DSM wants to get more out of life, or at least life and material sciences. It focuses on nutritional products and performance materials, which it terms Life Sciences and Material Sciences. DSM's nutrition unit makes sweeteners and food enzymes, among other products, for the flavor and fragrance, food and beverage, and animal health industries. The company's pharmaceutical chemicals are used in cardiovascular, AIDS, and asthma medications. Its performance materials unit (DSM Resins and Dyneema) makes synthetic fibers, engineering plastics, and resins used in coatings. DSM's polymer intermediates unit includes raw materials used for synthetic fibers and plastics.
DSM made a strategic decision in 2007 to turn to life sciences and performance materials because the business lines offer better profit margins and more stable revenues than the company formerly had when it disproportionately relied on petrochemicals. To support its strategic focus, DSM not only divested itself of a number of noncore assets, it also made selective acquisitions.
The shift began to pay off in 2010, with the company rebounding from the global economic downturn. The company's focus on high-margin, high-quality businesses helped shield it from the impact of cyclicality. By cutting costs, working capital, and workforce, and by divesting several businesses, the company was able to reduce its net debt. Although the company's total sales for 2010 improved only slightly, its net income grew more than 33% from the previous year.
In 2012 the company, still following its new strategy, acquired the oilseed processing enzymes operations of industrial biotech company Verenium for $37 million. The buy gives DSM certain licenses for enzymes used in the food and beverage markets, including the Purifine brand products and those under development in the oilseed processing market.
Several divestments in 2010 enabled DSM to concentrate on growing sales in its target business areas: personalized nutrition, specialty packaging, biomedical, and industrial biotechnology. That year the company sold its DSM Agro and DSM Melamine operations to Egypt's Orascom Construction Industries for $416 million. It sold its DSM Special Products unit, which manufactured benzoic acid, sodium benzoate, benzaldehyde, and benzyl alcohol, to Emerald Performance Materials.
DSM agreed to sell the last of its citric acid businesses, Citrique Belge, to Adcuram in 2010. It also sold its thermoplastic elastomers business Sarlink to US-based polymer company Teknor Apex, and sold the remaining part of its elastomers unit to LANXESS for $415 million. The sale of its DSM Elastomers unit in December 2010 eliminated its base chemicals and materials operations. It also completed DSM's transformation to a life sciences and materials company.
Although it was busy divesting businesses in 2010, DSM also made key acquisitions and investments that year. They helped it grow both geographically and in product lines, particularly in Asia and North America. It picked up Mitsubishi Chemical's Novamid polyamide business in a no-cash exchange for its Xantar polycarbonate unit. DSM's acquisition of US-based specialty ingredients company Microbia from Ironwood Pharmaceuticals lets it take advantage of Microbia's proprietary platform and research and development capabilities.
Also in 2010, DSM acquired US-based Martek Biosciences for more than $1 billion. Martek makes products from microbial sources that promote health and wellness through nutrition The deal adds a new platform at DSM for polyunsaturated fatty acids, which have applications in the infant formula nutrition market.
DSM agreed to form a joint venture with DuPont in 2010 to develop, manufacture, and commercialize advanced surgical biomedical materials. The 50-50 venture will be called Actamax Surgical Materials. It formed another 50-50 joint venture, this time with Sinochem Group, for a biopharmaceutical venture to produce anti-infectives. The joint venture, DSM Sinochem Pharmaceuticals, is based in Hong Kong and includes all current DSM anti-infectives operations.
Later that year, through a subsidiary, DSM acquired a 51% stake in Taiwan-based AGI Corporation in a share purchase deal worth about $65 million. DSM's US-based subsidiary, DSM Resins, will use AGI's curable resins to strengthen its UV technology platform.
In 2011 DSM acquired Vitatene S.A.U., a Spain-based producer of carotenoids, a naturally occurring fat-soluble pigment that is synthesized by plants, algae, and certain bacteria. The acquisition allows DSM to strengthen the natural carotenoids offerings of its nutrition business as part of its strategy to grow in markets where consumer demand is high. – less