Avantor stops key sales in Mexico of product used to make heroin

Avantor, a $6 billion chemical maker based in Radnor, this month stopped Mexico sales of a key industrial chemical used by that country’s illegal heroin labs and destroyed its supplies there, the company said.

The decision follows the publication of a Bloomberg Businessweek investigation documenting the easy retail availability in Mexico of acetic anhydride in convenient wine bottle-sized jugs made by Avantor’s J.T. Baker division there.

Bloomberg’s reporters found the jugs, each containing enough reagent to convert many pounds of opium to heroin, for sale for less than $20 a liter at drugstores and medical-supply shops in Mexico’s capital and in opium-growing Pacific Coast states.

(Avantor traces its roots to 1904, when it was known as J.T. Baker Chemical and based in Phillipsburg, where it maintains a manufacturing plant. It was headquartered in Center Valley from 2011 until 2018 and now has a presence in downtown Allentown’s Tower 6.)

In the United States, Bloomberg reported, Avantor obeyed the tough laws governing its product, but was not required to track its use as closely in Mexico. American manufacturers are expected to report theft, loss or unusual sales of controlled chemicals to law enforcement. In Mexico, though, the onus was on distributors.

Mexico is “the primary source of heroin available in the United States,” the U.S. Drug Enforcement Agency said in a report last year.

Police in Mexico have found Avantor’s acetic anhydride at illegal drug lab busts as far back as 2010 and as recently as last fall.

The day Bloomberg’s report was posted, Aug. 26, Avantor’s chief executive Michael Stubblefield and general counsel Justin Miller told Mexican managers to end acetic anhydride production and destroy inventory, spokesperson Allison Hosak confirmed. Five days later, they sent messages to Avantor customers saying they were leaving the business.

The company announced the move publicly only on Sept. 15, after Mexican President Andrés Manuel López Obrador vowed to prevent illegal heroin makers from using American companies’ chemicals, and Attorney General Alejandro Gertz Manero announced a criminal investigation of outlets that resold Avantor’s chemical to heroin cooks.

One source said Avantor hadn’t publicized its move sooner because it feared that drug cartels might try to grab remaining supplies. Avantor isn’t accused of any criminal activity under Mexican law.

Avantor Chairman Rajiv L. Gupta, a former Rohm & Haas chief executive, didn’t respond to calls seeking comment. He is also chair of Aptive Plc (Delphi Automotive), a director of the DuPont Co., and formerly of Vanguard Group, among other large companies, and is the namesake donor of Drexel University’s Raj and Kamla Gupta Corporate Governance Institute.

Industry data show that 21 tons of Avantor’s acetic anhydride found its way to retailers in 2019, enough to fill 1,200 jugs and make many tons of heroin, according to Bloomberg.

A little goes a long way. Avantor said its worldwide sales of acetic anhydride total “less than $1 million annually,” a fraction of its $6 billion in yearly revenue.

“Out of an abundance of caution, due to the potential for misuse of acetic anhydride outside of the regulated supply chain, the company chose to cease all production and sales of the product in Mexico,” and “properly discarded” its remaining supply, Avantor spokesperson Robert Donohoe said in an email.

Donohoe noted that acetic anhydride is made by other companies for use in chemical research and in making overthe-counter painkillers, as well as by Mexican petrochemical manufacturers. It is also used to make cigarette filters. Avantor produced well under 1% of the world’s supply, he said. The firm has only 100 employees in Mexico.

Bloomberg detailed volume discounts that Avantor gave its salesforce as an incentive to boost markets for the chemical.

Details of the Bloomberg investigation were widely republished in Mexico, including an article in the El Financiero business daily, titled, “Breaking Bad a la Mexicana.” The Bloomberg articles were written by Cam Simpson, Michael Smith and Nacha Cattan.

The U.N.’s International Narcotics Control Board and the U.S. Drug Enforcement Administration have listed acetic anhydride as a chemical to be carefully tracked and restricted since the early 2000s, and many other countries have imposed strict regulations.

Should U.S. companies be held to account for what their foreign factories sell under local laws?

Dow Chemical has adopted guidelines for multinational companies, which urge companies to “apply standards and processes across the whole company,” instead of following lower standards where local law allows. DuPont has embraced United Nations anti-corruption principles, which have similar goals, according to Brad Brooks-Rubin, a former State Department official who is now managing director at the Sentry, a Washington-based anti-corruption nonprofit.

Corporate directors used to think it was enough for the board to practice general oversight, without micromanaging local markets, said Charles Elson, head of the corporate governance center at the University of Delaware.

But court decisions in the last year have “dramatically expanded expectations for board responsibility for oversight of the compliance process,” Elson said. This includes last month’s Delaware Chancery Court ruling that investors could sue Chesterbrook-based drug distributor AmerisourceBergen directors for having “utterly failed” to stop employees from selling thousands of contaminated cancer-drug syringes.

Elson declined to comment on Avantor, saying that he and Gupta have professional ties.