DSM and NCPC Sign Contracts to Establish Nutrition and Anti-Infectives Joint Ventures in China

Parties will establish one nutrition production joint venture (Vitamin C) and two anti-infectives business joint ventures (anti-infectives active pharmaceutical ingredients and intermediates).

20/03/09 Royal DSM N.V., the global Life Sciences and Materials Sciences company headquartered in the Netherlands, North China Pharmaceutical Group Corporation Ltd. (NCPC GroupCo) of Shijiazhuang, Hebei Province, People’s Republic of China, NCPC ListCo, the listed affiliate of NCPC and the State-owned Assets Supervision and Administration Commission of the State Council (SASAC) of Hebei Province announce that they have signed the contracts regarding investment by DSM in NCPC GroupCo and the establishment of three joint ventures in the areas of nutritional products and anti-infectives.

These contracts are the follow-up to the announcements made at the end of 2004 and the further detailing of the agreement in late 2005. DSM will make a strategic investment in NCPC by obtaining a minority share (close to 10%) in NCPC GroupCo. Parties will establish one nutrition production joint venture (Vitamin C) and two anti-infectives business joint ventures (anti-infectives active pharmaceutical ingredients and intermediates). In the two anti-infectives joint ventures DSM will have a 51% interest. In the Nutrition production joint venture, DSM will hold a minority share of 30%.

The total cash investment by DSM following completion, will amount to approximately USD 110 million. In addition, DSM will with this investment leverage its technology and management capabilities. NCPC will bring into the joint ventures their existing factories, producing Vitamin C and beta lactam antibiotics, as well as their marketing and sales force for antibiotics, which is in particular geared toward the fast growing domestic markets in China. The combination of capabilities and competencies of DSM and NCPC will lead to the world’s best possible combination of technologies and low cost manufacturing, while securing high quality and benefiting from the global DSM sales network.

Meanwhile, NCPC and DSM will continue working on preparation and securing approval for the establishment of these joint ventures. It is expected that the implementation of the agreements will start somewhere in the second half of 2009. Furthermore, DSM and NCPC are still discussing possible additional projects for cooperation.