Chemical Update

CHEMICAL UPDATE

MARCH 2008

TABLE OF CONTENTS

UNITED STATES

Arch Chemicals Expanding Global Biocides Manufacturing Capacity

Cardinal Health Buys Drug Manufacturer Enturia for $490 million

Bayer Buys Over-the-Counter Health Unit from Libertyville's Sagmel

NuStar Energy Acquires Citgo Asphalt Refining Company's Asphalt Operations and Assets

Eastman Expanding Eastman Tritan Copolyester Capacity

INTERNATIONAL

BASF to sell Seal Sands site in the UK to INEOS Nitriles

Arkema Proposes to Sell French SAP Plant to Sumitomo Seika

Chlor-Alkali Investments in China $2 Billion in 2008

Gilead's Viread Wins EU Backing for Hepatitis B

Dow Corning Expands Polymer Production for Silicon-Infused Bilayer Photoresist

EUSA Pharma to Acquire US Specialty Oncology Company Cytogen

Arch Chemicals Expanding Global Biocides Manufacturing Capacity

Arch Chemicals, Inc is extending manufacturing capabilities for key biocide products and intermediate ingredients in China, the U.S. and Ireland to serve growing demand worldwide in the Preservation & Protection and Health & Hygiene markets.

“With global demand at near-record levels for Arch biocides used in a variety of health & hygiene and industrial applications, we are expanding biocides capacities on three continents,” said Louis S. Massimo, Arch Chemicals’ Executive Vice President and Chief Operating Officer. “We believe it is essential to have manufacturing and customer-support facilities in place wherever our major customers do business.”

To satisfy rapidly growing demand in China for Arch’s antidandruff agent, Arch is building a new, state of the art, manufacturing facility in Suzhou, China, with start-up expected in late 2008. The Company’s zinc Omadine® is the world’s most popular antidandruff agent, which reflects its combination of high antimicrobial efficacy and safety. New laboratory and technical customer-support facilities to support this new manufacturing facility and regional customer needs are expected to be completed in 2008.

In early 2008, Arch also successfully started up a new copper and zinc Omadine® powder drying and milling facility at the Suzhou complex to support growth in the marine paint sector.

Arch’s biocides manufacturing facilities in Rochester, New York and Swords, Ireland are also expanding capacities to insure adequate worldwide supply of the key intermediate 2-Chloropyridine (2-PCl) and Omadine® finished products for regional consumption.

Arch is currently doubling 2-PCl manufacturing capacity at its Rochester, New York location, already the world’s largest 2-PCl production facility. 2-PCl is the key intermediate used to produce the Company’s zinc, copper and sodium Omadine® biocides. These biocides are tailored for use in antidandruff shampoos, marine antifouling hull paints, metalworking fluids, and building products such as wallboard, ceiling tiles and paints and coatings, where they deter the growth of mold and mildew.

Headquartered in Norwalk, Connecticut (USA), Arch Chemicals, Inc. is a global Biocides company with annual sales of approximately $1.5 billion. Arch and its subsidiaries provide innovative, chemistry-based solutions to control the growth of harmful microbes. The Company’s concentration is in water, hair and skin care, treated wood, paints and coatings, building products and health and hygiene applications. Arch Chemicals operates in two segments: Treatment Products and Performance Products. Together with its subsidiaries, Arch has approximately 3,000 employees and manufacturing and customer-support facilities in North and South America, Europe, Asia, Australia and Africa. For more information, visit the Company’s Web site at http://www.archchemicals.com.

Cardinal Health Buys Drug Manufacturer Enturia for $490 million

Cardinal Health, a global provider of products and services that improve the safety and productivity of health care, recently announced a definitive agreement to acquire the assets of privately held Enturia Inc. for $490 million. The cash transaction includes Enturia's leading line of infection prevention products sold under the ChloraPrep brand name and is expected to close within 60 days, subject to customary regulatory approvals and other conditions.

ChloraPrep brand products are used widely in U.S. hospitals and surgery centers to disinfect the skin before surgical and vascular procedures to help prevent blood stream and surgical site infections, two of the most common types of health care-associated infections (HAIs) among patients.

The acquisition will complement Cardinal Health's infection prevention offerings by adding a differentiated and proven product line to the company's Medical Products and Technologies segment.

Enturia was founded as Medi-Flex Hospital Products in 1985. Over the past two years, the company's revenue has grown more than 70 percent to approximately $140 million in 2007. The company has about 600 employees in Kansas, Texas and the United Kingdom.

The acquisition is expected to be slightly dilutive to Cardinal Health's earnings for the remainder of fiscal year 2008 and accretive each year thereafter. The company's outlook for non-GAAP diluted earnings per share (EPS) from continuing operations(1) for fiscal 2008, including the impact of the acquisition, remains unchanged at $3.75 to $3.85. Consistent with Cardinal Health's approach to acquisitions, Enturia is expected to generate positive economic profit and returns above its cost of capital within the third fiscal year after the purchase.

Separately, and as part of the company's ongoing strategy to optimize its portfolio of products and services, Cardinal Health has decided to pursue the sale of several smaller, non-core offerings within its Medical Products and Technologies segment.

Bayer Buys Over-the-Counter Health Unit from Libertyville's Sagmel

Bayer AG, Germany's biggest drugmaker, agreed to buy the over-the-counter medicines unit from Libertyville-based Sagmel Inc. to expand in eastern Europe.

Financial details of the transaction, which is expected to close later this year, will remain confidential.

The acquisition gives Bayer the painkiller Theraflex, the hemorrhoid treatment Relief and the Calcemin, Theravit and Jungle supplements. Bayer's consumer-health unit sells brands including Aspirin, Alka-Seltzer, and Rennie. Sagmelhad sales of $119.9 million from the unit in the 12 months starting October 2006.

NuStar Energy Completes Acquisition of CITGO Asphalt Refining Company's As

NuStar Energy Acquires Citgo Asphalt Refining Company's Asphalt Operations and Assets

NuStar Energy L.P. recently announced that it has successfully completed its acquisition of CITGO Asphalt Refining Company’s asphalt operations and assets for $450 million, plus inventory of approximately $360 million subject to post-closing adjustment. With the capacity to produce and market over 36 million barrels of asphalt and light products, the partnership is now No. 1 in terms of supplying the U.S. market and No. 3 in U.S. asphalt production. The acquisition is expected to earn the company a place on the Fortune 500 list for the first time.

The assets acquired by NuStar Energy L.P. include a 74,000 barrel-per-day (BPD) asphalt refinery in Paulsboro, New Jersey; a 30,000 BPD asphalt refinery in Savannah, Georgia, which is the only refinery and asphalt producer on the Southeast seaboard; and three asphalt terminals. Combined, these assets contribute an additional 4.8 million barrels of storage capacity giving NuStar over 86 million barrels of total storage capacity, which makes the partnership the second largest independent liquids terminal operator in the U.S. NuStar also gains access to 15 terminals with a total storage capacity of approximately 2.1 million barrels that are leased from various third parties.

In connection with the acquisition, NuStar Energy L.P. has entered into supply agreements with Petróleos de Venezuela S.A. (“PDVSA”), which includes a commitment by PDVSA to supply NuStar Energy L.P. an annual average of 75,000 BPD of crude oil over a minimum seven-year period and a right of first offer to purchase up to nearly 11,000 BPD of paving-grade asphalt and approximately 13,000 BPD of roofing-flux asphalt each year for marketing and sale.

Eastman Expanding Eastman Tritan Copolyester Capacity

Eastman Chemical Company announced recently it is investing in commercial scale operations that will expand production capacity for Eastman Tritan copolyester products at its facility in Kingsport, Tenn. The expansion project, expected to be completed by late 2009, includes both the construction of new manufacturing facilities as well as conversion of some existing operations.

The announcement comes just months after the company successfully launched its new-generation copolyester, Tritan. The result of new technology, this innovative material delivers the advantages of traditional copolyesters, such as clarity and chemical resistance, with higher heat resistance, improved design flexibility and ease of processing. These unique attributes offer differentiated performance for brand owners, designers, fabricators, processors and consumers.

“We anticipate continued annual growth of 6 to 8% for the global copolyester market, including our new-generation copolyester, Tritan,” said Dante Rutstrom, vice president and general manager of Eastman’s specialty plastics business.

BASF to sell Seal Sands site in the UK to INEOS Nitriles

BASF SE and INEOS Nitriles announced today that they have reached an agreement for INEOS Nitriles to buy the Seal Sands site of BASF plc on Teesside in the United Kingdom. The acquisition is conditional on approval by the relevant competition authorities. The parties agreed not to disclose the acquisition price.

The BASF Group company BASF plc has approximately 240 employees at the site; a further 250 people are employed by contractors. All BASF plc personnel will be transferred to INEOS Nitriles, who will also take over existing contracts, supply and service arrangements.

The Seal Sands site operates large-scale production facilities for acrylonitrile (AN), adipodinitrile (ADN) and hexamethylenediamine (HMD), as well as for by-products. These chemical intermediates are used in the production of acrylic and polyamide (PA) fibers for clothing and carpets, as well as for acrylonitrile-butadiene-styrene (ABS) and PA plastics for the automotive, electric & electronics and domestic appliance industries.

HMD remains a key element in BASF’s PA 6.6 value chain. For this reason, the HMD plant is excluded from the transaction. INEOS Nitriles will operate the HMD plant for BASF. The same applies for the ADN plant. ADN will be produced at Seal Sands until the plant is shut down at the end of 2008 as announced by BASF in June 2007. ADN is a starting material for HMD.

“We have an external supply agreement for ADN from 2009 onward. The sale of the Seal Sands site is part of our approach to focus on the core assets of our polyamide value chain,” said Dr. Harald Lauke, President of BASF Performance Polymers division.

“The purchase of BASF’s Seal Sands manufacturing site is a natural development for INEOS Nitriles and supports our long-term strategy. We have a strong commitment to our customers and this acquisition will support their plans for growth,” said Rob Nevin, CEO of INEOS Nitriles.

“I am confident that the integration of this site and its workforce into INEOS Nitriles, a company committed to a long-term participation in the acrylonitrile business, will be the best guarantee of continued future success for the Seal Sands site,” said Bernd Brian, Site Director at the Seal Sands site.

BASF produces polyamide 6.6 (Ultramid® A) from the key intermediates HMD and adipic acid at its site in Ludwigshafen, Germany. In addition, BASF operates fully backward-integrated production plants for polyamide 6 (Ultramid® B) at its Verbund sites in Ludwigshafen, Germany; Antwerp, Belgium; and Freeport, Texas. Ultramid® A and B are used to produce engineering plastics which go into the automotive, electric & electronics, furniture and leisure industries. In addition, polyamide 6 and 6.6 are used to produce fibers for textile, carpet and industrial applications.

Arkema Proposes to Sell French SAP Plant to Sumitomo Seika

France's Arkema has proposed to sell its superabsorbent polymers (SAP) plant at Carling to Japan's Sumitomo Seika, Arkema announced in a recent presentation to the company's Central Works Council.

The plant has a 15,000 mt/year capacity to produce SAP, used in consumer products such as diapers. It has annual sales of Eur20 million ($30.8 million).

As part of the proposal, Arkema will have a toll-manufacture agreement with Sumitomo Seika at the Carling site. The proposed agreement includes a long-term contract for the supply of acrylic acid produced at Carling.

Sumitomo Seika ranks fourth in the world and second in Asia for manufacture SAP. It operates two production plants, in Singapore and Japan, with a total capacity of 140,000 mt/year.

"The acquisition by Sumitomo Seika of the SAP business from Arkema offers a genuine opportunity to develop this activity and strengthen the Arkema Carling plant which will toll-manufacture them," Arkema said in a statement. The acrylic acid contract would also "consolidate Arkema's acrylics business by bolstering a direct downstream activity," it added.

The deal is expected to be completed April 1, 2008, subject to the legal information and consultation procedure with the Arkema France works council.

Chlor-Alkali Investments in China $2 Billion in 2008

As China's economy rolls into the close of the first quarter of 2008, the chlor-alkali segment of China's Chemical Processing Industry (CPI) will see 28 projects worth an estimated $2 billion begin construction this year. This is a paralleled investment by China to take over the polyvinlyl chloride (PVC) market by 2010. Twenty-three of the projects will focus on the production of caustic soda, a highly corrosive material that is used in the manufacture of textiles, soaps, bleach, petroleum products, solvents, plastics and in wastewater treatment, among others.

Gilead's Viread Wins EU Backing for Hepatitis B

U.S. biotechnology company Gilead Sciences Inc said recently a European committee had recommended approving its Viread drug as a treatment for hepatitis B. Viread is already approved for treating HIV/AIDS.

Based on the opinion from the European Medicines Agency's Committee for Medicinal Products for Human Use, the European Commission is expected to formally authorize the marketing of Viread for chronic hepatitis B within a few months.

Gilead has also applied to sell Viread for treating hepatitis B in the United States, where a decision is expected this summer.

Dow Corning Expands Polymer Production for Silicon-Infused Bilayer Photoresist

Dow Corning Electronics announced that it is more than doubling its production capacity for the silicon polymer resin used to produce an innovative bilayer photoresist for semiconductor manufacturing.

In December 2006, Dow Corning and TOK announced that they had jointly developed a bilayer photoresist using a proprietary Dow Corning silicon polymer resin in the imaging layer, which provides improved etch selectivity for chip makers' 193nm lithography processes. In December 2007, the companies announced that the bilayer photoresist is now being used in production by a memory chip manufacturer.

Photoresist is a light-sensitive material that becomes either soluble or insoluble after exposure to light, allowing portions to be selectively removed during subsequent etching processes. Dow Corning's silicon resin, when combined with photosensitive materials, allows chip makers to use thinner photoresist layers. That, in turn, improves pattern resolution, which allows manufacturers to produce smaller circuit patterns.

EUSA Pharma to Acquire US Specialty Oncology Company Cytogen

EUSA Pharma to Acquire US Specialty Oncology Company Cytogen:

EUSA Pharma Inc ('EUSA'), a transatlantic specialty pharmaceutical company focused on oncology, pain control and critical care, announced that it has entered into a definitive agreement to acquire all the outstanding shares of Cytogen Corporation (NASDAQ: CYTO) for US$22.6 million. Cytogen is a specialty pharmaceutical company with three oncology and pain control products on the American market, a specialist US sales force and an established commercial infrastructure. To meet the acquisition consideration, and fund further investments, EUSA Pharma has concurrently raised over US$50 million in an investment round, led by TVM Capital, an international venture capital firm.

The acquisition of Cytogen brings to the enlarged EUSA group an established US commercial organization with a 40-strong specialist oncology sales force and three marketed products - Caphosol(R), ProstaScint(R) and Quadramet(R).

The enlarged group will have broad sales and marketing capabilities, via direct sales forces in the US and across Europe, and through distribution partners in a number of territories including Canada, South America and Asia. EUSA will have a portfolio of nine marketed medicines and five late-stage development products. The acquisition of Cytogen provides EUSA with the capabilities to commercialize a number of these medicines on both sides of the Atlantic.

In addition, the enlarged group's transatlantic infrastructure provides the company with a strategic growth platform to exploit additional products through acquisition and in-licensing. With its highly focused business model, EUSA will have the opportunity to compete effectively with major players, making it an attractive partner for companies seeking specialist transatlantic commercial and late-stage development expertise.

Under the terms of the all-cash merger agreement Cytogen shareholders will receive US$0.62 per share, representing a 35% premium on the company's share price at the close of trading on 10 March 2008, and valuing the company at US$22.6 million.

The Cytogen Board has approved the cash merger agreement and resolved to recommend that the company's shareholders adopt the agreement. Completion of the acquisition is conditional on the approval of a majority of Cytogen's shareholders and fulfillment of certain pre-closing conditions. Upon completion, EUSA intends to apply to delist all Cytogen's issued shares from the NASDAQ stock exchange.

To meet the consideration for the acquisition, provide working capital to integrate and refocus the Cytogen organization and undertake further investments, EUSA Pharma has raised over US$50 million in an investment fundraising. This investment round, which is conditional on the completion of the Cytogen acquisition, is led by TVM Capital and supported by EUSA's existing investors, Essex Woodlands, 3i, Goldman Sachs, Advent Venture Partners, SV Life Sciences, NeoMed and NovaQuest.

McIlvaine Company

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