Custom Manufacturing in Thailand, Evonik in China

10/2011 October

Markets and Companies Markets and Companies Interview with Styrolution’s CEO The newspaper for the Expert Peter Pollak discusses the Roberto Gualdoni chemical and fragmented world of fine chemicals

Page 5 life science marke ts Pages 8 and 14

N e w s f l o w Market and Companies: Haltermann sold to H.I.G Europe, Dr. Uwe Nickel named new CEO. An Industry Full of Opportunity DuPont seeking buyers for two separate businesses: a polyester-film CPhI Highlights the Latest Trends in Pharma joint venture and one that makes powder-based paint.

Bayer and Yunona Holdings have entered a memorandum of under- Markus Blocher Dr. Jörn Winterfeld standing to manufacture drugs in CEO, Dottikon Russia. Director Business Line Pharma/Agro at Wacker Biosolutions, Wacker AstraZeneca has announced it will be laying off about 400 employees in the U.S., primarily at its head- API Fine Chemicals quarters in Wilmington, Del. … Chemical exclusive synthesis partners Consolidation in the fine chemicals industry Lanxess has announced three in- need to possess a versatile technology will continue, since it is a very fragmented vestments totaling upwards of €30 “ portfolio like a Swiss army knife and be as industry. Many small players may vanish million in Brazil. ” “ ” precise and reliable as a Swiss watch. or merge to attain the so-called critical mass. Syngenta has posted a 21 % rise in This trend includes producers in China. its Q3 results over last year. More on Page 2 ▶ Jean Bléhaut Director of Marketing & Business Development, Novasep Dr. Martin Wienkenhöver Under Construction: CEO, CABB Both Solvay and Evonik are building hydrogen peroxide plants; Solvay Custom Manufacturing in Thailand, Evonik in China. Fine Chemicals Over the years, the new synthetic molecules …We see a strong growth in the The first production facilities in the developed in the pharmaceutical industry $1.4 billion expansion of BASF-YPC outsourcing of fine chemicals – especially Company have now begun opera- “ have become larger and more challenging ” of more challenging chemical syntheses. tions. “ ” to synthesize. More on Page 5 ▶

Wolfgang Schmitz Robert Hardy People: CEO, Aesica Dr. Thomas Büttner became CEO, Saltigo AllessaChemie’s president and CEO on Oct. 1, taking over from Almuth Poetz. Custom Manufacturing General Michael Träger, managing director …We see also growth potential in the In 10 years, our industry will be much and COO of Vestolit, has been reelected as chairman of Euro Chlor for pharmaceutical sector, because big pharma stronger, competitive and diverse with the another one-year term. “ companies are outsourcing more and more” “most significant contribution to the pharma ” Kenneth Frazier will be succeeding to concentrate on their core strengths and ceutical market coming from emerging econo Merck & Co. chairman Richard Clark emerging pharma companies continue to drive mies such as Brazil, Russia, China and India. on Dec. 1. new drug developments through innovation. Linde has appointed Thomas Bla- des as a new member of the executive board. Blades will succeed J. Kent Masters. Dr. Ralf Fink Dr. Andreas Dietrich Vice President and Head of Pharma Vice President Launch and Strategic Ingredients at BASF Events: Products, Boehringer Ingelheim There are several industry events coming up in November and De- General cember. Check out our event lis- APIs - Fotolia.com© askaja Cost pressure, strong growth in emerging tings for more details. While corresponding quality and regu- More on Page 19 ▶ countries, ongoing market consolidation latory understanding was still in need of “as well as the emergence of new regional or ” “ development, today’s Asian manufacturers” even global players and a significant higher have become better at responding to needs demand for performance excipients are which go beyond price. scenarios we want to be prepared for. ntgelt E ntgelt bezahlt · 78719 G· A The Powerhouse for API Solutions

CPhI Worldwide Frankfurt, 25-27 October 2011 - Hall 4.2 – Stand 42F31 www.sintesicomunicazione.it · PF 11 05 64 · 64220 Darmstadt · Pressepost · DP g F.I.S. - Fabbrica Italiana Sintetici SpA Viale Milano, 26 - 36075 Montecchio Maggiore - (Vicenza) - Italy www.fisvi.com GIT GIT Verla

chemanager-online.com/en Page 2 Markets & Companies CHEManager Europe 10/2011

Content DECISIVE INFORMATION

THE PORTAL AND NEWSPAPER FOR THE EUROPEAN CHEMICALS AND PHARMACEUTICAL MARKETS

Front Page Packaging / Logistics 10 A Changing World for CMOs 16 Consolidation in Pharma a Win for Custom Manufacturing An Industry Full of Opportunity 1, 11–19 Fighting Counterfeits 10 M. Griffiths, Carbogen Amcis; W. Schmitz, Saltigo; M. Cassidy, CPhI Highlights the Latest Trends in Pharma Enhanced Safety For Pharmaceutical Packaging SAFC; J. Bléhaut, Novasep Oliver Naucke, Uhlmann Pac-Systeme Fine Chemicals Developing Well in 2011 16, 17 Markets & Companies 2–9 Agro Segment Showing Particularly Strong Growth Let There Be Light! Dr. Martin Wienkenhöver, CABB; Dr. Peter Seufer-Wasserthal, Codexis; Specialty Chemicals in China 4 How Industrial Packaging Can Boost Sustainability Measures Dr. Jörn Winterfeld, Wacker What's So Special About It? Dr. Clemens Willée, CEO, Mauser Group Dr. Kai Pflug, CEO, Management Consulting and Dr. Bernhard Hartmann, Managing Director, A.T. Kearney China Functional Ingredients 17 Excipients Not Just Additives Anymore CPhI 2011 11–19 Dedicated To Styrenics 5 Hans Ole Klingenberg, Novozymes Styrolution Starts Operations, Positioned for Ei Gude, Wie? 11 Profitable Growth and Long-term Success ´As Reliable as a Swiss Watch´ 18 Roberto Gualdoni, Styrolution The CPhI Returns to Frankfurt Innovation Expected from API Manufacturers Interview with UBM Live brand directors Annemieke Timmers (CPhI)

© Nmedia/fotolia.com Markus Blocher, Dottikon; Dr. Andreas Dietrich, Boehringer Ingelheim; A Passion For Chemistry 6 and Haf Cennydd (ICSE, P-MEC & BioPh) Heinz Sieger, CU Chemie Uetikon Ferak Berlin: A Famili Company with a Global Reach Interview with Thomas Gründemann, CEO, Ferak Berlin Game Change 12, 13 Center Stage: Emerging Countries 19 online.com/en chemanager - chemanager Pharma's Future with a Disaggregated Supply Chain APIs in China 7 All-round Pharma Service Providers See Potential in Asia, Elsewhere chemanager - Pharma Industry Booming in Asia Michael Jarosch, Ulrich Korneck, Camelot Management Consultants Robert Hardy, Aesica; Dr. Ralf Fink, BASF; Burghard Freiberg, Iris Zhao, Frost & Sullivan Merck Millipore online.com /en Breaking Taboos 13 A Fragmented Industry 8, 14 Pharma Must Make Big Changes to Survive Peter Pollak on the World of Fine Chemicals Interview with Ulrich Korneck and Michael Jarosch, People · Events · Awards 19 www.gitverlag.com Interview with Dr. Peter Pollak, Fine Chemical Business Consultant Camelot Management Consultants

Flexibility, Internationality and Know How 9 API Sourcing in China and India 15 At A Glance 20 Industry Service: Expectations on Is Asia the Only Option for the Future Technical Service Providers Growing Index 20 Interview with Dr. Joachim Kreysing, Bob Kennedy, Manager of Industry Research, Thomson Reuters and executive vice president of the BIS Group Molly Bowman, Manager Small Molecule Research, Thomson Reuters Imprint 20

AkzoNobel Completes Haltermann Sold to H.I.G Europe Bayer Joins Yunona Holdings

Schramm Holding Acquisition Haltermann, a subsidiary of Dow, For Drug Manufacturing has been acquired by H.I.G. Europe, AkzoNobel has completed its ac- in 2010 of €115 million and employ the European arm of H.I.G. Capital. Bayer and Yunona Holdings, rep- quisition of more than 95 % of the around 800 people. In addition to The CEO of the new Haltermann resenting the Ural Pharmaceutical shares of coatings manufacturer the Schramm deal, the company is Dr. Uwe Nickel, formerly board Cluster (UPC) of Russia have entered Schramm Holding. Based in Ger- expects to finalize the acquisition of member of Clariant and head of the Dr. Uwe Nickel a memorandum of understanding CEO, Haltermann many and listed on the Hong Kong Korean SSCP’s coatings business as chemical practice of the consulting to manufacture drugs in Russia. Stock Exchange, Schramm manufac- of Nov. 1. SSCP was also the majority firm Arthur D. Little. At produc- The companies said they intend to tures and markets coatings for plas- shareholder of Schramm until the tion sites in Hamburg and Speyer, defined specifications. Haltermann establish themselves in the fields of tics, metals and electrical insulation Akzo deal. Germany, Haltermann produces is also a supplier of high-purity n-, production, marketing and distribu- as well as coil coatings for alumi- complex test and specialty fuels as iso- and cyclopentanes employed tion of pharmaceutical products in num. They achieved global revenues J well as various solvents based on as blowing agents in the production Russia, the website inpharm.com hydrocarbons with short to medi- of polystyrene and polyurethane reported. The cluster has received economic development program be- um chain length, all with narrowly foams. J funds worth 27.3 billion rubles tween 2010 and 2015. Lanxess to Invest €30 Million in Brazil (around $860 million) from Russia’s J

Lanxess has announced three invest- will go on stream in mid-2013. The ments totaling €30 million in Brazil. other plant will produce the rubber ECHA Board Decisions in Fee Disputes Ashland Opens Mumbai The company said investments will additives Rhenogran as well as Rhe- support the growing trend toward noshape curing bladders. The European Chemicals Agency’s registration fee, the particular cir- Technical Center green mobility in the Latin American In the third investment, Lanxess (ECHA) board of appeal has pub- cumstances of the cases are differ- country. The investments include is re-engineering parts of its plant in lished its first two final decisions on ent. The board of appeal decided in Ashland has opened a new techni- the construction of two new plants Triunfo, Rio Grande do Sul, in order appeals against decisions adopted favor of the appellant in one case cal center in Mumbai, India. The at the company’s Porto Feliz site in to produce EPDM rubber from bio- by ECHA under the Reach Regula- and in favor of ECHA in the other. company said the new Ashland the State of São Paulo. One plant will based ethylene. The Brazilian com- tion 1. In both cases, the appellants In one case, the appellant wanted Technical Center will develop ad- produce the high-tech engineering pany, Braskem S.A., will supply the had paid the fee required for the a refund of the registration fee; ditives and ingredients that deliver plastics Durethan and Pocan; the ethylene, derived from sugarcane, registration of a substance after the board ordered ECHA to refund high-performance characteristics plant will have an initial capacity by pipeline as of November. J the expiry of the deadlines set by the money. In the other case, the sought after by coatings and con- of 20,000 metric tons per year and the agency. According to the Reach appellant asked to board to annul struction industry professionals. Regulation and the associated Fee the decision rejecting the registra- The technical center offers the Regulation 2, non-payment of the tion. However, the board sided with latest technologies for rheological AstraZeneca to Cut 400 U.S. Jobs registration fee by the set deadline ECHA, stating that the agency had additives, surfactants, foam-control Plans call for the technical center to will result in the registration be- acted correctly in rejecting the reg- agents, buffers for water-based be expanded to offer solutions for AstraZeneca has announced plans said spokesman Tony Jewell. The ing rejected with any late fee not istration. paints, additives for cement dry ad- the personal care industry in early to cut about 400 employees in its specific jobs targeted haven't been being refunded. While both cases mix and for construction chemicals. 2012. J U.S. commercial operations, citing identified yet. All decisions will be dealt with the late payment of the J a need to reduce costs. The com- finalized by early December. pany said the jobs are mainly at its “The changes will enable the DuPont Looking to Sell Teijin JV U.S. headquarters in Wilmington, company to compete in a challeng- Del., and some field-based, non- ing environment, including pricing Syngenta Posts Increase in Q3 Sales DuPont said it is seeking buyers for Solae, its soy-products joint venture sales roles. The company has about pressures and the continuing growth two separate businesses, a polyes- with Bunge. It added that DuPont 14,400 employees in North America. of generics medicines,” the company Syngenta posted third-quarter sales the company said it expects substan- ter-film joint venture and one that has put that process on hold while About 70 of the estimated positions said in a press release. of $2.66 billion, an increase of 21 % tial top line growth, higher profit- makes powder-based paint. Accord- it decides whether to merge the to be eliminated will come from ex- Several of AstraZeneca's best- from last year’s $2.2 billion. At con- ability at constant exchange rates ing to a Bloomberg report, DuPont business with Danisco, a Danish- isting vacancies, leaving about 330 selling drugs face the loss of patent stant exchange rates, sales rose and a significant increase in free is also considering buying the 28 % based maker of food ingredients current workers affected by the cuts, expiration in coming years. J 16 %. Going ahead, for the full year, cash flow. J stake it doesn’t already own in and enzymes. J

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Page 4 Markets & Companies CHEManager Europe 10/2011

Specialty Chemicals In China What’s so Special About It?

Faster Than Industry Average – Generally, the chemical industry in any given country starts with basic chemicals and moves on to higher-value chemicals later. Accordingly, in China, more than 50 % of chemical sales come from basic chemicals, while in Japan the figure is around 40 %. As China’s development pro- ceeds, specialty chemicals will therefore grow faster than the chemical industry average. According to the National Bureau of Statistics of China, revenue growth in specialty chemicals was + 21 % for specialty chemicals but only + 7 % for the average of the chemical industry. So China’s specialty chemicals segment is highly attractive due to its high growth rate. This attractiveness is also reflected in direct

investment of foreign specialty chemicals companies. Klent – Fotolia © Alex

High Growth, High Fragmentation several qualifications that should be met. The company should have Specialty chemicals companies in a certain size already in order to China have a somewhat higher prof- reach critical mass quickly, and at itability than the chemicals average. Dr. Bernhard Hartmann the same time should be willing to However, this difference is not huge, Managing Director, be focused. It will probably not be A.T. Kearney China most likely as other factors such as possible to become the domestic the small average company size in specialty chemicals champion while specialty chemicals lower the aver- at the same time still pursuing sev- age profitability. eral other strategic goals. Another characteristic is the Furthermore, the company intense fragmentation of the spe- should have a mindset that en- cialty chemicals industry. There Dr. Kai Pflug courages innovation and research, are almost 10,000 domestic spe- CEO, Management focusing more on intellectual prop- Consulting – Chemicals cialty chemicals companies in erty than on physical assets and be China, far more than for any other willing to invest in providing techni- chemical segment. Even the biggest duced chemicals of MNCs or even cal service. specialty chemical companies such on imported materials for high-end Finally, the company should ideas Zhejiang Chuanhua account for chemicals. ally already have some international far less than 1 % of the total seg- Probably as a consequence, experience as a successful specialty ment sales. And clearly China does government policy is promoting a chemicals company will need to tar- not yet have companies that are as gradual shift of the chemical indus- get global markets. prominent as global leaders such as try towards specialty chemicals. This BASF, Clariant, DSM, Evonik, Rhodia is part of a general trend to move What Will Happen Next? © olly - Fotolia.com or Wacker. away from large-scale and often Domestic specialty chemicals polluting primary chemicals to high It is to be expected that a few Chi- companies have a low average value-added, high-end chemical shares well below 1 % of the total Lack of strong R&D competence: chemical company has established nese companies will come to real- technological level. This refers to all products. specialty chemicals market and China’s chemical industry is still itself as a major player for specialty ize the opportunities of becoming a relevant aspects such as their R&D sales far below one billion dol- at a relatively early development chemicals. After all, a domestic play- leading player in specialty chemi- level, their portfolio, their level of Limited Presence of Big Chinese Players … lars. Given that individual business stage. Domestic companies have er should enjoy the higher growth cals. This will first require estab- customer service and their capa- units of multinational players often not yet accumulated the wealth profitability of the segment and also lishing a clear specialty-focused bility to provide complete solutions Given the attractive market con- achieve far higher revenues, the of knowledge that enables West- have a number of advantages com- strategy, which may not be easy to customers. Therefore they can- ditions, it is surprising that there key question is what keeps Chinese ern companies to continuously pared to multinationals: given the relatively opportunistic not fulfill the needs of the domestic are no truly big domestic Chinese companies from becoming truly rel- pursue innovation. Furthermore, Specialty chemicals is relatively approach of Chinese companies to Chinese market. In many segments, specialty companies. Even the big- evant players in specialty chemicals. the mindset of Chinese companies labor intensive, allowing a Chinese business planning. In addition, it China relies on either locally pro- gest domestic players have market Likely reasons are: sometimes seems to be too focused player to benefit from lower labor will be necessary to quickly expand on physical assets rather than on cost. This is relevant even if multi- the business. Relying on internal intellectual property. This may be national companies start to produce growth alone will not be sufficient a consequence of the somewhat specialty chemicals in China, as their as the current gap in the special- limited protection of intellectual costs are generally higher. ty chemicals industry will not be property in China. Furthermore, success in specialty there for more than a few years. Lack of long-term thinking: Chi- chemicals depends on understand- Domestic mergers and acquisitions nese chemical companies sometimes ing specific markets and customers, also probably will not be sufficient lack the necessary longer-term and providing localized services to to become a leading player as most thinking to pursue an area such as them. This should also be easier to domestic acquisition targets them- specialty chemicals, in which any be achieved by a truly local company selves lack size and deep specialty success will only come after years than by a multinational. chemicals expertise. This leaves of efforts to establish the business. Lack of global reach: Most Chi- nese chemical companies so far simply lack the marketing and ”Given the attractive market conditions, sales network to market products it is surprising that there are no truly big domestic globally. This is not a problem for basic chemicals with a strong do- Chinese specialty companies.“ mestic demand, but a severe limita- tion for smaller markets that need to be penetrated globally to reach a Finally, while the market for overseas acquisitions. Though by profitable level of sales. petrochemicals in China is fairly far the most risky and expensive, Lack of size: This is necessary not consolidated and dominated by just this is also the approach most likely only due to the need for global pres- three companies, the fragmentation to work. The current gaps of Chi- ence, but also as customers more of the specialty chemicals sector nese chemical companies particu- and more expect specialty chemi- should allow a determined compa- larly in the areas of technological cals companies to provide complete ny to become a leading player com- knowledge, R&D capability and solutions to an industry. The intense paratively easily. After all, currently global reach are best filled by the fragmentation of the domestic spe- most Western chemical executives acquisition of global players or cialty chemicals industry is a major would probably find it difficult to subunits of such players. obstacle to reaching critical size. name just one domestic Chinese Major Chinese companies prefer to specialty chemicals company. The focus on basic chemicals that offer field for any contender thus is rela- 22 Contacts: less fragmented and less complex tively open. Dr. Kai Pflug markets which at the same time are Management Consulting – Chemicals much larger. Which Companies Will Make It? Hong Kong, China Tel.: +86 1 36 81 87 39 92 … And Why This Will Change That said, obviously not every Chi- [email protected] nese chemical company has the www.mc-chemicals.com Despite these reasons, it is surpris- qualities to become a leader in spe- ing that so far no major Chinese cialty chemicals. Indeed, there are Dr. Bernhard Hartmann A.T. Kearney China Terminology Shanghai, China Tel.: +86 21 61 82 20 06 Throughout this article, the term “specialty chemicals” is used in its European definition. [email protected] That is, specialty chemicals are low-volume chemicals sold based on their performance www.atkearney.com in a specific application. This is in contrast to the definition commonly used in China, where the terms “specialty chemicals” and “fine chemicals” are more or less used inter- changeably. In other words, in China only the dimension of production volume is used to distinguish between basic chemicals and fine/specialty chemicals, while in Europe (and in this article) the second dimension of whether a chemical is sold based on perfor- chemanager-online.com/en/ mance or on specification is used to distinguish between specialty and fine chemicals. tags/china

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Dedicated To Styrenics Styrolution Starts Operations, Positioned for Profitable Growth and Long-term Success

High Goals – On Oct.1, Styrolution officially started operating as an independ- R. Gualdoni: With our global head- tion and value-extraction of what we R&D from both mother companies. quarters in Frankfurt, Germany, have been given. And the third phase What we are aiming at is more ent company, following the approval of the relevant antitrust authorities. The new regional headquarters in Channa- would be growth. And with the capa- of process innovation in terms of company is a 50:50 joint venture between BASF and INEOS, comprising the key hon, U.S., and Singapore and with bilities that we have we can grow in commodities, I think we still have styrenics activities of the two partners. The company name, which is a combination 17 manufacturing sites across 10 any polymer in the developing world something which can be done, Roberto Gualdoni countries, Styrolution has a global and rather with the specialties in the without excluding absolutely that CEO, Styrolution of the words ”styrenics“ and ”solution“ implies that the world’s new leading styren- market presence. We have our “in developed world. there might be some tweaking on ics supplier with pro forma combined sales in 2010 of €6.4 billion is determined to the region for the region” approach, the product area for the commodi- R. Gualdoni: The EPS business with ex- which allows us to always be close ties. Whereas, when it comes to our give its customers a competitive edge, says Styrolution’s CEO Roberto Gualdoni. Dr. pandable polystyrene, as well as the to our customers. In fact, we do “This company is specialty part we are much more Michael Reubold spoke with him right after the launch of Styrolution. XPS business with extruded polysty- have a very strong position in Eu- built to last.” able to go with the customer all rene foam remain with BASF. This is rope, which stands for 48 % of our the way through and deliver cus- part of a long-term strategy of our turnover. But we also have a very tomized products. That is going to CHEManager Europe: Mr. Gualdoni, R. Gualdoni: Styrolution is the only mother companies. The charm of good position in the Americas, be it Innovation is certainly key to fulfill be the main point of our research what is the underlying strategy of one of the key players dedicated leaving the EPS and XPs activities in the U.S. or in Mexico. NAFTA is your customers’ requirements and going forward. Customer nearness, the creation of Styrolution? Do we entirely to styrenics. We are actu- within BASF is that the production of well covered from the point of view to add new applications for styren- understanding what the needs are have to think of it as a mere pooling ally marketing styrene monomer, these materials in the Ludwigshafen of Styrolution. And I think we also ics. How do you integrate the R&D going forward, and understanding of resources or even a consolidation polystyrene, ABS – acrylonitrile Verbund site is self-supported. This have a very good starting position activities of BASF and INEOS to get that having all the technology base of capacities? butadiene styrene – and certain way we reduce the complexity of the in Asia with almost a quarter of our the maximum out of the two R&D out there we can make something copolymers, most of them well- whole system in terms of Styrolu- turnover being made in this region cultures? better, much more than one plus R. Gualdoni: No, neither of these rea- known in the market, for instance tion, too. today. Obviously, when it comes to one in the area of R&D. sons was a relevant factor for the SBC – styrene-butadiene block co- our position in Europe, we are near R. Gualdoni: We are at the moment in formation of Styrolution. Our objec- polymers. We also have other sty- From a geographical point of view, al- to the customer. In terms of the a period in which we have to under- tive as a company is to be and re- rene-based copolymers like SAN, most 50 % of Styrolution’s revenues other geographies I think there is a stand each other’s businesses. The main a strong leader in our markets AMSAN, ASA, MABS, and certain come from Europe. What is your strat- three-phase scenario: At the begin- idea is that after a certain time, we globally, and we are excellently po- copolymer blends like polyamide egy to defend your leading position in ning there will be the integration of will have a very independent R&D, chemanager-online.com/en/ sitioned for profitable growth and ABS, ASA polycarbonate, ABS poly- Europe, while at the same grow your these heritage businesses. Then we also independent in the cultural tags/styrolution long-term success. We have a global carbonate. I think all in all we have businesses in other regions? would have to go through an evalua- aspects and the philosophy of the footprint; we are going to be a formi- the broadest product portfolio in the dable player in the fields of styrenics; industry when it comes to styren- we have all available technologies of ics. Styrolution holds global number relevance in the industry; we have one positions in styrene monomer, www.altana.com plants working in each region; we polystyrene, SBC, SAN, AMSAN, ASA, have an experienced team; and we MABS and copolymer blends, and a have low financial leverage. This is number two position in ABS. So, we a good basis for the start going for- are very well positioned to reap the ward. This company is built to last. benefits of that.

Can you give us a brief overview Your portfolio does not include busi- about your product portfolio? What nesses with expandable polystyrene are your market positions in these and extruded polystyrene foam. What respective areas? is the reason behind this? Our business is

Solvay Commissions HP Plant Growth

Solvay announced that MTP HPJV (SCG). Propylene oxide is primarily (Thailand), its hydrogen peroxide used to produce propylene glycol, joint venture with Dow, has success- polyurethanes and glycol ethers. It is fully commissioned the largest hydro- the second world-scale HP plant dedi- gen peroxide (HP) plant in the world. cated to PO production, the first being The production process of the new the 230,000 tons HP plant (Antwerp, plant in Map Ta Phut, Thailand, has Belgium) commissioned at the end of a capacity of over 330,000 tons per 2008, which serves a Dow and BASF year of hydrogen peroxide at 100 % HPPO plant. Producing PO with HP concentration and serves mainly as offers unique and sizeable economic a captive raw material source for and environmental benefits com- the manufacture of propylene oxide pared with conventional propylene (PO) by Dow and Siam Cement Group oxide production technologies. J

BASF-YPC Expansion Plants Onstream

The first production facilities in existing steam cracker, from 600,000 the $1.4 billion expansion of BASF- tons/year to 740,000 tons/year of eth- YPC Company have now begun op- ylene, the expansion of three exist- erations. Along with the successful ing plants, and the construction of ten completion of the steam cracker new plants. The products of this sec- expansion, the newly constructed ond phase will serve multiple indus- butadiene extraction plant and the tries such as agriculture, construction, non-ionic surfactants plant are now electronics, pharmaceutical, automo- operational. These plants are part of a tive and chemical manufacturing. The $1.4 billion investment project which bulk of the remaining plants are ex- broke ground in September 2009. The pected to come on-stream around the project includes the expansion of the end of 2011. J

Evonik to Build HP Plant in China

Evonik is investing more than €100 capacity of around 600,000 tons for million to build a new production H2O2 production by nearly 40 %. Ev- plant for hydrogen peroxide (H2O2) onik will supply its H2O2 from Jilin in Jilin Province in northeastern directly to the adjacent propylene Our business isStrategically positioned in the dynamic and global markets of the China. Scheduled to be completed by oxide plant run by Jishen Chemical world, ALTANA is a driving force of innovation for its customers. Our comprehensive the end of 2013, the plant will boast Industry Co., Ltd. via a pipeline that range of services is the key to proﬁtable growth, continually opening up new market an annual production capacity of will link the two facilities. A long-term opportunities for our customers. 230,000 metric tons, thus increas- supply agreement has already been ing Evonik’s current overall annual concluded between the companies. J Specialty chemicals are our business. A business we pursue with passion and dedication in more than 100 countries. Four specialized divisions work together to ensure that ALTANA‘s unrivalled competence and service excellence continue Solvias, RohnerChem Join for Custom to improve and expand. With a clear vision of what our customers expect of us, it is our ambition at all times to develop solutions that turn opportunities into Research, Manufacturing Services J future reality. Solvias and RohnerChem announced the synergy of Solvias’ expertise in a partnership for custom research chemical, analytical and solid-state and manufacturing services. The development and RohnerChem’s ex- preferred but non-exclusive part- perience in scale-up and commercial nership closes the chain of services scale custom synthesis of complex, from route scouting through to com- small molecule fine chemicals and mercial manufacturing. The compa- APIs. Financial terms of the partner- nies said customers will benefit from ship were not disclosed. J

chemanager-online.com/en Page 6 Markets and Companies CHEManager Europe 10/2011

A Passion For Chemistry Ferak Berlin: A Family Company with a Global Reach

Tearing Down Walls – The year 2000 marked a new beginning for family- owned Ferak Berlin GmbH. Today, the company produces fine chemicals for the life science and electronic industries under the direction of CEO Thomas Gründemann. After earning his degree in chemicals in 1992, Gründemann joined Ferak Berlin, the chemical company founded by his father in 1954 in the former West Berlin. However, despite enjoying success in the 1970s and 1980s, the company lost nearly all of its customers and employees in the 1990s after German reunification. In retrospect, Gründemann said he now regards the generational change at Ferak Berlin as a generational problem; in order to align the company’s portfolio in order to meet the needs of a changed market, he had to assert himself over his father. He was successful, and he was able to establish the company as a service enterprise for organic synthesis. He was also able to increase the turnover to several million euros as well adding 25 employees to the company. Gründemann talked to Dr. Michael Reubold asked about his next goals for the company and his passion for chemistry. Thomas Gründemann CEO, Ferak Berlin

CHEManager: Thomas, how do you You then created a new company. because they became aware of our retrospectively judge the situation know-how. Our clients saw that we that led to the reconstruction of T. Gründemann: Yes. The follow-up had excellent chemists. We were a Ferak? regulations are really not simple for small company but one with the a family-owned private company. I knowledge of the German Acad T. Gründemann: Ferak Berlin was es first looked into several opinions emy of Sciences at Berlin, which tablished in the time of the former for the possible future strategy of was the most important research German Democratic Republic Ferak Berlin before I created Fe institution in East Germany. We ab (GDR) as a manufacturer of labor rak Berlin GmbH in the year 2000 solutely wanted to be successful – atory chemicals and was based in as a service partner for research we had no other choice. Therefore West Berlin. The company main projects and custom organic syn we began looking for projects we tained business relations with our thesis with me as exclusive partner. could progress; at the time, it was customers in the GDR at that time That was completely intentional to just me and another colleague in and in other Eastern European throw away the baggage from the development. By 2006, Ferak Ber states with an emphasis on the So past and to create starting point. lin had four ranges: contract R&D; viet Union. In the mid 1980s, Ferak The only leftovers from the com custom synthesis; sales of NMR Berlin had over 60 employees and pany history were the rented busi analysis and expertise; and our an annual turnover of 15 million ness building in Berlin district Neu cleaning agent business. In 2007 A worker fills a solid material in a clean room. German marks. With the reunifica kölln, a few remaining co-workers, followed certification according to tion came the loss of most of our a cleaning agent named Q9, which DIN ISO 9001 and today Ferak Ber customers from Eastern Europe, we manufactured and sold, and the lin again has 25 employees, and we However, it is not our plan to T. Gründemann: CASID, which is now for jobs with us. Job applicants which led to the breakdown – or business contacts we had. want our success to grow further. become bigger than this. That is a a registered trade association, has who come from a large company one can nearly say collapse – of Production is working at full capac clear strategy, because I believe that developed to become a very suc structure look at the family-based the company. I entered the fam How did you then continue after this ity, so we are really reaching our the personal commitment to the cli cessful network. In CASID, our character of Ferak Berlin and no ily business, which was run by my new start? limits. We have recently financed ents and products would then suffer. members put the competitive situ tice that it can works well and that father, in 1992 as a chemist fresh major investments in order to de As far as I am concerned, that kind ation aside in order to haveregu small firms can be completely suc from university. Reconstruction is a T. Gründemann: Firstly, we remained velop our analytics. Now we want of growth wouldn’t be in line with lar exchanges of experiences and cessful. typical generational change prob with our own developed high speci to invest into the development of what Ferak Berlin stands for. Ferak recommendations. We want fine lem. As a successor of the com fication cleaning agent for electron our production, packing and stor Berlin stands for excellent products chemical manufacturing to remain Ferak Berlin is a small company with pany’s founder, it was expected ics products. This product, Ferasil, age capacities. whose chemistry and synthesis we in Germany, and we are all united a large global base of clients. Where that I would prove my worth and became in the course of the time understand in every last detail. The under that goal. CASID is a Ger are your customers today? go forward positively into the fu a strong trademark and has since What exactly are you planning? requirements of our customers re many wide network where ideas ture. But sometimes things do not been supplemented by other brand garding consistency of quality and are exchanged about regulatory T. Gründemann: We have many cus change in the way that is expected, ed products. In addition, I started T. Gründemann: We will expand into a service are time intensive to take matters which are of concern to all tomers worldwide in 40 countries, in particular events concerned with contract research investigations 1,500m2 area adjacent to our main care of. That is an important fac our members, e.g. GMP, Reach or in Europe, America, Asia, South the radical political changes at that for customers in the laboratory. building and establish three pro tor in defining Ferak Berlin’s size the federal emissions law for the America and Australia. We supply time. Therefore the transition peri We synthesized reagents in the duction areas as well as packing and growth strategy. Some busi protection of the environment. It to India and Japan and have de od from 1992 was difficult, and one laboratory on a gram scale, tested, units, raw and finished material, ness managers nowadays have only is actually very interesting to hear veloped relations with a Chinese which I was personally involved in packed and dispatched them. With supply and packaging items com growth in view. What is forgotten is concepts from other members about agency, because I believe that up until 2000. time more customers came to us pliant with the most recent quality the fact that controls and limits must how they have complied, at their China offers a large potential not standards. Our “one product per also be respected. manufacturing locations, with the only for large businesses, but also campaign” strategy will be contin federal emission protection laws. for small companies such as Ferak ued, both in the production and in Not just limits concerning size, but Berlin. the filling areas. With this strategy also concerning expertise. Will the development of the new pro- we can absolutely guarantee that duction capacity create new jobs at For many western chemical produc- cross contamination is excluded. In T. Gründemann: Absolutely! I person Ferak Berlin? ers, China represents not only an at- addition to guaranteeing industrial ally look at customer inquiries very tractive market, but also a threat by safety, the exclusion of all cross con closely in order to decide whether T. Gründemann: I think we are mov the increasing number of new com- tamination in our business is abso a project fits us or not. I usually ing in the direction of employing petitors. What’s your take on that? lutely essential. We work within the answer 70% to 75% of all inquiries 35 people, which is about 10 more area of fine chemicals, which has negatively, because I recognize that than today. That is appropriate and T. Gründemann: I have mixed feelings very strict specifications and high a project for some reason does not viable. I still would like to know on this. We source raw materials purities in a niche market with high fit Ferak Berlin, for a reason such the names of every employee and from both India and China, and we creation of value. But you must meet as the plant layout, the know-how, see them every day. Ferak Berlin submit these products to the strict the highest quality standards. This permission from the authorities, is a typical family business, and est quality inspections. Naturally it is a niche market not only regard or simply because the finances are I make sure much that a certain is important to control suppliers as ing chemistry, but also regarding not correct. These are the classic amount humanity prevails. That is well, and I personally evaluate the the volumes. four reasons that can lead to a re just as important to me as special conditions under which they pro fusal of project proposal. It is quite ized know-how. Therefore we work duce and they supply to us. Since In what quantities are these products something that we can decide on only with our own trained employ I am at heart and soul a chemist, I manufactured? which projects we take forward to ees and do not with borrow or hire can do this. There are quite a few work on. agency personnel. Some would call Asian companies who work really T. Gründemann: We feel that from 50l However, I am quite conscious it boring, I call it solid. We are a well, and their prices are not far to approximately 800l reactor vol that for me this is a nice problem to team – I can rely on my co-workers from ours. Within the product quan ume is our working range. We have have. On the other side of this phi and they can rely on me. tity range up to 500 kg, in which we full permission from the authorities losophy is the customer who expects mainly work, the competitive situa for this. We want to remain with re the highest quality, good service and Do you have problems finding good tion is still quite small. But that can actors under 1,000l, because firstly an increase in value from working people? naturally change. we are located in an industrial area with Ferak. That is only fair. in Berlin and secondly it gives us We are also a member of CASID, T. Gründemann: No, I see no difficulties a middle place in the market to an interest group for chemical cus at all in finding outstanding quali be sufficiently different from those tom synthesis in Germany. If I re fied technical personnel. It is true companies with capacity over 1m3. ceive enquiries that do not fit into at present that there is a lack of At present we have reactors from the Ferak Berlin portfolio or plants, specialists, but in Berlin in the past 100 to 500l. In the new production then I have the option to ask for per few years many companies have departments, we want to go to ap mission to pass them on to another reduced their personnel, and many proximately 800l. This is sufficient to German colleague who might be are still doing so. Think of Schering, transfer customer projects from the able to take on the project instead. Jerini and Daikin. Therefore there laboratory scale relatively quickly is an enormous potential supply of into production. With this new de CASID was created in the same year specialists for research, analytics velopment, we will at least double as the new Ferak Berlin. How has the and production on the job market. chemanager-online.com/en/ and possibly triple the existing pro association developed over the last Excellent chemists with unbeliev tags/ferak-berlin 10 L scale-up reactor duction capacities. 10 years? able specialized know-how apply

chemanager-online.com/en CHEManager Europe 10/2011 Markets and Companies Page 7

APIs In China Pharma Industry Booming in Asia

Pharma in China – The Chinese thesis. Main categories of biotech novative API segment. Customers APIs include amino acids, polypep tend to build long-term relation pharmaceutical market is one of the tides, proteins, enzymes and others. ships with ingredients suppliers. largest due to the large size of its popu- The key product portfolio of Chinese Thus, new entrants of the market lation. As the basis of pharmaceutical biotech APIs includes heparin, hy are facing challenges to strive for aluronic acid, chondroitin sulfate, customers. industry, the API market offers great urokinase, coenzyme A and others. While the potential for growth growth opportunities for manufactur- Biopharmaceuticals are effective of the API market is huge, overca in treating certain complex diseases pacity for bulk products is greatly ers both in-house and overseas. The such as tumor, diabetes, and other reducing the profitability of the API API segment makes up more than 50% immune related diseases with fewer manufacturers and traders, which of the export value of China’s pharma- side effects. The advancements in is mainly due to over investment. biotechnology and the ongoing re The low-margin generic API prod ceutical trade. search of biosimilars are expected ucts such as vitamins and some of to create great potential for growth the antibiotics accounted for the of the API market globally. Compar majority of the total API market in As a result, the Chinese market ing to chemical APIs, biotech APIs China. For instance, the proposed © mark huls - Fotolia.com for APIs is rapidly growing and is accounted for a negligible market capacity of vitamin C, a representa estimated to witness a compound share. However, this segment is fac tive of bulk products, is expected to annual growth rate (CAGR) of 18% ing a strong growth potential at a be more than 200 kilo tons, which can also achieve higher profits by from 2010 to 2017. Ingredient sup rate of 20%, which is higher than will be far more than the global focusing on the biotech API seg 22 Contact: pliers in the Chinese API market the overall API market in China. demand of this product. Ingredient ment, which holds considerable po Katja Feick will be keenly following the events Furthermore, the generic biotech suppliers can offset the issue of tential, but currently accounts for a Frost & Sullivan in the pharmaceuticals industry, API sector is expected to grow faster expanding production capacities negligible share of the market. Frankfurt, Germany which is in the midst of integration. than the innovative API sector. The by adjusting their product portfo Tel.: +49 69 7703343 chemanager-online.com/en/ Apart from the sustained and rapid share of the biotech API segment is lios in line with consumer trends [email protected] tags/china growth of the pharmaceuticals in expected to increase in the next few to maintain the profit margin. They Iris Zhao, Frost & Sullivan www.frost.com dustry, the long-term use of multi years due to the increasing focus on E FlexWall A4 _eng_0812 12.08.2010 14:11 Uhr Seite 1 ple specialized drugs for an ageing biological drugs. population and the reform of the The Chinese biotech API market Chinese medical system have also is an emerging market and is also given a shot in the arm to the Chi highly fragmented. Driven by the nese API market. healthcare reform in China, Chi As drug administrations in China nese ingredient manufacturers have put more effort into the supervision made efforts for developing biotech of the pharmaceutical industry, APIs. High profit margins and com safety and environmental protec petitive price of biosimilars compar TIME FOR CHANGE tion issues have become the areas ing with innovative APIs also make it of concern for the API producers. attractive for API companies. More API producers in China are re leading API manufacturers are step quired to follow the guidelines such ping into the biotech API segment in as the good manufacturing practice order to tap the growth potential in (GMP), which was revised by the this market. Some of these manu Ministry of Health of the People’s facturers have the capacity to com Republic of China in 2010. These pete with foreign pharmaceutical manufacturers are also required companies in certain segments like to reach higher levels of standards heparin products, which are used and certifications, which are simi for antithrombotic therapy. Compe lar to the Japanese and European tition in the biotech API segment is standards. currently lower due to the complex biotech routes of synthesis. Chemical API Segment will Continue to Dominate the API Market in China Providing a Cost-Effective Solution to the Customers Chemical APIs are produced through conventional routes of synthesis. The API market in China is highly They are extensively used in many fragmented with many participants therapeutic segments such as car involved. Companies located in He diovascular, central nervous system bei province, Shandong province disorder, oncology, gastrointestinal, and the Northeastern areas of China etc. The wide usage in these appli are mostly large state-owned enter cations ensures the stable growth of prises, while rising API production the chemical API market. Chemical bases in Suzhou and Zhejiang prov APIs have historically dominated the inces have a strong advantage in ex global API market, and this situation port markets. Key competitors in the is reflected in the Chinese market. Chinese API market include CSPC China is the world’s second largest Pharma, NCPC, Zhejiang Medicine, producer and exporter of chemical Anhui BBCA Biochemical, Northeast APIs, with competitive advantage Pharmaceutical Group. The sup mainly in antibiotics, vitamins, pliers range from CMOs (contract antipyretics and analgesics, etc. The manufacturing organizations) of growth of the market is mainly driv innovative and generic APIs (for ex en by sustained growth in chemical ample Hisun Pharmaceutical, focus drugs, especially the generic sector. ing on antibiotics and antitumors), Continuing patent expiries over the to many other suppliers which pro next few years is also considered to vide mainly bulk APIs with low profit be a key driver for the demand of margins. As more and more foreign chemical APIs. By 2012, about $80 companies established capacities Bulk ingredient metering feeders billion of patented drugs (including in China to transfer the costs and drugs for tumor, cardiovascular environmental pressures, local API for all kinds of applications disorders and digestive problems) suppliers are facing greater compe are expected to go off-patent, which tition. Loss-in-weight feeders will lead to great growth opportu Price fluctuations in 2010 have ® ® nities for the Chinese API market. affected the revenue growth of the FlexWall Plus feeders, FlexWall Food feeders, ® ® The generic chemical API segment Chinese API market. Currently, high- FlexWall Sanitary feeders, FlexWall Classic feeders, is considered to be well-positioned performance-cost ratio products twin screw feeders, laboratory feeders, ScrewDisc® feeders, to seize these opportunities. The are the key strengths of Chinese vibrating tray feeders, DualTray feeders, SiloTray feeders, chemical API segment added the API suppliers. Several China-made loss-in-weight liquid feeders largest portion of sales volume with products have played a major part 95.1% of the total market sales vol in the international market. In the Weigh feeders ume in 2010 due to the large con long term, prices are expected to Weigh-belt feeders, Coriolis mass flow scale sumption volume of chemical drugs. rise due to the general rise in price Although declining in market share, of raw pharmaceutical ingredients Batch systems the chemical API segment will con and government policies which are Loss-in-weight batch feeders, MicroBatch scales tinue to dominate the API market pushing the upgrading of the in Service in China in the next few years. Key dustry. Some of the pharmaceutical competitors in this segment include companies are vertically integrated Word-wide on site service, CSPC Pharma, NCPC, Northeast to manufacture their own pharma process consulting, Pharmaceutical Group and other ceutical formulations. The vertical feeding trials for your fields of applications, Brabender Technologie foreign and local companies. integration is expected to help these FeederScout – the scientific First-Choice Partner in Bulk Ingredient Feeding companies to reduce costs and con feeder selection program Focus on Biotech APIs is Next trol the supply channel of raw mate Highlight of API Industry in China rials. As the integration trend of the www.brabender-technologie.com Chinese pharmaceutical industry is www.feederscout.com Biotech APIs refer to APIs produced revealed, market concentration gets through the biotech routes of syn higher for both the generic and in

chemanager-online.com/en Page 8 Markets and Companies CHEManager Europe 10/2011

A Fragmented Industry Peter Pollak on the World of Fine Chemicals

Overview – In his book “Fine Chemicals – The Industry and the Business,” Dr. Peter Pollak provides a comprehensive view on one of the most challenging segments of the modern chemical industry, and a practical guide for succeeding in the multibillion dollar fine chemicals business. The second edition, which was published by Wiley in May, takes developments in the field since the first edition was written into consideration, including substantial updating of facts and figures; new chapters on M&A and biosimilars; and a discussion of the offer/demand development of the modern pharmaceutical fine chemicals industry. Before becoming a consultant in fine chemicals business and a board member of several fine chemical companies, Pollak spent more than 30 years at Lonza. CHEManager Europe asked him about the development and the current and future challenges of the global fine chemicals industry.

CHEManager Europe: Dr. Pollak, you write in your book that all fine chemicals, in general, are used to make specialty chemicals. Is there a more detailed definition that helps to understand the importance and value of fine chemicals?

P. Pollak: Fine chemicals are complex, single, pure chemical substances. They are produced in limited quantities – up to about 1,000 tons/year – in multipurpose plants by multistep batch chemical or biotechnological processes. They are described by ex- acting specifications, used for further processing within the chemical industry and sold for more than $10 per kilo. The class of fine chemicals is sub- Dr. Peter Pollak divided on the basis of the added value Fine Chemical Business Consultant – building blocks, advanced intermediates or active ingredients – and the type of business transaction, namely P. Pollak: Yes; globally, there are standard or exclusive products. 2,000–3,000 fine chemical com- The pharmaceutical industry, panies, extending from small, “ga- which is the largest user of fine rage-type” outfits in China making © Maxim_Kazmin - Fotolia.com chemicals, distinguishes between just one product, all the way to the drug substance, which is the active big, diversified companies. Among located in Europe, which is recog- on their “high skill/low cost/bright cal plant, the reaction vessel. The small, typically less than 5%, price ingredient, a fine chemical, and drug the top 20, 17 are divisions of large nized as the cradle of the fine chem- future” competitive advantage. unit cost for a fully installed reac- reductions on the finished drug in- product, which is the formulated, chemical or pharmaceutical com- ical industry. An example in case is “High skill” not only refers to the ed- tor ranges from $10 milllion/m3 for variably lead to requests for price finished drug, a specialty. panies like Albemarle; BASF; and the world’s No. 1 company, Lonza, ucation of managers and scientists a reactor installed in a Western Big concessions. More than $100 bil- Boehringer-Ingelheim, and there headquartered in Switzerland. The (not to mention the sheer number of Pharma company, to $1 milllion/m3 lion of drug sales revenues will be The fine chemicals industry is very are only three pure players. In terms second largest geographic area is university graduates), but also to the for a Western plant, and $0.1 mill- affected by patent expirations over fragmented … of geography, nine of the top 20 are Asia, housing seven of the top 20. quality of the fine chemical plants, lion/m3 in a Chindian plant. the next few years. When propri- With four large companies, the U.S. corporate governance, safety, health “Bright future” means that the etary drugs plunge over the patent ranks last. The combined revenues and environment standards, regula- demand for the two main outlets cliff and become generic, prices Table 1: Definition of Fine Chemicals of the top 20 reached about $10 bil- tory compliance, etc. for fine chemicals, namely phar- start to collapse immediately and Commodities Fine chemicals Specialities lion in 2009. Auditors from the leading West- maceuticals and agrochemicals, typically end up at a level of about ern pharmaceutical companies enjoy “double digit percent annual 20% of the original price of the APIs Single pure chemical substances Single pure chemicals Mixtures Traditionally a European and North agree that the top tier Chindian growth rates” in the Eastern hemi- affected. … substances … American business, the fine chemi- (Chinese and Indian) companies’ sphere, whereas it has decreased Consequently, Western suppli- Produced in dedicated plants Produced in multi-pur- Formulated cals industry is globalizing at a fast standards are in line with those of to “low single digit percent annual ers are driven out of business in pose plants pace. What are the driving forces be- their Western competitors. “Low growth rates” in the Western part of many cases. New drug launches High volume/low price Low vol. (< 1000 mtpa) Undifferentiated hind this globalization? cost” not only means low wages for the world. The main beneficiaries of have fallen from an all time high high price (> $10/kg) the plant operators, but also low this surging demand obviously will of 51 in 1997 to about 20 per year Many applications Few applications Undifferentiated P. Pollak: In the fine chemical indus- construction costs of Chindian fine be the domestic suppliers in Asia. at present. Thus, not even all of the try, globalization mainly refers to the chemical plants. top 20 pharma companies manage Sold on specifications Sold on specifications Sold on performance impressive foray of Asian, especially A dramatic example is the cost Most fine chemicals are produced to launch one new product per year. “what they are” “what they can do” Chinese and Indian companies. In of the pivotal piece of equipment captively or under an exclusive con- Moreover, as many new drugs either Source: Peter Pollak, Fine Chemicals – The Industry and the Business, 2nd, rev. edition simple terms, their success is based of every multipurpose fine chemi- tract for a single customer, especially are me-too drugs, showing only when it comes to fine chemicals used marginal improvements, or treat for pharmaceuticals. What kind of rare diseases, also the volume re- pressure does the consolidation of quirements decrease. The unpleas- the customer base (e.g. pharma) put ant consequences for the CMOs are on fine chemical companies? fewer business opportunities, both quantitatively and qualitatively. P. Pollak: The increasing purchasing There is, however, also a piece power of the life science industry in of good news. As part of restructur- SR PRINCIPAL general and Big Pharma in particu- ing programs implemented by most The Global Chemical Marketplace SCIENTIST lar leads to more and more stringent life science companies, the axiom of February 14-17, 2012 BAUSCH & LOMB clauses in the supply contracts for captive manufacture of fine chemi- Morial Convention Ctrt/FX0SMFBOT Louisiana fine chemicals. cals being a core activity is aban- GLOBAL EXTERNAL These comprise not only the pric- doned. The practical implications SUPPLY LEAD ing, “cost transparency” and pre- are plant divestments or even shut- PFIZER fixed yearly “cost improvements” downs – and more outsourcing, both have become almost standard ele- of drug substance and product. The : VP RESEARCH ments, but are extended to currency chips are out as to which extent the To register please go to ARDEA clauses – a particular problem for increase in outsourcing will com- BIOSCIENCES the Swiss industry, suffering from pensate the negative developments www.informex.com/register a grossly overvalued franc –, flex- mentioned. USE CODE CMP12 DIRECTOR ibility regarding production volumes Pfizer, with sales of $50 billion in PROCESS R&D and timing of production campaigns, 2009 is the world’s largest pharma ELI LILLY obligation to source raw materials company. Its top selling product, from a given supplier, share know- with a revenue of $11.4 billion, is GLOBAL how with competitors, etc. the cholesterol-lowering agent Lip- Grow your network. PROCUREMENT itor. Patent expiries in Canada and MANAGER The pharmaceutical industry itself Spain already caused a sales reduc- MERCK & CO Grow your business. is under pressure by governmental tion of 21% in Q2 2011. The situation drug price reductions, patent expira- will worsen when generic versions tions and low innovation rates. What will also be on sale in the U.S. as of stay connected. does that mean for the fine chemical November. According to Bloomberg, producers and custom manufactur- Pfizer will suffer from patent expiry Informex Online Events ing organizations? of 18 more drugs by 2015. They gen- erated 60% of revenues in 2009! www.informex.com/online-events P. Pollak: Most of these developments have an unfavorable effect both for What is your estimate for the size of the fine chemical industry in gen- the fine chemicals market in the fu- Join our groups: eral and custom manufacturers in ture depending on different growth particular. Although the incidence of scenarios? the cost of the fine chemical used for a particular pharmaceutical is Continues Page 14 ▶

chemanager-online.com/en CHEManager Europe 10/2011 Markets and Companies Page 9

Flexibility, Internationality and Know-how Industry Service: Expectations on Technical Service Providers Growing

Complexity – Bilfinger Berger Industrial Services (BIS) offers its process indus- of five years. This provides the cus- checkup dates and training. At specific proposals for maintenance tomer with a secure basis while we, the same time, it prints out safety strategies and execution. try customers complex services for the entire plant life cycle. As an independent for our part, are motivated to main- passes in various different formats. subgroup of Bilfinger Berger with 28,000 employees, the company earned €2.9 tain the quality of service at a high For those in charge of HSEQ or What do you consider the main chal- billion in 2010. And all signs are pointing to further growth. By focusing on the level, boost plant availability and “health, safety, environment, qual- lenges to be and how is the BIS Group thus contribute to the customer’s ity,” to give it its full name, this is responding to these? core markets of the process industry – such as chemicals and petrochemicals, productivity. In fact, we go so far an enormous help and greatly sim- pharma, food, refineries and power stations – BIS is able to meet the high demands as to develop new contracts mod- plifies their activities. J. Kreysing: Flexibility, an interna- els with the customer including, for tional outlook and consistently up- of its customers. CHEManager Europe asked Dr. Joachim Kreysing, executive vice example, such elements as bonuses The chemical industry has an in- to-date expertise form the basis president of the BIS Group, about current and future challenges for technical for the avoidance of non-scheduled ternational footprint; not only large for future success. As far as the service providers. repairs and down times. companies are acting on a global ba- customer-vendor relationship is With respect to turnarounds, cus- sis but increasingly also SMEs. What concerned, we will continue to see tomers are also increasingly expect- role is the international network of a move away from the conventional CHEManger Europe: At the Bilfinger ices and which also entail consulting us to handle long-term planning BIS companies playing in this re- links in favor of partnership-based Berger Industrial Services Group ing and the implementation of new as well as the overall coordination spect? models in which customers request all signs are pointing to continued processes. This may, for example, of the execution phase and ensuing strategic input from service pro- growth. What role is the chemical involve drawing up a road map to evaluation of the experience gained J. Kreysing: The network of BIS com- viders and assign responsibility to industry playing in this respect? define how the entire service system as input for future turnarounds. panies is very valuable to us. Our them. for a company is to be developed. Dr. Joachim Kreysing These are very demanding projects international customers frequently In turnaround business in par- J. Kreysing: A very important one. The Executive VP, BIS Group as the customer expects to receive want to implement models that we ticular, we expect local manage- BIS Group generates a large propor- What demands does the chemical a more reliable base for planning have established with them in a ment activities to increasingly tion of its revenues from business industry make on maintenance com- objectives, the BIS Group offers var- costs and particularly also sched- particular country at other sites evolve into cross-plant structures. with companies in the chemical in- panies? ious partnership models. The forms ule compliance in tandem with as well. Via the BIS companies lo- This means that it will be neces- dustry. In fact, it is one of the most that these contracts may take entail high standards in work safety and cated in these countries, we have sary to assign specialists to mul- important sectors for us. More than J. Kreysing: As economic success hinges individual, outline, and main con- quality assurance. We have a very from the outset local expertise that tiple plants in the future. What is 80 BIS companies provide services materially on the degree of efficiency tracts as well as full-service main- strong international position in large can be perfectly tailored to meet required will be general contrac- for companies in the chemical in- in maintenance activities, the fore- tenance and general contractor turnarounds as we not only have the these requirements. Customers are tors able to coordinate the entire dustry. As the European market most imperative is to obtain an op- contracts. With these forms of part- experience but also the necessary able to benefit substantially from cycle from the planning phase right leader in industrial services for the timum balance between plant avail- nership, the scope of the activities capacity within the group. this – not least of all because it is through to formal completion of the process industry, we are very firmly ability, maintenance times and cost. covered by the BIS Group is growing possible to initiate and implement project. In addition, internationally positioned in this key sector within At the same time, the market for all the time. This also applies to the You introduced the BICEPS program new projects with shorter startup active customers are seeking stra- the German economy. turnaround services is looking for extent to which we are involved in some time ago. What precisely is it? times. tegic service partners which also general contractors able to handle strategic matters and assume re- Other aspects include flexibil- have an international base. We as The sector is exposed to heavy global planning and overall coordination sponsibility for maintenance as well J. Kreysing: In the chemical indus- ity and the willingness to provide a company are addressing these competition. In what way does this in addition to execution of the ac- as project execution. try, it is crucial for data on staff services. In the case of large turn trends by enhancing our services affect you as a provider of services? tual activities. Companies operating Regardless of the type of part- medical checkups and training to arounds, for example, we are able and strengthening our internation- internationally seek service provid- nership, agreements are entered be kept up to date and monitored to deploy BIS staff from neighbour- al orientation. J. Kreysing: Our customers have very ers who likewise have an interna- into on an individual basis and on an ongoing basis. The Bilfinger ing locations and thus provide the high expectations and are increas- tional outlook. adjusted in the light of the cus- Berger Industrial Services Certifi- necessary resources. ingly seeking service providers who tomer’s requirements. In the case cation E-Management Programme, Our central corporate units also are also strategic partners. As the These are very diverse requirements. of customers with whom we have or BICEPS for short, is a computer- play a key role in addressing our production facilities are mostly be- What form does a specific partner- entered into full-service contracts, aided tool allowing the company customers’ international require- spoke, it is necessary to sit down ship with customers take? we assume complete responsibility to manage and monitor this data. ments by regularly working on do- with the customer to develop indi- for maintenance. With this form of Employee profiles are created for mestic and international consulting chemanager-online.com/en/ vidual solutions which go beyond a J. Kreysing: Depending on the cus- partnership, we work with long- each activity. The web-based tool projects and performing mainte- tags/industrialservices mere checklist of standardised serv- tomer’s specific requirements and term contracts of a minimum term manages and monitors due dates, nance analyses. These give rise to

chemanager-online.com/en Page 10 Packaging / Logistics CHEManager Europe 10/2011

Fighting Counterfeits Enhanced Safety for Pharmaceutical Packaging

Protection – The seamless documentation of supply chains and the ruling site software solution or cooper- ates closely with IT specialists that out of counterfeit products as far as possible are measures that serve to protect have established software systems producers as well as patients. These functions are assigned to one- and two- for such applications. These systems dimensional codes with which pharmaceutical manufacturers in an increasing also take over the processing of the data for the company network and number of countries are legally required to mark their products. However, that is the transfer of data to the authori- just one step. Such an identification system must function across national borders ties. To ensure the ideal integrated solution from the packaging line to and be adaptable to meet local requirements. A wide variety of peripheral equip- the internal ERP systems, Uhlmann ment has to be integrated into an overall system, data processed, and existing maintains overall responsibility for machines suitably upgraded. the project and is the sole contact partner for the customer. This is the case no matter whether the system In several countries such as India, to the manufacturer’s in-house IT is integrated in an Uhlmann line or China, Brazil and Turkey it already infrastructure. This is a complex in packaging lines of other machine applies; in others such as Rus- task that speaks in favor of an inte- manufacturers. sia, Spain and the U.S., it is in the grated solution with all components pipeline: legislation governing the and services provided by a turnkey Parent-Child Relationship unique marking of the smallest unit supplier. Moreover, a solution based of sale of pharmaceutical products on a system that not only meets the Track & Trace by Uhlmann works with a code. requirement of marking the smallest on the principle of parent-child re- Problematic is the fact that the unit of sale, but also offers benefits lationship. Every element is marked laws vary from country to country. in terms of efficiency of the complete with a code from the smallest While straightforward “French cod- packaging process. to the largest packaging ing” by simply printing and verify- unit. A tracking data- ing the code without data archiving Competence from a Single Source base supplies the data suffices in France, in Turkey, for ex- to higher ranking sys- ample, the verified codes have to be Track & Trace by Uhlmann is a tems and links the information transmitted to a government data- joint development with VisioTec, for maximum pharmaceutical base. The form of code also differs. Uhlmann’s center of excellence reliability. In some cases, a simple barcode for pharmaceutical inspection and (Code 128) depicting the data as a printing systems. Track & Trace is 22 Contact: binary symbol is sufficient, whereas implemented in three steps: Uhl- Oliver Naucke a data matrix code or 2D code en- mann VisioTec first provides the Uhlmann Pac-Systeme GmbH & Co. KG codes detailed information such as peripheral equipment such a laser Laupheim, Germany the product identification number, or ink-jet printer and inspection Tel.: +49 7392 702 8277 serial number, batch number and systems for the verification of the [email protected] expiry date (YYMMDD) in a pattern codes and competently integrates www.uhlmann.de of dots. these into the packaging lines. To ensure that coding is carried The second step involves the link- out properly, peripheral equipment ing to a line database. In the third such as camera systems and print- step, the line data are transferred ers have to be purchased, installed to a higher ranking system of the chemanager-online.com/en/ in new and/or existing lines, inte- pharmaceutical manufacturer, the tags/packaging Track and trace legislation worldwide grated in a line database, and linked site server. Uhlmann has its own

Let There Be Light! How Industrial Packaging Can Boost Sustainability Measures

ally remanufactured, reconditioned With its sustainable business ap- Many developments demonstrate Achieving Success – Sustain- and laundered packaging solutions. proach, it is able to manage the entire that sustainable solutions are already Through making use of recondi- packaging lifecycle in a sustainable real today. Thanks to the reduction of ability has become a decisive com- tioning services, companies in the way, comprising the complete sup- materials, Mauser is already able to petitive advantage in the chemical chemical industry contribute to de- ply chain – from production to rec- produce light-weight packaging so- Dr. Clemens Willée crease the volume of raw materials ollection to recycling. Latest devel- lutions, maintaining the customary industry. More than ever, it is the com- CEO, Mauser Holding – without having any quality loss in opments in the industrial packaging high-quality accompanied by a posi- panies’ ambition to act in a responsi- packaging. By doing so, customers industry show the potential of sus- tive influence on the environmental ble way throughout the entire supply diverse requirements is the Mauser are able to act in an ecological way tainable solutions – e.g. in the field of impact. For example, in the recent Group. Their composite IBCs fulfil and underline their own sustainable bioplastics. Mauser already produced past, the company realized weight chain. Advanced packaging solutions international packaging regulations activities. To secure the greatest pos- prototypes of IBC pallet components saving up to 10% through new prod- like light-weight products as well as and are blow-molded from UV-sta- sible outcome, companies should or blow-molded bottles for the usage uct design or the use of improved sustainable oriented services can bilized polyethylene of high molecu- attach importance to the partners’ in the agrochemical industry. Even materials. When using light-weight lar weight and density. This enables presence around the globe and verify if the area of bioplastics for indus- solutions, companies not only sup- help to achieve the objectives and an excellent chemical compatibility whether the supplier is able to offer trial packaging solutions still is in port a resource-sparing production to combine economic success with a and makes the bottle to be used for full service reconditioning services an early stage and the availability of of packaging solutions. They further- a broad range of filling goods. IBCs with short distances worldwide. material as well as the material costs more benefit from a lower fuel con- consistent corporate responsibility. have the advantage of being pro- make it difficult to issue an accurate sumption and transportation costs. duced with a modular design and a Less Is More forecast – the innovative potential is variety of accessories as well as ma- huge and implies an interesting op- Conclusion As a fast moving business sector, Focus on the Entire Supply Chain terial choices. This allows the adap- The Mauser Group is continuously tion especially for customer-specific the chemical industry faces several tion of individual packaging solutions searching for innovative solutions. developments in the near future. Sustainability is not just a symbol of challenges every day. Especially as For companies in the chemical in- meeting different customer demands good deeds anymore. It is a philosophy chemical companies bear a major dustry, it is increasingly important without overdesigning. There are, for that needs to be lived within a com- responsibility in terms of sustain- to cooperate with suppliers who instance, packaging solutions availa- pany. Advanced packaging solutions ability – to both society and the are also committed to a sustainable ble that are comprised of an external can help to organize supply chains environment. Therefore, many of approach in order to achieve their layer of permanent antistatic com- more sustainably and to expedite the the enterprises have already im- own sustainable goals. This requires pound. This prevents the solution of company’s initiatives. By cooperating plemented sustainability initiatives the involvement of the entire supply becoming electrostatically charged. with an experienced partner that is in their companies to reduce the chain – from a fuel-efficient route Other IBC solutions reflect sunlight able to attest his achievements and environmental impact and to gen- planning through to sustainable in- and thereby help to control temper- objectives through reports and analy- erally act in a more responsible dustrial packaging solutions. Espe- ature levels inside the container in sis, companies in the chemical indus- way. cially because advanced packaging order to avoid chemical reactions. try can gain a competitive advantage However, activities in the field designs do not only ensure a safe Several additional specifications and and combine social responsibility of sustainability need to be looked and reliable transport of sensitive options make IBCs the first choice with economic success. from a holistic perspective. On the goods. They can furthermore help for the chemical industry. Also, new one hand, there are usual internal companies to combine ecological materials and comprehensive recon- 22 Contact: processes that should be optimized. with economical targets. ditioning services support companies Dr. Clemens Willée This includes measures as simple as in the chemicals in pursuing their Mauser Holding GmbH the reduction of electricity and gas As Companies Need It – Fit for Purpose goals in terms of sustainability. Brühl, Germany consumption, the responsible use or Tel.: +49 2232 78 1000 reuse of water as well as a stringent Often used and proven as reliable Reconditioning: A Clean Business [email protected] waste separation. But sustainability packaging solutions for the trans- www.mausergroup.com measures need to contain external port of sensitive or dangerous fill- The reusability of industrial pack- processes as well – through part- ing goods are intermediate bulk aging solutions is gathering speed. ners, vendors and service providers containers (IBCs). A manufacturer Today, vendors offer comprehen- chemanager-online.com/en/ that support the companies’ sustain- who offers a comprehensive port- sive programs providing customers tags/packaging able approach. folio of IBC solutions for the most with new products and addition-

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Pharma API Sourcing Short Interviews Follow us on Follow us on An in-depth look at the Is Asia the only option Read what industry leaders have future of pharma for the future? to say about the latest trends

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Ei Gude, Wie?* The CPhI Returns to Frankfurt

Tailor-made – Almost 30,000 people visited the CPhI in Paris last year – that’s equivalent to the population of an averaged-sized town. While the show has grown and grown since its inception in 1990, it has also faced its fair share of criticism from the industry regarding its size – something the its directors say reflects industry growth. The show’s brand directors Annemieke Timmers (CPhI) and Haf Cennydd (ICSE, P-MEC & BioPh) are therefore always on the look- out for new ways to better connect with the industry’s needs and tailoring the show accordingly. Brandi Schuster spoke with them ahead of this year’s show © askaja - Fotolia.com© askaja in Frankfurt, to take place Oct. 25–27.

pules and vials; caps and closures; exhibitor numbers looking compared gistics and Supply Chain. The new Conferences like the Pharma Chem- tubes and glass; bottles; pouches; to 2010? InnoPack event was borne out of the Outsourcing in New Jersey are gain- strip packs; and more. Packaging Zone that successfully ing in popularity within the industry A. Timmers: We are thankful to say debuted in 2010 as part of ICSE, because of the familiar atmosphere. H. Cennydd: Similarly, the LabWorld that this dynamic does not appear while P-MEC Europe will introduce The CPhI, on the other hand, is one Pavilion, which debuts at P-MEC to have directly affected the show. the LabWorld Pavilion in response of the largest events in the industry; Europe, reflects the significant di- 2010 was a record year in Paris and to the increasing demand for small what steps are you taking to make versification seen in global exhibi- as we approach 2011 in Frankfurt, scale laboratory instruments and it more personal for visitors and ex- tor demographics throughout the there is once again growth across all resources. Finally, BioPh has tran- hibitors? P-MEC events by offering resources of the events. sitioned away from a standalone beyond the “traditional” large-scale event and into zones within CPhI H. Cennydd: As such a large exhibi- capital machinery with which the How have the parallel shows ICSE, and ICSE to more effectively offer tion, it is important that we do not event has become associated. The P-MEC & BioPh been developing? visitors resources for a wide range lose the personal connection to our LabWorld Pavilion will effectively What can visitors expect this year? of specialized biopharm areas such client base. A large part of this is offer high technology laboratory so- as bioelectronics, diagnostics and listening to feedback and paying at- Haf Cennydd Annemieke Timmers lutions such as instrumental anal- H. Cennydd: Each event is constantly technology services. tention to market trends that affect Brand director, ICSE, P-MEC and BioPh Brand director, CPhI ysis, measuring and testing tech- changing to cater specifically to its our exhibitors and visitors. CPhI, nologies, materials testing, quality target market. As such, the brands Two new zones have been added to ICSE, P-MEC Europe and InnoPack control and laboratory equipment have all experienced development the Frankfurt show – generic APIs have all been tailored around re- CHEManager Europe: What trends the market with new or transition- that cater for smaller scale lab en- in their own right. ICSE has evolved and finished dosage. What led to search and feedback from our have you picked up on in the industry ing demands for resources. For in- vironments. through the expansion of the zon- this? Will there be any new elements customer base and even in such a since last year’s show in Paris? stance, InnoPack will address the ing that was introduced last year to this year’s show? large-scale environment, we feel increased need for innovative pack- While most chemical companies have in Paris. For 2011, the General and that the events are still able to pro- A. Timmers: From our additions of aging concepts in the global phar- posted positive quarterly results, CRO-Clinical Trials zones will re- A. Timmers: The zoning format was vide a unique experience to each the new InnoPack event and the ma market, including resources many pharma companies have seen turn to ICSE and will be joined by introduced in Paris last year to visitor. Our core focus on network- LabWorld Pavilion within P-MEC, and solutions for the production of a drop. Will this dynamic have any ef- additional zones to highlight New more effectively facilitate naviga- ing events, whether educational or it is clear that there are areas of blisters; blow-molded plastics; am- fect on the show? How are this year’s Exhibitors, USA Exhibitors, and Lo- tion of the events and it received purely social, allows for guests to exceptional feedback from both ex- maximize their time onsite and fos- hibitors and attendees. As we car- ter existing business relationships,

raumkontakt .de ried the zoning format over into the while also making new business 2011 show, we evaluated ways to connections. Features like Zon- expand the usefulness of this for- ing allow visitors to schedule their mat for visitors. Pre-show registra- own agenda while onsite and eas- tion patterns consistently show that ily locate exhibitors who provide October 25-27 2011, Booth F0F14 resources for both APIs and finished targeted solutions for their needs dosage are two of the biggest de- within the different sectors of the mands from our visitors, which is Pharma industry. > 50,000 Fine Chemicals no surprise, as CPhI’s primary focus remains the pharmaceutical ingre- What are your expectations for the dients market. Frankfurt show? Organics & Inorganics Also new this year are the Lunch- Metals & Rare Earth Compounds time Learning Sessions presented H. Cennydd: The last time the events Silanes & Silicones by CPhI Conferences, comprising were held in Frankfurt was in 2008, six different workshops across the and we had extremely positive feed- Unique Fluorinated Compounds three days. The series features a back from visitors. The venue itself lunch break in between the two is located in a central and vibrant From Gram to Bulk Scale daily sessions to further facilitate pharmaceuticals business market networking and the creation of new that provides optimum accessibility New Production Facility business connections for registered for both local and global visitors. We Custom Manufacturing attendees. Also exciting are some are pleased to return to Frankfurt International Sourcing your professional of the new digital offerings for pre- for the 2011 editions of CPhI World- show planning that include the “Ex- wide, ICSE, P-MEC Europe and In- hibitor Invites” feature for exhibi- noPack with a positive outlook. Last tors to invite targeted attendees to year’s events in Paris hosted record partner their booth, as well as the “Who’s attendance of 28,897 unique visi- Attending” feature for visitors to tors, and we are excited to have ex- see who is onsite from exhibiting pectations of another record year in companies and plan meetings. The Frankfurt. social media aspect of the show has also been expanded to offer up to date information from the show *Frankfurter dialect for “How are you?” floor, as well as to maximize networking onsite at the events, and facilitate connections that will allow for networking and expanded www.abcr.de chemanager-online.com/en/ business exposure even after the tags/cphi events close.

chemanager-online.com/en Page 12 CPhI 2011 CHEManager Europe 10/2011

Game Change Pharma’s Future with a Disaggregated Supply Chain

New Rules –The game has changed for the global pharmaceutical industry. nies have turned this into a board- room decision. Numerous forces are shaping this new pharmaceutical era: The rise of emerging markets, increasing price pressure and expiring patents are just some of the fac- Reshaping The Supply Chain tors forcing pharmaceutical companies to change the way they operate and how Abandoning the single minded they manage their value chain. “Drug Supply 2.0: How to manage a disaggregated blockbuster mindset, pharmaceu- pharmaceutical supply chain” is a study by Camelot Management Consultants, the tical companies have been forced to review their business plans and ESB Business School Reutlingen and the S.P. Jain Institute of Management and reconsider new business models Research (SPJIMR) Mumbai that examines how companies are responding to the as well as how they allocate their changed environment and looks at the growing role of third-party suppliers in capital. Contract manufacturing organizations (CMOs) play a large the pharmaceutical business. The interviewed companies are no newcomers to role in the business models that are © buchachon - Fotolia.com the field: 88 % of the companies look back on more than 10 years of experience evolving. CMOs are increasingly being considered strategic partners, in sourcing supply chain services and already manage on average a portfolio of responsible for greater amounts of 214 suppliers. They count among the sector’s forerunners. the portfolio volume, and less as step-in organizations to smooth out Fig. 1 manufacturing peaks. This view is supported by this study’s participat- ing companies, which believe that this trend will gain even more trac- tion over the next five years. Most pharmaceutical companies already outsource activities such as clinical trials, API production or logistics to third-party suppliers. Over the next five years, pharmaceutical companies are likely to become more emboldened and will start ex- significant bottom-line impact and ▪▪ Tier 1: China and manufacturing) will continue to amining all their technologies and variabilisation of their cost base ▪▪ Tier 2: Brazil, Russia and India provide the highest growth oppor- business processes for outsourcing resulting from this outsourcing and ▪▪ Tier 3: Venezuela, Poland, Argen- tunity. Some of the bigger contract opportunities, according to the com- spurred by the emerging vendor tina, Turkey, Mexico, Vietnam, service providers could start to lead panies interviewed. When this hap- base already built-up by some big South Africa, Thailand, Indonesia, the global market concentration. pens, contract service providers will pharmaceutical companies. Romania, Egypt, Pakistan and the Also private equity firms could start have made the jump from service to Ukraine to concentrate the low end to build strategic partner. Phase 3: Collaboration competitive full service suppliers. Based on the experience and In the third phase, companies start The sheer size alone of the popula- Geographic Shift and Supply Chains guarantee success. According to the roadmap of other industries like collaborating with third-party suppli- tion in the tier 1 and tier 2 markets The New Strategic experts interviewed, the potential automotive and electronics, phar- ers, seeing them more and more as creates tantalizing opportunities Pharmaceutical Business Models Although traditional markets for doing so is huge: Up to 75 % of maceutical companies are likely to trusted strategic partners. Outsourc- for pharmaceutical companies that account for the bulk of sales, production volume could be reallo- make this change in three phases: ing leaders will sign contract part- manage to establish themselves in Tectonic shifts in the pharmaceuti- “pharmerging” markets will out- cated to third-party manufacturing. nership deals involving new product these countries. In addition China cal industry have compelled compa- pace traditional markets in terms Yet there are hurdles that need to Phase 1: Early wins development, full single/multi-market still provides a good hub to enter nies to take drastic action in order of growth by 2013. Given the en- be overcome. Managing a disaggre- In this phase companies focus on supply as well as direct to pharmacy Africa beyond tier 3 markets due to secure their long-term survival. vironmental forces at play, phar- gated value chain involving a grow- low-risk support functions such as by 3PL. At this stage, R&D outsourc- to China’s good relationships with With the blockbuster strategy of the maceutical companies have no ing number of third-party providers finance and accounting, IT and HR ing involves lead generation and markets in central Africa. past decade losing currency, phar- alternative but to make striking is a different game than managing as well as low-risk R&D functions optimization. Increasingly, support Established companies should maceutical companies have increas- changes to their supply chains. A own sites. More extensive and new such as clinical development and functions such as planning and data by-pass the tried-and-tested busi- ingly been branching out into new closer cooperation with contract forms of information exchange be- data management. services will also be outsourced. ness models that they use in the business areas. The business seg- manufacturers or R&D providers yond the own company´s boundaries traditional triad markets North ment strategies of big pharma of is the chosen option. This is not will be necessary to ensure produc- Phase 2: Minimal risk move The Rise of the ‘Pharmerging 17’ America, Europe and Japan and the future are more versatile than only the easiest way to partner in tive planning. In the second phase, companies opt for new models to address the as seen in the past: new and uncertain markets, it also This is increasing the pres- are prepared to move out of their The second major pressure front emerging markets. Given each Big pharma – referring to top 20 enables them to manage increasing sure on supply chain management comfort zone and start outsourc- forcing pharmaceutical companies country’s unique market dynamics, pharma by sales – have redefined price pressures arising from health to create processes to steer this ing contract service functions such to alter their supply chains radi- health care system, political and their strategy mainly by differen- care reforms, patent expiry and the new virtual network, reducing the as bulk drug manufacturing and cally is the explosive and continu- regulatory environment, experience tiating into four business models, success of generics. threats seen in know-how transfer, packaging, API production and 3PL. ing growth of the emerging markets. in dealing with established western which we can be segmented in the Each of the four new strategic internal change process and in- They are also likely to consider the While traditional markets are grow- players and general ways of doing clusters “Harvesters”, “Rx Innova- business models adopted by phar- creasing administrational costs. On outsourcing of R&D activities including at a steady single-digit level, the business there is no generic blue- tors”, “Gx Innovators”, and “Brand- maceutical business units – Harvest- a positive note: while the majority ing bio-informatics, analytic services “pharmerging markets” promise print for success. ed Generics.” These business mod- ers, Rx Innovators, Gx Innovators of companies still primarily let the and Phase III clinical trials. Other growth of up to 15 % over the next els are far more diversified than and Branded Generics (fig. 1) – re- manufacturing organization make functions like the sales force are few years. These emerging phar- Navigating the Global Supplier Landscape the old blockbuster one and open quires stronger partnerships with supply chain disaggregation deci- also outsourced during this phase. maceutical markets are generally up new opportunities, especially third-party suppliers to be formed to sions, already one-third of compa- Companies are encouraged by the divided into three tiers: The local nature of contract re- for companies that can rely on no search outsourcing (CRO) and CMOs strong pipeline. makes them ideal partners for en- Put simply, Harvesters expand tering these unchartered and un- their portfolio by making a broad familiar markets. Partnering with range of highly differentiated prod- CROs and CMOs will make it easier ucts for new markets, Rx Innovators for established pharmaceutical com- divest assets to focus on developing panies to get a toehold in these re- new drugs, Gx Innovators add value gions. In some respect, pharmaceu- to expired patents with their low- tical companies will have no other cost and narrow focus, and Branded choice: Stricter import regulations, Generics produce a broad range of for instance, will force pharma- products at low cost (fig. 1). ceutical companies to either invest directly or enter partnerships with The Road Ahead local players if they wish to be active in the market. Business constraints Turning away from the blockbust- also encourage pharmaceutical er business model, pharmaceuti- companies to get involved in joint cal companies are concentrating ventures, R&D partnerships, stra- on their core competences and tegic business collaborations, and increasingly exploring avenues to to gain more experience in out- shift product volume to third-party licensing and outsourcing. Lower manufacturing to keep their own per capita health care spending, for assets low. The expected cost re- example, means companies must duction from disaggregating cer- offer products at a lower price. To tain supply chains amounts to 43 % accomplish this without exposing on average COGS basis, providing profits to risk, bigger amounts of the an exceptionally good reason for supply chain will need to be shifted hesitant pharmaceutical compa- Visit us at CPhI Worldwide to local partners. nies to wholeheartedly embrace Our people make in Frankfurt, For many companies, it just this trend. makes good business sense to have The products and functional hall 4.2, booth # 42F03 strong partners on the ground who services most pharmaceutical com- the difference understand the local market and panies are prepared to source from who can quickly respond to chang- a third-party provider within the ing conditions. This is how the needs next five years are still limited, in of local customers can be met. Other terms of their cost saving potential companies will prefer to collaborate as well as their complexity. As a closely with hospitals and medical whole, pharmaceutical companies centers in specific regions. are just starting to jointly develop Combined or full service providers like CRAMS (contract research Continues Page 13 ▶

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»During all stages of your project we Breaking Taboos strive for speed, flexibility, transparency and openness which are the basis for a Pharma Must Make Big Changes to Survive trustful relationship.«

Evolve for Survival – Patent cliff, the rise of “pharmerging” markets: These are billion in sales per product – phar- The study recommends that estab- Boris Bosch Head of Project Management ma companies were very adamant lished companies should by-pass just a few of the challenges the global pharmaceutical industry is facing. In order Business Line Agro & Fine Chemicals about protecting their intellectual their traditional business models and www.saltigo.com to ward off billions of dollars in losses, pharma companies will have to redesign property, keeping most of their opt for new ones for the emerging their supply chains and become less squeamish about outsourcing more and knowledge and processes in house. markets. How are these new markets But now there is pressure to reduce different from the traditional ones more elements of their businesses. These issues were highlighted in the recent costs and blockbusters are going off other than spending per capita? study “Drug Supply 2.0” conducted by the ESB Business School, Camelot Manage- patent, practically invalidating the blockbuster business model. M. Jarosch: Other than the lower ment Consultants and the S.P. Jain Institute of Management and Research (SPJIMR) amount spent, there is also a dif- Mumbai. Brandi Schuster spoke with Camelot’s pharma experts Ulrich Korneck Did the industry just not see the signs ferent infrastructure in those Western CMOs to more full-service there any parts that should definitely and Michael Jarosch about the results of the study. or did they choose to ignore them and emerging markets with respect to providers. What this means is that be kept internally? trudge on with the blockbuster busi- logistics and sales capabilities and the CMOs would need to follow ness model? capacities. The population might the originators into these emerg- U. Korneck: According to the study, be spread very differently either ing markets with their Western there is no technology or no step of M. Jarosch: Yes, they did see the signs, in population centers or very rural know-how. An example for that is the value chain that should remain but they also have an existing as- populations. While there are many Lonza, who has taken that step and untouched. In the future, outsourc- set footprint that needs to be lev- differences in these markets, the already built-up capacity in China, ing along the value chain will focus eraged. It takes time to sell assets key element is the lower spend- but still is a Western partner for the on formulation and packaging. Also, to contract manufacturing organi- ing per patient. This, of course, pharma companies. solid forms – hard-capsule tablets, zations (CMOs). On the other side, requires companies to also move for example – are most suitable to the pharma industry has also been their production to these lower- This brings us back to the reluctance outsourcing, but also 80 % of those working intensively on lean pro- wage countries. of most companies to put concrete surveyed said that also liquid and grams to make their manufacturing in the ground in these pharmerging all other pharmaceutical technolo- more efficient and to reduce costs. Many companies consider build- markets. Is this just a phenomenon gies could be outsourced. The one It’s clear that the industry hasn’t ing greenfield projects in these for pharma companies, not for CMOs exception is injections; only 50 % of been completely sedentary on this, pharmerging countries to be too risky such as Lonza? participants said it was appropri- but they are late moving down the and prefer to opt for partnerships ate for outsourcing. In my opinion, path that other industries have al- instead. What do companies need to M. Jarosch: This is very strongly de- the pharmaceutical industry is ready taken 10–15 years ago, such take into consideration when they pendent on the experience of the working on breaking some long- as automotive, consumer products are looking for a CRO or a CMO in respective pharma company. It also standing taboos in order to catch and electronics. these areas? depends on the country’s initiatives up with other industries. Design- Michael Jarosch Ulrich Korneck for encouraging investment. In Rus- ing new supply networks has the Partner and pharma expert, Expert for contract manufacturing and external Many large pharma companies see U. Korneck: Our study has shown that sia, the recently announced govern- potential to break taboos from the Camelot Management Consultants supply, Camelot Management Consultants moving into the rapidly growing there are certain prerequisites. For ment support has made it an attrac- top downwards. emerging markets as something that example, quality really is a basic tive region for pharma companies CHEManager Europe: The study the market, Big Pharma has been can offset losses incurred due to the criterion that needs to be provided to invest directly. For example, What will the big pharma company shows that Western pharma compa- very slow to outsource. Why? patent cliff. How realistic is this? by the CRO or CMO. Delivery reli- AstraZeneca is currently investing of the future look like? nies have to cooperate with contract ability is very important, as is then over $150 million in the construc- manufacturers and/or R&D providers U. Korneck: In the past, the main busi- U. Korneck: A lot of companies are financial capability and stability, and tion of a manufacturing plant there. U. Korneck: If we look at the evolution in order to compete with pharmerg- ness model in the pharma industry striving to get into these rapidly flexibility. In other countries the political risks of other industries that have gone ing markets. Although all signs have was about blockbusters. With such growing markets. I believe there is might be very different, but Russia through this process, it shouldn’t be been pointing to this kind of shift in high-value products – more than $1 up to $180 billion in pharmerging M. Jarosch: Yes. Another important took that risk out. India, for exam- any different for pharma. Looking country markets. As to whether or aspect is that CMOs are expected ple, is very stable, but also rather at food and consumer goods, the lo- not it’s realistic: These are areas to have experience in cooperative protectionist, because they have cal supply for local demand strat- with huge populations, which means sourcing. But there are also threats such a strong domestic pharma egy has been very successful. As for a huge patient base. The caveat is or risks that need to be managed at footprint. companies who don’t own a strong that people in these countries have the pharma company: the transfer pipeline and need to “harvest” prod- much less money to spend on pro- of know-how; the increasing admin- What kind of a role will private equity ucts from the current portfolio, this tecting and improving their health istration and coordination costs; a companies play in the future of full- local-to-local strategy could be a than their counterparts in the west- risk of high staff turnover during the service providers? very good one for several reasons. ern world. The price for entering changes and change process; and For example, there is the advantage these markets is selling at a lower establishing and monitoring quality U. Korneck: Private equity is usually of taxation and overcoming local price and maintaining margins to standards at the CMO. very tight-lipped about their invest- protectionism, but also being able to serve at a lower cost. To put it into ment plans, and so the picture is not hedge currency and political risks perspective: In the traditional mar- If we would look at all the Western- as clear as it is in other branches. by producing local with local costs kets – Japan, U.S., EU – more than based CMOs and CROs, what does However, we do see there a lot of and local sales. $4,000 spent per capita per year. this growth in the emerging markets small loose players all over the Companies with strong pipelines In these new markets, there’s a per mean for them? world, especially in Central and are more interested in protecting capita spending of anywhere be- Eastern Europe. These small play- their IP and keeping relevant pro tween $40–400. M. Jarosch: It means two things: In ers are very specialized with big cesses in-house. For them, it would entails risks, but also new opportu- pharma companies who require full be more interesting to serve globally M. Jarosch: There is really a race going nities for them. As far as risk is con- service as customers. There seems from one side and to finish locally. on to secure large volumes in those cerned, Western CMOs are currently to be a textbook baseline for a buy- If we look at the idea of a virtual markets; companies can only offset rather specialized, and they might and-build strategy that some private supply chain – meaning outsourc- those lower prices with economies get trapped in this niche. There is equity companies pursue. When I ing big portions of manufacturing of scale. also strong pressure coming from look at the current landscape – at and R&D – it should be noted that originators on prices and costs – this the Cardinal Health investment of pharmaceutical companies that are So what we are really talking about could threaten the Western CMOs’ Blackstone, for example – there is pursuing this business model for here is the sheer quantity of the pa- business models. currently a buy-and-build strategy the last years are entering the glo- tient base in these economies that is On the other side, there are also within the portfolio of some private bal pharmaceutical top 50 by sales. hoped to offset the losses that will new opportunities, too. CMOs could equity companies. These companies’ core competence come from these blockbusters going orchestrate the activities for the is managing the brands and sup- off patent? originators in emerging markets M. Jarosch: We see an opportunity for ply chains very differently than we based on their experience as a private equity to consolidate the see in traditional pharma comps. M. Jarosch: Absolutely. The growth CMO, and kind of work as an agent CMO markets, and create those full- These companies are more flexible rates in the BRIC regions are very who takes part of the risk for the service providers with big enough to act on the currently fast changing high. In China we’re looking at pharma company, but also receives scale. Internally, the CMO market landscape. Traditional pharma rec- 23–26 %; in Russia 12–15 %; and in then a price premium for this serv- is quite fragmented, and the size ognized this as well. One thing all of If it wants to survive, big pharma has to change its business model. India, 11–14 %. ice. This would really transform the and scale of the CMOs is limited. our survey participants unanimously And there is certainly a trend in agreed on was that the current sup- the pharma companies to reduce ply chain is completely different to the number of their suppliers, be- the supply chain we’ll see within the cause the complexity is growing so next five years. strongly. There is a real opportunity Game Change for consolidation here. What risks are involved in outsourc- chemanager-online.com/en/ ing multiple facets of a business? Are tags/outsourcing ◀ Continued Page 12 engaging third-party suppliers in enable automatic information trans- 22 Contact: intermediate release, finished goods fer they will win the favor of global Sebastian Deck products or innovations with service release, electronic information ex- pharmaceutical firms. Top ranked Camelot Management Consultants AG providers. The dual-pressure fronts change and collaborative planning. third-party providers must not shy Mannheim, Germany »At Saltigo, we are committed to arising from the collapse in profit- Service providers would be wise away from asking for investment Tel.: +49 621 86298 168 ability in established markets and to act quickly: Those that partner support. And most critically, they [email protected] providing quality in every respect, strong growth in pharmerging mar- successfully with pharmaceutical must show that they themselves are www.camelot-mc.com ranging from specification kets make this an untenable posi- companies can expect substantial lean organizations with a business compliance to cGMP standards.« tion, even in the medium term. business opportunities, involving firmly focused on excellent delivery, The study will be published in November. CMOs are being offered an op- the supply of large volumes and the cost effectiveness and continuous You can order a copy of the study free of Ulrich Notheis portunity – and they must rise to chance to become an integral part improvement. charge then at: Fellow Process Development the challenge. Pharmaceutical of the supply chain. http://www.camelot-mc.com/en/about-us/ Business Line Agro & Fine Chemicals companies have set out in no un- But first they must become ca- Dr. Josef Packowski (CEO), Michael insights/surveys/ www.saltigo.com certain terms their expectations pable of providing a full-service of- Jarosch, Ulrich Korneck, Camelot about working with third parties. fering – whether in logistics, ware- Management Consultants chemanager-online.com/en/ They have made clear the condi- housing or quality functions. By Prof. Dr. Harald Augustin, ESB Busi- tags/outsourcing tions that must be fulfilled before standardizing their IT systems to ness School

chemanager-online.com/en Page 14 CPhI 2011 CHEManager Europe 10/2011

A Fragmented Industry

◀ Continued Page 8 will be negatively affected by the acquisition spree of Western fine How can traditional fine chemical thesis of biopharmaceutical APIs is no economy of size in manufac- twofold impact of soft demand and chemical/generics companies. Be- companies succeed in this challeng- for the innovator companies and turing. Fine chemicals have to be P. Pollak: The future growth of the globalization. The production value tween 2004 and 2006 alone, more ing competitive environment? production of APIs for the fledgling produced in campaigns in multi- fine chemicals market depends will be about halved. In contrast, than 20 deals were completed. Like generic versions of biopharmaceu- purpose plants regardless the size mainly on the growth of the phar- the production value of the Asian their European counterparts, which P. Pollak: Organic chemical synthe- ticals, the biosimilars represent an of the company. In a business, where maceutical industry and the trend fine chemical industry will more had a negative experience with sis is a mature science. It did not attractive opportunity for entrepre- “low cost” is more important than in outsourcing. The development of than double. their transatlantic expansions in evolve much beyond the substitu- neurial companies with a full war “over-the-fence” supply, the Asian the Western fine chemicals market the 1990s, not all Indian overseas tion of wood by stainless or glass- chest. In the more distant future, fine chemical companies have a big alone depends on the globalization. What are major market trends in acquisitions were a sweeping suc- lined steel as construction material stem cell technology could become advantage. Using optimistic/pessimistic as- terms of customer requirements? cess. More recently, financial inves- for chemical reactors, where chemi- a major tool in medicine. It allows sumptions for the three variables tors have begun acquiring mainly cal reactions developed during the substitution of damaged human What is the single most important the following API growth scenarios P. Pollak: In the medicine chests of European fine chemical companies. golden years of the dyestuff industry cells with new, healthier versions success factor for a fine chemical result. the people living in emerging coun- International Chemical Investor are performed. Except a few niche that could eventually lead to cure company? Due to the impact of reduced tries, more and more Western type Group (ICIG) has been particularly technologies, the capability to op- for many chronic diseases, from growth of the pharma industry on pharmaceuticals will be stored. active. Since inception in 2004, ICIG, erate a GMP multipurpose plant is macular degeneration to Alzheimer, P. Pollak: A track record of suc- the one hand, and increased out- Worldwide, originator drugs will dubbed one of the most prolific buy- hardly a differentiator any more diabetes, heart disease and spinal cessfully completed new product sourcing on the other hand, the be substituted by generic versions. ers of fine chemical assets in recent – with one notable exception: bio- cord injury. projects with several big pharma value of captive API production Therefore, custom manufacturing of years has acquired 16 independent technology. Especially mammalian In terms of size, mid-sized, fam- companies. within the pharma industry will re- pharmaceutical fine chemicals will chemicals and pharmaceutical busi- cell technology has a big future. It is ily owned companies have several main flat at about $33 billion/year lose ground against API-for-generics nesses with total sales of approxi- required for producing the modern advantages. They are not afflicted by throughout the 2010–2020 period. production. mately €700 million. The figure does big molecule APIs, dominating for the imperative to show better finan- In scenario I, the API produc- On the M&A market, there have not include ICIG’s most recent ac- instance the market for oncology cial results from quarter to quarter tion in the European and U.S. fine been two important developments quisition, namely Roche’s (formerly drugs. – in a volatile market! The CEO gets chemical industries will continue to since the beginning of the new mil- Syntex’s) large fine chemical plant However, entry barriers are involved in projects, visits custom- grow, albeit at a slower rate than lennium. In order to get a stronger in Boulder, Colo. ICIG’s portfolio of high. Existing facilities cannot be ers and takes binding decisions. As Asia’s (+ 6 % p.a. against + 10 % grip on the Western markets, cash- pharma and fine chemical compa- used and demand for containment the size of a production campaign chemanager-online.com/en/ p.a.). demand and globalization. rich Indian pharmaceutical and fine nies is managed as CordenPharma. has reached a new dimension. On for any given fine chemical rarely tags/fine-chemicals In scenario II, both the EU and U.S. chemical companies entered into an the other hand, both exclusive syn- exceeds a few ten tons, there also

Saudi Aramco, Dow Sign Sadara JV

Dow Chemical and Saudi Aramco facilities, and the largest ever built have signed a joint venture share- in one single phase. In July, the re- holders agreement for Sadara spective boards authorized for a go Chemical Company. The joint ven- ahead with the joint venture. ture is expected to drive down- The manufacturing units will stream industries and support produce a wide range of per- economic growth in Kingdom and formance products such as poly- emerging markets, with production urethanes, propylene oxide, pro- to start in the second half of 2015. pylene glycol, elastomers, linear The financial aspects of the deal low density polyethylene, low den- were not revealed. sity polyethylene, glycol ethers Saudi Aramco President and and amines. Sadara will market Chief Executive Officer Khalid A. Al- products within a regional zone Falih and Dow Chairman and Chief of eight countries, including the Executive Officer Andrew Liveris Kingdom. Dow said it expects Sa- were the signatories. Once complete, dara to deliver annual revenues of the JV complex will be one of the approximately $10 billion within a world’s largest integrated chemical few years of operation. J

DuPont: $500 Million Kevlar Facility

DuPont has started up its $500 mil- world. Commercial supply will begin lion Cooper River Kevlar facility by the end of the year. near Charleston, South Carolina. Overall global production capac- The Cooper River Kevlar plant ity for Kevlar will increase initially uses state-of-the-art technology by 25 % and is expected to grow by that the company said will allow it 40 %, with planned productivity im- to meet increased customer demand provements and continued technol- for advanced protective materials ogy developments over the next two in emerging industries around the years, DuPont said. J

Clariant Sells Polysilazane Coatings

Clariant said it is selling its polysila- precursors and fibers based on zane coatings business including the polysilazanes. It is for this reason production site in India to AZ Elec- that Clariant also concluded a long- tronic Materials (AZ) for approxi- term supply agreement for polysila- mately €4 million. zanes with AZ. Under the terms of the agree- The company said it is divesting ment, Clariant retains the exclusive the business in order to increase op- right to develop and use polysila- erational efficiency and in order to INNOVATIVE MATERIALS NEED INNOVATIVE LOCATIONS. zanes for composite materials and refocus management time on core ceramics. Clariant will continue its new business development activi- CHEMPARK, ideally situated along the Rhine. The right place to development in the area of ceramic ties. J invest in the future. Dow Sells Polypropylene Business Innovative materials certainly require benefi cial conditions for research, development and production. Chemical Dow Chemical said that it has closed facturing facilities at Schkopau and and chemical-related companies will fi nd these at CHEMPARK – at all three of its sites in Leverkusen, Dormagen the sale of its global Polypropylene Wesseling, Germany, and Freeport and Krefeld-Uerdingen. Directly situated on the banks of the Rhine, CHEMPARK off ers a wide range of product business to Braskem. and Seadrift, Texas. networks, a comprehensive service portfolio and an excellent infrastructure. All these benefi ts fi t together to In addition to the deal, the two Dow’s Polypropylene Licensing & make an ideal place for future investment – for both resident companies and those looking to locate here in companies will continue to evaluate Catalyst business and related cata- the future. potential future collaborations on lyst facilities were excluded from the growth opportunities in connection scope of the deal. to their strategies. The assets involved in the deal in- cluded Dow’s polypropylene manu- J Currenta GmbH & Co. OHG CHEMPARK 51368 Leverkusen Europas Chemiepark Air Products Buys 25 % Stake www.chempark.de Air Products & Chemicals an- lah Hashim Group, based in The nounced it has agreed to acquire a Kingdom of Saudi Arabia. Powered by CURRENTA 25 % stake in the gases and equip- AHG has three main production ment businesses of Abdullah Hashim locations in Dammam, Jeddah and Industrial Gases & Equipment. The Riyadh, plus distribution centers at transaction is subject to regulatory key locations across The Kingdom. approval and customary local clos- AHG also has a purchase agreement ing conditions. Financial terms are with National Industrial Gases Com- not being disclosed. AHG is a com- panyat Jubail and Yanbu for liquid pany of the privately-owned Abdul- products. J

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API Sourcing in China and India Is Asia the Only Option for the Future?

Paradigm Shift – The number of API manufacturers in India and China focused Many of these new API manufactur- continues to invest strongly in the vironmental compliance is a major compared to the over 1,500 API ers have also invested in finished local manufacturing industry. China expense in China, and factories that manufacturers in India and China, on supplying active ingredients to regulated markets has grown considerably over dose development and manufactur- has seemingly unlimited supplies of cannot invest in sufficient upgrades there is little API manufacturing in the past few years, which can be attributed to the increasing focus by dose compa- ing, frequently utilizing their own capable, talented scientists and en- are closing. Furthermore, when other emerging markets, such as nies based in regulated markets to find ways of lowering costs, including those for active ingredients. However, these gineers, as well as better infrastruc- sourcing from India and China, there Latin America and Russia. Part of regions that once offered signifi- ture than India. The number of U.S. is a lack of senior level talent in cer- the Russian government’s planned active ingredients. cantly lower costs are experiencing FDA inspected facilities in China has tain areas such as quality assurance $1.3 billion investment into the a rise in energy and labor costs, in increased over the past few years and project management. There is Russian pharmaceutical market is API Manufacturers in India Fig. 1 addition to re-emerging competi- and companies are continuing to in- also a pervasive focus on short-term intended to improve and increase tion from established European vest in quality upgrades. China also rather than long-term returns. local API production. Also, the low API manufacturers and speculation has easier access to a wide variety number of facilities that have im-

Established Less Established Potential Future about the emergence of a second- of intermediates and chemicals. European Comeback plemented GMP will be a consider- wave of even-lower cost sourcing Where China has surpassed India is able obstacle to supplying API into destinations. in its classes of fermentation-based In addition to the rising manufactur- regulated markets. Today, most of 18 Thomson Reuters assesses the APIs, intermediates and many base ing costs in India and China, recent the manufacturers in the second 2004 17 capabilities and experience of API chemicals. At the end of 2010, the sourcing issues involving import bans wave of emerging markets offer lit- 56 manufacturers according to a pro- first Chinese ANDA was approved have placed European API manufac- tle experience in regulated markets, prietary scheme based on objective and additional filings by Chinese turers in a better position to compete. and there is no indication of better 22 regulatory data. Companies range companies are awaiting approval. At Almost all of the suspended COSs are price at acceptable quality than in 2008 25 73 from those focused on supplying present, four Chinese groups hold a linked to companies from these two India or China. Companies looking their local market to companies combined 13 ANDAs with final U.S. countries as well because they failed at alternative sourcing options may 22 with years of experience supplying FDA approval. or refused inspections. The increas- have better luck in Eastern Europe, 2011 44 highly regulated markets. Although The geographical shift in API ing finished dose manufacturing in South Korea or Taiwan. 99 a large number of the companies in sourcing over the past decade is quite India has also offered opportunities Industry competition will contin- India and China continue to be lo- apparent when we look at U.S. Drug for European manufacturers to sup- ue to push both API and dose manu-

cally focused, many have invested Master File (DMF) filings by region. ply API to Indian companies formu- facturers to search for lower costs in facility upgrades and supplying Although filing a DMF doesn’t neces- lating products bound for the U.S. and and strategic advantages. However, Source: Thomson Reuters Newport Premium © CHEManager Europe regulated markets (fig. 1–2). sarily mean that a company is supply- EU markets. we believe that there will also be API Manufacturers in China Fig. 2 When sourcing from India, the ing the product into the U.S., the no- European API manufacturers with increased focus on quality and reli- cost advantages range from basic re- table rise in the number of U.S. DMFs strong technological capabilities in ability, ultimately leading to a more search and development to finished held by Indian companies and the niche areas will also be in a posi- level playing field between India,

Established Less Established Potential Future dose formulation. There are vast re- gains that Chinese companies have tion to take advantage of the many China and Europe. serves of local labor and chemistry made is quite significant. The number small volume APIs coming off patent talent, and intellectual property pro- of U.S. FDA inspections of facilities in after 2015. Companies in regulated 22 Contacts: 8 tection is improving. The number of these regions has also risen dramati- markets have also made themselves Bob Kennedy, Manager of Industry Research, Thomson 2004 11 FDA approved API and finished dose cally. In 2004, less than 10 companies more competitive by entering into Reuters 44 facilities in India is large and con- in India and China were inspected, joint ventures with emerging market [email protected] tinues to grow. Many Indian compa- while in 2009 the number had risen players or building manufacturing fa- 9 nies have moved from supplying API to over 50 companies being inspect- cilities in emerging markets, allowing Molly Bowman, Manager, Small Molecule Research, 2008 26 144 into the U.S. and the EU to supplying ed. Almost half of the COSs filed in them to circumvent patents and sup- Thomson Reuters finished doses. There has been an the past few years have been filed by plementary protection certificates. [email protected] 13 almost exponential increase in the companies from India and China. 2011 39 number of Indian companies’ Abbre- However, there are challenges as Emerging Markets www.thomsonreuters.com 162 viated New Drug Application (ANDA) well. Salaries in China and India are approvals over the past 10 years. increasing much faster when com- Rising costs in India and China pared to regulated markets. The high *Legend When sourcing from China, there have also prompted companies to chemanager-online.com/en/ is massive scale and capacity avail- turnover of personnel in China and consider other countries as sourc- Source: Thomson Reuters Newport Premium © CHEManager Europe tags/api-sourcing able, and the Chinese government India also adds to labor costs. En- ing alternatives. However, when

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A Changing World for CMOs Consolidation in Pharma a Win for Custom Manufacturing

Advantages – With more and more players in big pharma looking to outsource in order to focus on core competencies, custom manufacturers stand to benefit from this shift. Custom

The most exciting trend in pharma Manufacturing custom manufacturing is …

M. Griffiths (Carbogen Amcis): … chang- Big pharma are increasingly filling es in big pharma. Costs of bring- their pipelines through in-licensing ing a new drug to the market rose innovative therapeutics from bio- above $1 billion according the techs, which in turn provides addi- PhRMA due to longer clinical trials tional funding for the biotech sector and tougher regulations for drug to re-invest. For CMOs this means approvals. The numbers of NCEs that strong relationships across both approved by the FDA declined and Mark Griffiths Wolfgang Schmitz Nick Johnson Jean Bléhaut biotech and pharma sectors is in- the patent cliff has increased com- CEO, Carbogen Amcis CEO, Saltigo Strategic Marketing Manager, SAFC Director, Marketing & Business Development, creasingly a requirement. CMO or- petition from generics drugs. Job Novasep ganizations like the Dishman group cuts, mega merges and co-devel- having significant exposure in both opment programs are some of the areas clearly have an advantage strategies implemented to reduce W. Schmitz (Saltigo): … the full integra- N. Johnson (SAFC): … pharma compa- J. Bléhaut (Novasep): … the increasing contain sensitive functionalities, here. Business mix is likewise key costs, improve profit margins and tion of the custom manufacturer in nies outsourcing, continuing the complexity of the new APIs reach- cannot crystallize, etc. for CMOs, those who are over ex- mitigate the risk of drug devel- the business process of the customer. shift away from manufacturing in ing the market. Over the years, the posed to and over reliant on early opment. Big pharma is gradually Whereas in the past only the prod- their own assets and opening up new synthetic molecules developed The biggest challenge we face in cus- development revenues are disad- transitioning away from the his- uct has been bought by the customer major opportunities for the con- in the pharmaceutical industry tom manufacturing today is … vantaged as the pharma industry torical heartland of primary care nowadays the custom manufactur- tract manufacturing sector. While a have become larger and more chal- realigns itself to a greater emphasis therapeutics and the blockbuster er has to provide a wide variety of large proportion of pharmaceutical lenging to synthesize. This trend is M. Griffiths (Carbogen Amcis): … the fact on specialist drug platforms, biolog- model towards hard to treat con- services. These product related serv- manufacture remains within phar- driven by two major factors: the that world we inhabit as CMOs has ics and generic products. ditions with requiring high value ices, like quality risk assessments, ma companies’ assets, eventually, an development of more and more changed markedly in the last four drugs targeting complex niche dis- definition of design of experiments even greater proportion will reach targeted therapies, leading to spe- years. Continuing retrenchment and W. Schmitz (Saltigo): … the huge over- eases such as oncology. Access to and design spaces, etc., and the inte- the merchant market. cifically designed, highly functional- consolidation of our large pharma capacity and the overdue market leading edge technology and spe- gration of chemistry and technology Pharma companies are also con- ized molecules; and the intellectual customers’ activities and cash avail- consolidation in combination with cialized skills is paramount for the at the custom manufacturer site al- tinuing to develop innovative, highly property mine field, forcing innova- able for small biotechs to pursue the trend towards shorter timelines, development and manufacture of low the customer to focus on its core novel therapeutics, which again cre- tors to look for unpatented molecu- innovative NCEs will be key in the less new molecular entities, contin- high value small molecules, biolog- competencies and hence reduces the ates new demands and requirements lar structures to protect their future next five years. With large pharma uous price pressure due to health ics and conjugates. Consequently, time to market. The integration of for CMOs. To capitalize on these new markets. This has impacted on our divesting much of their historical care reforms and blockbusters going the trend among many CMOs is to the CMO in the business process opportunities, CMOs need to take a customer’s expectations, they need API manufacturing operations and off patent. invest in highly specialized technol- leads to an alignment of the two technology leadership position and chiral separation, purification of with the biotech sector continu- ogies necessary to handle complex parties and ideally to a long lasting also to invest in the necessary capa- molecules that are insoluble in ing to struggle for funding, a new drugs. partnership. bilities and infrastructure. organic solvents, thermally labile, model is starting to become reality. Continues Page 17 ▶

Fine Chemicals Developing Well In 2011 Agro Segment Showing Particularly Strong Growth

Showing Muscle – Fine chemicals of ecological compliance of the chemical industry – also in the have had a strong showing in 2011, emerging countries. thanks in particular to a strong agro segment. Also, the industry is seeing The future of fine chemicals is … more requests for challenging chemical syntheses from blue-chip life sci- Dr. M. Wienkenhöver (CABB): … looking at- ence and chemical companies. tractive for those companies who can add real value to Fine We see Asia as … the business of their customers. CABB thrives to be the partner of Chemicals Dr. M. Wienkenhöver (CABB): … an attrac- choice by applying intelligent solu- tive market for our products, espe- tions and innovative technical and cially in the acetyls business. CABB chemical concepts, supported by is meeting the opportunity head on, sizable investments both into assets Consolidation in the fine chemicals having established a foothold in and know-how; as well as a well- industry will … Asia in 2008 by taking over Karna- perceived service offering enabling vati Rasayan, India’s market leader Dr. Martin Wienkenhöver Dr. Peter Seufer-Wasserthal Dr. Jörn Winterfeld the customers to concentrate on Dr. M. Wienkenhöver (CABB): … further operating the country’s biggest MCA CEO, CABB SVP Pharmaceuticals, Codexis Director Business Line Pharma/Agro at Wacker their core business considerations continue. CABB just acquired Kem- (monochloroacetic acid) plant. This Biosolutions, Wacker and rely on a strong outsourcing Fine in August with the support of was only the first step. We are look- partner. our new owner, Bridgepoint. For ing for further regionalization of our vested heavily in production plants ing at our customers. We find our blue chip life science and chemical CABB KemFine is absolutely the business into Asia, especially China, – for instance for silicones – and set pharmaceutical customers turning majors. Our clients have now asked Dr. P. Seufer-Wasserthal (Codexis): … in right partner to help grow and de- the biggest market for MCA globally. up a comprehensive sales organiza- to qualified suppliers such as Co- us for more innovative and complex more advanced and more compli- velop our business further – espe- Asia as a whole – and particularly tion in countries like China, Japan, dexis for process development of products that until recently they cated products using new tech- cially in the area of custom manu- China – is increasing the quality re- Korea and India. Concerning the intermediate and API manufactur- were manufacturing in-house. Over- nologies. We find customers are facturing. quirements for this important chem- fine chemicals segment, we will con- ing. all, we see a strong growth in the rapidly adopting biocatalysis into ical building block, particularly as it tinue to focus on our core markets in outsourcing of fine chemicals – es- their operations as this technology Dr. P. Seufer-Wasserthal (Codexis): … intends to participate in the export Europe and the U.S. Asian countries Dr. J. Winterfeld (Wacker): … improving pecially of more challenging chemi- has moved broadly into the main- happen! It also means that syner- area for the downstream products. like China and India also offer large further, following the economic cri- cal syntheses. CABB can apply its stream. gies will be used in existing West- business opportunities and growth sis in 2009. Sales and profitability core competencies to the customers’ ern plants and that these companies Dr. P. Seufer-Wasserthal (Codexis): … as a prospects for fine chemicals. But on recovered in 2010 and in the first – and our own – benefit. We are pre- Dr. J. Winterfeld (Wacker): … positive, will have to deal with technologies great and proven partner for using the other hand, it is a very competi- half of 2011 and were driven by a pared to grow with the customers by with a growing global market de- they have not been familiar with. our enzymes to produce pharma in- tive region with benefits for domes- strong market demand, especially investing in these partially complex mand. However, business will re- This allows for new technologies to termediates and APIs, and a grow- tic producers. from industrial applications like au- synthesis routes and by continuing main competitive, with competition be used as well. ing market for our intermediates tomotive and construction. Wacker, to provide on-time, best-in-class coming especially from Asia. Wacker and APIs. We have been selling our The business of fine chemicals in too, benefits from this positive busi- service and reliability. considers its backward-integration Dr. J. Winterfeld (Wacker): … continue, products in India for many years 2011 is … ness environment by selling organic to basic chemicals, the long-stand- since it is a very fragmented indus- to a growing number of customers. fine chemicals like acetyl acetone, Dr. P. Seufer-Wasserthal (Codexis): … opening know-how and experience re- try. Many small players may van- In January, we were very pleased Dr. M. Wienkenhöver (CABB): … develop- chlorinated carbonyl compounds ness for the use of new technologies garding certain technologies like ish or merge to attain the so-called to announce a collaboration with ing well, driven by extraordinary and special silanes. in the manufacture of the products chlorinations, silane and ketene critical mass. This trend includes Dainippon Sumitomo Pharma, one growth in the agro chemicals. But rather than only moving to lower chemistry, as well as production at producers in China. of Japan’s 10 largest pharmaceuti- also custom manufacturing for The most promising trend in fine cost areas to improve economics. a fully integrated site as particular cal manufacturers. pharma intermediates and for the chemicals is … strengths for the fine chemicals personal care segment was strong. Dr. J. Winterfeld (Wacker): … beside a business. Constant process improve- Dr. J. Winterfeld (Wacker): … an impor- Dr. M. Wienkenhöver (CABB): … an in- growing market place, especially ments and upgrade in technology chemanager-online.com/en/ tant focus region for the Wacker Dr. P. Seufer-Wasserthal (Codexis): … is creasing demand for custom manu- for agro chemicals and some indus- are also key success factors in the tags/fine-chemicals Group. The company has already in- growing because of the re-structur- facturing services coming from the trial applications, the improvement fine chemicals field.

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ticularly relevant as more and more stage intermediates. However, in required to offer a more integrat- require custom manufacturers to demands is the cornerstone to gen- lead compounds are developed by custom manufacturing, customers ed approach for development and reconsider their asset base and erate profitability. emerging pharmaceutical compa- need open communication, reli- manufacture of drug products, manufacturing technologies ac- Our strategy as a service-provid- nies, dealing with limited resources ability, excellence in quality and where complimentary services will cording to the product needs of er combines professional outsourc- and very tight timelines to carry compliance and manufacturing ef- be offered under one umbrella (such these developing areas. ing, first-rate method development on with the development process. ficiencies. Taken collectively, these as MedChem, early phase develop- and ongoing improvement with the For these companies, the delay of a are characteristics not found to be ment, formulation services, com- J. Bléhaut (Novasep): … certainly more aim of achieving a high degree of clinical milestone can threaten their localized regionally, but are rather mercialization and integrated com- concentrated. At the moment this flexibility and reliability, while keep- existence. They really need partners characteristics of individual commercial supply of drug substance market is constituted by a multitude ing the overall cost of the products they can trust. panies and their capabilities and and drug product). The ultimate of relatively small companies. In the that we supply to customers, as low culture. goal is to reduce time to market coming years a more limited number as possible. For custom manufacturing, Asia is through streamlined project man- of larger companies will emerge … J. Bléhaut (Novasep): … an opportunity, agement, or at least to “fail fast.” from these. In addition, specialist N. Johnson (SAFC): … not easy to de- but also a market where savings We expect to see a more intimately CMOs like us, able to solve certain fine as a single characteristic. For M. Griffiths (Carbogen Amcis): … a fac- might come at a cost. integrated approach among drug types of manufacturing challenges sustainable performance a custom Custom tor. In 2010, Western companies For us, the Eastern market place substance and drug product manu- (coupling multi-step synthesis with manufacturer needs to build close were still the preferred outsourcing represents an opportunity to source facture at least in the development advanced purification technologies relationships with their customer, Manufacturing partners for premium services and early intermediates in a cost effec- stages of NCEs. to make complex APIs or global with flexibility and commitment to products e.g. complex new chemical tive manner, and we ensure that we manufacturing of antibody-drug quality and service. It is also para- entities, technical flexibility, speed make the best of it. However, we re- W. Schmitz (Saltigo): … influenced conjugates are good examples) are mount to develop deep and broad ◀ Continued Page 16 and commercialization expertise. main extremely cautious in the es- by growing population, resource aiming at becoming real references technology and capabilities to ad- The Dishman group has a signifi- tablishment and control of our sup- scarcity, increasing urbanization on the market place. dress the wider needs of the cus- N. Johnson (SAFC): … the fact that mar- cant presence in Asia which allows ply chain to avoid any delays which and mobility. In the long run, we tomer. In isolation, none of these ket for general small molecule con- the group as a whole, including Car- would impact the time to market for see a positive market environ- Our most crucial differentiating com- elements is sufficient to be suc- tract manufacturing remains highly bogen Amcis traditional costumer our customers. ment for agrochemicals and phar- petence is … cessful. competitive, with a significant sup- base the advantage of leveraging the Now, from a competition point of maceuticals. This comes from the ply/demand imbalance. Coupled right skills and assets at the right view, Asian companies undoubtedly increasing demand and interest M. Griffiths (Carbogen Amcis): … the qual- J. Bléhaut (Novasep): … our ability to with this is the general reduction in time throughout the drug develop- present financial advantages but in biofuels and changing eating ity of our people throughout the en- offer choice to our customers. We R&D funding, with 2009 being the ment process and during product many other elements are to be ac- habits, particularly in Asia. And tire group, who offer both broad and have a unique position on the mar- first year that the total spend actu- lifecycle management. counted for. The custom manufactur- we see also growth potential in the deep expertise in many areas, from ket place as a technology expert and ally decreased. Collectively these ing market is a complex equation in pharmaceutical sector, because big chiral organic chemistry, peptide a process developer. We can supply points mean challenged profitabil- W. Schmitz (Saltigo): …a challenge and, which the human factor has become pharma companies are outsourc- chemistry to complex separation our client with purification equip- ity in certain segments and at some at the same time, a chance. the precious resource nowadays. ing more and more to concentrate sciences and their absolute passion ment that we develop within our point there will need to be some sig- Saltigo benefits indirectly through Geographical and cultural proximi- on their core strengths and emerg- for problem solving and customer company and/or provide them with nificant asset closures to allow these its customers from the trend to ex- ties are advantages Western Europe ing pharma companies continue service. The majority of the projects the custom synthesis and purifica- over-capacity segments to return to pand business in Asian regions. The companies will always retain for to drive new drug developments we handle are highly technically tion of their products. This places profitability. Asian competition has been rapidly their European and U.S. customers. through innovation. demanding and require an open us as the ideal partner for develop- growing in recent years and our Simple aspects like shorter travel approach and effective communica- ment through large scale manufac- J. Bléhaut (Novasep): … the perception customers from different industries times and less jet lag for example N. Johnson (SAFC): As pharma compa- tion to quickly define the project’s turing. of our value by the customer. Lately, have been exploring this supply base – which both impact on productiv- nies continue to simplify their sup- specifications and deliverables, the In addition, our presence in many fine chemical outsourcing decisions using multiple strategies. ity – can make the difference. Com- ply base, we are likely to see fur- must-have versus nice-to-have, and markets (including pharmaceutical, have often been essentially driven Saltigo benefits in Asia directly bined with strong relationships and ther consolidation amongst custom the project’s timeline. biopharmaceutical, food and func- by price considerations. However, from the network that its mother mutual trust we develop with our manufacturers and fine chemical tional ingredients, bio industries, fundamental factors have sometimes company Lanxess has built in Asia clients, this makes European CMO companies, with the possible exit W. Schmitz (Saltigo): …our expertise agrochemicals …) enables cross-fer- been overlooked by pharmaceutical by building various production sites. companies attractive for the west- of some lower performing players. in the chemical development in tilization of our know-how, resulting companies. For instance the lack of Saltigo can offer unique services es- ern industries. We expect that strategic relation- combination with technology, up- in the design of smarter and more professional project management pecially with regard to procurement ships will transition to symbiotic scaling and refinement of chemical cost effective processes. on the supplier’s side may have by utilizing this network and the di- In 10 years, custom manufacturing inter-dependency, with more in- processes for efficient, cost-effective dramatic impact on the timing of rect access it provides. will be … tegrated and productive working and safe production of complex mol- delivery of an intermediate for clini- practices. Additionally the trend ecules, state of the art waste dispos- chemanager-online.com/en/ cal trials, thereby delaying critical N. Johnson (SAFC): … an established M. Griffiths (Carbogen Amcis): In the towards more niche therapies and al and HSE compliance. Using this tags/custom-manufacturing development milestones. This is par- base for generic APIs and early- future, CMOs will increasingly be personalization of medicines will core competence to meet customer

Functional Ingredients GZRGEVOQTG Excipients Not Just Additives Anymore

For the excipient business, Asia is … gredients, proprietary technologies and unique know-how, contributing H. O. Klingenberg (Novozymes): … one toward the development of improved of the fastest growing countries in drug products that provide real and terms of innovation. For example, sustainable benefits to patients. As a in China, recent years have seen company, we are constantly review- double-digit growth in the country’s ing industry trends and looking for biotechnology industry, transform- new opportunities to improve our ing it into one of the fastest grow- customers’ processes by developing in terms of biotech innovation. ing better and safer alternatives to Novozymes was one of the first the products that they are currently western biotech companies to enter marketing. However, we are more China and has more than 20 years’ than a mere supplier of enabling experience running and operating technologies or products; we see facilities in the country. With this our relationship with each custom- experience in hand, Novozymes is er as a partnership. By combining now looking to push the boundaries our scientists’ unique knowledge of further with the opening of a new Novozymes’ biological solutions with dedicated Q7 cGMP facility for the the customers’ specific application %QORNKCPEG (NGZKDKNKV[ Excipients production of state of the art cGMP knowledge, we work with our cus- grade hyaluronic acid (HA) making tomers to find the right answer to it suitable for biomedical and phar- their development challenges. Multifunctional – The expecta- maceutical applications. tions on excipients have grown over the In excipients, innovation is driven cGMP certification for excipients by … last years. No longer seen as mere fillers manufacturers is … and binders, pharma is now looking to- H. O. Klingenberg (Novozymes): … the H. O. Klingenberg (Novozymes): … vital demand for safe and consistent bio- ward excipients that add value to their to ensure that drug development logically-derived solutions that can end product and are multifunctional. processes are as efficient and ef- ultimately improve treatments for fective as possible. Working with patients. Novozymes develops and The most exciting trend in excipients raw materials that are already Q7 manufactures high-quality, animal- is … compliant can help medical device free, recombinant ingredients and 5KGIHTKGFEQODKPGUEQORNKCPEG and pharmaceutical manufacturers technologies. We provide pharma- YKVJƃGZKDKNKV[ Hans Ole Klingenberg (global marketing to reduce testing time, minimize ceutical manufacturers with proven director at Novozymes): … the pharma- documentation requirements, save options based on our established #UCPKPVGITCVGFUWRRNKGTYKVJCDTQCFTCPIGQHVGEJPQNQIKECNEQORGVGPEGCNQPI ceutical industry’s shift towards recon manufacturing costs and take technology platform that has been VJGXCNWGEJCKPHWNNEQORNKCPEGHQTCNNRTQFWEVUCPFYQTMRTQEGUUGUVQGPUWTG ognizing excipients as functional in- products to market faster. developed over the last 50 years, and gredients rather than non-functional which will enable them to develop UCHGV[KUCJKIJRTKQTKV[#UVJGKFGCNQWVUQWTEKPIRCTVPGT5KGIHTKGFEQODKPGUVJKU additives. As a result, manufacturers Our most crucial differentiating com- safer and more consistent products. VTCEMTGEQTFYKVJVJGITGCVGUVRQUUKDNGFGITGGQHƃGZKDKNKV[VCTIGVKPIVQTGFWEGC are increasingly looking for novel, petence is … Currently, 14% of Novozymes’ total RTQLGEVoUEQORNGZKV[ value-added multifunctional excipi- revenue is spent on R&D projects. ents, that offer real advantages to H. O. Klingenberg (Novozymes): … 'ZRGEVOQTGYKVJ5KGIHTKGFCU[QWTRTGHGTTGFRCTVPGT both the manufacturer and patients. Novozymes’ commitment to provid- In addition, advances in technology ing solutions that help its customers offer new opportunities to explore solve their most demanding chal- chemanager-online.com/en/ YYYUKGIHTKGFEJ 8KUKVWUCVDQQVJ(JCNN simpler product formulations with lenges. The company does this by tags/exipients reduced numbers of excipients. providing access to high-quality in-

chemanager-online.com/en Page 18 CPhI 2011 CHEManager Europe 10/2011

‘As Reliable as a Swiss Watch’ API Innovation Expected from API Manufacturers

Up To Task – Facing a huge patent could expect that The future of APIs during this decade is … cliff and a less-than-robust pipeline, the manufacturing cost pharma companies must look to cus- advantage between East and M. Blocher (Dottikon): … not tomized and personalized medicines. West will shrink and eventually overwhelming but sound. vanish. In parallel, the need of The pharmaceutical compa- This is where API manufacturers are Western pharmaceutical manufac- nies are concentrating on their expected to step up to the plate. turers to select strategic suppliers core competencies of clinical re- within reach will continue to be search and development, patenting important. Not only do they want and distribution, and will increas- For our API business, Asia is … to maintain a supplier base close to ingly seek out strategic coopera- their wholesaler markets, but they tion with experienced, innovative M. Blocher (Dottikon): … still a minor also require expertise and under- and reliable partners in process market today. Margins are rapidly standing of the local regulatory development and manufacturing. decreasing with increasing number environment and launch expertise. Such chemical exclusive synthesis of players attracted by high growth One can already see today opera- partners need to possess a versatile rates of non-branded and branded tional excellence advances and technology portfolio like a Swiss generics in pharmerging markets cost focus, which have transformed army knife and be as precise and such as Eastern Europe and Latin some Western API manufacturers reliable as a Swiss watch. America besides Asia. In addi- Markus Blocher Dr. Andreas Dietrich Heinz Sieger into global cost competitive players tion, intensified price pressure by CEO, Dottikon Vice President Launch and Strategic Products at CEO, CU Chemie Uetikon – without jeopardizing the expected Dr. A. Dietrich (Boehringer Ingelheim): regulation is taking place as gov- Boehringer Ingelheim high standards of launch services … is certainly driven by a number ernments seek to keep healthcare or product quality. of exciting trends. We know that spending under control, similar the two largest populations residing Dr. A. Dietrich (Boehringer Ingelheim): … market and government debt cri- the global market for biopharma- to industrialized countries. China in India and China the drug market will be influenced by several fac- ses drastically increased pressure H. Sieger (CU Chemie Uetikon): … the glo- ceutical APIs is expected to grow plans to motivate scientists from in Asia and in the other E7 countries tors. Finding new and innovative to reduce healthcare spend in all bal, worldwide interconnection and continuously at approximately 4% the U.S. with hundreds of billions to is expected still to grow much faster synthetic routes, and continued industrialized countries. Generation expansion of information exchange per year. Average growth for large start up biotechs within China, and than in the developed markets and manufacturing efficiency gains to promises inherent in the social se- and technology. This has improved molecule-based APIs is outperform- Indian generics manufacturers are will reach a market share of about lower overall API cost will remain curity systems in combination with the availability of health care data, ing the projected corresponding increasing their efforts to develop 20% in 2020 that means will at least important. Emerging markets are over-aging populations exacerbate our knowledge management and the rate for chemically derived small their own branded drugs. Despite double within the next nine years. benefiting from expansion of medi- this situation. This is changing the speed and scale of economy, creat- molecule APIs. The majority of the these facts, the custom manufac- Especially because of our GMP cal infrastructures and an increase pharmaceutical industry structure ing thereby major opportunities and worldwide market for biopharma- turing for Asian biotechs and drug compliance, our high and reliable in per-capita income. A successful fundamentally. For instance, phar- challenges for an increasing global ceutical APIs is located in Europe; innovators is still in the introduc- quality in general and the trend set- growing penetration of health in- ma manufacturing capacity is dis- business. Pharmaceutical Industry, North America and Japan show tion and years from entering the ting GMP design of our production surance, a growing aging popula- patched, consolidated and reduced being a highly research and knowl- satisfactory growth rates. Only Asia growth phase. Therefore, for the facility, we see good chances to grow tion and information campaigns of employing the aid of short-term edge driven global industry, is in the promises an even better outlook for time being, Asia remains a source our business in these countries. pharmaceutical companies prepare cash flow maximizing financial in- process of profiting from and adapt- growth since the biosimilars mar- for low-cost starting material and the way for API market growth. Also vestors as undertakers. In the long ing to these changes. This long last- ket will grow more than the innova- generic APIs, and a direct and in- The most promising trend in APIs biopharmaceutical APIs, which cur- run, this improves the bargaining ing socio-medical-economic change tor’s biopharmaceutical APIs. When direct market to sell high-valued is … rently make up the smaller part of power of financially sound, experi- will undoubtedly lead to a strong looking at the market for biosimi- intermediates finally ending up in the global API market compared enced, technology-leading and reli- but different pharma industry in lars, the potential is somewhat less generics. M. Blocher (Dottikon): … that the with chemically produced counter- able manufacturers. the future. defined when compared to chemi- number of new drug approvals by parts, are of interest. The growth cally designed generic APIs, since Dr. A. Dietrich (Vice President Launch the FDA in the first half of 2011 has prospects for these kinds of actives Dr. A. Dietrich (Boehringer Ingelheim): Generic APIs will … it is still a more complex issue to and Strategic Products at Boehringer already exceeded the total of 2010 represent attractive opportunities … cost pressure on API synthesis establish a bioequivalence for a bi- Ingelheim): … remains important. approvals, despite high attrition for growth for innovator companies, in manufacturing pharma compa- M. Blocher (Dottikon): … have a consid- opharmaceutical versus a chemi- Macroeconomic indicators point to rates and therefore low number of as well as for biosimilar API manu- nies and their inability to maintain erable share of the pharma market cally synthesized API. Consequently, continued growth of the pharma- NDAs for approval. The majority of facturers. margins once products are off pat- as the population gets older, as this matter creates an uncertain ceutical market. Of course, each approvals involves significant im- ent. In response to this problem, healthcare cost pressure contin- regulatory framework for approv- region of the world influences provements over existing treatment H. Sieger (CU Chemie Uetikon): … stricter many companies turned to Asian ues and as emerging economies ing biosimilars in some parts of the growth in different ways. Changes options and may mark the begin- regulatory legislation and better manufacturers that were trying progress. world which needs to be addressed in demographics in Europe, rising ning of a new era of customized and international coordination and co- to gain market access by offering and solved. In addition, the costs of disposable income in Asia, wider personalized medicines. Indications operation. The New Falsified Medi- products at a lower-priced starting Dr. A. Dietrich (Boehringer Ingelheim): … developing a biosimilar are more availability of health insurance and treatments of the newly ap- cines Directive, which we very hard point. While corresponding quality will benefit from the fact that the expensive due to the required schemes around the world are just proved drugs typically address small worked for in the last 10 years with and regulatory understanding was global pharmaceutical market is time and resources needed for the a few changes to mention here. The and highly targeted patient groups. APIC and EFCG and which has been still in need of development, today’s expected to continue growing over- protein analytics and clinical tri- Asia-Pacific pharmaceutical market The novel chemical core structures in place since July 1 will change the Asian manufacturers have become all and from the fact that over $100 als requirements. We believe that has been emerging as a fast grow- of these APIs often require state-of- API supply chain and is a good step better at responding to needs which billion in revenues in 2013 will be at despite all these challenges there ing region over the past decade. the-art technology in the synthesis. forward toward towards safe and go beyond price. In response to this stake due to patent expiry of block- will be attractive market growth for The reason for these changes can in However, their significantly lower trustworthy medication especially development, many Western API buster products. Here it is notewor- these types of APIs down the road. particular be attributed to a favo- annual volume needs economically in Europe. The regulation will also manufacturing pharma companies thy, that the API world is divided Novel, chemically derived APIs will rable manufacturing cost environ- disfavor commoditized monoplant help to level the playing field for have expanded their API outsourc- into two types of producers. On the continue playing an important part ment and the need to access better manufacturing. The demand for fine chemical companies in Eu- ing activities beyond the traditional one side are the captive API produc- in helping to bring new and inno- healthcare. Consequently, Asia has rapid process development, reliable rope. high quality European or North ing pharma groups which exclu- vative medicines to the market. Of seen important developments in scale-up and safe manufacturing American partners to also include sively manufacture APIs for their course, managing cost early on will contract manufacturing, especially of commercial API quantities is in- The most drastic change that has upcoming Asian manufacturers. finished, branded products and on play an ever increasing role, inde- for APIs and generics, and has to no creasing. This is a clear effect from happened in the last 10 years is … For the pharma companies, it is the other side are the so called third pendent of the life cycle stage the surprise positioned itself as a front- the deferral of chemical process de- not only an opportunity to focus party manufacturers which serve product is associated with. Lower- runner of global API production. We velopment to later clinical phases M. Blocher (Dottikon): … the loss of more on their core competencies the merchant market as supplier of ing cost for already well established believe this positive development with the aim to avoid R&D spend on the U.S.’ hegemonial power, sym- developing innovative medicines, APIs. The growth of the merchant products has to be examined care- will continue to strengthen Asia unsuccessful projects; and the need bolically initiated by the collapse but it is also a way to offload their API market for generic products has fully and weighed against benefits. as a global API production hub, a to substitute each lost blockbuster of the World Trade Center at the balance sheets with manufactur- substantially outpaced the growth Reducing cost will more and more trend which is predominantly driv- by a multiple of smaller new drugs. beginning of this century. Lacking ing assets. The manufacturing and of the API for innovator products. be designed early on into the dis- en by continued pressure around In essence, the future successful of financial resources and politi- growing supply of APIs out of Asia As we know, many of these third- covery routes. In order to support the world on drug product cost, as contract manufacturing consists cal will, unilateral global stability has enjoyed the trend of diversifi- party manufacturing companies are such efforts, the various internal well as by technology and partner- of exclusive synthesis by partner- will no longer be provided by the cation and globalization of the sup- located in Asia. China, in particular, stakeholders from R&D, procure- ship advancements. ing with an experienced, reliable, U.S. A reverse of globalization to plier base. In the long-run, these is expected to increase its partici- ment up to operations have to work highly flexible supplier having the regional fragmentation is the re- advances will increase the cost for pation in this growth significantly. hand in hand to manage the total H. Sieger (CEO, CU Chemie Uetikon): … an right versatile technology portfolio sult and will affect global supply CMO services out of Asia and will Even though the amount spent by cost design of the final drug. There interesting market, offering oppor- to tackle today’s chemical manufac- chains, also of pharmaceutical in- shift towards meeting a growing emerging generic markets for medi- are many opportunities and chal- tunities of economic growth. With turing control challenges. dustries. The cascade of financial local demand. Consequently, one cation is still small compared with lenges for novel and generic APIs in those of Europe, North America and the future. Pharma companies have Japan, it nevertheless announces to be smart about the ways they can that generic drugs will most likely increase the economic value prod- be responsible for the future growth uct by product. of the pharmaceutical industry. China, India, South America and H. Sieger (CU Chemie Uetikon): … most Russia consequently represent at- likely a future of more diversifica- SEE YOU tractive growth opportunities for tion. The age of block-busters is generic APIs. over. We will probably see an increasing number of highly specific

© Heino Pattschull/Fotolia IN FRANKFURT H. Sieger (CU Chemie Uetikon): … be drugs to treat rare diseases for rare an important pillar of our future or yet not treated diseases and for This year’s CPhI Worldwide is taking place in the heart health care system and of Chemie prevention rather than treatment. of Germany. From Oct. 25–27, Frankfurt is the place to Uetikon’s pharmaceutical custom Preventative healthcare provides be if you do business in the pharma industry. We’re manufacturing activities. It is likely, significant opportunities for Phar- looking forward to seeing you there! that branded Generics will be a suc- ma industry and healthcare sys- cess by reducing health care costs tems alike. Publishing Manager Editor-in-Chief Dr. Michael Reubold while providing high quality medi- Do you have a story to tell? Or just want to ﬁ nd out more about Brandi Schuster Tel.: +49 6201 606 745 what CHEManager Europe and CHEManager have to offer? Tel.: +49 6201 606 755 Editor [email protected] cation. This will hold true as long as [email protected] Dr. Birgit Megges manufacturing sites and processes Then just drop us a line – we’d love to hear from you. Tel.: +49 9617 448250 Media Consultant [email protected] do comply with highest, European Corinna Matz-Grund Tel.: +49 6201 606 735 standards and are not sacrificed for [email protected] economical reasons by manufactur- chemanager-online.com/en/ www. chemanager-online.com/en ing in uncontrolled and unregulated tags/apis markets.

chemanager-online.com/en CHEManager Europe 10/2011 CPhI 2011 / People · Events · Awards Page 19

Center Stage: Emerging Countries All-round Pharma Service Providers See Potential in Asia, Elsewhere

markets, declining R&D productiv- R. Hardy (Aesica): … a critical market ity, decrease in average patent life for Aesica and an area we’re active- and government pressure to reduce ly looking at expanding into. Aesica drugs prices. In these circumstances is already a global business with contract manufacturing as a strate- six manufacturing facilities in our gic option offers several advantages. growing portfolio. However, further Using an outsourced company pro- expansion is planned and we are General vides flexibility, a quicker time to looking at opportunities for strate- market and lower scale up costs. gic acquisitions and the potential of This means that emerging pharma forming long-term partnerships in and biotechnology companies can the U.S. and Asia, especially India, as meet the growing demand for new we look to grow the business further Challenges – The challenges facing drugs and focus on their core com- globally. petencies. Furthermore, outsourcing the pharma industry today – impend- enables companies to reduce excess Dr. R. Fink (BASF): … very important, ing patent cliff, pressure coming from capacity in their manufacturing fascinating and challenging. We are pharmerging markets, etc. – make the networks and restructure supply keen to play an even more active chains. role in that part of our world. playing field rife with opportunities for pharma service providers. Dr. R. Fink (BASF): … new APIs for the Robert Hardy Dr. Ralf Fink Burghard Freiberg B. Freiberg (Merck Millipore): Essential. typical therapeutical areas. How- CEO, Aesica Vice President and Head of Senior Vice President Pharm Chemicals We are striving and continuing to Innovation in the pharmaceuticals ever, we think that lower solubility Pharma Ingredients at BASF Solutions, Merck Millipore build relationships in Asia that will ingredients industry is being driven and bioavailability will become a allow us to expand our reach and by … significant challenge of our indus- emerging economies will grow at B. Freiberg (Merck Millipore): Redefined However, working with a partner provide customers – in this rapidly try and requires intensified innova- 14–17% year on year between now by forward thinking companies, like that can provide a full service of- developing market – with innovative R. Hardy (Aesica): … the versatility of tion efforts in the area of excipi- and 2014. These regions are expected Merck Millipore, who are willing to fering from formulation develop- products and solutions to meet their contract manufacturing organiza- ents. BASF is part of this innovation to grow three times faster than ma- push the envelope in the interest of ment through to commercial sup- goals. We are deeply committed and tions, which are now in a much process by own R&D activities as ture markets due to a combination innovating the pharmaceutical in- ply, packaging, as well as regulatory invested (more than 30 years) to in- stronger position because of their well as together with its customers of evolving demographics including a gredients industry. support is a unique proposition in creasing innovation and the quality ability to offer a greater portfolio and partners. rise in incomes, upgrading of health the industry. of the drugs that are made in the of services. The trend to outsource systems and an increased investment The most drastic change that has region. has been significantly shaped by B. Freiberg (Merck Millipore): … customer in the treatment of chronic diseases. happened in the last 10 years is … Dr. R. Fink (BASF): … the importance of the rising cost pressure on the needs. In this industry, services and Factors such as low-production cost the emerging economies and their Governmental healthcare reforms pharmaceutical companies. De- solutions are constantly evolving and minimum taxes on production R. Hardy (Aesica): … the trend for large increasing role along the whole and cost-reduction plans will … mand for pharmaceuticals has in- to improve customer productiv- will ensure China is an attractive re- pharma companies to outsource value chain, including R&D. creased worldwide and this, cou- ity, minimize complexity and lower gion for drug manufacturing and the various stages of the manufacturing Dr. R. Fink (BASF): … continue. pled with improving standards of costs while reducing risk. export of pharmaceutical products process to minimize overheads and B. Freiberg (Merck Millipore): … increased manufacturing facilities and rising from China has increased consider- reduce capital investment. As they global regulation. Now more than B. Freiberg (Merck Millipore): Drive in- cost pressure on companies, are In 10 years, our industry will be … ably during the last few years alone. concentrate on R&D and focus on ever, pharmaceutical companies are novation in the market and ensure the prominent factors contributing uncovering new compounds while faced with regulatory pressures that that manufacturers will continue to to the huge growth in the contract R. Hardy (Aesica): … much stronger, Dr. R. Fink (BASF): … different. Cost investing in marketing and brand need to be addressed. That is why streamline processes (while advanc- manufacturing sector. The pharma- competitive and diverse with the pressure, strong growth in emerging building, they are choosing to out- partnering with an organization that ing technology) to deliver the best ceutical industry is facing several most significant contribution to the countries, ongoing market consoli- source all aspects of the manufac- deeply understands your challenges possible product to the market. challenges, which lead to increased pharmaceutical market coming from dation as well as the emergence of turing process to specialist provid- and can help assure the quality and demand for contract manufacturing emerging economies such as Brazil, new regional or even global players ers. In particular, over course of the safety of products you bring to mar- services. These include the rising Russia, China and India. In fact, the and a significant higher demand for last five years there has been an ket, is paramount. chemanager-online.com/en/ cost of new product development, 2010 IMS Health forecast predicts performance excipients are scenari- increased demand for formulated tags/pharma increasing competition in generic that pharmaceutical markets in os we want to be prepared for. products and packaging services. For our business, Asia is …

European Chemical Region Network 2011 Congress in Germany

The chemical industry has played a Halle/Saale Germany. This year the vital role in the industrial sector in congress host is the federal state of Saxony-Anhalt, Germany, for many Saxony-Anhalt in central Germany years now. Generating 14% of over- and the organizers expect a range of all turnover and employing 9% of high-ranking representatives from the total workforce, it has a lead- politics, business, academia and ing position among the various in- public authorities to put a spot on dustries in the federal state of cen- the European regional policy. tral Germany. In terms of exports, Particularly the potential and The ChemShow, Nov. 1–3, New York City Showcasing the latest process it is top of the pile. The chemical challenges of sustainable use of Büttner New AllessaChemie President and CEO Dr. Thomas equipment, products and technology, the Chem Show brings together industry makes up one fifth of all structural funds in the European Büttner became AllessaChemie’s president and CEO on manufacturers and innovative new suppliers with executives, process industry export turnover in Saxony- chemical regions in terms of the Oct. 1. Büttner, who has been directing the company’s engineers, production teams and plant personnel. Anhalt. Europe 2020 Strategy will be one of group functions since May 1, takes over from Almuth 22 www.chemshow.com So, it’s all the more pleasing that the main topics. Poetz. He began his career in chemicals in 1984 with the local chemical industry has had The congress aims to support Rütgerswerken in Frankfurt, where he worked in vari- such a strong start to 2011. At the the exchange of views and experi- ous subsidiaries in several different positions until 2003. Expoquimia 2011, Nov. 14–18, Barcelona This year’s show will be putting home of the central German chemi- ences from different stakeholders in Thomas Büttner Before joining AllessaChemie in May, he was managing an emphasis on the scientific side of chemicals, with a program of confer- cal industry, turnover from Janu- the chemical sector at a European director at WeylChem and Sensient. ences, seminars and other activities. Expoquimia aims to provide solu- ary to March rose to €1.9 billion. level and fruitful discussions with tions for emerging markets, such as alternative energies, biotechnology, Seasonally adjusted in comparison representatives from the European Träger Reelected as Euro Chlor Chair Michael Träger, man- industrial pharmaceuticals, fine chemicals and food-related sectors. with the previous quarter, turno- Commission, the European chemi- aging director and COO of Vestolit, has been reelected as 22 www.firabcn.es ver has risen by more than 21%. cal industry associations, unions and chairman of Euro Chlor for another one-year term. This Compared to the same quarter the the member regions. re-election is the logical consequence of a change in the previous year, business volume has Additionally visitors are free Euro Chlor statutes to extend the term of the manage- 10th Annual World Drug Manufacturing Summit, Nov. 29–Dec. 1, Berlin Now in risen by a third. The main impetus to attend the workshops “Demo- ment committee chairman to two years. Träger has been its 10th year, World Drug Manufacturing is firmly established as the must behind this rapid development has graphic Change”, “New ways in involved with Euro Chlor activities for over 11 years. attend event for small molecule and biologic manufacturers. Over the been the classic chemical industry. the politics of innovation” and “The Michael Träger During his chairmanship, he said intends to help further course of the three days, the industry will gather to discuss many hot topics. The pharmaceutical industry has contribution of chemical logistics develop the new and improved sustainability program for The 2011 WDM program will address the major issues affecting the contributed nearly €300 million to to the maintenance of the competi- the coming decade in order to foster and strengthen the pharmaceutical and biotech industries at the current time, such as this sector’s turnover in the federal tiveness of the chemical industry achievements of the chlor-alkali industry’s reputation and its sustainable change management; cost reduction; changing product portfolios; and state. in Europe.” The report of Prof. Dr. contribution to a safe and healthy community. much more. “Investing in innovations is an Birgitta Wolff on the active role of 22 www.wdmsummit.com absolute necessity if we want to the German federal government in Merck & Co. Announces New Chairman Merck & Co. an- continue to drive growth forward developing European transport cor- nounced the retirement of its chairman Richard Clark, and ensure competitiveness, be- ridors to create the base for chemi- effective Dec. 1. Kenneth Frazier, president of chief ex- Industrial Green Chemistry World- Symposium & Expo (IGCW 2011), Dec. 4–6, cause knowledge is increasingly cal logistics completes the congress ecutive officer will succeed as chairman. Clark has been Mumbai Industrial Green Chemistry World is India’s first flagship plat- becoming a decisive production program. with the company since 1972 and served as chairman form that brings together mainstream issues concerning Green Chemistry factor,” said Prof. Dr. Birgitta Wolff, since 2007. He was president and chief executive officer and Green Engineering (GC&E) to all Chemical Industry stakeholders. Minister for Science and Economy from 2005 through 2010. From the role of quality control At the IGCW 2011, you can be assured of in-depth exposure to diverse in Saxony-Anhalt and president of Kenneth Frazier inspector, he progressed through increasingly respon- and successful endeavors in the industry and bring on par your techno- the European Chemical Regions sible roles. He left the company to join Merck-Medco logical and business practices with world leading practices and global Network (ECRN). Managed Care subsidiary as executive vice president and trends in GC&E. ECRN currently brings together chief operating officer. He later became the chairman, president and 22 www.industrialgreenchem.com 21 chemical regions from across chief executive officer of Medco Health Solutions. In 2003 Clark rejoined Europe. This year’s 9th Congress Merck as president of manufacturing division. of the European Chemical Regions 22 www.ecrn.net Network, will be held at Oct. 27 in www.investieren-in-sachsen-anhalt.de

chemanager-online.com/en Page 20 At A Glance CHEManager Europe 10/2011

CHEMonitor: Focus on Sustainability

Growth Strategies Graphic 1 Which growth strategies will your company be following over the next 12 months? Three times a year, CHEMonitor – a coop- Growth through M&A both equal organic growth no answer eration between CHEManager and Camelot Management Consultants – examines the 1% 4% current trends and developments in the 23% chemical industry. This time, managers, board members and decision makers in 72% the chemical industry were asked about sustainability. When asked about their company’s growth strategy, 72 % of those asked said they are relying on organic growth; this is up from 11 % in January (graphic 1). Only 4 % of those asked said that they plan on

achieving growth through M&A activities. In Source: CHEMonitor, September 2011 © CHEManager / Camelot Management Consultants order to achieve sustainable management and growth, more and more chemical companies are tailoring their strategies to meet the current mega trends. These trends have Megatrends and Corporate Strategy Graphic 2 a half life of at least 50 years, are widely Which megatrends does your corporate strategy follow? immune to set backs and usually affect many parts of daily human life in different Energy (energy shortage, e ciency, etc.) 43% cultures. They change forms of civilization, Environmental protection 42% technology, economies and value systems. World’s Largest POM Manufacturing Plant After three years of construction, Celanese recently opened its state- Population (growth, age structure) 40% According to the most recent CHEMonitor, of-the art polyoxymethylene (POM) production facility in Frankfurt Hoechst Industrial Park, Germany. The Globalization 31% the mega trends energy (43 %), environmen- company said it is the world’s largest acetal copolymer production plant, with a nameplate capacity of 140,000 Nutrition 29% tal protection (42 %) and population (40 %) tons per year. The company said the new plant will strengthen Ticona’s engineering polymers business. Ticona Mobility 23% are very close together (graphic 2). Howev- is Celanese’s engineering polymers business. The new manufacturing facility is expected to meet the increased Water (water shortage, e ciency, etc.) 19% Urbanization 13% er, all three trends were able to gain impor- global demand for innovative specialty solutions in polymer-based products. Communication 11% tance in terms of chemical industry strategy Other 14% when compared with CHEMonitor results No Answer 7% from May 2007 and August 2009. Futher- more, the mega trends mobility (+ 15 % over This issue of CHEManager Europe contains Multiple answers possible 2009) and water (+ 7 % over 2009) were able the special supplement Source: CHEMonitor, September 2011 © CHEManager / Camelot Management Consultants to win significance over the last two years. One example of an innovative product that caters to several mega trends is the superabsorber Stockosorb from Evonik. The polymer can absorb many times its weight Corporate Sustainability Graphic 3 in water, which it can then release to plants How do you measure your company’s sustainability? as necessary. It can be used to increase the survival for young argan trees in Morocco.

E ciency criteria (ex: energy e ciency) 59% These trees provide the population with Personnel turnover 40% wood, animal feed and oil; their population has been in rapid decline over the last Scorecards (incl. qualitative monitoring) 35% Coming up in our November issue Turnover of customers and suppliers 35% several years. The company recently won Measuring the company image 29% the Cefic Responsible Care Award for the ▪▪ Dr. Christian Jochem of the European Process Safety Centre examines climate change and plant security Long-term development of shareholder value 26% development. ▪ Percentage of renewable materials 21% Almost 60 % of those asked said that effi- ▪ Bayer’s Christian Drumm looks at energy efficiency management and benchmarking Not at all 11% ciency criteria, particularly energy, were the ▪▪ Ruben Gill of AspenTech explains how software solutions can achieve success for speciality chemicals manufac- No answer most important indicator when it comes to 5% turers measuring the sustainability of a chemical company (graphic 3). Close behind was per- ▪▪ Irina Steer of Süd Chemie writes about how second generation biorefineries can contribute to a bio-based Multiple answers possible sonnel turnover, which 40 % of the chemical economy In Europe Source: CHEMonitor, September 2011 © CHEManager / Camelot Management Consultants company managers named as a parameter. Such fluctuation was particularly seen by ▪▪ And much more! smaller companies (< 50 employees) as the top indicator for sustainability (48 %) When asked about the advantages of a The November issue of CHEManager Europe will be published on Nov. 10. Sustainable Corporate Strategy Graphic 4 sustainable corporate strategy, almost half Where do you see the biggest advantages of a sustainable corporate strategy for chemical companies? Name three important topics. of all the chemical company managers listed improving own cost effectiveness; taking social responsibility; and customer loyalty Improving own cost e ectiveness 50% (graphic 4). A much smaller percentage – Index Social responsibility 49% 20 % – drew a correlation to an increase in

Customer loyalty 48% innovation power. Camelot chemicals expert A.T. Kearney 4 Frost & Sullivan 7 Mauser Group 10 Image enhancement 41% Dr. Sven Mandewirth said: “The advantages ABCR 11 Gempex 20 Expansion to new markets 28% of a sustainable innovation strategy is of- MCA 16 ten underestimated. Sustainable growth re- Attracting new employees/Employee loyalty 27% Aesica Pharmaceuticals 1, 19 H.I.G Europe 1 Increased innovation power 20% quires innovative ideas all along the value Merck & Co 1 chain – from changing the raw material AkzoNobel 2 Haltermann 1, 2 Reduction of nancial risks 13% base all the way to returning the end prod- Merck Millipore 19 No answer 2% uct for reuse.” AllessaChemie 1, 15, 19 Ineos 5

Multiple answers possible Novasep 16 Altana 5 Kemfine 16 Source: CHEMonitor, September 2011 © CHEManager / Camelot Management Consultants Source: CHEMonitor, CHEManager 19/2011 AstraZeneca 1, 2 Lanxess 1, 2, 16 Novozymes Biopharma 17

BASF 1, 5, 19 Linde 1 PP Consulting 8

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