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Fine Chemicals: Degussa Sells Raylo Chemicals and Establishes a Long-Term Supply Partnership With Gilead Sciences
Tuesday June 6, 9:23 am ET

DUSSELDORF, Germany, June 6 /PRNewswire-FirstCall/ -- Degussa AG of Dusseldorf, Germany today announced that the company has signed a definitive agreement under which Gilead Sciences, Inc., of Foster City, California plans to acquire Degussa's subsidiary Raylo Chemicals Inc. with its assets at the Clover Bar site. Under the terms of the agreements and subject to certain closing conditions, Gilead will pay approximately 115 million euros to Degussa. In addition, Degussa has entered into long-term agreements with Gilead for the supply of raw materials and the manufacture of certain active pharmaceutical ingredients (API) for Gilead products. The companies expect the transaction to close in the fourth quarter of 2006.

Located in Edmonton, Canada, Raylo Chemicals is currently part of Degussa's Exclusive Synthesis & Catalysts Business Unit with approximately 200 employees at two sites, Clover Bar and Argyll Road. Raylo's operations encompass custom manufacturing of API and advanced intermediates for the pharmaceutical and biopharmaceutical industries. Gilead has worked with Raylo over the course of the last 14 years, during which time Raylo has provided both development expertise and commercial product on a large scale for Gilead.

Gilead intends to utilize this site primarily for manufacturing development of investigational products, supplying API for clinical research programs and contributing to new product launch supplies. Degussa will ensure the business and supply relationships with Raylo's existing customers (other than Gilead). The Raylo name and the Argyll Road site will remain assets of Degussa.

Degussa will focus its European custom manufacturing sites to produce high-value regulated intermediates and on-patent API from now on. In executing its Asian strategy, the Business Line Exclusive Synthesis will concentrate the production of pharmaceutical raw materials, certain intermediates and off-patent API in the newly formed Degussa Lynchem joint venture in Dalian/China or with other long-term co-operations in India and China. This horizontal integration will allow attractive value proposals for customers based on Degussa's technological leadership, its track record in customers' intellectual property protection, worldwide compliance with good manufacturing practice (GMP) and high environmental, safety and health standards.

Dr. Klaus Engel, Chairman of Degussa's Management Board: "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. It underlines our sustainable growth strategy in Fine Chemicals, which is one of Degussa's core businesses. The sale of Raylo is a key step in our strategy to shift production capacity from the Western Hemisphere to Asia. For the Raylo employees this transaction opens new and attractive opportunities within Gilead."

John C. Martin, PhD, President and CEO, Gilead Sciences: "Gilead has had a long-standing and successful partnership with Degussa and Raylo, and we look forward to welcoming our colleagues at Raylo to the Gilead team. As our company continues to grow, so does our need for chemical and manufacturing expertise. This agreement enables us to rapidly provide adequate supply of Gilead's investigational products for preclinical and clinical evaluation."

Gilead Sciences is a biopharmaceutical company that discovers, develops and commercializes innovative therapeutics in areas of unmet medical need. The company's mission is to advance the care of patients suffering from life-threatening diseases worldwide. Headquartered in Foster City, California, Gilead has operations in North America, Europe and Australia.

With sales of 335 million euros in 2005, Degussa's Exclusive Synthesis & Catalysts Business Unit focuses on the custom manufacturing of chemical catalysts, advanced pharmaceutical intermediates and active pharmaceutical ingredients. Through its global network of sites and R&D facilities, the business unit offers seamless services ranging from synthesis development on lab-scale to commercial production in its different USFDA approved facilities. It is also a leading supplier of catalytic system solutions, offering a broad portfolio of catalysts as well as all-round services for the life science, fine chemicals, industrial chemicals, intermediates and polymer industries.

Editorial note:

A press briefing will be held in this connection at 12 p.m. noon on Wednesday, June 21, 2006, at the Degussa building at Weissfrauenstrasse 9 in Frankfurt.

The participants will include Dr. Alfred Oberholz, Deputy Chairman of the Management Board, and Patrik Wohlhauser, Head of the Exclusive Synthesis & Catalysts Business Unit.

Degussa is the global market leader in specialty chemicals. Our business is creating essentials - innovative products and system solutions that make indispensable contributions to our customers' success. In fiscal 2005 around 44,000 employees worldwide generated sales of 11.8 billion euros and operating profits (EBIT) of 940 million euros.

Source: Degussa AG

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