Catalytica Announces Restructuring of its Catalytica Pharmaceuticals Business.

Business Editors/Health & Medical Writers

MOUNTAIN VIEW, Calif.--(BW HealthWire)--Nov. 7, 2000

Catalytica, Inc. (Nasdaq:CTAL) today announced that it plans to restructure its Catalytica Pharmaceuticals business in order to increase efficiencies in its operations.

As a result of an extensive review of its business, Catalytica Pharmaceuticals plans to close its small Bay View chemical manufacturing operation in East Palo Alto, California, a facility with limited capacity and flexibility. Catalytica Pharmaceuticals will transfer products currently manufactured at Bay View to its Greenville, North Carolina and South Haven, Michigan facilities and, at the same time, will reorganize the Greenville and South Haven facilities to increase efficiency and better serve customers.

As a result of the facility closure and reorganization, Catalytica will incur a pre-tax charge of approximately $12-14 million in the fourth quarter, of which $3-4 million will require cash payments and the remainder will represent non-cash write-offs.

Ricardo B. Levy, president and chief executive officer of Catalytica, Inc., commented, "This restructuring is the result of an extensive review of our operations by our management team at Catalytica Pharmaceuticals with a keen focus on efficiency and uncompromised quality and service to our customers. Through feedback compiled from customer surveys and help from outside experts regarding streamlining the manufacture of pharmaceutical products, we have put in place a restructuring plan that we believe will both improve our cost structure and enable us to continue to be responsive to our customers' needs."

Catalytica announced on August 2, 2000, that DSM will acquire Catalytica's pharmaceuticals business through the purchase of Catalytica, Inc. for approximately $750 million plus the assumption of debt, for a total current value of approximately $800 million. The transaction is structured as a merger of a wholly-owned U.S. subsidiary of DSM with Catalytica and a taxable spin-off of the Catalytica Combustion Systems and Catalytica Advanced Technologies businesses as a single entity to Catalytica stockholders. As a result, Catalytica will operate as a subsidiary of DSM and the Catalytica Combustion Systems and Catalytica Advanced Technologies businesses will comprise a stand-alone company that has been re-named Catalytica Energy Systems, Inc. Shares of the spin-off company will be distributed in conjunction with the close of the merger. Catalytica Energy Systems, Inc. has filed a registration statement on Form S-1 with the SEC with respect to the spin-off. Catalytica, Inc. has filed a preliminary proxy statement on Schedule 14A with respect to the merger agreement and merger with DSM. Concurrently, Catalytica, Catalytica Energy Systems, and DSM are moving forward in order to complete this transaction in the fourth quarter.

Catalytica Pharmaceuticals, Inc., a subsidiary of Catalytica, Inc., provides the pharmaceutical and biotech industries with comprehensive skills and demonstrated commercial experience in a broad spectrum of areas extending from process development through drug development, formulation, manufacturing, and packaging. Its customers include Aventis, Eli Lilly, Glaxo Wellcome, Pfizer, Pharmacia, Amgen, Monarch, Shire, and others. Catalytica Pharmaceuticals employs over 1500 people. It is the largest independent, fully integrated drug development and manufacturing supplier in the world.

Catalytica, Inc. (www.Catalytica-inc.com) finds new pathways to improve chemical processes -- reducing time, waste, and costs.

This news release contains forward-looking statements regarding Catalytica, Catalytica Energy Systems, their respective businesses and future performances, the merger with DSM and the spin-off of Catalytica Energy Systems. Such forward-looking statements include the prospects for our business, our ability to identify and implement cost-saving measures and the potential savings that may result from cost-saving measures. Actual results may differ and such differences may be material from those anticipated in such forward-looking statements. These statements involve risks and uncertainties, including without limitation the ability to complete the spin-off of Catalytica Energy Systems and merger with DSM, the ability of Catalytica Pharmaceuticals to perform cost-effectively and in a timely manner, the ability to terminate operations of the Bay View facility efficiently, changes in market conditions, changes in the Companies' competitive positions, changes in the pharmaceutical and energy production industries and the impact of environmental and other regulation on the closing of a pharmaceutical and biotech manufacturing facility. Readers are cautioned not to place undo reliance on these forward-looking statements, which speak only as of the date of this release. The Company undertakes no obligation to update publicly any forward-looking statements to reflect new information, events or circumstances after the date of this release or to reflect the incurrence of unanticipated events. Investors are encouraged to review Catalytica's preliminary Proxy Statement on Schedule 14-A as filed on September 6, 2000, Form 10K for the year ending December 31, 1999, Form 10Q's for the periods ending March 31 and June 30, 2000 and Catalytica Energy Systems' Registration Statement on Form S-1 as filed on November 1, 2000 with the Securities and Exchange Commission for a discussion of additional factors that could affect Catalytica's and Catalytica Energy Systems' future performance.