project is a terrific feeling, and the achievement of a job well done is worth everything. I know, I was here 15 years ago when we built the first phase of this plant. Thank you for your efforts, and congratulations for your achievements – you can all be proud of yourselves and of your work. Guy Villax Chief Executive Macau, 9th November 2001     1 As part of their European factories tour the Baeyer Team was kindly welcomed in Germany by Bayer, who organized visits in Kiel, Wuppertahl, Monheim and Leverkusen. The Baeyer team was made up of 5 plant operators (Eric Ng would seem to have had an undeclared leadership role… Eric today heads Safety and Warehouse services).

Press Release
Speech during the Chinese Banquet at the Hyatt Hotel

Address by the CEO on the inauguration of Building 2A in Macau

Nov 09, 2001

Lisbon, Nov. 5 (Bloomberg) -- Hovione FarmaCiencia SA is using one of its oldest products to fight the world's newest terrorist threat. The Portuguese company makes doxycycline, an antibiotic that U.S. authorities are increasingly choosing to treat anthrax over Bayer AG's more expensive Cipro, which they used after the initial cases of exposure to the potentially deadly bacteria. After almost 20 years of selling doxycycline to treat respiratory disorders, sexually transmitted diseases, even an outbreak of plague in India, Hovione says it's able to quickly boost production to meet the increased demand. In fact, it's done so before. ``Ten years ago, before Desert Storm, it was exactly the same situation,'' Chief Executive Officer Guy Villax said in an interview. ``Every soldier that went to Desert Storm had their doses of doxycycline in anticipation for bio-warfare,'' and soldiers who went to Somalia did the same. ``Whenever there's this type of emergency, we have to find solutions,'' he said. Web Site Hovione says it accounts for about 75 percent of the U.S. market for doxycycline, a generic drug. The family-controlled chemicals company exports the active ingredient for doxycycline to companies in the U.S. and about 30 other countries that put the ingredient into pills. The company started preparing to boost production when it received a surge in hits on its Web page about doxycycline, soon after the Sept. 11 terrorist attacks, as people anticipated the possibility of bio-terrorism. ``We got our act together in terms of reorganizing production, redefining priorities, getting in touch with our raw-materials suppliers to put the supply chains in place,'' Villax said. Hovione makes doxycycline at its plant in Macau, the former Portuguese colony governed by China since 1999. Hovione's near Lisbon boasts two Chinese statues of lions at the gates. The Portugal plant may pitch in to meet the increased demand, Villax said. Demand Peaks The U.S. government is ordering enough doxycycline to treat 20 million people for 60 days, Villax said. ``We know we are facing a peak in demand because of all this stockpiling,'' he added. ``We can produce large quantities very fast, but I cannot imagine that this rush is going to last beyond (the first quarter) of next year, and by that time there will be ample stocks and the concern with shortage will disappear.'' Besides costing about one fourth as much as Cipro, doxycycline is gaining acceptance as a safer drug for dealing with anthrax, with fewer side effects. After a report by the U.S. Centers for Disease Control last month recommended the use of doxycycline, officials in Washington who had provided Cipro to thousands of postal and government workers switched to the generic drug. Doxycycline accounts for less than 10 percent of Hovione's annual sales of about $70 million, Villax said. ``It's an old product, and having regard for its life cycle, it's still a good money earner,'' he added. Antibiotics gradually give way to replacements as bacteria become more resistant and companies promote new products. ``I really think the future of the company is the fact that half our sales are (from) products launched less than five years ago,'' he said. Revenue has almost tripled from $25 million in 1995. The company doesn't disclose profits, though Villax said it's always had an operating profit since it started large-scale production in the 1970s. Hungarian Roots ``Hovione is a respected player, with a high-quality image,'' said Enrico Polastro, senior analyst for European pharmaceuticals and fine chemicals at Arthur D. Little Inc.  Villax's father, Ivan Villax, immigrated to Portugal in 1951 and started the company with two other natives of Hungary in 1959. Letters from the founders' names -- Horty, Villax and Onody --were combined for the company name. Ivan Villax's two partners later sold their shares, and he's still the company chairman. ``In the whole of the 60s, we were just a lab in the basement,'' Guy Villax said. ``Occasionally the basement exploded, and the kids were woken up, and that was our momma-and-poppa shop.'' Industrial-scale production began in the 1970s, selling Japanese companies ingredients for use in anti-inflammatory creams and anti-asthma pumps. In the 1980s, as many antibiotics' patents expired, Hovione joined the trend of companies making generic drugs. Right Chemistry The most recent round of growth comes from ``outsourcing'' work, producing pharmaceutical ingredients on behalf of specific drug and biotechnology companies. ``Big Pharma went through a major restructuring, spinning off the chemistry, consolidating,'' Villax said. ``At the same time, you had the emergence of all the biotech sector at Nasdaq, with tremendous amounts of capital to invest in drug discovery. And someone has to do the chemistry.'' Hovione aims to get half its revenue from generic drugs and half from outsourcing work, Villax said. The company's shareholders include Hovione employees, plus some of the chairman's business associates from other ventures, though it has no plans to sell shares in the market, the CEO said. Larger companies have approached Hovione about a possible purchase, he added, though he's skeptical about the benefits for customers, ``and I think that's what matters at the end of the day.'' --Jim Silver in the Lisbon bureau (351-21) 340-4545, or jsilver@bloomberg.net

Press Release
Hovione FarmaCiencia SA is using one of its oldest products to fight the world's newest terrorist threat.

Hovione's Antibiotic Doxycycline Joins Fight Against Anthrax

Nov 05, 2001

A total investment of 120 million MOP (15,6m Euros) duplicates production capacity of the Macau plant.   The inauguration of the expansion of the plant is scheduled for 9th November with the presence of the Chief Executive of Macau SAR, Dr. Edmund Ho.   Inaugurated in 1986, the plant in Macau accounts for one third of the company’s total production.   Exports to the USA, European Community, Japan and Australia. Hovione has almost concluded an investment plan of 120 million MOP (15,6m Euros) for the expansion of its plant in Taipa, Macau. This investment will duplicate the production capacity of Hovione in Macau. This complex will be inaugurated on 9th November by the Chief Executive of Macau SAR, Dr. Edmund Ho. This investment, which began in 2000, demonstrates Hovione’s confidence in the future not only of its plant in Macau but also in the future of the territory. In order to assure future expansion of its activity, Hovione is studying various alternatives for upcoming investments in the Macau territory. Hovione’s plant in Taipa, Macau, began its production of active pharmaceutical ingredients in December 1986 and was approved by the FDA the following year. The plant has today a total workforce of 150 professionals and manufactures Hovione’s most stable process products. The plant in Macau is responsible for one third of Hovione’s total production, and exports to the most demanding markets such as USA, EU, Japan and Australia. Hovione is the Portuguese company that most contributes to health science, investigating and manufacturing with state-of-the-art technology and quality, active pharmaceutical ingredients (APIs) of the last generation. Founded in 1959, Hovione has two synthesis plants, one in Loures (Portugal) and another in Macau, both US FDA (Food and Drug Administration) approved, and a Technology Transfer Center in New Jersey, USA. Hovione began its activity manufacturing generic products, developing in its laboratories proprietary synthetic processes. In the beginning of the 90’s, the company started the second branch of the business subcontracting exclusively to third parties. In the outsourcing business, Hovione develops all the technical services from laboratorial development to the regulatory filing for official approval and commercial manufacture, being today an essential link to the pharmaceutical international companies investigating new drugs. With a professional team of a high scientific level, Hovione distinguishes itself from the competition by the quality of its products and its technical know-how in developing true industrial chemical processes for novel APIs. Among these products stands out the production of active ingredients used in drugs that combat HIV. As the largest R&D investor in the Portuguese pharmaceutical industry, Hovione has already developed more that 100 chemical synthesis processes and filed more than 500 patents all over the world, 400 of which are still effective.

Press Release

Investment of 120 million MOP duplicates Hovione's production capacity in Macau

Nov 05, 2001

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