The Dow Chemical Company (DOW - Analyst Report) and life sciences company Cambrex Corporation (CBM - Snapshot Report) have entered into an agreement, wherein, the latter will manufacture drug-solubility solution, Dow Hydroxypropyl Methylcellulose Acetate Succinate (HPMCAS), to enhance drug solubility.
Operations under the agreement will be conducted in a new facility at Cambrex Karlskoga. Construction is currently underway at the facility with commercial product launch is expected by the end of 2013. The agreement will help Dow to supply solubility enabling excipients. It also marks the final step in building on the solubilization partnership as announced by Dow and Bend Research in Oct 2012.
The AFFINISOL product range is designed to meet the diverse excipients needs of the customers. The first solution from this product range, which leverages Dow’s polymer science and application expertise along with Cambrex's capabilities, is expected to be well received in the market.
Dow came out with its fourth-quarter 2012 results last month. The company reported a wider loss in the quarter hurt by hefty restructuring and goodwill impairment charges. The company’s adjusted earnings missed the Zacks Consensus Estimate but revenues beat.
Lower pricing and weak end market conditions impacted sales in the quarter. However, Dow’s agricultural business was a bright spot, with sales increasing at a double-digit clip.
Dow is benefiting from strong fundamentals in agriculture and food markets and is leveraging its North American feedstock advantage. A string of innovative products in its pipeline adds to its strength. However, weakness in the electronics and construction end markets may continue in first-quarter 2013. Moreover, Dow still faces challenges in Western Europe and is exposed to significant pension headwinds.
Dow Chemical retains a short-term (1 to 3 months) Zacks Rank #3 (Hold).
Other companies in the chemical industry worth considering are Arkema S.A. and PetroLogistics LP with both retaining a Zacks Rank #1 (Strong Buy).