The Glass Is Half Full Representing the Specialty Chemical Industry Cphi 2013 Exhibitors Demonstrate Positive Outlook

10/2013 October

Markets and Companies CPhI Up close and personal THE NEWSPAPER FOR THE It’s that time of year! with Lonza CEO Catch up on the Richard Ridinger. CHEMICAL AND latest trends.

Page 6 LIFE SCIENCE MARKETS Pages 13–18

From SOCMA, the only U.S. organization The Glass is Half Full representing the specialty chemical industry CPhI 2013 Exhibitors Demonstrate Positive Outlook

Optimistic — The worldwide economic less volatile areas of the industry. Ever- drug entities coming to market, cus- who tried their hand at working with terviews can be found in their entirety situation has been a rocky one since changing regulations worldwide have tom manufacturers are seeing a boom Asian companies coming back to Eu- exclusively online by following the ma- the last CPhI in Madrid; many compa- also been a challenge in the past year. in their business as pharma companies rope. Brandi Schuster spoke to leaders trix barcode following each statement nies have had to revise their 2012 out- But it’s not all doom and gloom: In a look to offset risk. Also, many compa- from several different companies about or by going to www.chemanager- looks and are looking to invest more in time where there is no safe bet on new nies have reported a shift of customers what’s moving their businesses. The in- online.com/en/tags/CPhI-2013. SOCMA Marketplace and Chemical Services Directory Peter Seufer-Wasserthal, Rudolf Hanko, CEO, Siegfried, Gabriel Haering, CEO, Cerbios, Search 200+ top notch Senior Vice President, Pharmaceuticals, on being a pioneer on the custom on the advantages of being a companies, 24/7access by: Codexis on the patent cliff: manufacturing frontier: Swiss-based API manufacturer: 400+ Reactions 200+ Capabilities “The patent cliff can actually be a very “Custom manufacturing started as kind “Pharma companies who want to save on Toll Capacities positive factor for a company developing of an extended workbench for the phar- cost end up losing millions of dollars due Products, Equipment new technology, e.g. a manufacturer of maceutical industry. New APIs were being to delayed clinical trials and, as a result, biocatalysts. It creates an opportunity for developed that required advanced chemi- delayed product launches. A very simple Certifications, Awards companies to reevaluate the process for cal technologies compared to historic APIs example: if you consider a drug that can and more! making an API or intermediate. This allows and not all pharmaceutical companies had generate $350 million a year, every day a generic, but also the innovator company, that know how. Also, the pharmaceutical of delay in the launch means a $1 million www.SOCMA to think outside the box and look at every industry was booming in a way that some loss to the company. For a month, the lost ChemicalDirectory.com available alternative to lower manufactu- were simply running out of capacity. But turnover is $30 million! The final balance ring costs. Codexis has on-going programs over the years, CMOs have evolved from is in any case negative: $29.7 million lost with many companies as a result of oppor- being an extended workbench to an in- considering that the company made a $0.3 N ewsflow tunities caused by the patent cliff.” surance system for the pharma industry.” million initial cost saving.” Markets and Companies: Hall 3.1 Booth A53 Hall 3.1 Booth H25 Hall 3.1 H20 Nobel Prize goes to three ‘computer chemists.’

AkzoNobel invests €50 million in Western China.

Sanofi considers buying back L’Oreal’s stake.

Rockwood finds a buyer for its TiO2 Wolfgang Schmitz, CEO, Saltigo, Laura Parks, President of DSM Pharmaceu- Matthew Dickman, international business business. on the increasing costs of ticals, on growth in custom manufacturing: director Pharma, Azelis, on potential in the AI development for agrichemicals: Chinese pharma market: Ineos’ Grangemouth dispute con- “Yes, custom manufacturing continues to tinues on. “We work proactively with these trends grow. Several large pharma companies “Selling APIs in China is not such a com- More on Pages 2-12 ▶ by maintaining close relationships with have made it clear that outsourcing is a mon or easy thing to do due to the amount all the major agrochemical innovators from very important part of their strategy. On the of raw materials that are made in China. It‘s Pharma: the early stages of product development. other side, there will always be companies a different story with excipients. We have Aesica set to start up new high We have noticed a tendency for CMOs to who decide that operational excellence and seen an increasing demand for value-ad- capacity manufacturing facility become more intensively involved in such doing their own manufacturing is impor- ded excipients in China, particularly to tho- projects than in the past. The time-to-mar- tant. And, of course, there are companies se companies who are formulating for the Novartis considers shedding un- ket requirements have also become very who are slowly moving into working with European or U.S. markets. This is going to derperforming units. ambitious. It has become quite essential to CMOs. In effect, there are companies who become more common moving forward. save time and to be the first on the market have really worked hard to develop compe- There is a demand for the distribution of GlaxoSmithKline India sees drop in with a new product solution; this is where tencies in working strategically with CMOs value-added excipients in China, and our bulk orders. agrochemical companies look for recog- while others are still working on what such intention is to provide a value-added ser- nized CMOs who can support them. All in a relationship could look like.” vice which mimics what we do in Europe.” Carbogen Amcis beefs up ADC ca- all, I see a positive trend in agrochemical pabilities. custom manufacturing for the coming Hall 3, Booth A32 Hall 3, Booth D45 years.” Merck & Co. wants to slash annual costs by $2.5 billion Hall 5, Booth F01

More on Pages 13-18 ▶

Scott Thomson, senior VP, BASF Pharma In- Lars Hansen, VP, Novozymes, on the deve- Michel Spagnol, CEO, Novasep, gredients and Services, on the challenges lopment of a European bio-based Economy: on the taking on a new role: in the pharma industry: “The development of the bio-based econo- “The first year as a CEO is a unique mo- “The pharmaceutical industry is in a time my in Europe will contribute to re-industria- ment: One brings an external view and of significant transition that creates both lize and revitalize rural areas, thus providing confronts it with internal reality. This is the challenges and opportunities for our cus- tens of thousands of high-skilled research, perfect time to bring new impulses and tomers and BASF. Cost pressure and incre- development, and production jobs over the changes to the organization and teams. asing market volatility caused by strong next decade, jobs that are solidly anchored In my first month at Novasep, I discovered out- and insourcing of services are direct in Europe’s diverse regions; it is estimated my colleagues’ enthusiasm and dedication results from changing health care systems that the global revenue potential of the to the company and our customers’ pro- and the large number of medical products entire biomass value-chain for biorefineries jects, which lead me to believe Novasep that come off patent. Additionally the in- could exceed 200 billion euro by 2020. This employees’ mindset is a key competitive dustry is operating in an ever increasing is critical at a time where Europe is trying differentiator and a powerful driving force regulatory environment that is varied ac- to get out of recession and is looking for for development.” ross the globe.” sustainable growth opportunities. “ Hall 5, Booth C30 Hall 3.1, Booth E19 Hall 6.2, Booth E47 · PF 11 05 64 · 69469 Weinheim · Pressepost · DPAG· Entgelt bezahlt · 78719 Entgelt · DPAG· · Pressepost Weinheim · PF 11 05 64 69469 WILEY VCH WILEY

chemanager-online.com/en Page 2 MARKETS & COMPANIES CHEManager Europe 10/2013

CONTENT DECISIVE INFORMATION

THE PORTAL AND NEWSPAPER FOR THE EUROPEAN CHEMICALS AND PHARMACEUTICAL MARKETS

Front Page Challenges in Healthcare Industry 11 Pharma News 18 Pharma Logistics Expert Movianto Provides Solutions The Glass is Half Full 1 Interview Marina Steensen, Commercial Director, Movianto A Safe and Secure Pharma Supply Chain 18 CPhI 2013 Exhibitors Demonstrate Positive Outlook Preventing Counterfeits Using Track and Trace Methods Europe’s Largest Chemical Cluster 12 Ian Parsonage, Director of Global Serialization Services, PCI Antwerp Continues to Invest in Chemical Industry Markets & Companies 2–12 Standardized Tests 12 Plastics 19–22 Portfolio 4 SQAS Has Assessed Logistics and Distributors for 21 years Victor Antonio Trapani, SQAS Manager, Cefic Materials Enable Sustainability Improvements 19 Searching for Targets in China 4 Acquisitions Gives Local Access to Foreign Chemical Companies Material Innovations Steer the Drive for More Sustainable Products Dr. Kai Pflug, CEO, Management Consulting, Dr. Werner Heil, Heil Yang Group Pharma 13–18 Catherine Maxey, Vice President, Public Affairs, Government Affairs and Business Intelligence The Lifeblood of Business 5 Expanding CMOs 13 Ashland on the Importance of Innovation Companies Aim to Stand Out in Global Pharmaceutical Quo Vadis Phthalates? 20 Interview with Jeff Wolff, group VP of Pharmaceutical and Nutrition Contract Manufacturing Market Road Ahead for High Phthalates Specialties, Ashland Aiswariya Chidambaram, Senior Research Analyst Life Sciences, Dr. Stéphane Content, Manager, European Council for Frost & Sullivan Plasticizers and Intermediates (ECPI) Corporate Overhaul at Lonza 6 New CEO Fine Tunes the Organization After Acquisition Phase A Shaky Platform? 14 Drastic Transformation 21 Interview with Richard Ridinger, CEO, Lonza Sourcing of Chemical Raw Materials for Pharmaceutical Industry VinylPlus: Taking the Lead in the Quest for Sustainability Rolf Dach, Independent Consultant Brigitte Dero, General Manager, European Council of From Explosives to APIs 7 Vinyl Manufacturers, DGM VinylPlus Dottikon Celebrates 100 Years of Transformation Double Risk with an Upgrade 15 Interview with Dr. Markus Blocher, CEO and Chairman, Dottikon Business Development Landscape in Pharmaceutical The East Is Green 22 © Nmedia/fotolia.com Contract Manufacturing Russia’s Booming Pharma Industry 8 Asia’s Role in the Commercialization of Bioplastics Andrew Badrot, Partner and CEO, and Peter Pollak, Fine Chemicals Busi- Eastern Europe Shows Great Promise for API Manufacture Bruno Rudnik, Managing Director, SusTech Consult Joshua Gilpatrick, Pharmaceutical Research Analyst, Thomson Reuters ness Consultan, CMS Pharma online.com/en

chemanager - Products From Plants 22 The Limits of the Biosimilars Revolution 16, 24 Here Comes The Bribe 9 Enabling Sustainable Materials with Biosuccinium Succinic Acid Pharma Management Radar by Camelot Management Consultants chemanager - Endemic Corruption Holds Back Emerging Markets Marieke Smidt, Marketing Manager, Reverdia John Manners-Bell, CEO, Transport Intelligence Dr. Axel Sinner, Head of Competence Center Pharma Commercial, Camel- online.com /en ot Management Consultants, and Michael Jarosch, Head of Industry Seg- ment Pharmaceuticals & Life Sciences, Camelot Management Consultants Refreshing Chemical Distribution 10 People • Publications • Events 23 Azelis Sets Out to Drive Future Growth Plans with a www.gitverlag.com Different Way of Doing Business Highly Potent Powerhouse 16 Interivew with Dr. Hans-Joachim Mueller, CEO, Azelis The Demand for HPAPIs is on the Rise Molly Bowman, Manager Small Molecule Research, Thomson Reuters At A Glance 24 Hidden Costs of Broken Supply Chains 11 Tariffs are No Longer Biggest Barrier to Cross-Border Trade Do Your Homework 17 Index 24 Gerry A. Mattios, Expert Principal, Bain & Company Australia and Sourcing Intelligently From India Mark Gottfredson, Partner, Bain & Company USA Ram Balani, CEO and Founder, FDA Smart Imprint 24

Nobel Prize for Chemistry Three Clariant BUs Sold, AkzoNobel Invests €50 Million Awarded to 3 ‘Computer Chemists’ Renamed Archroma in Western China

AWARDS U.S.-Based Scientists Lauded for Multiscale Models For Switzerland — Clariant announced China — AkzoNobel will invest a Complex Chemical Systems the closing of the sale of its Textile total of more than €50 million in Chemicals, Paper Specialties and China to build new manufacturing In modern science, the computer has Emulsions businesses to SK Capital. facilities for its Powder Coatings and The three businesses are now op- Decorative Paints businesses, the become just as important as the test Alexander Wessels Ton Buechner Martin Karplus erating under the name Archroma. company said in a release. Both new CEO, Archroma CEO, AkzoNobel tube, allowing scientists to create simu- Harvard University According to a press release, the facilities will be located in Chengdu (Photo Stephanie lations so realistic that they are able to transaction will amount to approxi- with the powder facility scheduled Mitchell/Harvard Staff mately CHF 425 million, mainly con- 2,000 employees have transfered to open in 2014 and the deco site “China is playing an increas- Photographer) predict the outcome of experiments. sisting of a cash inflow of CHF 355 to Archroma. CEO is former DSM starting production in 2015. ingly important role in our growth million and the transfer of pensions Pharmaceutical Products President The announcement follows the strategy,” said AkzoNobel CEO Ton Sweden — The Nobel Prize in Chem- and other liabilities. Worldwide, Alexander Wessels. ▪ recent start-up of commercial pro- Buechner. istry 2013 has been awarded to duction of Bermocoll cellulose deriv- AkzoNobel currently employs three scientists in the U.S.: Martin atives at the company’s multi-site in more than 7,700 people in China, Karplus (Harvard University), Mi- Michael Levitt Ningbo, which will serve the growing including 500 in research and de- chael Levitt (Stanford University Stanford University demand from customers throughout velopment. School of Medicine) and Arieh War- School of Medicine Oman Oil Company Acquires Oxea the region, as well as from AkzoNo- (Photo Wiki Commons) shel (University of Southern Califor- bel’s own decorative paints business. ▪ nia). The Royal Swedish Academy Oman — The Oman Oil Company Oman is looking to strengthen its of Sciences has honored the three (OOC), a commercial company wholly position in the global chemicals sec- for their work in the development owned by Oman, will buy Oxo chemi- tor, particularly though its economic of multiscale models for complex cals maker Oxea from private equity development program Vision 2020. Teva Announces 5,000 Job Cuts chemical systems. The scientists Arieh Warshel company Advent International for an The initiative is aimed at diversify- have paved the way for computer University of Southern undisclosed amount. With 1.3 million ing the economy across a variety of PHARMA Generics Maker Falls in Line with Other Companies simulations that are now key in California tons of Oxo chemicals and deriva- industrial and commercial activities (Photo Wiki Commons) studying chemical reactions; they tives each year, Oxea generated sales in Oman and abroad while decreas- Teva Pharmaceutical Industries will cut including Pfizer, AstraZeneca and have devised methods that use both of around €1.5 billion in 2012. ing dependence on oil. Sanofi have also slashed staff num- ▪ about 5,000 jobs, 10% of its workforce, classical and quantum physics. For Karplus, born in 1930 in Vienna, bers in recent years due to slowing instance, in simulations of how a is a dual citizen of the U.S. and Aus- accelerating a cost-cutting plan as it sales growth, often due to competi- drug couples to its target protein tria. Levitt was born in 1947 in Pre- prepares for lower-priced competition tion from cheaper generic medicines in the body, the computer performs toria in South Africa and is a dual — many of which are made by Teva. quantum theoretical calculations on citizen of the U.S. and the UK. War- Solvay to Build Bicarbonate for its best-selling drug. When Teva announced the cost- those atoms in the target protein shel is both a citizen of the U.S. and cutting plan in December, it said that interact with the drug. The rest Israel; he was born in 1940 in the Plant in Thailand Israel — The world’s largest mak- savings of $1.5-$2 billion would take of the large protein is simulated us- kibbuz Sde-Nahum in present-day er of generic drugs by sales said place over five years and it was un- ing less demanding classic physics. Israel. (bhs) ▪ Thailand — Solvay recently an- products from the region’s dynamic it expects its overall cost-cutting clear how many jobs would be lost. nounced plans to build Southeast healthcare and food markets, the program to save about $2 billion a Now the company has said the Asia’s largest sodium bicarbonate company said in a statement. year by the end of 2017. Teva is the savings would be at the top of Petronas Awards Order to Hyundai plant in Thailand on its existing site Solvay will invest €20 million in latest in a string of big drug mak- that range. It said $1 billion would in Map Ta Phut Industrial Estate the plant due for start-up in the first ers to take an ax to costs. Merck come by the end of 2014 and 70% Malaysia — Hyundai Heavy Indus- ronas. The South Korean shipbuilder (Rayong province, Thailand). With half of 2015 to supply its Bicar prod- & Co has said it would cut annual by the end of 2015. The majority of tries has won a $850 million order said in a statement the carriers are a total planned capacity of 100,000 uct range throughout the region. operating costs by $2.5 billion and the savings will come from a reduc- to build four liquefied natural gas scheduled to be delivered from the t/a, this new facility will help meet The project is fully supported by the eliminate 8,500 jobs, or more than tion in the company’s cost of goods, (LNG) carriers from Malaysia’s Pet- second half of 2016. ▪ the growing demand for high quality Board of Investment in Thailand. ▪ 10% of its global workforce. Others it said. ▪

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Searching for Targets in China Acquisitions Gives Local Access to Foreign Chemical Companies

Deals are Worth the Trouble – quality, long lists of targets. China’s chemical markets are notoriously With the ever-increasing importance of fragmented and fast-moving — the the Chinese market, foreign chemical market participants change rapidly, Dr. Kai Pflug companies obviously have a strong in- and it is not easy to get reliable data. CEO, The best approach is not to rely on Management Consulting terest in buying local players. As a con- a single database but utilize a vari- Sanofi Interested in Buying Back L’Oreal’s $12 Billion Stake sequence, China leads chemical M&A ety of sources, e.g., databases from Repurchasing L’Oreal’s 9% stake in Sanofi might make sense for the strengthen the local market position, different providers, sourcing sites, French drugmaker if the $12 billion holding is put up for sale, Sanofi’s chief activity in the BRIC countries (Brazil, add local production capacity and market studies, expert interviews, executive said. Chris Viehbacher told an investor conference the group Russia, India and China), accounting for pursue lower-end markets. In con- etc. Hints from the own sales staff had the resources to do “opportunistic” share buybacks, as well as mak- two-thirds of deal volume in the first trast, chemical acquisitions by MNCs may highlight some particularly ing bolt-on acquisitions and potentially increasing its stake in U.S. biotech

are rarely used to enter completely promising targets. On the other hand, Klent — Fotolia © Alex firm Regeneron Pharmaceuticals. Speculation over the fate of L’Oreal’s quarter of 2013, with six transactions new markets, or markets with weak the resulting long lists will contain a stake in Sanofi has been fuelled by comments from L’Oreal’s CEO, who worth more than $50 million. starting position. For example, be- large number of companies that are said in August that the cosmetics company could buy back the $30 billion fore AkzoNobel bought Boxing Oleo- either only traders of the relevant stake Nestle holds in it if L’Oreal in turn sold the €9 billion stake it owns chemicals, it was already a leading chemicals or may not even exist at all in Sanofi. Asked about his potential interest in buying back L’Oreal’s stake, This is despite the many obstacles player in specialty surfactants. (not such a rare occurrence, either). Viehbacher said it was difficult to comment because the issue was highly for acquisitions in China. Good target The subsequent elimination pro- conditional. Viehbacher said he did not exclude other share buybacks, but companies are hard to find, and the Defining Selection Criteria cess should first focus on those cri- For example, for a specialty chemi- said these would depend on opportunities for acquisitions. Sanofi could majority of deals are initiated by pro- teria that are an absolute must and cals company we looked at about also look at raising its stake in Regeneron to as much as 30%. Sanofi prietary networks and brokers. The Once the decision to search for an 2,100 companies in a specific chem- holds about 16% of Regeneron and said in February it has the right to success rate for closing deals is much M&A target has been made, the se- ical segment. Elimination of import- increase this to a maximum 30% under its decade-long partnership with lower than in Western markets. lection criteria need to be defined ers and traders brought the num- Regeneron. “The Regeneron relationship has become extremely produc- based on the company strategy. This ber down to about 700, which we tive for us,” Viehbacher said. “Over time, it could well make sense to build Reasons to Go For Acquisitions will result in a variety of criteria that reduced to about 50 based on more our stake up to 30%. How fast we do that, whether or not we do that is may include, e.g.: specific criteria (particularly mini- a function of a number of different factors — but it is a bulky chunk of However, strategic investors — that ▪▪ Chemical subsegment (as men- mum sales size). Only at this stage money to use.” Regeneron’s market value is about $27 billion. is, companies already active in the tioned above, likely to be one in some of the criteria that are more chemical industry as opposed to which the acquirer is already difficult to assess (e.g., technology Huntsman Buying Rockwood’s Pigments Unit for $1.1 Billion equity investors — have a variety active — few Chinese chemical level, potential willingness to do a Huntsman is buying Rockwood Holdings’s titanium dioxide pigments of good reasons to acquire chemi- companies are technologically deal) were taken into account. The business for $1.1 billion cash, a deal that could mark the start of a long- cal businesses in China. Buying a attractive as stand-alone targets) top 10 targets were then prioritized expected shake-up in the volatile industry. The buyout, which is expected Chinese company may give a multi- ▪▪ Customer base (in particular re- GMP goes Asia with the management of our client, to close by June of next year, will make Huntsman second only to DuPont national corporation (MNC) access garding overlap/synergies with leading to a detailed profiling of ini- atop the market for titanium dioxide, a key white pigment used in paint, to local production facilities as well existing customers of the MNC tially five companies. sunscreen and myriad other consumer goods. Huntsman plans to spin as to key local accounts. In addition, — for example, AkzoNobel ac- off roughly 20% of the combined pigments business in an initial public Chinese companies often have a quired Prime Automotive Coat- GMP-Compliant Covering Targets in and out of China offering within two years of closing the deal. Huntsman would retain low-cost distribution network, which ings as this domestic company a majority stake in the new pigments business, Chief Executive Peter is particularly important for mid- served a lower market segment Projects On a side note, an interesting as- Huntsman said in an interview. The IPO would give investors the option market products, where distribution than AkzoNobel itself) pect of expanding the presence in to invest directly in either a Ti02 producer or the legacy Huntsman Corp, ▪▪ has a higher share of the total costs. Annual sales of the target (too- We bridge the gap with the Chinese chemical industry was which will have about $11 billion in annual sales after the offering and Such an acquisition may also allow large targets are not realistic highlighted by the recent acquisi- largely be a polyurethane foam producer. Huntsman’s shares have “been our German GMP-Expert execution of a two-brand strategy, while too-small targets may not tion of PCTS, a specialist in biocides disproportionately weighted to Ti02,” Peter Huntsman said. “This will be such as done by DSM in its acquisi- be worth the effort, often result- gempex and our Chinese for paints and coatings, by Lanxess. an opportunity for us to have investors that want to invest in pigments,” tion of ICD, a domestic producer of ing in a target sales range, e.g., local ofﬁces gemro Though the company is based in Sin- he said. Pigments prices, which are closely tied to the economy, have ultra-high molecular-weight poly- $10 million to $100 million U.S.) gapore, 60% of its sales are gener- started to rebound after five years of weak global demand and capacity ethylene (UHMWPE). It helped DSM ▪▪ Profitability (particularly relevant ated in China. This example shows increases that crimped pricing power. Producers have been trying to to fill some portfolio gaps and to add if acquiring company is margin www.gemro-services.com that a target search with the objec- restructure their titanium dioxide businesses to shield themselves from different price segments. By taking driven) www.gempex.de tive of expanding the China pres- swings in prices for the pigment used to whiten everything from sun- over existing facilities as well as cus- ▪▪ Regional focus (e.g., a foreign ence may also cover targets outside screen to toothpaste. Huntsman said the deal would give it 16% of global tomers, growth via acquisitions can company may want to strengthen of China. In some industries for titanium dioxide capacity, up from 10%. be much faster than organic growth. its business in the west of China) which the market has shifted mas- Overall, most of the recent acqui- ▪▪ Ownership type (private compa- at the same time fairly easy to as- sively toward Asia, even companies Total CEO Considers Increasing Its Asset Sales Target sitions of Chinese chemical companies are more likely to be suc- sess. For example, product groups located in Europe may be worthy Total may increase its target for asset sales to finance exploration and attain nies by MNCs were in the core area cessfully acquired than state- or annual sales of a domestic chem- targets given their share of exports its oil and gas production goals, the Wall Street Journal quoted the French of the MNC. Acquirers tend to be owned ones) ical company tend to be easier to to China. Such deals may also help company’s chief executive as saying. The oil major said earlier this year it global leading players in the respec- ▪▪ Company image and culture (as evaluate than the potential fit with avoid dealing with some of the spe- planned to sell assets worth $15 billion to $20 billion by 2014. “Depending tive areas, for example W.R. Grace, this will influence the later ease the culture of a Western company. In cific complexities of acquisitions in on how the plan goes and investors’ appetite, I am considering amending which in 2012 acquired the Chinese of integration) the later stages (once only a handful China. Acquiring Chinese assets of the target,” CEO Christophe de Margerie was quoted as saying, without Noblestar Catalysts, expanding its of target candidates remain), more multinational companies is another elaborating, in a report published on the Wall Street Journal’s website. He production footprint in fluid cracking Target Lists specific checks are vital, e.g.: option, an example being the re- said he was maintaining his objective of increasing oil and gas production catalysts, or CABB obtaining local ▪▪ Site visits cent acquisition of Bayer’s vitamin by an average of 3% a year between 2012 and 2015, the report said. production capacity through the ac- Once at least a few basic criteria ▪▪ In-depth analysis of products premix activities in Chengdu by the quisition (via joint venture) of mon- have been determined, one of the (e.g., quality, portfolio) Animal Nutrition and Health seg- BASF Announces Cash Offer to Acquire Verenium ochloroacetic acid producer Jinwei most difficult tasks in the whole ▪▪ Talks with customers ment of DSM. BASF said its American affiliate, BASF Corporation, has agreed to buy all the Huasheng. The overriding aim is to process is the preparation of high ▪▪ Factual checks of company data outstanding shares of common stock of biotech Verenium for $4 per share. Word of Caution The enterprise value is estimated at $62 million. The San Diego-based biotech generated sales of $57 million in 2012. In a statement, BASF said the Finally, a word of warning based on price corresponds to a premium of 56% above the volume-weighted average our project experience. It is unlikely share price for Verenium’s shares in the six months prior to announcement such a search will result in finding of the transaction. The acquisition is expected to close in the fourth quarter the perfect acquisition target. Often of 2013. BASF said it will finance the transaction out of operating cash. at least one aspect of the target will be less than ideal. In particular, few AkzoNobel: Phasing of Restructuring Charges between Q3 and Q4 2013 Chinese chemical companies can At the announcement of the Q2 results in July, AkzoNobel indicated that be integrated without major invest- it had identified further efficiency and cost saving measures that would ment in health, safety and environ- require €120 million of restructuring charges in the second half of 2013. ment (HSE) equipment. Only very In addition to the previously announced Performance Improvement Pro- few targets will be attractive from gram costs this made a total of €256 million of restructuring charges that a technology standpoint — and if so, were expected to be incurred in the second half of 2013. It is now expected they are likely to be part of larger, that the majority of these costs will be booked in the fourth quarter with less attractive operations. So a cer- over 20% to be booked in the third quarter. As previously indicated, the full tain readiness for compromise is year 2013 operating income is unlikely to exceed the €908 million of 2012. almost a precondition for an acquisition to eventually happen. Sabo Announces Agreement with BASF Sabo said it has entered into an agreement with BASF for a license of the Dr. Kai Pflug, management Chimassorb 2020 technology. Chimassorb 2020 combines exceptionally consulting — Chemicals high UV and long-term thermal stability in applications such as polypropylene fibers and tapes. Demand for solutions based on Chimassorb Dr. Werner Heil, Heil Yang Group 2020 has been steadily increasing, and the technology will grow as the product of choice for many applications.The acquisition of the license will further expand the product range of Sabo and complements the offer of 22 Contact: high molecular weight monomeric light stabilizers already produced by Dr. Kai Pflug Sabo in Bergamo, the company said in a statement. Management Consulting – Chemicals Hong Kong, China Oxea Expands Alcohol Portfolio to Include 3-Methylbutanol Tel.: +86 1 36 81 87 39 92 Chemical manufacturer Oxea said it is expanding its portfolio of higher [email protected] alcohols with 3-methylbutanol (isoamyl alcohol), a versatile intermediate www.mc-chemicals.com product for the chemical industry. Among others, it is an ingredient in the production of flavors and fragrances, cosmetics, fuel and lubricant additives and is used as a special solvent in the pharmaceutical industry, as well as in the paints and coatings industry. Oxea will manufacture 3 methylbutanol in Oberhausen, Germany. The product is already available bit.ly/CMI_China in commercial quantities. © alphaspirit - Fotolia.com

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The Lifeblood of Business Ashland on the Importance of Innovation

Transformer – It was one of the big- Additionally, we operate global What about nutraceuticals? How manufacturing plants under the important are those for your busi- gest headlines of 2011 — Ashland Clos- GMP standards, and our customers ness? es ISP Acquisition For $3.2 Billion. When depend on high-quality products. the Kentucky-based specialty chemicals J. Wolff: This is one of Can you tell me a little bit more the growing areas of company wrapped up the deal for Inter- about what your strategy is for en- our pharma business. national Specialty Products, it was also tering new markets? How much of There are something a role do joint ventures play versus like 1,800 nutraceuti- a turning point. Since the acquisition acquisitions? cal companies out there and integration of ISP, Ashland has been right now, and while our able to beef up its innovation and R&D J. Wolff: We are always looking for op- focus is not necessarily to go portunities to grow our business. We after everyone, there are clearly capabilities. Brandi Schuster spoke to closely examine both new and ex- targeted companies that are im- Jeff Wolff, Ashland’s group VP of Phar- isting markets and look for chances portant for us. This is going to be a

to expand our base. When we have very large industry by 2018, to the © M.studio - Fotolia.com maceutical and Nutrition Specialties, a new market of interest, we spend tune of hundreds of billions of dol- about the transformation. a lot of time to determine the best lars, and we see an opportunity for route of entry. This could include us to participate in it from a global CHEManager Europe: It’s been two Jeff Wolff, group VP of Pharmaceutical organic investments in personnel perspective. years since Ashland integrated ISP and Nutrition Specialties, Ashland or assets to enable entry. It could into the Ashland Aqualon Func- also include an inorganic approach 22 www.ashland.com tional Ingredients commercial gions of the world, both short and such as acquisitions, joint ventures, unit, creating Ashland Specialty long term. We’ve obviously seen tre- strategic alliances, etc. A host of Ingredients. Have the expectations mendous opportunity in Asia; we’ve factors come in to determining the been met so far? seen continuous growth there re- preferred approach, and we try to cently, and we expect that to con- be as flexible as possible to insure bit.ly/Ashland1 J. Wolff: The 2011 acquisition of ISP tinue, particularly in line with the long-term success. truly transformed Ashland into a increasing prevalence of diseases global specialty chemical company. and healthcare spending. Europe With the addition of ISP’s leading remains an important market for markets and personal care and us, as does North America. Our new pharma, we were able to double lab in Düsseldorf provides high-level the size of Ashland Specialty Ingre- technical support to Ashland’s Euro- dients. We also tripled our research pean pharmaceutical and nutraceu- and development scientists and sig- tical customers. In addition to the nificantly have increased our num- lab in Germany, we also have phar- FlexWall - The perfect fit ber of patents. We actually increased maceutical technology centers in our ability to penetrate the market- Buenos Aires, Argentina; São Paulo, place from an innovation perspec- Brazil; Shanghai, China; Hyderabad, tive. Today, ASI represents around India; Istanbul, Turkey; and Mexico 35% of the $8 billion in annual sales City, Mexico; and we will be opening for Ashland; it is absolutely a very a center of excellence in Wilmington, important part of Ashland today, and Delaware in the U.S. next summer. it was a very good acquisition. If you look at places like China or Tripling the number of R&D scien- India, it is difficult for companies tists must have really had an im- to get a foot in the door sometimes. pact on the company’s R&D clout. Do you have a specific strategy for What can you tell us about new in- those emerging markets in Asia? novations coming out of Ashland? J. Wolff: It’s important for us to grow J. Wolff: Innovation is really the life- in these regions. We have also made blood of our business, and our cus- people and lab investments. Ashland tomers expect us to make products is clearly looking at the emerging re- and technologies that will help them gions and examining what the right gain a competitive advantage in the approach is, be it people, lab invest- marketplace. This is one of the rea- ments or even acquisitions. sons we have double our investment in R&D spending. What are currently the main chal- Specifically, we have made some lenges facing Ashland in the phar- significant investments in the emerg- ma market and what does your ing markets, such as in India and company do to overcome them? China. We have put labs in place to support growth in these areas, spe- J. Wolff: One of the main challenges cifically around the technology part in the pharma market is the issue of our business. About 70% of our of solubility in APIs and how bio- current R&D projects involve work- available it is inside the body. We ing with customers on a collabora- are currently in the process of de- tive basis; this helps create value. veloping some new products in this area to address the needs of today’s What regions are most interesting formulators. When an active is be- for Ashland in terms of pharma, ing developed, our customers need both short and long term? to make sure that it is also soluble ® in the body, and Ashland has unique J. Wolff: There are attractive growth technology in this area, which puts FlexWall Plus - opportunities in almost all the re- us in a good position to help. ng lk i red the original for optimum u i e b n d t

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a Plus bulk ingredient feeding r Ineos Writes Down Value of Petchem P LOCATIONS Grangemouth Continues to Lose Money Even for poor flowing ingredients Oil refiner Ineos has written down the is effectively worthless. Without low- the FlexWall® Plus fit provides: er costs and an alternative source of value of its Grangemouth, UK petro- additional raw material it will close True mass flow due to chemical plant to zero, it said, further 2017, at the latest.” raising the stakes in a complex dispute Writing down the value of the patented trapezoidal shape plant could put pressure on the with workers at the facility. workers to accept lesser terms and Accurate feeding conditions in their dispute with Ineos. UK — The privately owned, Swiss- The Grangemouth petrochemi- Dependable performance based refining and chemical plant cal plant in Scotland is attached to owner Ineos said it had invested a 210,000 barrel per day refinery, more than £1 billion since taking which Ineos jointly owns with Pet- over at the Grangemouth plant in roChina. 2006, but that it continued to lose Oil traders are closely watching 50 years of experience in the development money. the dispute, as the refinery provides “We had no option but to write steam for a pipeline that brings of trend-setting weigh feeders. Brabender Technologie down these assets,” Calum MacLean, crude oil from the Forties North Sea chairman of the Grangemouth Pet- oilfield, one of the four crude grades Experts in bulk ingredient feeding FlexWall® is a registered trademark of rochemicals Business, said in a that underpins the Brent benchmark. Brabender Technologie GmbH & Co. KG www.brabender-technologie.com statement. “After four years of heavy losses, the petrochemicals business See also page 6 ▶

chemanager-online.com/en Page 6 MARKETS & COMPANIES CHEManager Europe 10/2013

Corporate Overhaul at Lonza New CEO Fine Tunes the Organization After Acquisition Phase

Strategic Maneuvers – When consolidate assets, but change its As part of a plan to reduce the already number one in anti-micro- approach from technology-driven number of worldwide locations from bials.” Richard Ridinger took over as CEO of Richard Ridinger became to market-driven. Lonza’s CEO in May 2012. the current 50, Lonza’s Swords, Alongside its strong position in Basel, Switzerland-based Lonza in May Along with strengthening the fi- Ireland, site, which manufactured fine chemicals and custom manufac- 2012, the 115-year old life science and nancial and organizatorial base, the biocides for anti-fouling paints and ture of pharmaceuticals, the com- goal of the efficiency scheme subse- metal-working fluids — another pany is also already an important chemical company with sales of just quently launched and slated to run Arch legacy — was shuttered in this player in water treatment. Currently under 4 billion Swiss francs was ripe until 2015 is to become more proac- year’s second quarter and produc- the focus is on recreational water, tive in its approach to the markets. tion moved to the U.S. and China. such as swimming pools, but - mus- for a major overhaul. Not only had the “Instead of developing a product The new corporate stratgey also tering its expertise in anti-bacterial latest economic crisis taken its toll on and trying to find a market for it, foresees phasing out some of the technologies - Lonza intends to customers and countries. The apprecia- in future we will first analyze the company’s activities in Hopkinton, move into public and industrial wa- markets, decide which products we Massachusetts in the U.S .and trans- ter treatment. tion of the Swiss franc against major can supply or develop and offer the ferring some microbial biologics “We will deepen our footprint currencies such as the euro and the customer solutions,” the CEO says. manufacturing operations to Visp, here within the next year,” Riding- Another of the foremost strate- where this business will be concen- er says, “utilizing technology we dollar was threatening its financial re- gic objectives in the post-acquisition trated in future.The VispChallenge already have in-house. Access to sources, and a spate of recent acquisi- phase is to become more productive. efficiency program, sharpening the clean water will become crucially tions had weakened its focus. Under its new leadership, the com- focus of Lonza’s largest site (begun important to the emerging middle pany’s entire operational structure, in 2011), is being continued. class in many countries.” Personal including sites and support func- care, where the new Lonza chief Through the first decade of the new tions, is being examined. Another Position in Life Sciences Pivotal can contribute his expertise from millennium, Lonza grew rapidly task will be to clearly define pri- Cognis, will also be a sharper focus. through acquisition, strengthening orities. “If we want to get closer to Most of the realignment so far has its life science position more than the markets, we will have to decide affected the chemicals side of the The Challenge of the Swiss Franc its specialty chemical activities. The which ones we want to be in,” says business. Retaining Lonza’s leading takeover of U.S. biocides special- Ridinger. position in life sciences, particularly An obstacle more difficult to sur- ist Arch Chemicals in 2011 was a From his experience at Cognis, Pharma & Biotech — which focuses mount, but still manageable none- watershed as it added one-third to the manager understands that “it is on supplying active ingredients to theless, Ridinger says, is operating Lonza’s size and shifted the focus possible to identify a target market pharmaceutical producers and cus- from a country that has the world’s back into a balance of the two very and become a leader. This proactive tom manufacturing of drugs — will hardest currency. But there are also different segments. But while adding approach is what I want to strength- be a pivotal point going forward. advantages to being in Switzerland, muscle and international presence, en at Lonza. The company has an From its leading berth in what he says. The economy is stable, the the company also gained unneeded excellent basis from which we can Ridinger has identified as the back- workforce highly qualified and loyal, bulk in some businesses not clearly improve our go-to-market skills. In bone of Lonza’s business, the com- the transportation infrastructure aligned with its desired profile. some segments we are already do- pany can leverage its strong tech- favorable and the relationship with After settling into the chief ex- ing this quite well. In others, we can nology base to enter new markets in local authorities amiable. ecutive’s chair, the now 55-year-old do better.” consumer markets and agricultural But “while this is a good place German citizen who was executive applications, sometimes with “only to be, all our sites need to be com- vice president of the care chemicals Making Progress minor” adjustments needed. For petitive,” Ridinger says, explaining segment and a member of the ex- both industries, we have the kno- the need for efficiency improve- ecutive board at Cognis prior to its After nearly a year of restructuring, whow to master a high technology ment scheme at Visp, which initially acquisition by BASF in 2011, quick- tangible progress has been made. In level, whether it is recombining pep- raised concern among the compa- ly went to work analyzing Lonza’s Q1 2013, Lonza successfully priced tides, microbial fermentation, mam- ny’s unions. portfolio, its production structure a 300 million Swiss franc-denomi- malian stem cells, or conjugation of When the ambitious company- and its approach to its markets to nated straight bond issue aimed at biological and chemical molecules.” wide realignment scheme is com- facilitate the needed reorganization. improving conditions. Core results pleted two years from now and the What he found was an unclear ori- for H1 2013 were better than ex- to determine their compatibility with The dissolution of the biosimi- The Importance of Global Megatrends new strategy firmly in place, where entation, a complex operation with pected, and the company is on track the new priorities. One non-core lars joint venture with lsraeli ge- will Lonza’s growth come from? “We too many sites and a business phi- to realize cost savings of 100 million business has been shed, another neric drugmaker Teva will allow the For its future orientation, the medi- will continue moving up the value losophy driven perhaps too heavily Swiss francs through efficiency im- carved out, a joint venture dissolved. company to concentrate on its core um-sized Swiss company —similar chain, and consider bolt-on acquisi- by technology. provements. A smaller European production site expertise in contract manufacturing in size to Ridinger’s former employ- tions to add new technologies where “Up to now, all the milestones has been closed and restructuring and cell line development without er Cognis — has identified several needed,” Ridinger says. One thing is A Market-Driven Approach have been met, and it is clear that of the company’s biggest site is in having to invest in areas not as stra- global megatrends such as health- certain, however. “We will not add we will get where we want to be,” progress. tegic, such as clinical development care, hygiene, nutrition, water more complexity.” Like many other players with a he says. To facilitate operational At the end of 2012, the U.S. per- and end-product commercializa- treatment and consumer products, traditionally strong science base, improvements, business teams are formance urethanes and organics tion. where the CEO says “we can make Dede Williams, Lonza’s approach to the market was being directed to the target markets, subsidiary in Brandenburg, Ken- This would have required more a difference.” freelance journalist, in Basel somewhat underdeveloped, Ridinger and administrative functions have tucky, a legacy of the Arch acquisi- capital than initially envisaged, “This will not of necessity take says. One thing was obvious: To sur- been grouped into regional business tion, was sold to Monument Chemi- Ridinger says. Another factor was into new directions,” he stresses. vive in an intensely competitive en- service centers. cal. A carve-out process for the wood the intensifying efforts of ethical While many companies now are vironment, the venerable company In other crucial steps, the num- treatment activities has been initi- pharmaceutical manufacturers to striving to develop skills in fermen- that began life in 1897 at Gampel on ber of reporting segments has been ated to facilitate a partnership or develop their own generic versions tation and biotechnology, Lonza the small river Lonza in the Swiss pared to two — Pharma & Biotech divestment. The latter was deemed of drugs coming off patent. This already has them and is physically canton Valais not only would have and Specialty Ingredients. Industrial not a core business for the future would have placed the company in present in the marketplace. In the bit.ly/CMI_Lonza to streamline its organization and businesses are now under scrutiny Lonza portfolio, Ridinger remarks. competition with its customers. specialty ingredients sector, “we are

UK Refinery Dispute Deepens as Ineos Snubs Conciliation Offer

UK — The Swiss-based oil refiner Separately, Unite said it had Ineos refused to go to independent agreed to discuss pensions, pay and arbitration in a dispute with workers conditions, and had submitted a at its Grangemouth refinery and pet- transition plan, which Ineos would rochemical plant in Scotland, increas- respond to by Thursday. ing the chances of a full-scale strike. “I’m not optimistic, but our of- Ineos and Unite, Britain’s largest fer shows that accusations from the trade union, have been engaged in company that we are ‘fiddling while a separate war of words about the Rome burns’ are untrue,” said Pat future of the petrochemical plant. Rafferty, regional secretary of Unite. Ineos recently announced a “sur- An Ineos spokesman said Unite vival plan” involving job cuts and had not come up with new proposals changes to pension plans to keep but that talks with the union on the the plant in operation. future of the plants were continuing. On Oct. 7, across the complex Ineos says cutting costs is crucial began working to rule and refusing to securing a loan guarantee from overtime in a dispute over Ineos’s the British Treasury of 125 million treatment of union organizer Ste- pounds, and a grant of £9 million phen Deans. from the Scottish government. The union said it could still es- It says it is investigating whether calate to a full strike, which would Deans’ political activities with the have serious implications for North Labor Party contravened company Sea supply as steam from the plant policies, and that it will announce helps to power the Forties pipeline. its findings on Oct. 25. Ineos on Tuesday morning turned The union says both the Labor down a union offer to take the dis- Party and the police have found no pute to the independent conciliation evidence of wrongdoing. service ACAS. The refinery that the chemical “We’re following due process plant is attached to is owned jointly with the investigation and that’s not by Ineos and PetroChina. ▪ concluded and, until it is, we don’t think there’s anything to go to ACAS about,” a spokesman for Ineos said. See also page 5 ▶

chemanager-online.com/en CHEManager Europe 10/2013 MARKETS & COMPANIES Page 7

From Explosives to APIs Xylene production, 1967 Dottikon Celebrates 100 Years of Transformation

Big Bang Beginning – In its Dr. Markus Blocher, 100-year existence, Swiss fine chemi- CEO and Chairman, Dottikon cal company Dottikon Exclusive Syn- thesis (Dottikon) has transformed itself from a company specialized in explosives to a manufacturer of high- quality performance chemicals, intermediates and exclusive APIs. Despite this rather extreme change in direction, the company has always had one constant: Its dedication to its one- site manufacturing strategy. Brandi Schuster asked CEO and Chairman Dr. Markus Blocher about the company’s unusual history and its unique position in the market.

Reactor trains 4 and 5, CHEManager Europe: How did Dot- multipurpose plant 10, 2010 tikon go from producing explosives to APIs? crisis by entering into the produc- with civilian explosives and distilla- site strategy and being located in skilled and qualified chemists. As What other regions of the world M. Blocher: In the beginning, Dottikon tion of gelatinized explosives made tion products. It became clear that Switzerland, arguably one of the performance leader, we are po- are of importance to your busi- — at that time called Schweizerische of nitroglycerine for civil purposes, SSF could not survive with its exist- most expensive places in the world sitioning ourselves as strategic ness? Sprengstoffabrik (SSF) — was active and the purification of aromatic iso- ing product range. A change in direc- to produce chemicals. development and manufacturing in the mixing and production pro- mers for highly purified products tion towards higher, multi-stage in- partner. Our safety culture created M. Blocher: Europe, with many coun- cessing of the powdered explosive through distillation and forward intermediates for agrochemicals, dyes, M. Blocher: Yes, for commodities that’s over the last 100 years guides inno- tries having a leading position in Aldorfit, used for tunnel construction. tegration into the manufacturing of pharmaceutical products and fra- true. But if you sell value for money, vative use of hazardous reactions, the arena of industrial engineering Due to the lack of raw materials dur- first chemical intermediates for the grances was gradually implemented cost-effectiveness is the right meas- low-temperature and high-pressure and precision technology, plays an ing World War I, the forced back inte- dye industry. over several years by extending the ure. chemistry, as well as continuous important role in supporting the U.S. gration into distillation of gasworks World War II also brought new core technologies with catalytic hy- processing. This allows us to short- innovation as well as the develop- tar waste was necessary to reclaim explosives such as hexogen and ni- drogenation and oxidation. Finally, What is the philosophy behind the en conventional chemical synthesis ment of emerging markets. The high toluene, as well as its nitration to pro- tropenta for military and later also there was a focused forward integra- strategy? routes, increase yields, selectivities standard of living and the ageing duce trinitrotoluene (TNT) – the ma- for civil purposes. However, after tion along the value chain to chemi- and purities, and reduce waste. The population are further stimulating jority of it for Swiss national defense. the war ended in 1945, a fruitless cal end products, particularly APIs. M. Blocher: Our production site in versatile technology and equipment the demand for APIs, high-value After the drop of military explo- attempt was made to compensate Dottikon, located in the canton of portfolio is used to design, develop and performance chemicals. These sives needs in the interwar years, for decreasing business with the Dottikon is one-of-a-kind in the Aargau, is specialized in hazard- and optimize chemical processes, positive economic factors are, how- the company found its way out of the confederation and the Swiss army chemical industry, with its one- ous reactions and employs highly and scale up from kilograms to ever, on the long-term thwarted by multi-tons. overwhelming bureaucracy, ever The combination of these factors increasing fiscal quotes and mis- at one site allows reduced decision leading and idealism-driven over- and communication pathways, en- regulation of labor and financial sures rapid and efficient project markets, as well as an energy and development as well as clear and environmental protection policy that transparent communication with is mainly based on extra charges customers and results over all in and their redistribution, hence miss- superior cost-effectiveness and re- ing effective environmental-friendly liability. impact.

At the beginning of April 2012 Dot- How big is the temptation to follow tikon founded an American coop- the trend to produce in low-cost eration, Dottikon ES America, Inc. countries? Does this mean the era of being a one-site manufacturer is coming M. Blocher: Nonexistent. We follow to an end? the principle of effective, not low- cost. It’s not only the price; perfor- M. Blocher: No. Dottikon ES America mance also counts. Our customers Ammonium nitrate drying trough in the beginning of Schweizerische Sprengstoff-Fabrik AG (SSF) in Laboratory can be seen behind automobile. Aldorfit plant is next to horse and cart, naphthalene is a business development-only seek effective value creation: It’s Dottikon plant is in the background. Chimneys of the boiler house are to the left of the toluene plant. company and was founded to meet about effectively solving challeng- the growing demands of business ing chemical problems and deliv- development there. Any opera- ering in full, on time, in spec and tional activities such as route find- at agreed costs. Given the trend of ing, process development, scale-up, regionalization, this becomes an process optimization, large-scale even more important and strategic production, validation, stability success factor. studies, recycling and waste treatment are performed in Dottikon, Where is the future of manufac- Switzerland, in line with our one turing in Europe heading? Do you site strategy. think it will pick up in the years to come? How important is the American market for Dottikon? M. Blocher: Success or failure of manufacturing in Europe is dependent M. Blocher: Although moderate, the on the willingness and ability of the U.S. economy is growing, and the political decision makers in each fundamental outlook looks promis- country to assure economically ing. In the context of competition beneficial framework conditions. for fiscal resources among different Education, labor, fiscal and environ- countries — and thereby the revival ment policies have to be set liberally, of trade barriers build-up — pow- farsightedly and sustainably. If these erful nations as the U.S. are in a requirements are met, effective and favorable position. Combined with reliable chemical manufacturing the risk-taking “can do” attitude, a in European countries will have a liberal job market and a long-term market and therefore a future. In energy policy focusing on secure such an environment, there will supply and economic prices, the be plenty of innovative customers U.S. is likely to maintain the unique willing to partner with a strategic competitive advantage in the long development and manufacturing run that will foster innovation and company having high performance re-industrialization. All these factors aspirations and strong technological favor the demand for high-value and skills such as Dottikon. performance chemicals; therefore, America is an increasingly important market for Dottikon.

Visit Dottikon at the CPhI, Oct. 22-24, Frankfurt bit.ly/Dottikon Hall 5 Booth C18

chemanager-online.com/en Page 8 MARKETS & COMPANIES CHEManager Europe 10/2013

Russia’s Booming Pharma Industry Eastern Europe Shows Great Promise for API Manufacture

Potential For Success – There is Number of API Manufacturers Based on Corporate Group Rating Fig. 1 great promise for innovative R&D, ge- Local Potential Future Less Established Established nerics and active pharmaceutical ingre- 45 dient (API) manufacture in Russia and 40 the countries that make up Central and 35 Eastern Europe (CEE). The development 30 plan for Russia’s Pharma 2020 outlines 25 a pathway towards an increase in inno- 20 vative drug development as well as do- 15 mestic manufacturing output for inter- 10 nal and export use. Generic medicines 5 will take up a majority of market volume © olgavolodina - Fotolia.com 0 Bulgaria Czech Hungary Romania Poland Slovenia Latvia Russia Ukraine Turkey Republic and approximately 20% or greater of

Source: Thomson Reuters Newport Premium © CHEManager Europe market value share. In response, there has been a cohort of companies seeking Thomson Reuters assesses the capabilities and experience of API manufacturers according to a pro- to start establishing platforms for proprietary scheme based on objective regulatory data. Companies range from those focused on supply- duction that will promote the initiative. ing their local market to companies with years of experience supplying highly regulated markets.

The Russian market is set to grow subsidiaries of larger multination Points To Address still less than 50 Russian-owned Total Number of API Manufacturers in Russia & CEE Fig. 2 at twice the pace of the global phar- corporations (MNCs), these coun- companies with the capability to Compared to Rest of BRIC Countries maceutical market, with growth es- tries have the most experience in With any of the emerging markets, produce API and only a fraction of timates around 10-15% annually producing pharmaceuticals for their there are barriers to entry. Russia’s finished-dose companies when com- reaching an approximate market regions. The CEE region also can regulations differ from the rest of the pared to India and China (figs. 2-3). Russia & CEE Brazil India China value of $43-60 billion by 2020 serve as a contract manufacturing CEE region, and many of these coun- while the rest of the CEE forecasts and research hub as well. Based on tries have been trying to improve Looking Ahead exceptional growth as well. The data from Thomson Reuters Cortellis regulation and authorization proce- 98 36 Russian government intends to in- Clinical Trials Intelligence, there are dures. In part with the groundwork Russia and CEE might seem over- vest over $3.9 billion to incentivize currently over 2,260 clinical trials in laid out by the New Collaboration shadowed by the number of API 615 companies to increase total domes- phases I-III within this region. The Agreement between Drug Regulato- manufacturers in India and China, 1129 tic medicine sales and production to leading CRO locations are Poland ry Authorities in Central and Eastern but it also contains room for compa- a level of 50% or greater within the with 682; Russia with 642; Czech Re- European Countries or (nCADREAC). nies to set up infrastructure in the Russian pharmaceutical market. public with 505; and finally Hungary In order for pharmaceutical compa- coming years and establish them- The most promising CEE markets, with 431 ongoing trials. nies to continue their investment, selves, especially for clinical trials. based on market size and potential however, the Russian regulatory Clinical trials and R&D spending revenue, include Poland, Romania, Recent Investments into Infrastructure authority must continue to improve have traditionally been an inherent Hungary and the Czech Republic. upon the Law on the Circulation of necessity for drug development by With a number of developed com- With the promise of government Medicines passed in 2010. It cur- the pharmaceutical industry, but Source: Thomson Reuters Newport Premium © CHEManager Europe panies like Zentiva (Sanofi), Gedeon funding and several tax incentives, rently stands that if a drug maker these future costs will need to be Richter, Polpharma, Egis and other there has been an increase in recent wants to register a generic medicine contained and countries within the investments into the CEE and Russian in Russia, that bioequivalence stud- CEE offer a skilled workforce with a regions. Cadila Pharmaceuticals has ies must be repeated in Russia and less costly location to do so, in com- vouched to setup a new manufactur- also that the reference drug should parison to Western Europe and the ing plant in Russia’s Astrakhan region be purchased at the local level. This U.S. Patients are often more willing at a cost of $150 million that will most could inflate the cost of registering to participate in clinical trials for ac- likely be for API manufacture. Addi- products drastically. cess to newer medicines and thus tionally, MSD (Merck) and Akrikhin Historically, there have been in- the recruitment process is overall just extended their line of local pro- tellectual property and transpar- quicker than in western countries. duction to include five additional MSD ency issues as well, which hopefully As the population ages and the drugs covering therapeutic areas in- will be alleviated with Russia’s as- middle class expands, the most including diabetes and asthma that will cension into the World Trade Or- fluential therapeutic segments will start in the beginning of 2014. ganization (WTO) and the creation typically be oncology and cardiovas- The news of Pharmstandard’s re- of a specialized IP court earlier this cular medicines for these regions. cent acquisition of Singapore’s Bever year in February. There are some If the Russian government con- Pharmaceutical shows a shift in men- additional barriers that will ensnare tinues to provide funding and can tality that not every company will try companies looking to produce such improve upon regulations that will to position API manufacturing at the as protectionist penalties, which invite foreign investors to support local level. It is likely that Russia will directly go against standards of domestic production of pharma- continue to rely on companies in In- the WTO. The ban that is being ad- ceuticals, Russia could become a dia and China to aid in the materials dressed would block participation of renowned hub for the industry. and imports needed to produce many foreign pharmaceutical companies of its drugs. Most of the substances with respect to the tenders for the Joshua Gilpatrick Pharmaceuti- needed for pharmaceutical produc- public procurement of medicines. cal Research Analyst, Thomson tion are still being imported at this This is only the case when there is Reuters time, but this may start to decrease a presence of at least two similar as other major drug companies build therapeutic drugs produced by local 22 Contact: capable plants in these regions. Fig- manufacturers already available to Joshua Gilpatrick ure 1 shows some of the other no- the market. Although protectionist Thomson Reuters table deals, which are comprised efforts may deter interested compa- Portland, Maine, U.S. Ashland — your full-service pharmaceutical technology resource mostly of manufacturing investments nies, Russia and certain CEE coun- Tel.: +1 207 871 9700 ext 18 Delivering pharmaceutical and nutraceutical performance and joint ventures into these regions. tries will also need to consolidate [email protected] Joint ventures into Russia and CEE and revise internal reimbursement thomsonreuters.com are necessary in order to create a re- schemes to allow pharmaceutical Ashland meets formulators’ needs by providing an • Polyplasdone™ crospovidone lationship with local parties, in order companies to time the release and unparalleled range of excipients and technologies, as to utilize expertise in their respective pricing of drugs appropriately. • Aquarius™ film coating systems bit.ly/CMI_Russia well as longstanding polymer expertise and technical territories and also circumvent lan- Along with the issues mentioned • Benecel™ methylcellulose and hypromellose (HPMC) guage constraints (fig.1). above comes the fact that there are support from benchtop to commercialization for • Benecel™ HPMC custom grades controlled-release formulations, drug solubilization, and Company Investment / Target Value (U.S. $) Details tablet binding, film coating and disintegration. • Natrosol™ hydroxyethylcellulose (HEC) Teva Manufacturing Plant in $50 million Oral Dosage forms; expected commercial production Q2 2015 Ashland offers both cellulosic- and vinyl pyrrolidone- • Aqualon™ ethylcellulose (EC) Yaroslavl, Russia based polymers and provides innovative solutions for a • Aqualon™ and Blanose™ sodium Aurobindo JV with OJSC DIOD Undisclosed OTC products in Russia and also sourcing penicillins, broad array of active pharmaceutical ingredients. carboxymethylcellulose (CMC) cephalosporins to Kazakhstan and Belarus • Introducing AquaSolve™ (AquaSolve AS™ in the • Pharmasolve™ N-methyl-2-pyrrolidone NovaMedica JV with RUSNANO to build $85 million Also inted to invest upwards of $760 million in emerging life United Kingdom) hypromellose acetate succinate • Cavamax*, Cavitron™ and Cavasol* cyclodextrins manufacturing plant sciences companies (HPMCAS) Takeda Manufacturing Plant in $95 million Fully operational in 2014, plans to produce Cardiomagnyl For more information, please contact your local • Introducing directly compressible Benecel™ DC HPMC Yaroslavl, Russia and Actovegin Ashland Specialty Ingredients representative or visit AstraZeneca Kaluga Region Plant $187 million Planned production near end of 2014 • Klucel™ hydroxypropylcellulose (HPC) us at ashland.com/cm/pharmaceutical. • Plasdone™ povidone and copovidone Abbott Laboratories Petrovax & PharmaStandard Approx. $300 million Developing influenza vaccine Visit Ashland at CPhI Worldwide • Hall 6.1, Booth 61B38 Bayer JV with Medsintez Undisclosed Moxifloxacin, ciprofloxacin, and nimodipine Novo Nordisk Insulin Plant in Kaluga Region $100 million Expected start of manufacture 2014 Sanofi-Aventis ChemRar innovative drug Undisclosed 18 month agreement partnerships

® Registered trademark, Ashland or its subsidiaries, registered in various countries Recordati Acquisition of Poland $22.5 million Produce cardiovascular and urological medicines as well as ™ Trademark, Ashland or its subsidiaries, registered in various countries * Registered trademark owned by Wacker Chemie AG. Ashland Inc. acts as a worldwide distributor for Wacker. © 2013, Ashland Farma-Projekt dietary supplements AD-12580 Zentiva Into current plant in Bucharest $12 million Due to an increase in exports to Germany and the UK this year Teva Plant in Gödöllő, Hungary $110 million Sterile injectable plant mainly for cytotoxic drugs

chemanager-online.com/en CHEManager Europe 10/2013 MARKETS & COMPANIES Page 9

Here Comes The Bribe Endemic Corruption Holds Back Emerging Markets

Barrier To Business – One of the Development Bank report found willingness on both sides of this that the average customs trans- transaction. defining trends of the past three dec- action involves 30-40 different ades has been globalization. In order © babimu - Fotolia.com parties, 40 documents, John Manners-Bell to take advantage of low-cost labor 200 individual pieces This article has been excerpted CEO, of data (30 of which from John Manners-Bell’s forth- Transport Intelligence in emerging economies, companies are repeated at coming book, “Global Supply Chain have unbundled production process- least 30 times) Risk: Understanding Emerging in 69th position, followed by China and the rekey- Threats to Global Supply Chains,” es and outsourced manufacturing to in 80th. India was 94th and Russia ing of 60%-70% published by Kogan Page. remote markets. As economies, such lagged behind in 133rd position. of data at least as China, move from “emerging” to Given the importance of these once. This is not John Manners-Bell, CEO, Transport countries to the logistics sector, it only an issue Intelligence “emerged” status, manufacturers is not surprising that international on the importing seek new, even more remote markets freight forwarders have run into side of the bor- 22 Contact: trouble when attempting to do der — there are controls John Manners-Bell to take advantage of lower rates of business in them. Nigeria, a to go through on the exporting Transport Intelligence pay. Such countries may be unstable, country with massive potential side, too, doubling the bureau- London, UK have a fragile security situation, and for economic growth, appears at cracy. Waiting time for a truck at [email protected] 139th in the list. a border crossing can be anything www.transportintelligence.com weak legislative and judicial systems, up to three days. Customs clear- factors that have allowed corruption High Standards, Low Corruption ance adds an estimated $185 for each day delayed to the cost of a to become endemic in society and At the other end of the spectrum, consignment. It is for this reason government. some countries in emerging regions that many shippers prefer to bribe have exceptional records in ad- customs officials to cut the process bit.ly/CMI_Logistics One of the little-understood impli- dressing corruption. The two most short. Of course there has to be a cations of this trend has been the outstanding are Singapore (fifth) exposure to corrupt practices that and Hong Kong (14th), both of which companies face when establishing have high regulatory standards and operations in emerging markets. governance. In the Middle East, the This not only applies to manufac- United Arab Emirates performs turers but also to the logistics com- best (27th). It is no coincidence that panies they employ. these three countries have very successfully transformed themselves Obstacle To Development into global logistics hubs, with efficient administration and customs Although corruption is not a sub- processes largely untroubled by cor- ject many companies are happy ruption. to discuss, there is no doubting its One of the reasons the logistics importance. Corruption has been industry — and freight forwarding identified as the leading barrier to in particular — is so vulnerable to conducting business in 22 out of corruption is its close engagement 144 economies, according to the with customs officials. In the de- World Economic Forum’s Global veloping world, government em- Competitiveness Report. In fact the ployees are often poorly paid, and WEF describes corruption — the there is an understanding that they in the jungle widespread and deep-rooted abuse will make their wages up from “fa- Lost of entrusted power for private gain cilitation” payments made by for- — as the single greatest obstacle to warding and express companies economic and social development to ensure fast clearance of goods. of hazardous substances? around the world. This includes In many countries, particularly in fraud, bribery and kickbacks but Africa (but certainly not restricted can also include in other contexts to the continent), corruption is so non-financial forms of corruption, deeply ingrained in the system that such as preferential treatment in it is seen as an operational cost to the assistance or hiring processes be absorbed within the cost of mov- for family members or friends, or ing goods. even the intimidation of staff to turn In any case, customs corruption a blind eye to illegal acts. is a two-way problem. Not only do Part of the problem is cultural. customs offices attempt to solicit In many parts of the world kinships bribes, but they are also the targets and affinity to social networks are of bribes from organized crime, at- more important than in the West; tempting to smuggle goods across therefore, it seems perfectly legiti- borders, and in some cases private- mate to provide job opportunities sector companies; the involvement or kickbacks to friends and fam- of the latter organizations is by far ily. Even in the EU this can be a the most frequent as companies at- problem, especially on the eastern tempt to expedite slow bureaucratic border. For instance, the Russian processes. ethnic community on both sides An investigation by Indian au- of the Russian/Latvian border has thorities found that the number of been identified as being complicit people involved in bribery schemes in organized smuggling networks, goes far beyond just logistics com- and the border officials are drawn panies and customs offices. In one from the local community. Bribery instance it was estimated that 100 is often not needed to ensure that people at Nhava Sheva port, Mum- a customs officer turns a blind eye, bai, were involved, including mid- as a culture of exchange of favors dlemen and couriers collecting already exists. bribes and delivering them to the Visit us at the A+A Düsseldorf According to a survey by Trans- officers. Couriers may even take parency International, a consultancy money directly to officers’ home- 5th – 8th November 2013 involved in highlighting corruption towns or villages and give it directly Halle 6, Booth E 15 on a global basis, emerging markets to their families. score particularly badly in terms of In Africa, customs corruption af- perceived levels of public sector cor- fects local traders and international ruption. shippers alike. Cross-border activity Countries highlighted by the or- in parts of West Africa is character- ganization for high levels of corrup- ized by the endemic payment of tion include Somalia, North Korea, bribes and harassment. A common Keep on the track to safety - with Dräger. Afghanistan, Myanmar and Sudan catch phrase of customs officials is, When working with dangerous substances, you and your employees have to negotiate a multitude of different challenges. New — the bottom five in the ranking of “Sans argent, on ne passe pas.” applications, regulations and substance compositions demand reliable solutions. Therefore let Dräger be your guide. With our 174 countries. This is perhaps not One of the problems highlighted track record and experience of on-the-job-safety, Dräger is well equipped to satisfy your exacting requirements. From personal surprising given that these countries about trade with Nigeria has been protective clothing and innovative gas measuring technology to respiratory protection equipment and service solutions that keep could all be classified as failed or the length of the restricted goods you on the right track, we’ll make sure you make it through the jungle safely. on the verge of failing. Central Asian list, which prohibits or limits the countries such as Tajikistan, Uzbeki- importation of goods from neigh- stan and Turkmenistan all perform boring countries. This means that FOR MORE INFORMATION: WWW.DRAEGER.COM/JUNGLE poorly as well. smuggling of these goods is rife, and However, it is perhaps more in- so is the payment of customs officers teresting to look at the performance by organized crime. of the major emerging countries — for example, those included in Time And Money the BRIC group. On a list of 174 countries, Brazil had the “cleanest” Another problem is the extent of public sector of the four appearing bureaucracy and delays. An African

chemanager-online.com/en Page 10 MARKETS & COMPANIES CHEManager Europe 10/2013

Refreshing Chemical Distribution Azelis Sets Out to Drive Future Growth Plans with a Different Way of Doing Business

Development and Growth – At the end of April, specialty chemicals dis- I strongly believe though, that the Having worked for chemical pro- the expertise to develop inventive time of just “going with the flow” is ducers in the past you know both formulations. tributor Azelis, which has an annual turnover of €1.1 billion announced that it had gone. You need to have a clear-cut sides of the fence. What are the So firstly, we can help our princi- successfully secured a refinancing package for a further three years. In addition strategy to decide what you want to success factors of a good relation- pals learn what the trends are and the company’s main shareholder, private equity investor 3i, has provided further accomplish and where you want to ship between a chemical distribu- secondly, we are able to ensure that go. In Latin America, even though tor and a chemical producer? their products are embedded in for- equity support of €10 million. The deal that provides Azelis with strengthened these are very attractive econo- mulations that are then offered to liquidity and financial resources reflects exceptional support from the banking mies, there are several people al- Dr. H.-J. Mueller: The essential success customers. This is a service very ready playing. The same applies to factors, like almost everywhere much appreciated. We develop new community and from 3i for the business plan proposed by the new manage- the U.S.: we have a representation in life, are openness and trust. As ways to create value for our part- ment around Dr. Hans-Joachim Mueller. The former executive at Swiss specialty in Canada, which is doing well, but a chemical distributor, we have to ners, and through our experienced chemicals group Clariant and German chemical company Süd Chemie became going into the U.S., which is the align our strategy with the strategy people we introduce fresh ideas most mature distribution market for of our principals, which we do on and innovative products to benefit CEO of the Azelis Group a year ago. CHEManager Europe’s Dr. Michael Reubold chemicals you can think of, is not a regular basis. This sometimes can both our customers and principals. spoke with Dr. Mueller about what the new leadership team has achieved so far somewhere we would really enter be a little bit of a challenge because Thus, we believe that we have a into at this time. different principals can have vary- refreshing approach to chemical and about his strategy to further develop and grow the business. After Southeast Asia we are con- ing strategies and we need to amal- distribution. sidering to move more into Africa. gamate them into one approach that Although the African market is still satisfies the ambitions of all. That Would you say that for distribu- Dr. Hans-Joachim Mueller, very fragmented and distribution is said, overall our partners have the tors, who usually don’t have prod- CEO, Azelis Group difficult, we have seen good growth ambition to grow, so for us this is the uct brands and production facili- rates in economies like Angola, Ken- common denominator and the basis ties, the most important assets are CHEManager Europe: Azelis has need to develop further, and know- For instance in China, in addition ya and Nigeria in the last couple of of a relationship that creates value market knowledge and the skills of gone through some restructuring. ing the principals we need to get on to our headquarters in Shanghai, we years. So we will further determine for our partners. your people? What are key changes that have board, to be even stronger along this have representations in Guangzhou whether it makes sense for us and been made, recently? market driven lateral value chain. in the south and in the Chaoyang for our partners to be represented At the Fecc annual congress, del- Dr. H.-J. Mueller: It is most definitely Why do we want to have that? As District of Beijing in the north. We in those countries. egates discussed the role of dis- our people. They are the real asset Dr. H.-J. Mueller: I wouldn’t call it re- the company is geared for growth, will also be rolling out into the west tributors in driving innovation in of a distributor. As said, we don’t structuring because that sounds as we have well defined growth objec- of China, because we believe there Does the refinancing give you a the supply chain. How do you see have any production facilities, so though we were only cutting costs, tives with clear-cut responsibilities is extensive untapped potential for solid basis for these future invest- this role? we need to make sure that the as- which was not our prime focus: This on who is driving the business from distribution there. ments and expansions? sets we offer to our partners are is most definitely to generate profit- a financial point of view: this takes In India we will also add more of- Dr. H.-J. Mueller: Outsourcing into dis- value-added, relevant and appreci- able growth. Azelis was established place in the countries because in fices as we are currently only repre- Dr. H.-J. Mueller: Absolutely. The whole tributors is growing in the chemical ated. And this is very much what we in 2001 and over time has grown distribution, where we aim to add sented in Mumbai. But we also need refinancing was done in light of industry. And that is partly because do have in Azelis, an understanding rapidly through acquisitions bring- value and be close to customers, to be in Delhi and in Hyderabad, and what we are trying to accomplish. the face time chemicals produc- that our value is in our knowledge- ing together over 37 specialist dis- we must have local managers in a will consider having a representa- We explained to our lenders what ers have with smaller B, C and D able people. tribution companies. country who run the business. Over tion in Trivandrum, Kerala. This is In 2008, new management was and above that, we have additional our role as a distributor, as a part- In the past “think globally, act brought in to build one streamlined personnel who oversee and drive ner for our principals, to channel We develop new ways to locally” was the formula for suc- organization, a one-brand Azelis principal development. These are their products into every corner create value for our partners. cess for chemical distributors. value system and a common ERP key people for business generation where there is a potential buyer. Is that still true or do you think platform. During this process a who have close interactions with our that meanwhile there are other number of internal activities were principals and with Azelis’ manag- Do you also look into other geog- we planned to do and then outlined customers — sometimes even with requirements and success factors? started. However, when you do this, ing directors in the countries. raphies like the Americas? what we needed to get there. We A customers — is diminishing. So quite naturally you can lose sight of were able to secure all the neces- when you don’t have direct cus- Dr. H.-J. Mueller: I think the statement external factors; thus our market Speaking of countries, will this Dr. H.-J. Mueller: We certainly do look sary funds in that refinancing so tomer contact, where do you learn as such is still very much true. focus was maybe not as good as it new strategy also increase Azelis’ into these markets, however, not we can take the necessary steps for what the market wants to have to- But there is a different facet that could have been. So at the end of geographic footprint? with the strategic ambition to ad- a successful future for Azelis, cen- morrow? Distributors facilitate a needs to be taken into considera- 2012 a new management team was dress them within the next two to tered on helping our principals to really close interaction between the tion. Clearly you always sell locally. brought in — Laurent Nataf as the Dr. H.-J. Mueller: Definitely, we will fur- three years. The distribution indus- grow in the markets we serve. principal and the customer. We are However, when it comes to knowl- COO, Martin Hollenhorst as the CFO, ther build on what we have in Eu- try, and this obviously has some- well placed to hear about a future edge and expertise, we also need and myself. We were entrusted to rope and also expand our reach into thing to do with how it was primed, trend in a certain market which we to have a more global approach. take Azelis to the next stage of its Asia. As we speak, we are active in is very much opportunistic driven. can then encourage our principal to For example, when we represent development by building on what India, have a fast-growing represen- As there were so many op- embark upon. a principal in one country and the was already established and to push tation in China and an established portunities in the past, On top of that, at Azelis we are same principal also entrusts us his more strongly into the markets we presence in Japan. Next we will roll companies’ cherry picked continually adding to our suite of business in another country; our serve. We aim to improve our of- out our activities into Southeast and there was no real need labs located worldwide, to carry customer-facing people across a fering to customers by fostering re- Asia by establishing three, maybe to have a rolled-out strategy. out formulation work for customers. market can interact and exchange lationships with existing principals four new distribution centers with- This is another value-added service their views on the USP of the prod- and forming sustainable relation- in less than two years. That doesn’t which is strongly pushed within uct and how to best position it. ships with new principals. mean that we will stop investing in our group. As we represent differ- This in turn results in more rapid the countries where we are already ent products from various principals market penetration, hence a clear Have you changed your market established, but vast countries with we can do things a manufacturer advantage in having this global approach in terms of the product several regional languages like Chi- cannot do: we can promote adja- perspective. This is also the prime portfolio you offer or the market na or India, just cannot be served cent products because our chem- driver I believe for expanding our segments you address? from one office. ists and chemical engineers have geographical reach.

Dr. H.-J. Mueller: No, there are still two Do you think that consolidation in markets we address. On one side, the chemical industry among the there is the chemical industry with producers of chemicals also affects segments like coatings, additives the chemical distribution indus- or homecare and cleaning. On the try? Do you see more challenges other side is the life sciences indus- from that or more opportunities try where we are active in pharma, for your company? food and health, personal care and to a lesser extent, animal nutrition. Dr. H.-J. Mueller: Certainly, when you So here we didn’t restructure, to consolidate as a producer and use that word, as an effective mar- reach the critical mass that allows ket driven organization already ex- you to have the lateral value chain isted. What we did do though, was in-house, then you may be tempted to better adapt our set up to deliver to move more away from distribu- on growth objectives: we focused tors. And yes, consolidation in the on developing a clear-cut strategy chemical industry is going to con- and securing refinancing to ensure tinue, because when you look on a that we have the means to really global scale, this is still a very, very grow in these markets in the years fragmented industry. Having said to come. So our prime focus for the that, I do not envisage this to be dis- first couple of months was really advantageous for us within the next refinancing. 20 to 30 years. There is still a great deal of innovation taking place in After you successfully accom- the industry, not necessarily com- plished the refinancing, you then ing from the biggest firms, but also focused on the strategy? from those challenging. There are many smaller firms coming up with Dr. H.-J. Mueller: Yes, after winning the new, game changing technologies. trust of the lenders, we started to So I do really believe that there is develop a strategy that will allow us great potential for the distribution to offer what we internally call the industry. lateral value chain to an industry. Offering a lateral value chain portfolio from A to Z into a market enables one-stop shopping for our customers and also demonstrates to principals that we are generating a pull. This is what we have addressed strategi- bit.ly/chem-distribution cally: identifying the principals we © alphaspirit - Fotolia.com

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Hidden Costs of Broken Supply Chains Tariffs are No Longer Biggest Barrier to Cross-Border Trade

In The Red Tape – For decades, requires full understanding and ply to your product or service? Are ment officials, or is there a history analysis of how supply chain bar- there preferential rules or regula- of random taxation, excessive fees governments and companies around riers affect return on investment. tions that give local companies an or other attempts to extract value the world focused almost exclusively Failing to anticipate the costs and advantage in the market? Will that from the private sector? Are the on tariffs as the biggest impediment to risks involved can wipe out the busi- affect your costs or competitive- rules and regulations that pertain to ness advantages of sourcing, oper- ness? your business clear and consistent? global trade. Today, tariffs are at a 30- ating or selling in foreign markets. Border administration. What Are there established procedures percentage of shipments will be infor working through them? year low, but trade remains seriously © Olivier Le Moal - Fotolia.com Moving Production To Mexico spected at the border, on average? All of these costs can be estimat- constrained. How does that compare with other ed to gauge the effect on potential Over the years, my colleagues markets? What is the typical delay investment returns. But if your team The chief culprit? The many ineffi- and I have worked with many time at a particular border or port, can’t provide definitive answers to ciencies, chokepoints and nontariff companies weighing the mer- and what will that cost in terms questions like these, moving forward barriers that hobble global supply its of moving production to of spoilage, theft or the need to can have real repercussions. chains and increase the costs of Mexico, particularly after stockpile additional invento- Global trade has increased trade. Companies ignore these bar- the North American Free ries? How often do border sharply in the past 30 years, and the riers and costs at their peril. Trade Agreement ended most officials demand “facilita- opening of markets long considered Many corporate leaders know of formal trade barriers on the tion payments” to move inaccessible has created rich oppor- these obstacles from direct experi- continent. In doing these goods efficiently? tunities for companies of all sizes in ence. For example, one diversified analyses, we have been able Are you prepared every industry. But the companies chemical company exports acetyl to quantify supply chain costs and for the reper- that get it right are the ones that and other products to the United understand how they affect a com- cussions of not identify and analyze the real cost of States. It needs approvals for every pany’s real return on invest- paying, includ- capturing the opportunities — and shipment from as many as five U.S. ment. ing potentially that avoid the mistake of going in regulatory agencies. The require- The benefits of invest- severe delays? unprepared. ment delays 30% of inbound ship- ing in Mexico are well- Telecom and trans- ments, often causing cancellations known. Hourly wage port infrastructure. Does the coun- In-depth graphics for this article- from customers who are fed up with rates are about one-fifth and risks into account, and as a try have an electronic system at the can be found online. waiting. of those in the U.S. Capi- result find themselves locked into border allowing shippers to declare How significant are such bar- tal expenditures related uneconomical production and goods in advance, speeding up pro- Gerry A. Mattios, expert principal, riers overall? Bain & Company, in to building facilities are typically marketing decisions. cessing? Are those systems reliable Bain & Company Australia and collaboration with the World Bank, 10% less than in the U.S. or Canada. and used consistently? How fast on Mark Gottfredson, partner, Bain analyzed the business implications Certain products — nonperishable traordinary measures to safeguard Finding Hidden Costs average are trucks or rail shipments & Company USA of nontariff supply chain barriers — items with high labor content and both its facilities and its goods in able to move to and from key ports? everything from border delays and high value-to-weight ratio — are transit — putting armed guards Supply chain barriers to trade are What are the common delays and 22 Contact: inconsistent product regulations to particularly well-suited for produc- on all trucks, for instance. Security both complex and widespread. A how costly are they? What special Gerry A. Mattios poor infrastructure and rampant tion in Mexico. measures alone can boost fixed comprehensive approach to foreign fees, licenses or other regulations do Bain & Company corruption. The analysis demon- A thorough analysis, however, costs by as much as 7% per year. investment decisions means recog- local authorities impose on truckers Sydney, Australia strates that reducing even a subset turns up a number of hidden costs Many companies have profitable nizing costs in four important cate- that add costs or slow the movement Tel: +61 2 9024 8600 of these obstructions could bring (fig. 2). Mexico’s lack of federal and operations in Mexico, and it might gories of the supply chain. Executive of goods? [email protected] about an increase in global gross provincial tax breaks can add 1% make sense for a manufacturer to teams can begin by asking some key Business environment. What are www.bain.com domestic product that is six times to investment costs up front. The establish a beachhead there. But questions relating to each category: the political and administrative re- greater than the potential increase lower productivity of Mexican hour- the key to all such decisions, regard- Market access. How many regu- alities in your chosen market, and from removing all tariffs. ly workers coupled with a lack of ing Mexico or any other country, is latory agencies will you have to deal how will that affect the ease and These findings have broad, long- automation means that a company to take a full accounting of all the with as you move goods into or out security of doing business there? term implications for policymakers: might have to boost staffing levels relevant costs and potential supply of your chosen market? What are Do businesses enjoy the support bit.ly/Supply-Chain They suggest that governments need 25%, erasing some of the labor-cost chain inefficiencies. the licensing regulations that ap- and encouragement of govern- to refocus efforts on creating sup- advantage. For instance, will delays force a ply chain efficiencies if they want to Transporting goods in Mexico is company to stockpile buffer inven- truly unlock the economic potential also a problem. Gaps in road and tories, tying up working capital and of global trade. For companies op- rail connections require shipments adding to direct costs such as ware- erating in international markets, the to travel extra distances, eating into housing? If so, what risks follow in message is more immediate. Mak- margins. Safety is a consideration the form of depreciation, spoilage expect more ing the right choices about where as well. High crime rates in Mexico or production bottlenecks? Com- and how to deploy assets globally might require a company to take ex- panies often fail to take these costs

Challenges in Healthcare Industry Pharma Logistics Expert Movianto Provides Solutions

CHEManager Europe: What ma- What is your main aim as Com- jor trends do you see in European mercial Director for Europe? healthcare and logistics? M.Steensen: Movianto should be top Innovation + Sustainability M.Steensen: The European healthcare of mind for healthcare companies market is, as many other industries, requiring the logistical solutions facing major challenges. Due to the which we offer and develop together financial crisis and cuts in health- with customers. And it is my job to care spending, we are seeing a lot of create the conditions to allow our consolidation in the form of merg- teammates to give our customers ers and acquisitions. Consequently, the best-possible service in this customers require easy access and competitive environment. Further- consistency in quality across the more, the European sales team co- whole of Europe, as operations ordinates with teammates across here can be quite complex. Other Europe in order to make us even segments within the healthcare more successful. industry, such as regional hospital Siegfried combines innovation distribution centers, are also look- What new services will you be of- ing to outsource their supply chain fering to clients? with sustainability to professionals. Marina Steensen, commercial director, Movianto M.Steensen: Our branded medical de- Bringing together our long-standing pharma and chemical heritage, our customers What is Movianto’s current situa- vice services are new, heavily sup- beneﬁ t from our innovative approach of an integrated supplier with more synergy, tion? Where is Movianto heading stra- ported by Owens & Minor. Our Eu- expertise and value. A combination of know-how and experience that is unique for tegically? ropean Distribution Center in Oss, in M.Steensen: Due to growing demand, the Netherlands, has recently been a supplier of development and manufacturing services. our customers in the healthcare in- M.Steensen: Many years of success in certified with the important ISO dustry require truly specialized and providing local solutions have made 13485 standard. Value-added ser- Expect more with Siegfried as your preferred partner centralized logistics service provid- us a truly pan-European provider vices are adapted to each client’s ers. Movianto was recently acquired of logistics in branded medical sup- needs – labeling, kitting and re- Siegfried at CPhI Frankfurt 2013 by Owens & Minor. This proved to be plies for pharmaceutical and health- packing, postponement and more. an excellent opportunity to merge care customers. Through processes Important to say is that we work You are most welcome to our booth 31H25/Hall 3.1 Owens & Minor’s capabilities in such as restructuring our acces- with our customers in meeting the from October 22–24, 2013 traditionaldistribution of branded sibility and centralization, we are challenges in the supply chain in an medical supplies with Movianto’s expanding our extensive European ever changing environment. strength in pharmaceutical logistics. coverage, as well as improving our The two cultures come together and accessibility for customers on a Eu- thrive as a result of the strengths of ropean level, all while continuing to www.siegfried.ch each, based on organizational align- put value to the local expertise our bit.ly/CMI_Logistics ment to customers’ requirements. teams have.

chemanager-online.com/en Page 12 MARKETS & COMPANIES CHEManager Europe 10/2013

Europe’s Largest Chemical Cluster Antwerp Continues to Invest in Chemical Industry

Gateway For Major Players – to invest strongly in expanding the of its glass fiber plant (€15 million), packaged chemicals. Experts from capacity of the oil and chemical starting up two pilot plants for de- the Port Authority and specialist With 40 square kilometers of chemical sectors. As a result, maritime trans- veloping environmentally friendly private companies examine ways industry housing the world’s major play- port for tank storage companies has chemical bands and investing in a in which the logistics handling of ers, the port of Antwerp may rightfully grown by 151% in the past 10 years. new polyamide plant that is due to packaged chemicals can be further Over the same period the number become operational in early 2014 improved. By bringing the port’s call itself the largest European chemi- of tank storage terminals has risen (€75 million). FRX Polymers is strong points further into line with cal cluster. Its central position with easy by 40%, to 15, while the total tank building a new production unit for the requirements of the chemical storage capacity has doubled to 6.3 a fire-resistant polymer (€20 mil- sector, better use can be made of the access to both German and French in- million cubic meters. The port of lion). Evonik Degussa is expand- port’s existing advantages. The Ex- dustrial hot spots and major local pro- Antwerp has Europe’s largest stor- ing the capacity of its methionine pertise Group also acts as a sound- duction of chemicals make Antwerp an age capacity for the petrochemical and MTBE production plants and ing board for the Port Authority for industry, with nearly 350,000 cubic is building additional facilities for the purpose of developing a proac- attractive facilitator for chemical com- meters of stainless steel tanks and producing butadiene. As a con- tive strategy aimed at expanding the panies worldwide. With continuous in- eight multi-customer plastics ter- sequence of this investment, the port’s market share in this sector in minals with a total storage capacity neighboring company Oiltanking a sustainable way. vestments, the port of Antwerp keeps of more than 430,000 cubic meters. Stolthaven Antwerp will invest in improving its capacity, with proper re- All these terminals operate to the additional facilities. Ineos Oxide Growing In Difficult Times spect for safety and the environment. highest standards (Safety, Security, has built a new ethylene terminal. Health, Environmental care and together with the huge pipeline and bulk carriers and the extensive Kuwait Petroleum International Figures show that between 2000 and Quality — SSHEQ) for storage and network, ensure fast, safe and envi- quadri-mode connections with the is modernizing its lubricating oil 2011 the total deep-sea traffic for Leading Chemical Companies value-added activities. ronmentally friendly transportation. hinterland mean that the stay in plant (€63 million). Sinopec has petroleum derivatives increased by This correlates very well with the port is very short. acquired a 50% stake in Vesta Ter- nearly 50%, and maritime flow of liq- Seven of the world’s top 10 chemical Important Nodal Point of requirements of the chemical com- The logistics service providers minals with the intention of further uid bulk for chemicals has more than companies have their plants here. European Pipeline Network panies under their Responsible Care active in the chemical sector are expanding it. Ferro expands its doubled. When we look at the evolu- Significant investments are under- scheme. world-renowned companies recog- plasticizer product line by invest- tion of cracking from 1973 until today, taken by the likes of majors such The port of Antwerp is the most im- nized for their high productivity and ing in dibenzoates manufacturing volumes have increased from 3 mil- as BASF, Total, Kuwait Petroleum, portant nodal point for the West Eu- Value-Added Logistics their innovative, flexible, customer- capacity. Praxair will build its sec- lion to 10 million tons. In 1973 there Lanxess and Evonik. These compa- ropean pipeline network. Pipelines oriented, no-nonsense approach. ond air separation plant expanding was still no desulfurization. Today the nies keep their plants in Antwerp offer a safe, reliable and environ- Players in the port of Antwerp offer The close connections with the its production capacity of industrial port of Antwerp has 36 million tons of competitive and at world-class ef- mentally friendly means of transport extensive value-added activities such largest chemical cluster in Europe gases. Praxair also announced its desulfurized product a year. ficiency levels. for the oil, chemical and energy sec- as breaking bulk and transferring ensure that customers in this sector investment in the extension of its It’s clear that even in today’s dif- tors to supply and distribute their containerized cargo to all possible enjoy state-of-the-art facilities and a pipeline system in the port of Ant- ficult times the port of Antwerp re- Deep-Sea Traffic in the Heart of Europe products in Belgium and neighbor- formats and sizes, blending, tolling, wide range of value-added activities werp. Indaver-MediPower is build- mains one of the best locations in the ing countries. labeling, heating/cooling, grinding, for packaged chemicals. ing a facility for environmentally world for the chemical industry. It Right in the center of the continent Within the Antwerp chemical and quality and quantity control, tem- friendly processing of medical and benefits greatly from continuous in- of Europe, the port of Antwerp con- petrochemical cluster, the manufac- perature-controlled warehouses, Continuous Investments sensitive waste. vestments, its strategic location and tinues to thrive. Its location is ideal turing and tank storage companies vendor-managed inventories, trans- The port itself also continues to comprehensive logistical services. because of the many industrial sites are connected by more than 100 port and distribution, etc. The port of The port leads not only in size, but make significant investments. One of The port has confidence in the at relatively short distances, which different product pipelines: Nearly Antwerp favors an open and compet- also in innovation matched with all the major ongoing projects is LNG- future and continues to invest to re- is of course very advantageous for 1,000 kilometers of pipelines trans- itive offer in logistics for chemicals in necessary investments, both private fueled traffic. Barge LNG bunkering main a key partner for the European transportation of chemicals. The port about 90% of the liquid prod- all stages of the value chain, tailored and public. has been available since 2012, and chemical industry. port also has easy access for deep- ucts within the port. to the customer’s needs. The three largest oil refineries Antwerp plans to have ship-to-ship sea ships. It can receive Triple E Antwerp, the largest producer of Goods are handled with efficiency in the port of Antwerp — Gunvor, bunkering ready by the year 2015. For in-depth graphics and more Class container ships and Class LR2 ethylene in Europe, is connected to and care, offering a high-quality ser- Total and ExxonMobil — together The port of Antwerp leads the In- photos, please see the article tankers. Its central position and easy the ARG network that supplies all vice. are investing billions of euros in ternational Association of Ports and online. access combined with a dense fore- the ethylene to the chemical indus- their Antwerp sites. BASF is build- Harbors’ (IAPH) workgroup on LNG- land and hinterland network make try in Belgium, Germany and the Combining Speed And Quality ing a butadiene extraction facility fueled traffic. 22 Contact: the port of Antwerp a great partner Netherlands. (for more than €100 million), ex- Rose-Marie Pype for the chemical industry. From Antwerp there are numer- The tailored handling of chemical panding its cyclohexanone capacity Expertise Group Antwerp Port Authority, ous pipelines to Terneuzen, Rot- products doesn’t slow down the (for about €10 million) and invest- Antwerp, Belgium Largest Chemical Storage Capacity in Europe terdam, Feluy and the Rhine/Ruhr transit of goods through the port ing in additional berthing facilities To further develop this growth po- area. in the least. The high productivity for unloading seagoing ships and tential, the Antwerp port community The Port Authority and the private The relatively short delivery dis- of dock labor, the port’s accessibil- barges (tens of millions of euros). has set up an Expertise Group fo- bit.ly/Antwerp1 sector have invested and continue tances within the port of Antwerp, ity for the very largest container Lanxess is expanding the capacity cusing on value-added activities for

Standardized Tests SQAS Has Assessed Logistics and Distributors for 21 years

Streamlined System – The service providers and distributors a sharp increase in the number of were issued this year: The SQAS/ The SQAS website allows the user improvement in safety and quality of the chemical industry in Europe. warehouses being assessed under ESAD 2012 Guidelines and the SQAS to carry out statistical analysis and standards. As such, it is inevitable chemical industry in Europe utilizes to SQAS provides a tool to assess the SQAS in recent years, with 170 Accreditation Manual. The first doc- generate meaningful data to find out that SQAS will develop over time. a large extent the logistics services of- quality, safety, security and environ- such facilities active in the database ument explains the main features of areas of improvement. The most sig- As long as chemical companies con- fered by third parties to store, handle mental management systems of logis- at the end of 2012. There is still a the SQAS system and the second the nificant value in such analysis is that tinue to use it as a source of infor- tics service providers and distributors growing trend, and another record rules for candidates to become SQAS it allows all assessed companies to mation to improve their knowledge and transport raw materials, interme- in a uniform manner by independ- in the number of SQAS assessments assessors and to maintain their ac- benchmark themselves against in- of their logistics service partners, it diates and finished chemical products. ent assessors, using a standardized is expected by the end of this year. creditation. The documents can be dustry at large. Each company can will continue to be a major element questionnaire. SQAS helps chemical downloaded from the SQAS website. see exactly where they lag behind in the ongoing process of improving The chemical industry also partners companies in the process of selecting Support from the Chemical Industry the industry average and, where safety standards in the transport of with chemical distributors as an es- logistics service providers or distribu- Checking L&D Performance there is not a good reason for such chemicals, on a global basis. sential route to certain customers. tors and in defining improvement ac- There are now 44 chemical compa- divergence, can target its resources tions with each of them. nies supporting and using SQAS, as Cefic has calculated the average toward improving its performance. Victor Antonio Trapani, An SQAS assessment by an inde- well as 18 chemical companies us- “yes” score for each subsection Each SQAS user can simultane- SQAS manager, Cefic Chemical companies need assur- pendent assessor does not lead to a ing ESAD. Ninety-five logistics com- of the different SQAS modules ously compare up to 15 assessment ance that these operations are car- certificate but results in a detailed panies and chemical distributors are (transport service, tank cleaning, reports, whether they refer to sub- 22 Contact: ried out in a safe and high-quality factual report, which each individual part of the Logistics & Distributors warehouses, rail operators and sidiaries of the same company or Victor Antonio Trapani manner with due regard for the pro- chemical company needs to evaluate (L&D) User Group, which all have distributors) and there is some different companies. Cefic tection of employees, the public and according to its own requirements. access to reports of other logistics consistency in those that have the Brussels, Belgium the environment. In the past, this SQAS includes five modules that companies when those reports are lowest scores. In broad terms, they SQAS in the World Tel.: + 32 2 676 73 85 assurance has often been obtained can be combined to cover the dif- authorized for release. Participation deal with service partners and con- [email protected] by individual chemical companies ferent activities of the company to in the L&D User Group is open to tractors, security, and the use of SQAS is also breaking out of its Eu- www.sqas.org undertaking periodic audits of their be assessed: transport service, tank any transport company or chemical behavior-based safety programs. ropean bounds and being taken up logistics service providers and dis- cleaning stations, warehouses, rail distributor that has been assessed Risk assessments and manage- by chemical trade organizations in tributors, leading to a fragmented operators and distributors (called under SQAS or ESAD. ment review are important areas other parts of the world. Local ver- approach and a multiplicity of audit- ESAD). And it is not only logistics service for improvement in tank cleaning sions of SQAS have been introduced ing programs, which was costly and providers who are being assessed. stations. For chemical distributors in Brazil, South Africa and China. inefficient for the chemical, trans- Growing Population In March of this year the European under the ESAD assessment, issues Cefic manages SQAS in Europe and port and distributor industries. Chemical Industry Council (Cefic) such as community interaction, it is supporting the development of A total of 814 assessments were undertook a survey about the qual- product stewardship of food prod- similar systems in other parts of the SQAS Basics made under SQAS and ESAD in ity of its assessors. A questionnaire ucts and the transport of unpacked world. New versions of two rel- 2012, a record number with increas- was sent to 93 assessed companies, food products are aspects to im- Cefic is currently helping Gulf evant documents related In 1992, the first trials of a pioneer es seen in Spain, the Netherlands randomly selected, of which 36 re- prove. It is notable that Cefic itself Petrochemical and Chemical Asso- to the SQAS system can system to assess haulers were car- and the UK. By the end of 2012 sponded. All of them rated the asses- is addressing some of these issues ciation (GPCA) to develop a SQAS be downloaded here. ried out. Twenty-one years later, there were 2,308 active reports in sors as good or excellent. The survey by issuing guidelines jointly with system in the Gulf Area. the Safety and Quality Assessment the SQAS database, of which 1,319 will be repeated again before the the European Chemical Transport An important part of SQAS, as System (SQAS) has obtained wide came from transport companies and end of this year. Association (ECTA) on, for instance, with all initiatives deriving from acceptance in standardizing as- more than half the remainder from New versions of two relevant doc- behavior-based safety and loading/ the Responsible Care program, bit.ly/CMI_Logistics sessment procedures for logistics cleaning stations. There has been uments related to the SQAS system unloading procedures. is that it should drive continuous

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Save your Stamps [email protected] www.nnepharmaplan.com CHEManager Europe 10/2013 Pharm a Page 13 Pharma Pharma Packaging K-Show 2013 Camelot’s Pharma Radar How counterfeits We’ve put the shows limitations can be stopped using spotlight on plasticizers of biosimilars. track and trace. and bioplastics.

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Expanding CMOs Companies Aim to Stand Out in Global Pharmaceutical Contract Manufacturing Market

Joining The Supply Chain – Pharmaceutical contract manufacturing Unmet Market Need Potential Game-Changing Strategy

used to be viewed as a one-off activity where a pharmaceutical company An integrated, end-to- Increased focus on preclinical development services such as formulation development, process support, pro- outsourced a drug for manufacturing predominantly because of capac- end business model on cess development, clinical trial manufacturing, analytical service and regulatory support in addition to the core a risk-sharing basis with custom manufacturing services is necessary to integrate into the value chain at early life-cycle stages and to ity constraints. clients build long-term relationship with clients. To attract more clients, certain CMOs likely will adopt a differentiation strategy that includes repositioning In recent times, however, Low-volume products such as themselves among clients by promoting more services such as formulation improvements, alternate dose for- there has been a para- niche products, orphan drugs and mulations, real-time order tracking, and logistics support. digm shift in the busi- generics as well as emerging mar- Patheon and DPT Laboratories have been two such leading CMOs that have positioned themselves as develop- ness model of contract kets present poor profit margins ment service providers capable of transitioning from offering clinical services to commercial manufacturing. manufacturers. They and lower inventories for CMOs, Instilling new capabili- Industry consolidation by means of acquisitions and strategic alliances to expand capabilities in new product have gone from one-off thereby resulting in price pressure ties and anticipating and service segments as well as new geographies has made Aenova one of the fastest-growing companies. manufacturing to in- and increased competition. The ex- capacity demand for Aenova’s foray into the liquid and semi-solid dose formulations segment by the acquisition of the Temmler tegrating themselves isting CMO business model can ad- into the supply chain of dress only the basic requirements careful outweighing of Group in 2012 has resulted in a significant increase of market shares and capacities to meet global demands. pharmaceutical com- of global pharmaceutical companies benefits and risks panies, right from the such as unit cost, technology, IP pro- Demand for next-gene- Because of increased focus of big pharma companies on biologics to address unmet needs in therapeutic areas early-stage activities, tection, cost flexibility, and security ration biological thera- such as oncology, the injectable-dose formulations segment — which is a low-volume, high-margin business including preformulation of supply. This model does not cater pies such as vaccines, — will likely be the growth driver for CMOs. design, process optimiza- to the restructuring costs (compen- anti-cancer therapies, Key focus areas in sterile manufacturing of injectable-dose formulations include vaccines, anti-cancer thera- tion, preclinical stage to sation arrangements and disposal of gene therapies, specia- pies, antibodies, gene therapies, specialized antibiotic treatments and proteins. commercial manufacturing, old facilities), financial effects (tax lized antibiotic treat- Hence, investments and capacity expansions in injectable-dose formulations manufacturing will help CMOs, fill-finish services, packag- implications, government subsidies ments and recom- particularly the small and medium-sized, to grow and sustain their businesses in the market. ing and logistics, regu- and exchange rate exposure) and binant proteins Cytotoxics and lyophilized products dispensed as injectable-dose formulations are expected to be a significant latory, analytical, and commercial demands (local market source of revenue for CMOs; therefore, more contract manufacturers likely will develop these capabilities. marketing support. approvals, portfolio and brand). Lack of venture capitalist (VC) Challenges of the Exist- funding for early-stage companies strong growth in the past five years, with overfilling of expensive drugs, CMO. But differentiation strategies ing CMO Business Model will result in lower expenditures with a compound annual growth rate thereby resulting in significant cost- such as repositioning themselves than prerecession levels. (CAGR) of 18.7% from 2007 to 2012. savings. This likely will be a major among clients, capturing projects Fragmented market and A majority of VC firms prefer in- The significant growth for injectable- driver for outsourcing to CMOs. at early life-cycle stages and en- price pressure drive down vesting in companies with promising dose formulations is expected to con- Other factors driving the growth trenching an integrated end-to-end CMO revenues. late-stage (phase II and phase III) tinue in the next five years attributed of the injectable-dose formulations business model are likely to pave the The pharmaceutical drug candidates than in early-stage to the following key factors: segment include rapid onset of ac- way for growth and sustenance in contract manufacturing companies. The United States and The highly sterile and aseptic tion, better therapeutic efficacy and a market as highly fragmented and market remains highly Asia seem to be more attractive tar- conditions and skilled personnel greater return on investments to regulated as pharmaceutical con- fragmented, with many CMOs gets for VC firms than Europe, as Eu- required for manufacturing inject- manufacturers. tract manufacturing. (contract manufacturing or- rope has been comparatively slow in able-dose formulations fuel demand ganizations) relying on one cli- regaining financial stability. In 2011, for outsourcing as it appears to be Unmet Market Needs and Potential Aiswariya Chidambaram, senior ent for more than 50% of their pharmaceutical R&D spending de- a viable alternative to additional Game-Changing Strategies research analyst life sciences, revenue. This suppresses prices creased for the first time in more manufacturing capacities for phar- Frost & Sullivan’s Healthcare throughout the industry. Based on than a decade in major markets such maceutical and biotech companies. Given the challenges and complexi- Practice Europe experience, cost and size, nearly as the United States. Overall, VC in- Cytotoxics are expected to be the ties of the existing business model of 60% to 80% of pharmaceutical vestments in the pharmaceutical con- key growth driver for the injectable- CMOs globally, market participants 22 Contact: companies consider going back to tract manufacturing market seem to dose formulations segment because must adopt potential game-changing Katja Feick preferred suppliers. Furthermore, be on a declining curve over the next of the robust demand for oncology strategies, both to address unmet Corporate Communications - Europe CMOs face immense price pressure five years as investors back away. and other high-potency drugs such market needs as well as to grow in the Frost & Sullivan © Gina Sanders - Fotolia.com because of tax incentives and lower as antibody conjugates, steroids and highly competitive global pharmaceu- Tel.: +49 69 7703343 inventories for low-volume products. Injectable-Dose Formulations Likely IV fluids that require quick onset of tical contract manufacturing market. [email protected] Manufacturing costs must drop up to to Spur the Growth of CMOs action. www.frost.com 30% to generate tax savings. Pharmaceutical and biotech Conclusion Lower unit volumes and new Despite the current dominance of companies prefer prefilled syringes technologies likely will pose a threat solid-dose formulations, injectable- for existing and new products as Quality, timeliness and cost remain bit.ly/CMOS_CP to CMOs. dose formulations have experienced prefilled syringes eliminate issues the top three factors in choosing a

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High Potency Active Ingredients (HPAIs) g

D n i e n l i u v t e - r e development and manufacturing for y n fi S e y t s a te t early market entry and improved clinical profile m S s d li o S

Pre-formulation

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A Shaky Platform? Sourcing of Chemical Raw Materials for Pharmaceutical Industry

Monitoring The Supply Chain panding their technical capabili- ▪▪ Many Western organic chemical EHS (Environmental, Health and ties and their business. companies closed their plants Safety) audit has been added lately – The globalization of chemical raw ma- ▪▪ Transportation of organic chem- and companies in China and In- to comply with the responsible-care terial procurement is presenting signifi- icals took place over short dis- dia entered this business. principle. However, these EHS audits cant challenges to the pharmaceutical tances and was well-organized. ▪▪ Transportation from Asia to Eu- raise fundamental questions, name- ▪▪ Regulations for current good rope needs more time than trans- ly checking for compliance with lo- industry. Adopting basic good manufac- manufacturing practice (cGMP) portation within Europe (e.g., sea cal regulations only or with Western turing practice (GMP) and environmen- were not established and were transportation from Asia takes standards? Should the audits be car- virtually unknown. five to six weeks). ried out by EHS specialists or pur- tal, health and safety (EHS) standards ▪▪ Organic chemicals were commer- ▪▪ Some other risks can be added: chasing generalists? Confronting with constitutes an important tool for reduc- cially available and could be con- workers going on strike; natural the deficiencies of the underlying phi- ing the inherent risks. Observation of the sidered partially as commodities. disasters, such as earthquakes; losophy raises a ”conflict between political riots; arbitrariness of (their) company´s ethic and its finan- latter, in particular, is getting more and As a result of these six major de- local authorities; insufficient cial objectives,” said Tony Scott of the more important. A dilemma between fi- velopments, the term “supply chain” protection of intellectual prop- European Fine Chemicals Group. has become an integral part of the erty rights. Examples of fundamental param- nancial objectives and ethical behavior sourcing process in the pharmaceu- ▪▪ Clear communication is a must to eters — though not always men- is particularly obvious in China and India. tical industry, too. avoid misunderstandings caused tioned in reports — are difficult to Having this new challenge in by culture differences. assess, for example: Introduction mind, the International Pharma- ▪▪ Qualification systems including ceutical Supply Chain Consortium As mentioned above, these shortcom- design, installation and opera- In the early beginning of manufac- Rx-360 was founded in 2009. Its ings may drive the “total cost of own- tion qualification (DQ, IQ and OQ). turing active pharmaceutical in- mission is to enhance the security ership” into unfavorable dimensions. ▪▪ Process safety management: e.g., gredients (APIs), the situation was of the pharmaceutical supply chain. process design, process safety different from today. Take acetylsali- Audits And Inspections studies, determination of critical cylic acid (aspirin) as an example. Global Aspects for API Manufacturers parameters, risk management Aspirin was manufactured from In the course of the sourcing exer- studies. ▪ simple and readily available chemi- The situation for API manufacturers cise for API or advanced interme- ▪ Qualification and training of work- © Nenov Brothers - Fotolia.com cal raw materials has changed dramatically within the diates, quality audits are generally ers. Chemical raw materials were last 20-30 years: conducted according to ICH Q7A. defined as organic chemicals that Regarding the supply chain of, for could be used in organic synthesis to example, a 10- to 15-step synthesis manufacture APIs or fine chemicals. (e.g. Pradaxa, launched in 2012), a rough classification for the supply Chemical Supply Chain in Pharmaceutical chain for the chemical raw materi- Industry als can be made, as shown in figure 1: namely basic raw materials, inter- At the beginning of the last century, mediates (IM), advanced intermedi- the main sourcing aspects for an ates and the final API. Note: If the API manufacturer with regard to its wording “chemical raw materials” chemical raw materials were: or only “raw materials” is used, a ▪▪ Only a few chemical steps were clear definition is needed. necessary in order to manufacture the final drug. Advanced Intermediate And API ▪▪ Organic chemistry was booming. ▪▪ Companies such as BASF, Bayer, The regulated part of the synthesis Dow, ICI and Hoechst were ex- Fig. 1: Supply chain from basic raw material to API begins normally from advanced IM. Advanced IM and the API have to be manufactured according to cGMP rules. These steps often will be man- professionals committed to success ufactured by the pharmaceuticals company itself (in-house manufacturing) or by custom manufacturing (outsourcing). It is acceptable that intermediates are produced under non-GMP conditions. The term non-GMP is misleading for several reasons. It should be replaced by basic GMP. Basic GMP is not officially defined, expertise in challenging chemistries but it’s a much better wording than non-GMP. The big advantage of basic GMP: A thousands-ton-year that is used in ▪ relationships built to last the regulated part of the API syn- ▪ Is a fiber suitable as a secondary basic raw materials to intermedi- thesis, often following basic GMP packaging material, or is an iron ates and advanced intermediates requirements. drum necessary? up to API. ▪▪ Can the drum be filled to its max- Inspection of the manufacturer of Basic Raw Materials imum? Half filling is a matter of non-cGMP products should be inte- waste. grated in the supply chain. Instead Basic raw materials are normally ▪▪ Are coated drums (or drums with of non-GMP, basic GMP (and basic commercially available and usually inliners) necessary if the chemi- EHS) requirements are defined and not regulated. The chemistry behind cal material is a liquid? Can the proposed and may become the basis it is, e.g., nitration, chlorination and liquid be solidified? Is the drum in an inspection. fluorination of aromatic compounds. or inliner suitable when the ma- Price cutting by Western com- Nobody is really interested in any in- terial has to be melted before panies will create further risks, be- spection of those “nasty” chemistries. further use? cause basic raw materials manufac- Pharmaceutical Outsourcing: Saltigo What is more, even any “observation” ▪▪ Are all the required packaging turers in Asia should get the chance our expertise, your solution is dedicated to custom synthesis is not easy to arrange, since these materials available in Asia or do to invest in better EHS standards. and manufacturing – conﬁ dential- suppliers, as mentioned before, are they have to be imported? It would be much better to skip all ly, relia bly, efﬁ ciently, and globally. located in Asia. Meanwhile, Western ▪▪ Does the labeling meet interna- extended EHS audits by Western Based on decades of experience, a companies would like to get best pric- tional standards and internal companies and transfer this task to broad and growing technology base ing together with Western EHS stand- requirements of the customer’s local authorities. Local authorities and our own intellectual property, ards. These two targets don’t match. company? should have the biggest interest in we provide tai l o red supply solutions. Purchasing people should bear in establishing appropriate EHS stand- Our skilled em ployees know how to mind that the low price of the prod- Pest control of the container, for ards. Corruption could be a hurdle, handle challenging chemistries em- uct often does not match with the example, sometimes is done before but it will be a better approach than ploying explosive, corrosive or toxic chemistry behind it. Sometimes this charging the material, but that is a faked EHS inspection based on reagents and highly exothermic re- is also a result of their target-setting difficult to check. Storage of chemi- Western standards. actions. Saltigo provides quality and and focusing on cost. cal materials at harbor for a long On the other hand, Big Pharma is time can cause degradation. Thus Rolf Dach, independent consultant safety in every respect, from the kilo- facing serious cost problems once its analytical results from China and In- gram to the multi hundred ton scale. Visit us at top-selling originator drug becomes dia may be different from those the 22 Contact: At our integrated, FDA-approved site CPhI Worldwide off-patent. customer gets after several weeks of Rolf Dach in Lever kusen, Ger many, we employ 22-24 October 2013 transportation. RoTego Chem at Messe Frankfurt cGMP standards according to your Packaging And Transportation Gau-Algesheim, Germany needs. Our professi o nals are com- Conclusion And Outlook [email protected] Hall 5.0/Booth # 50F01 mitted to your success! When sourcing chemical raw mate- www.facebook.com/rotegochem rials from Asia, further topics have Today’s sourcing of chemical raw to be clarified before ordering: materials from phase I onward ▪▪ Is a simple polyethylene bag suit- should be part of well-organized able in case the chemical mate- supply chain management in the rial is a solid? pharmaceutical industry. ▪▪ Does the material need to be Fine chemicals are the most im- WWW.SALTIGO.COM | [email protected] protected against light and mois- portant category in the pharmaceu- bit.ly/CMI_Sourcing ture? tical industry, covering the line from

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Double Risk with an Upgrade Business Development Landscape in Pharmaceutical Contract Manufacturing

Trial And Error – Despite a 150- attractiveness of the offering. Offers Figure 3: Project Initiation Gateways along the Drug Life Cycle from newcomers will be considered Source: The Division of Science Resources (SRS) of the National Science Foundation; U.S. Institute of Applied Manpower Research, India (2011) 8. year history and an aggregate R&D ex- World Intellectual Property Report only for smaller, early stage projects, penditure of $150 billion per year, inno- or if they have a unique technology Peter Pollak Andrew Badrot vation in the modern pharmaceutical indispensable for manufacturing a fine chemicals business partner and CEO, particular molecule. industry is essentially still based on trial consultant, CMS Pharma CMS Pharma and error. Only one out of 5,000-10,000 Conclusions And Way Forward Probability of Success of the nities for custom manufacturing. In investigated molecules will eventually Pharmaceutical in Development reality this is rarely the case, rather Identifying, realizing and maximiz- be approved by regulatory authorities. a strike of luck than a repeatable ing business opportunities from With a total size of 10,452 R&D strategy. new drug candidates are a ques- In total, fewer than 30 new medi- projects in the pharma pipeline, the tion of survival for the fine chemi- cines based on new molecular enti- reservoir of opportunities for new Probability of Securing the Business cal industry. In order for CMOs to ties have been launched per year business appears enormous — at successfully manage their business over the past 10 years. Moreover, first glance. Nonetheless, reality is There are four points of entry along risks and realize the growth strat- during this period, one third of the different when taking into account the life cycle of a pharmaceutical egy through the necessary rejuve- Figure 4: Probability of Securing the Business new drug substances were high mo- the high attrition rate for new drugs. drug (figure 3) for a CMO to step in. nation of their aging product port- lecular weight molecules made by In preclinical development, more At gate No. 1, samples of the new folios, a commitment and involve- mammalian cell technology, which than 99% of the projects fail. Once in drug molecule are needed for in ment of the company as a whole is is accessible only to a small number clinical development, the probabil- vitro tests. This business is not at- mandatory: of fine chemical companies. In the ity of success increases from 16% in tractive because of the small chance ▪▪ Management has to define a future, the share of biopharmaceu- phase I to 26% in phase II and 66% of success and small quantities of strategy focused around the ticals is expected to increase fur- in phase III, to close to 100% after active pharmaceutical ingredients pharma and good manufactur- ther. submission to the competent health (APIs) being produced. Therefore, ing practice (GMP) requirements. The relationship between the authority authorizing the commer- it should be considered primarily ▪▪ Business development has to ag- pharma and the fine chemical in- cialization (fig. 1). as a promotional tool for acquiring gressively identify new opportu- dustries is challenging. On the one For the fine chemical industry, a new customer. At gate No. 3, the nities, conduct thorough evalua- hand, pharma is the major customer the high dropout rate in drug devel- FDA has approved the new drug tions of the drug R&D pipeline. segment, accounting for almost two- opment across the various clinical for commercialization. However, ▪▪ R&D has to be ready to develop thirds of the $85 billion fine chemi- phases is a major source of uncer- at this point, suppliers have often lab processes and assist with cals market. On the other hand, the tainty for contract manufacturing been selected, and supply contracts product technology transfers to high attrition rate of the pharma organizations (CMOs) looking to re- have already been signed. Therefore the pilot plant while manufactur- R&D is such that the reservoir of juvenate their product portfolio. It is gate No. 3 can be considered only ing and QA have to also partici- attractive new product opportuni- also the reason the CRAM (Contract if the price pressure on a product pate in delivering demonstration ties is small. The situation is ex- Research and Manufacturing) strat- is increasing and there is a chance batches and ultimately establish- Peter Pollak, fine chemicals 22 Contacts: acerbated by the fact that the fine egy pushed by many Indian compa- to submit an attractive offer, e.g., on ing industrial-scale production. business consultant, and Peter Pollak chemical industry is plagued with nies was not a particular success. the base of cost reductions achieved Andrew Badrot, partner and CEO, Fine Chemicals Business Consultant overcapacity and desperately needs It is based on the hypothesis that a after development of a substantially More than ever, success in pharma CMS Pharma Reinach, Switzerland to rejuvenate and expand its aging backward integration to contract re- more economical second-generation fine chemicals will require focus on [email protected] product portfolio. search generates business opportu- manufacturing process. At gate No. 4 servicing an industry that is highly www.swissonline.ch the proprietary drug is approaching regulated but nonetheless growing patent expiration and generic com- and with a stabilizing business out- Andrew Badrot Figure 1: New Drug Development — Probability of FDA Approval panies are preparing to enter the look. CMS Pharma Source: J.A. DiMasi & al., Trends in Risks Associated with New Drug Development: Success Rates for Investigational Drugs. field. This gate is suitable for a fine Martigny, Switzerland Clinical Pharmacology & Therapies (March 2010) 87, pp 272-277 chemical company involved in the A full version of this article is co- bit.ly/CMI_Pharma [email protected] manufacturing of API for generics. published by Contract Pharma. www.cms-pharma.com For custom manufacturing projects, gate No. 2 is the pivotal decision point and requires close scrutiny. As drugs approach the completion of phase II-b clinical trials, several decisive events have taken place: the probability of getting approval for the drug now exceeds 50% while the volume requirements both for the drug product and drug substance are likely to take off rapidly. The procurement office of the pharmaceutical company gets involved. It determines the procurement policy, i.e., at which stage of the manufacturing process external suppliers will be chosen for both generics and exclusive products. Requests for proposals have been dispatched to preferred suppliers as well as “niche” CMOs with the specific technical capacity and capability, while unsolicited offers are also received from interested fine chemi- Figure 2: Size of Pharma Pipeline cal companies. Source: The Division of Science Resources (SRS) of the National Science Foundation; U.S. Institute of Applied Manpower Research, India The key parameters for the se- (2011) 8. World Intellectual Property Report lection of the contract manufacturer are the depth of the relationship between the pharma company and the CMO, the financial stability of the CMO and the attractiveness of the offering (fig. 4). CMOs with the “preferred supplier” status typically have gained this status because of a track record of successfully complet- ed projects. Price plays an important role in the valuation of the offering for commercial supplies, yet less so for quotations involving smaller sup- With a big partner on board, plies from pilot plants. Figure 4 illus- trates the probability of securing a it’s easier to push ahead with big ideas. specific order as a function of the relationship with the customer and the We love your problems.

#JHQBSUOFS CJHCFOFGJUT8FSFPOFPGUIFCJHHFTU Aesica Unveils New High Capacity Manufacturing Facility 8JUIHMPCBMBDUJWJUJFTDPWFSJOHFWFSZBTQFDUPGPVS DPSFQIBSNBDFVUJDBMTCVTJOFTT XFBSFTPCSPBEMZ LOCATIONS British Formulator Says £30 Million Investment Reflects Global Demand CBTFEUIBUXFDBOPGGFSZPVUIFTFDVSFTUPGQBSUOFS TIJQToGJOBODJBMTUBCJMJUZ GBSTJHIUFEQMBOOJOH SFMJBCJMJUZ QMVTUIFVOMJNJUFEPQUJPOTUIBUDPNFXJUI Aesica has announced the creation of a of a solid dose medication used in lumper, blender and a sieve system. BXPSMEXJEFOFUXPSL*UTUIFLJOEPGQFBDFPGNJOE treating type two diabetes. The com- The design of the facility will allow ZPVOFFEUPMFUZPVSJEFBTGMPXBOEHSPX*GZPVE new high capacity manufacturing facil- like to know more good reasons for a stable partner- pany said commercial production at the current capacity to be more than ship with us, go to www.evonik.com/pharma. ity following a £30 million investment the facility will begin in November. doubled in the future which would at its Queenborough, Kent site. The facility contains a large amount require a further additional 50 staff of highly technical and specialist to be recruited. U.K. — The 10,000 m2expansion has equipment including spray granu- been constructed for the production lators, coaters, tablet presses, a de- ▪

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Register to participate in the bi-annual The Limits of the Biosimilars Revolution PHARMA Management Radar: Pharma Management Radar by Camelot Management Consultants www.pharmamanagementradar.com

Limitations – The global pharma For the comparably new segment of the biologicals/biosimilars business tors name “high R&D and regulatory Michael Jarosch biosimilars, this means a potential today will tend to keep up or even approval cost” as the top problem. industry is steering toward the patent partner and head of Dr. Axel Sinner market volume of more than $62 increase these activities. Innovators While more than half of the ge- cliff; Nine of the 10 top-selling biologi- industry segment principal and head of billion. Nevertheless, the market Pharmaceuticals & Life Camelot’s Competence actors do not expect the upswing of cals will lose patent protection by 2020 As long as the regulatory Sciences, Camelot Center Pharma biosimilars to fundamentally change Management Consultants Commercial either in Europe or the U.S. the entire pharmaceutical industry. environment doesn’t change This is mainly due to the fact that dramatically, biosimilars will not biosimilars are not expected to be priced as high as the patent-pro- completely change the world. tected originals. Also, the necessary Holger Kliebe, Head of Corporate Commercial Controlling, Grunenthal Group R&D pose a difficult hurdle for many companies. that are not yet in the biologicals nerics executives still expect quite This is the picture that emerges business will most probably not enter high biosimilars prices at levels from the second Camelot Manage- the biosimilars market, either. around 70%, the innovators’ esti- ment Consultants Pharma Manage- At the same time, some biologi- mations are more pessimistic: More ment Radar survey, a biannual survey cals producers will stay away from than 40% expect biosimilars prices that serves to examine the general climate in the pharmaceutical industry. In August and September 2013, While the pharmaceutical industry is the Pharma Management Radar ex- still suffering from the Eurozone crisis, some of pert panel, consisting of more than 80 executives from globally active the established markets seem to be coming back: pharmaceutical companies based Demand expectations for North America and in 16 countries, was interviewed to analyze the influence of biosimilars. Japan are showing considerable growth. Michael Jarosch Biosimilars’ Limited Effect biosimilars completely. The reason to drop to only 15% of the prices of Although biosimilars are considered for this may be that some of the big the originator or less. All in all the one of the most important industry biologicals innovators avoid biosimi- market seems to be divided as far as trends, large parts of the industry do lars for image reasons — or just pre- the expectation of the influence of biosimilars is concerned. More than half of the companies don’t feel af- It remains interesting to see how pre- fected at all; also, half of the panel scribers will handle the substitution of originator members expect biosimilar prices to decline rapidly after launch. These biologicals and how payer organizations will two developments will considerably play the price game in the competitive area limit the value of the multibillion- between these biologicals and biosimilars. dollar market of biologicals coming off-patent in the near future. Dr. Axel Sinner See also page 24. not feel affected. Biologicals play no fer to fully concentrate strategically big role for nearly three-fourths of ge- on patent-protected drugs. Generics 22 Contact: nerics and even half of the innovators. and innovators agree that biosimilars Sebastian Deck The figures are quite similar when it will have neither dramatic effects on Camelot Management Consultants comes to the future development of shifts in therapeutic treatments nor [email protected] biosimilars within the companies’ on their respective product portfolios. product portfolios. This reflects the When asked about the biggest limits mature phase of the decision-making that might affect the success of bio- bit.ly/Biosimilars1 process: Generics that are engaged in similars, both generics and innova-

Highly Potent Powerhouse The Demand for HPAPIs is on the Rise

Small But Mighty – Highly potent active ingredients (HPAPIs) are remark- specialized equipment. For compa- for handling HPAPIs. Aesica opened Prospects for the Market as single-use production, could see nies getting involved, the barriers to a high potency granulation facil- additional HPAPI manufacturing ably effective at small doses. Therapies including oncology, hormones, narcotics, entry include a lack of guidance in ity in 2012 and announced plans Analysts estimate that 25% of the being kept in-house. The lack of a musculoskeletal treatments and retinoids all utilize these compounds. By 2018, design, limited skills outside of big to invest in HPAPI manufacturing drugs in development globally are universal regulatory framework for the market for HPAPIs is expected to reach over $17 billion, and although the pharma, and high operating costs. as well. Novasep invested €3 mil- highly potent. As medicine becomes handling HPAPIs will continue to be The acquisition of Carbogen- lion in their HPAPI production ca- more specialized, the number of a challenge. Those companies with majority of high potency products are manufactured in Western countries many Amcis supported Dishman’s con- pabilities at their facility in France; highly potent drugs being developed extensive knowledge in the field will companies around the world is investing in highly sophisticated facilities in order struction of a commercial HPAPI while Evonik has invested in both will likely increase. It is also expect- continue to dominate the high po- manufacturing site in India. Sigma- their high potency laboratory space ed that competition will drive new tency manufacturing space, and the to participate in this lucrative field. Aldrich Fine Chemicals and Frese- and kilogram facility and Lonza has technological developments and continued demand for such products nius Kabi have each made signifi- plans to double the existing capacity more high potency manufacturing will compel more companies into A compound’s occupational expo- ate their own categorization. Since cant investments into their facilities handling HPAPIs as well. will be developed in high growth this highly technical arena. sure limit (OEL) is often established containment varies depending on regions of Asia, such as India and using toxicology information from the toxicity of the product, the han- China. There are numerous HPAPIs Molly Bowman, Manager Small scientific literature in additional dling requirements will also differ that are losing patent protection in Molecule Research, Thomson to toxicology studies. APIs with an greatly. Numerous companies utilize the next few years as well, which Reuters OEL of 10µg/m3 or less are consid- SafeBridge Consultants and their will likely drive more generic com- ered highly potent compounds. The classification system, while many panies’ investment into high potency 22 Contact: exposure limit of a known com- have developed their own, based on manufacturing or partnerships to Molly Bowman pound can be determined based on their equipment and facilities. develop these products. Thomson Reuters the lowest therapeutic dose, other As more drugs are created with Portland, Maine, U.S.A factors that have to be considered Investment Into HPAPIs higher pharmacological activities, Tel.: +1 207 871 9700 Ext. 13 include whether the API is in liquid the market will continue growing. [email protected] or powder form, the process of for- Many companies have been making More companies will decide the www.thomsonreuters.com mulation, as well as the frequency strategic deals and investments into initial investment to develop their of contact. Often, new developmen- high potency manufacturing since it capabilities will be worth it, as the tal products may not have toxic- requires people with specific exper- market for high potency products ity information available. Currently tise in addition to highly specialized grows. While some advancements bit.ly/CMI_HPAPIS there is no official guidance for the equipment. A lot of high potency in manufacturing technology, such safe handling of highly potent com- manufacturing is kept in house, but pounds; therefore companies cre- over the past few years there has Table 2: Examples of Banding Systems & Categorization of APIs been significant outsourcing of HPA- 3 Table 1: Occupational Exposure Limits PI manufacturing from big pharma OEL (mg,µg,ng/m ) SafeBridge Consultants Merck & Co. Lonza Group Ltd. API OEL to contract manufacturing organi- 10mg Category 1: Low Toxicity Category 1 Category 1 ethinyl estradiol 35ng/m3 zations (CMO). Often it can be more 1mg Category 2 Category 2 economically practical to outsource fentanyl 0.7µg/m3 100µg Category 2: Intermediate Category 3 Category 3 as resource demands and the level 3 Toxicity isotretinoin 5µg/m of specialization needed increases 10µg Category 4 leuprolide 0.02µg/m3 for small volumes HPAPI. There 1µg Category 3: Potent Category 3+ naproxen 5 mg/m3 are also significant challenges with 100ng Category 4 & 5 Category 5 manufacturing HPAPIs. The facilities nicardipine 400µg/m3 10ng Category 4: Highly Potent require high containment technolo- paclitaxel 0.8-1.0µg/m3 ≤1ng Category 6 Highly potent active ingredients (HPAPIs) © contrastwerkstatt - Fotolia.com gies, and there is significant cost in are remarkably effective at small doses.

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Do Your Homework Sourcing Intelligently From India

‘Pharmacy To The World’ – In ▪▪ A unique dhaba walla system that hired but who is powerless to make delivers thousands of homemade, decisions. today’s global pharmaceutical indus- precooked lunches in stacked alu- On the other hand, though large try 2.0, emerging regions led by India minum containers all over Mum- enterprises conduct business in a (BRIC — Brazil, Russia, India, China) bai offices on foot, bicycles and manner more familiar to Western- trains without computerization by ers, they are not immune to India’s have moved to the front row in terms mostly illiterate couriers that has grip on culture and religion. De- of new market growth, outsourcing earned a Six Sigma standard of livery deadlines could be missed reliability or accuracy rating from because the senior employee-in- production-scale commercial manu- Forbes magazine. charge, for example, had to travel to facturing, and— most commonly — his hometown for a sudden wedding the sourcing of intermediates and APIs To source from India successfully, or known religious holiday left out one needs to understand India first, during project planning and sched- for finished formulations. i.e., the history and evolution of the uling discussions. pharmaceutical industry, its entre- Then there’s the Indian “wobble,” India and China these days com- preneurial and highly fragmented unique to India. mand more and more attention for state, and its people and culture. An Indian nodding his head side sourcing pharmaceutical ingredients Buyers can then better map their to side often means an agreement and finished generic drugs. China needs against the supply chain and to the context of the conversation and India now source 80% of active navigate the sourcing terrain while but could also be a polite way to pharmaceutical ingredients (APIs), avoiding “land mines.” © byheaven - Fotolia.com acknowledge what is being said and India provides the U.S. with with hesitation to say “no.” Old In- 25% of its generic drugs while at the Let’s Get Started dia traditions are steep; Indians find same time India is heavily expanding it hard to say “no,” so best you ask its “pharmacy to the world” reach. India today is arguably considered India’s culture and languages are as diverse as its spices; expert Ram Balani recommends anyone interested in sourcing from there to get to know the with a question like, “Do you agree?” Experiences or results when the 800-pound gorilla of generic country first hand. and wait for an answer. Western companies source from In- drugs. The Indian pharmaceuti- Get to know India first with your dia vary widely, from successful to cal industry is the third-largest in stressing pharmaceutical produc- Fast-forward to today: India has Know Your Supplier feet on the ground if possible. Leave “could have been better” to “what the world in terms of volume but tion in India. Then along came the close to 20,000 pharmaceutical those expensive market analysis re- a nightmare!” stands only 14th in rank by dollar New Patent Law in 1970, which ba- firms, most of which are small com- You have to know whom you are ports back home. Why is that? In a nutshell: home- value. sically mandated that patents would panies. A survey by the Federation dealing with in India, then map your work (or lack thereof). India, however, provides 25% of be granted only on the process level of Indian Chambers of Commerce business practices accordingly. Ram Balani, CEO and founder, To start with, India is a land of the generics in the U.S. markets. not the product level. and Industry (FICCI) tells the story, Dealing with a small to medium- FDA Smart contrasts and presents challenges Since 80% of drugs consumed in MNCs soon found extreme com- that is, the fragmented pharmaceu- sized manufacturer of API, for ex- with its myriad languages, customs, the U.S. are generics, this essen- petition from government and pri- tical scenario in India with 5,700 ample, demands you force Western 22 Contact: religion and culture. tially translates to India supply- vate sector reverse engineering small firms vs. only 100 large com- discipline into what seems like a Ram Balani Where else in the world can any- ing 20% of the drugs in American drug molecules by altering some of panies. disorganized, mostly verbal and FDASmart Inc. one find: medicine cabinets. Indian pharma the manufacturing process, bypass- So why does this matter? India undocumented, make-it-up-as- Amawaik, New York, U.S. ▪▪ Electronic voting machines being manufacturing is cheaper and for ing patents to get approval for mar- has a highly fragmented pharma- you-go-along mentality from your Tel.: + 1 516 515 9642 transported on elephant backs? the most part meets good manufac- kets in India. This drove MNCs out of ceutical industry, which one needs Indian supplier. Social “bonding” [email protected] ▪▪ Fiber-optic cables laid by digging turing practice (GMP) quality man- the Indian pharmaceutical markets, to keep in mind when sourcing APIs needs to be a prelude to talking www.fdasmart.com out concrete or dirt roads with dates demanded by the U.S. Coupled at least for while. or finished formulations or even business. You will likely be dealing picks and shovels? with the global appetite for generics This led to the rise of thousands outsourcing manufacturing, custom with younger second-generation ▪▪ Yet find: these days, this explains India’s rise. of entrepreneurial and in some cas- synthesis or R&D in India. family members handed down ▪▪ A global state-of-the-art cyto- es government-led enterprises. Calibrating your approach is key a family business they run with toxic, Category IV HPAPI (high- Memory Lane In 1984, the Drug Price Compe- to dealing with India; there’s no “one advice from a senior, more expe- bit.ly/CMI-India potency API) manufacturing facil- tition and Patent Term Restoration size fits all.” rienced, professional the founder ity that matches, even exceeds, How did India pharma get here? Act, informally known as the Hatch- European and U.S. occupational What was the Indian pharmaceuti- Waxman Act, was passed in the U.S. exposure limits (OELs) and con- cal industry like before it evolved? That spawned and legitimized the tainment standards but can per- Soon after India’s independence generics industry globally, starting form and deliver at a substan- in 1947, India’s pharma industry with the U.S. But by then, India had tially lower cost. was largely dominated by Western developed a cadre of scientists, engi- ▪▪ The largest number of manu- multinational corporations (MNCs), neers, entrepreneurs and investors facturing facilities approved by with eight out of 10 of the largest that recognized a generics bonanza the U.S. Food and Drug Adminis- firms being foreign. was ahead with the passage of the

tration outside the U.S. (close to The Indian pharmaceutical in- Hutch-Waxman Act in the U.S. 200), many with their own U.S. dustry was largely import-depend- Finally, the Patent Act of 2005 CPhI 2013 FDA generic abbreviated new ent through the 1960s until the In- came along, and Trade-Related As- Meet us at drug applications filed. dian government initiated policies pects of Intellectual Property Rights Hall 5.1, Booth 51C02 (TRIPS) mandates obliterated the Generic APIs Indian pharma process patent “free India’s Pharmaceutical Firms by size ride.” India buckled to the WTO, and now Indian manufacturers were Strategic Moves Require forced to comply with product pat- Large Firms Mid Size Firms Small Firms ents. But Hutch-Waxman provided Strategic Partnerships 100 200 the Indian pharmaceutical industry with an alternative route that lever- aged India’s copycat prowess. With India’s past astute legislative reforms (process vs. product 5,700 patent), the growth in pharmaceutical contract manufacturing and outsourcing plus India’s mastery of reverse molecule re-engineering peppered MNCs and more novel Source: Ram Balani © CHEManager Europe technology, India has labeled itself as the “pharmacy to the world.”

Novartis Looks at Underperforming Business Units PORTFOLIO Speculation Abounds that Swiss Drug Maker Might Sell Units Peptide and Small Molecule APIs Novartis may take a leaf out of its past the drugmaker could unlock value Novartis‘ diversification strategy, Batch sizes from grams to tons for shareholders. but stressed the company would deal-book as the Swiss drugmaker „There are markets in which we only hang on to companies that are cGMP and non-GMP production conducts a review into some of its have to grow. Syngenta could be a among world leaders. He has also underperforming businesses, a board model there,“ Landolt, who is also said a $10 billion buy would not be Regulatory support chairman of the Sandoz Family Foun- out of reach. member said. dation that owns 3.3% of Novartis‘s Global drugmakers have stepped Quality control share capital, said in an interview for up the pace of restructurings, as in- Switzerland — New chairman Joerg the Basler Zeitung newspaper. vestors clamor for management to Reinhardt has launched a review of „Back then we succeeded in cre- unlock value trapped inside large the drugmaker‘s portfolio fanning ating a new type of integrated agro- firms. speculation that some of the com- group through a combination of spin- If Novartis were to consider spin- Supply of high quality peptide pany‘s smaller units could be sold, off and fusion. Perhaps there are ning off its animal health unit, it and small molecule Generic APIs. spun-off or integrated into other other activities in the company which would be following in the footsteps divisions. could be developed in this way,“ he of Pfizer that spun out its operations Regulatory documentation such as Drug Master Files Novartis board member Pierre said in the paper‘s weekend edition. in this area into a new company (DMFs) and Certiﬁ cates of Suitability (CEPs). Landolt cited agrochemicals com- Syngenta is now the world‘s No. called Zoetis last February. pany Syngenta — formed in 2000 1 maker of crop chemicals with a through the merger of Novartis‘ market value of $38 billion. Agribusiness and Zeneca Agro- Reinhardt, who took over as chemicals — as a guide for how chairman on Aug. 1, has defended ▪

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A Safe and Secure Pharma Supply Chain Preventing Counterfeits Using Track and Trace Methods

Safety Net – With the increasing om PCI has chosen the track and the crucial next step in the crea- ia.c tol - Fo race solution from Antares Vision tion of true serialization and supply es threat of counterfeit medicines enter- ag im lff to manage the delivery of serializa- chain security. ro ing the legitimate supply chain, there © tion at both line and site levels on The introduction of regulations Ian Parsonage is a need to introduce a standardized a global basis. This system merges requiring the implementation of a Director of Global information received from PCI’s standardized track and trace sys- Serialization Services, PCI identification system to accurately es- customers with data held with- tem, combined with the commit- tablish the identity of each individual in its own ERP system to de- ment of pharmaceutical companies standardized coding system liver the serialization to the throughout Europe, as well as glob- pharmaceutical product. In order to that will include unique customer’s product. Serial ally to the use of this technology will tackle the escalating issue of counter- identifiers on each indi- activation and aggrega- go a long way in creating a safe, se- feit and falsified medicines, a unified vidual pack of medicines tion data can then be cure and trustworthy supply chain. throughout EU member sent securely in B2B That is not to say that achieving a approach is required. states. Following the transactions to enable harmonized identification solution successful trial of a a customer’s system to on a global scale will not represent Recent regulatory requirements point of dispensing ver- prepare for the receipt a significant challenge, but once it introduced in the European Union ification system in Swe- of serialized product has been effectively established, the have stipulated increasingly strin- den in 2009 and 2010, and then perform its benefits will be hugely significant. It gent measures for pharmaceutical the Falsified Medicines onward distribution. is imperative that the pharmaceuti- companies to implement track and Directive (FMD) was cal companies act now to overcome trace technology. This technology is published in July 2011, Conclusion one of the most significant challeng- a serialisation method that can im- requiring the introduc- es facing the industry. prove traceability and transparency tion of serialization and The threat of counter- within the supply chain, providing anti-counterfeiting meas- feit and falsified medi- 22 Contact: increased confidence that only le- ures throughout the phar- cines is a global issue Ian Parsonage gitimate products are being taken to maceutical supply chain. and therefore requires Packaging Coordinators, Inc. market. The pharmaceutical indus- EU member states were re- a united global approach Hay-On-Wye, UK try has a significant role to play in quired to adopt the measures to tackle it effectively. The Tel.: +44 1497 820829 implementing the right technology by January 2013, and pharma- serialization of pharmaceuti- [email protected] into their processes, so that medi- ceutical companies must be fully cal products and the ability to pciservices.com cines can be accurately identified compliant with the requirements by effectively track them is essential and tracked throughout the supply 2017 in order to be eligible to trade to the creation of a truly safe and chain. within the EU. secure supply chain. The formation In 2011, the European Federa- of a unified, single-source, pan- A United Front tion of Pharmaceutical Industries European or even global database and Associations (EFPIA) created where scanned bar codes can be bit.ly/CMI_Track-Trace Dispensing and dosing errors, re- the European Stakeholder Model verified at the point of dispense is imbursement issues and cases of (ESM), with the aim of establishing counterfeits in the legitimate phar- a system for verifying pharmaceuti- maceutical supply chain have high- cal products in compliance with the lighted the need to establish more FMD. Key stakeholders in the phar- will be essential to establish who complying with new international clearly and effectively the identity maceutical industry, including man- will be responsible for covering the standards to secure the supply chain of each individual medicine pack. ufacturers, distributors, wholesalers cost of the new barcode readers for against counterfeiters. The European supply chain is be- and pharmacists are now working the end-supplier. If smaller inde- A key priority for pharmaceutical coming increasingly complex, with in partnership under ESM to imple- pendent retailers are unable to af- companies is having absolute confi- billions of pharmaceutical products ment a standardized identification ford to put the necessary measures dence that only safe products that being transported and sold across solution for pharmaceutical prod- in place, the system will not be ef- are compliant with domestic and in- the EU each year in an increasingly ucts across Europe. fective. There are also concerns over ternational packaging requirements fragmented supply chain. This has The solution developed by ESM the potential disruption to existing are taken to market. Sophisticated resulted in a lack of transparency partners is the European Medi- production processes, as any time security systems can be put in place and increased difficulties in provid- cines Verification System (EMVS), a delays in production can result in to monitor product flow throughout ing a full genealogy of medicines in cost-effective dispense coding and pharmaceutical companies incur- the packaging process, from the re- the market place. serialization system which uses 2D ring significant costs. ceipt of incoming bulk product to To tackle this issue effectively, barcoding to verify the authenticity storage, transfer, processing, and there needs to be a united effort of medicinal products. The codes The Track and Trace Solution final shipment. GlaxoSmithKline India Hit By Drop In Bulk Orders GlaxoSmithKline’s In- from the pharmaceutical industry, are generated and applied by man- The PCI serialization system is dian business has been hit by a drop in sales which two industry sources regulatory bodies, wholesalers and ufacturers using a 2D data matrix With industry guidelines stipulating an end-to-end, point-of-dispense said was linked to a protest by bulk buyers against a cut in their profit retailers to establish a standard- barcode containing a unique se- the need for more stringent meas- identification solution which uses a margins under a new government drug pricing policy. GlaxoSmithKline ized identification solution. A da- rial number. Pharmacists can then ures to combat falsified and coun- unique identification code on each Pharmaceuticals said bulk sellers in “major pockets” of India had stopped tabase where uniquely identifying check the identification code on terfeit drugs, pharmaceutical com- pack, generated and applied by the buying the company’s drugs since Sept. 15. bar codes on drug packaging can be each pack at point of dispense. This panies are increasingly introducing packer. The system uses data struc- The two sources said wholesalers and retailers in many parts of India verified at point of dispensing would solution meets the requirements for track and trace technology into their tures defined by GS1 in their Global had stopped buying medicines from some companies in protest against a significantly improve the ability to pack identification under the FMD production processes. Traceability Standard for Health- reduction in their profit margins under a new government pricing policy. track pharmaceutical products on and will go a long way to combat the Track and trace is a serializa- care document to create a “license Under the recent policy change, the prices of 348 drugs deemed essential a global basis; there is an urgent entry of falsified medicines in the tion method that can help to protect plate” or serial on each pack. This are now being regulated, compared with 74 previously. The move has need to improve traceability within EU supply chain ensuring patient against counterfeiting and the falsi- number, when combined with the curbed prices of costly brands sold by drug makers in a market that the supply chain. Serialization tech- safety across Europe. fication of medicines by authenticat- Global Trade Item Number (GTIN) already has rock-bottom medicine prices. nology provides the ideal solution to ing, monitoring and controlling the creates a globally unique number. enhancing efficiency in the supply Challenges Facing the flow of medicines throughout the Each license plate also contains a AstraZeneca CEO Gets Two Cheers after First Year in Job Fixing AstraZeneca chain, reducing theft, counterfeit Pharmaceutical Industry supply chain. Serial numbers can 2D data matrix code together with remains a work in progress for Chief Executive Pascal Soriot, with sales products and allowing manufactur- be traced at various points through- the human readable data contained and profits still heading firmly downhill after his first year in the job. ers, distributors, retailers, pharma- The regulatory changes taking place out the supply chain which makes it within, for example; serial number, Yet confidence is slowly building that he may have the right long-term cies and end-users to ensure compli- will have a significant impact at the easier to identify where counterfeit GTIN, lot number and expiry date. prescription for the British group; Soriot has shunned a big acquisition ance with industry regulations. manufacturing and quality control products have entered the chain Each pack can then be associated as a way to plug the deep revenue gap left by multiple patent expiries, level, and businesses will need to and also allows for full traceability. with its bundle and further with the opting instead for a string of smaller deals, a reboot of the drug pipeline Drive to Establish Regulatory Compliance ensure they are compliant with Ultimately, the primary aim of the shipping container and finally with and a shake-out of top management. standards throughout all their pro- technology is to protect the pharma- the pallet with all of this aggrega- His approach has resonated with many younger researchers who felt the In order to sufficiently protect pub- cesses. ceutical supply chain and guarantee tion information being stored and group was drifting, following past R&D setbacks. It has already acceler- lic health interests and the rela- Counterfeit drugs are estimated patient safety. However, there are a moved around the supply chain. ated work on several promising cancer drugs. tionship of trust between patients to cost 7-10% of global pharma- considerable number of business The product verification process Rival executives say he is borrowing some ideas from Switzerland’s Roche. and pharmaceutical suppliers, the ceutical market revenue; there is a and economic benefits that can be then compares the data held within Roche — particularly its Genentech biotech unit, which Soriot used to entire production and supply chain strong desire within the industry to gained from the practice helping to the data matrix code, with a secure head — is renowned for its R&D successes, something Soriot hopes to needs to be closely regulated. The implement track and trace technol- overcome a number of challenges product record on a database shared replicate with a $500 million move of AstraZeneca operations to Cam- pharmaceutical industry operates ogy to help overcome this issue. As faced by pharmaceutical companies. between the supplier and the cus- bridge, a British science hub. on a global scale, and regulatory well as being potentially life threat- Due to the risk counterfeit pharma- tomer. This provides confirmation compliance across multiple geog- ening to the patient, counterfeit ceutical products pose to patients, that the product record exists and Carbogen Amcis Makes Capital Investments in ADC Capabilities Switzerland- raphies is fundamental to ensuring medicines can damage a business’ they can tarnish the reputation of a matches the data held on the prod- based Carbogen Amcis announced a series of significant investments that the supply chain remains safe reputation, and many pharmaceu- brand, leading to reduced revenue uct itself, as well as checking that it aimed at enhancing its antibody drug conjugate (ADC) capabilities to and secure. tical companies cannot match the and market share. Serialization has not been previously marked as better respond to increasing demand for ADCs in the development of The lack of a standardized sys- low cost competition, resulting in a techniques make it easier to iden- “dispensed” or that it does not con- highly targeted cancer treatments. The investments include a $4 million tem or recognized industry stand- loss of revenue, which would oth- tify counterfeits and help protect tain any warning or advisory notes. clean room clinical supply facility at the Bubendorf, Switzerland, site and ard for the identification and coding erwise provide funding for further genuine pharmaceutical brands. In This verification process would im- a $950,000 upgrade of the sterile manufacturing area at the facility in of pharmaceutical products within research and development. In ad- line with this, secure and traceable mediately alert the pharmacist if a Riom, France. By adding on to the current high potency facility, Carbogen Europe has resulted in many EU dition, pharmaceutical companies products are much more appealing packet containing the same number Amcis said it is positioned to offer its partners seamless development and countries proposing and developing must now also find cost effective to customers which can help to cre- had been released into the supply manufacturing services for ADCs. their own individual coding systems. ways of complying with legislative ate a competitive advantage. chain. These systems all differ in terms of requirements. Track and trace solutions need to Merck & Co. to Slash Annual Costs by $2.5 Billion, Cut 8,500 Jobs Merck & Co, the content of each code, through As is often the case with the im- Delivering a Secure accommodate different manufactur- taking a cue from rival drug makers that have slashed research spending to its physical placement. The lack plementation of many new tech- Supply Chain ing sites and technologies, regula- to bolster earnings, said it will cut annual operating costs by $2.5 billion of a coherent approach to verifying nologies and techniques, there are tory regimes and product require- and eliminate 8,500 jobs, or more than 10 % of its global workforce. The scanned bar codes on drug packag- concerns over the associated capital In response to the challenges fac- ments. Flexible and customizable U.S.-based company said it aims to narrow its focus to products with the ing has undoubtedly contributed to expenditure and installation of ad- ing the pharmaceutical industry, track and trace solutions can be best chance of winning regulatory approval and achieving substantial the growing problem of pharmaceu- ditional equipment throughout the companies such as Packaging Co- provided to meet a client’s specific sales. The job cuts would be in addition to expected remaining cuts of tical counterfeiting. supply chain and in particular, at ordinators Inc. (PCI) are working to needs and can be easily integrated 7,500 positions from a 2011 restructuring that involved elimination of To combat these issues, the EU the point of dispensation. In order provide secure packaging solutions to ensure minimum disruption to 13,000 positions. is pursuing the implementation of a for the system to be successful, it to support their customers in fully existing manufacturing lines.

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www.twitter.com/ CHEManager_EU CHEManager Europe 10/2013 Pla stics Page 19 Materials Enable Sustainability Improvements Material Innovations Steer the Drive for More Sustainable Products

Corporations Get a Push from Plastics – For global material compa- and will continue to play an increasing role in the marketplace. Energy nies such as Styron, R&D departments have become increasingly important to Star estimates that residential LED enhance our customers’ sustainability efforts. In every region and every market, lighting uses at least 75% less en- sustainability is high on the agenda, primarily because of increased regulation but ergy and lasts at least 15 times longer than incandescent lighting. also to a large extent because of increased customer awareness and demands. Polycarbonate resins are an important component in LED lighting, and have proved to be a more sustain- Fig. 2 : First-in-Market Thermoplastic Lift-Gate Solution for the New Renault Clio. able option, not only because of du- Styron contributed in the engineering phase, but also brought in its expertise in rability, but also because they offer the material development implementation phase to select and test the materials high transparency for LED display required to fulfill the specific requirements lighting and can be suitably modi- fied for exceptional opalescence when required for light diffusion. All these elements make material development integral to the performance of more sustainable lighting. Styron’s R&D team is working on several development projects with lighting industry, particularly in Chi- na, to further enhance high transmis- sion light in LED lighting. Recently, Styron has developed a proprietary opalescent technology that ensures optimum light management by giving the plastic part a special luminous performance (e.g., the invisibility of the light source behind the diffuser or the globe). In addition, we are continuing the application of flame retardant technology, which supports the drive toward very low wall thick- ness, while maintaining high transparency and product safety.

Marking the Road to oped by Renault and Styron’s R&D Navigating the Path to With the introduction of Styron’s

Improved Fuel Economy departments. Through a success- Reduced CO2 Emissions enhanced S-SBRs, we have further ful synergy, the French carmaker demonstrated our commitment to Improving fuel economy is a top not only achieved weight reduction Advancements in low rolling-resist- providing sustainable solutions by priority in the automotive industry. of 10% for optimal fuel efficiency ance tires, also known as “green creating an opportunity to reduce Leading car producers are mak- but also responded to their waste tires,” will significantly contribute to fuel consumption by 4g/km. For Eu- ing significant changes in material management guidelines promoting improving fuel efficiency and reduc- rope, this equates to a reduction of

selection and also in the engineer- recyclability without disassembly ing CO2 emissions, especially in light 34 million tons of CO2. This reducing methodology behind vehicle by creating this mono-material so- of the fact that tires account for 20% tion corresponds to the global fore-

design. Due to the inherent rela- lution. With the knowledge that the to 30% of total fuel consumption, ac- cast for an increase of CO2 emission tionship between vehicle mass and base polymer of the lift-gate solution cording to the Official Journal of the levels for transportation in the next Fig. 1: Polycarbonate resins are an important component in LED lighting fuel consumption, light-weighting was the same material, the part can European Union. two years. of cars is key to meeting efficiency be easily recycled. Styron has used its strong under- Consequently, plastics innovations move into this direction. Especially requirements. A polymer solution Styron played an important role standing of solution styrene butadi- Catherine Maxey, Vice President, have become critical to the overall in electrical cars, lightweight is an that is continuously finding inroads from development to manufacturing ene rubber (S-SBR) to develop the Public Affairs, Government performance of end-applications in area to address. Prior to the launch for light-weighting is long-glass- of the product. The Styron and Re- latest generation of functionalized S- Affairs and Business Intelligence several markets and are intrinsical- of some of the new electrical car fiber-filled polypropylene (LGF-PP). nault teams collaborated closely in SBR. This technology, in combination ly linked to the sustainability strate- models, Styron Automotive has been LGF-PP provides automotive com- the engineering phase to design the with the tire design improvements, gies of corporations. With a strong collaborating closely with several of ponents with strength and impact optimal structural part for the lift- has enabled Styron to improve its 22 Contact: commitment to sustainability, Styron the key electrical car producers to resistance, thereby enabling lighter gate. Styron also used its material offering to customers. Tire makers Styron Europe GmbH continues to push the technology considerably decrease the weight of parts and allowing for thin-walling characterization expertise to select are able to build efficient tires with Horgen, Switzerland boundaries in markets such as elec- interior components. of structural applications. Styron and test the materials required to a lower rolling-resistance without Tel.: +41 44 718 3600 trical and lighting, automotive and Also, for EVs to gain widespread is addressing this trend by assist- fulfill the specific requirements for compromising on grip performance. [email protected] tires by addressing considerations consumer adoption, an infrastruc- ing automotive original equipment a lift-gate and to predict lift-gate Styron is continuously committed to www.styron.com such as down-gauging, flame retar- ture of charging units outside and manufacturers (OEMs) and their performance characteristics via introducing more innovative prod- dancy and low rolling-resistance. inside the home is critical. Electrical tiers across the globe in replacing computer-aided engineering (CAE) ucts to meet the high standards set Styron’s global R&D team is continu- vehicle charging units are a growing steel components with long-glass- simulations. To help improve impact by the recent EU tire-labeling regu- ously on the lookout for high per- application for Styron, with special fiber-filled composites as well as in resistance, expansion and durabil- lation. Our ultimate goal is to sup- formance products and engineering demands on the polymer perfor- application engineering. ity of the structural part of the lift- port global mobility, while reducing processes that help to ensure safe, mance, particularly in terms of de- The Renault Clio is a prime exam- gate, Styron’s engineers introduced the carbon footprint and creating a bit.ly/CMI_Plastics long-lasting operation of sustainable sign freedom, impact at a range of ple. The concept was jointly devel- a long-glass-fiber polymer. more sustainable environment. applications every step of the way. temperatures, extreme mechanical loads and resisting vandalism, while Making A Right Turn Towards providing ignition resistance. Sty- Improved Energy Efficiency ron has been closely collaborating with the utility market, especially in The electric vehicle (EV) market is Southern Europe, to develop the next gaining momentum with traditional generation of charging stations made automakers recognizing the need to with polycarbonate (PC)/Acronitrile- butadiene-styrene (ABS) blends. INTELLIGENT FIELDBUS Due to its mechanical and physical Hall 7A properties, PC/ABS is an appealing KEEPS YOUR PROCESS RUNNING Booth 338 choice of material. The chargers’ cas- ings can withstand heat, aging and humidity, while their internal electrical connections exhibit enhanced functional longevity compared to traditional materials such as steel. Styron’s next generation of charging stations are being devel- Future Technology For More Availability oped with advanced resins that ʑ address all performance require- Advanced Diagnostic Gateway with I/Os for the control cabinet ments, in combination with an ef- ʑ Segment Protectors with progressive fault isolation fective chlorine- and bromine-free ʑ Diagnostic-enabled surge protector with DCS connection – no flame retardant package to support repetitive checks sustainability requirements. ʑ Leakage sensors for guaranteed water-proof installation

Illuminating the Road to Improved Light Efficiency Fig. 3: green tires will significantly contribute Fieldbus with intelligent diagnostics: www.pepperl-fuchs.com/intelligent-ʜeldbus to improving fuel efficiency and reducing CO2 When it comes to lighting efficiency, emissions LED (solid-state) lighting is playing

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Quo Vadis Phthalates? Road Ahead for High Phthalates

The ECHA recently concluded in fluenced in part by the strong pres- large enough volumes of high phtha- its re-evaluation of the restrictions sure exerted by NGOs, campaigning lates to satisfy the needs of tens of on DINP and DIDP in toys and child- scientists and consumer groups. thousands of companies throughout care articles that no further risks the supply chain. High phthalate have been identified from the use Public Debate And Misconceptions producers, who are strongly com- of these substances by adults or chil- mitted to product safety and the dren. While the existing restrictions In public and media debates, par- use of science and risk assessments, are maintained, it can be concluded ticipants often mistakenly use the have constantly supported their cus- This evolution in the science around phthalates and their legal that DINP and DIDP are safe for use general term “phthalates” when tomers to enable this transition. In classification has been closely followed by the global market. © Beth Van Trees - Fotolia.com in all current applications. The final talking about some of them, thus addition, plasticizer producers are decision from the European Com- implying that they all have negative working on improving the sustain- mission is expected later this year. health effects, such as being endo- able use of additives as part of the Not All Created Equal – The Eu- that will not be granted At the global level, the trend is crine disruptors. However, there is work accomplished by VinylPlus, the an authorization for spe- quite different; DEHP still represents National Initiatives ample research on the safety of high European PVC industry sustainabil- ropean plasticizers market has evolved cific applications will be subject to around 50% of all phthalates used molecular weight phthalates, which ity program. considerably in the last decade, mov- specific phase-out dates; for low worldwide. It is also important to Pressure at the national level in Eu- should not be ignored. In fact, most Ensuring that the differences being away from classified low phthalates phthalates this is Feb. 21, 2015. note that the non-phthalate plasti- rope has been coming mainly from studies claiming to prove that phtha- tween high and low phthalates are However, specific concerns re- cizer market segment is growing in Denmark and France, with Denmark lates are endocrine disruptors have effectively communicated and un- to nonclassified high phthalates and lated to phthalates continue to be Europe and elsewhere in the world. working on its own national phtha- studied only DBP or DEHP, both clas- derstood remains a key challenge alternative plasticizers belonging to mistakenly extended to the entire late strategy and France working sified as toxic to reproduction. for the plasticizers sector, although family when high phthalates actu- Policy Update on a national endocrine strategy. It is therefore important to avoid progress has been made in recent different chemical classes. However, ally can be safely used in all cur- In Denmark, a national ban on low making unjustified, undifferentiated years. The industry will continue some phthalates continue to be in the rent applications. Extensive risk The REACH regulation has been in- phthalates — DEHP, DBP, DIBP and and generic claims when referring working hard to provide the infor- spotlight of regulators, environmental assessments performed by inde- strumental in further defining the BBP — was announced in December to the effects of single substances mation needed by policymakers, pendent sources and EU authorities differences between the two main 2012, later to be postponed by two that are not relevant to the entire regulators, users and other stake- nongovernmental organizations and have concluded that high molecu- groups of phthalates. In the case of years. This ban will now be effec- family. holders to help ensure that society consumer groups. The industry con- lar weight phthalates (DINP, DIDP, DEHP, BBP, DBP and DIBP, they must tive as of 2015. The main reason for Another common misconception has the benefits of flexible PVC ar- DPHP) pose no risk to human health follow the authorization process to this postponement is that these four is that phthalates can readily “leach ticles and that they are safe and en- tinues to work on making sure that in current applications. They do not determine if they can continue to be low phthalates continue to be used out” from articles and migrate into vironmentally sustainable. consumers, media, industry and poli- require any classification or labeling used in specific applications beyond widely outside the EU in the manu- the surrounding environment. How- cymakers understand the difference nor are they on the REACH Candi- their sunset date of Feb. 21, 2015. facture of electrical and electronic ever, it is actually quite difficult for Dr. Stéphane Content, manager, date List for Authorization. As of Aug. 21, the phthalates au- equipment and other articles that phthalates to separate from the European Council for Plasticizers between high and low phthalates. thorization application window has are subsequently imported into the plastic in which they are physically and Intermediates (ECPI) Market Trends closed, and the European Chemicals EU. Thus retailers in Denmark who bound following high-temperature Agency (ECHA) has announced that are importing these articles asked processing. Reports of these plasti- 22 Contact: Phthalates are broadly divided into This evolution in the science around several dossiers have been submit- the Danish government to delay the cizers causing asthma and allergies Dr. Stéphane Content two groups — high and low — ac- phthalates and their legal classifica- ted. ECHA said it would disclose de- ban. have since been shown to be un- European Council for Plasticizers and Intermediates cording to their molecular weight. tion has been closely followed by the tails of these applications when the In addition to the work on an up- founded and scientific studies have Brussels, Belgium They are different in terms of ap- global market. In the EU in particu- related public consultations start in coming national endocrine strategy, concluded that household dust does [email protected] plications types, their health and lar, demand has been steadily shift- mid-November. France has already passed a ban not correlate to human exposure www.plasticizers.org environmental effect, and their le- ing away from low molecular weight Three of these low phthalates on DEHP in medical tubing used levels for phthalates, and neither is gal classification. In the case of low phthalates (LMW), which were in (DEHP, DBP and BBP) have also in pediatrics and maternity wards, it an indicator of indoor air quality. phthalates (known under acronyms widespread use until the 2000s, to- been included on the Restriction of effective in July 2015. The debate such as DEHP, DBP, DIBP, BBP), they ward high molecular weight phtha- Hazardous Substances (RoHS) Di- around these substances, often The Future are classified as substances of very lates (HMW), which today represent rective list of potential substances linked to the issue of endocrine dis- high concern (SVHC). Under the around 85% of all phthalates being to be restricted in electrical and ruptors, has been high on the media It has taken more than 20 years bit.ly/CMI_Phthalates REACH regulation, SVHC substances produced in the EU. electronic equipment. and political agendas in France, in- and cost billions of euros to develop

G S L U O N B S A T L A

R IN E A A B C I H L IT Y

SOLUTIONS TO

N IO T A BREAKTHROUGH V O N

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chemanager-online.com/en CHEManager Europe 10/2013 PLASTICS Page 21

Drastic Transformation VinylPlus: Taking the Lead in the Quest for Sustainability

United Industry – Twenty years ago, it was hard to imagine that in- Brigitte Dero creasing concerns about the way PVC general manager, European Council of was produced would trigger such a Vinyl Manufacturers, radical industry transformation. In its DGM VinylPlus third year, VinylPlus is well on target numbers speak for themselves. In to meet the ambitious, new 10-year 2012, VinylPlus registered a record goals carrying the work started with 362,076 tons of PVC recycled. Post- Vinyl 2010 to the next level. consumer and limited types of post- industrial PVC, including some of the regulated waste streams in the EU, Everything started 13 years ago are accounted for based on the new, with the launch of Vinyl 2010, the wider scope of the program. The first-ever sustainability program of industry, which has been working the European PVC industry. Based for years on technologies to recycle on the voluntary commitment of the difficult-to-treat PVC waste such as entire value-chain — resin manu- VinyLoop, is currently evaluating a facturers, additive producers and number of innovative processes. converters represented by their Significant efforts have been respective European associations made to address the issue of “leg- (ECVM, ECPI, ESPA and EuPC) — all acy additives,” i.e., the presence of its members renewed their sustain- certain substances in recycled PVC ability pledge in June 2011. Vinyl- that are, or may be, restricted or Plus was born. prohibited in the future following the Registration, Evaluation, Author- © Maksim Samasiuk - Fotolia.com Bigger Challenges, Ambitious Goals ization and Restriction of Chemicals (REACH) regulation. A solution has “The EU needs a strong industrial look into your supply chain, subsidi- terials back into the production Brigitte Dero, general manager, While it initially aimed to address been found for cadmium and, very base but this has not always been aries and other contacts, that kind stream, extending the added value European Council of Vinyl the industry’s waste management recently, for DEHP. More discus- the case. The current economic cri- of conversation and dialogue is part of PVC’s inherent durability and ver- Manufacturers, DGM VinylPlus needs, at the completion of Vi- sions with the European Commis- sis has been a wake-up call.” of how we need to do things in the satility. Many things remain to be nyl2010 the targets set had been sion are, however, necessary to find He highlighted the need for man- future … Together we must create done, of course, but the ongoing ef- met and exceeded in many cases. a way that will reconcile resource ufacturing to be “the backbone” of and catalyze transformation and forts of the PVC industry are clearly The achievements are particularly efficiency and consumer safety. our economy, especially when tak- change,” said Ambassador Tomas going in the right direction. 22 Contact: notable when it comes to collection The sector also registered a de- ing into account that about 80% of Anker Christensen, senior advisor at All the solid work done so far is Brigitte Dero and recycling. In 1999, there was no crease of 76.37% in lead stabilizer research and development comes the United Nations Office for Part- the best springboard to take the in- VinylPlus infrastructure for PVC recycling in consumption in the EU-27 compared from this sector. nerships, at the 2013 Vinyl Sustain- dustry to the next level. In the words Brussels, Belgium Europe, and many dismissed it as an with 2007 levels, well on track to ability Forum. of the European Union’s Cozigou, Tel.: +32 2 676 74 45 unrecyclable material. At the end of complete the substitution by the Competitive And Sustainable “the PVC industry has a great role to [email protected] the program almost 1 million tons end of 2015. What’s Next? play” in Europe’s journey to smart, www.vinylplus.eu of PVC had been recycled in Europe. Indeed, the slowdown in Europe sustainable and inclusive growth. Additives such as cadmium stabiliz- Working Harder in Times of Crisis has more than ever established the The progress of VinylPlus proves We must make sure we continue to ers have been phased out. need for a globally competitive and that the industry is successfully have the support of the entire value- Achieving the initial goals gave PVC is one of the most widely used sustainable industrial sector. Both moving to a truly circular economy chain; only together can we continue bit.ly/CMI_PVC the PVC industry the necessary con- plastics in the world, after polyeth- goals are part of VinylPlus’ genes as model, which puts end-of-life ma- the journey toward sustainability. fidence to launch VinylPlus, with ylene and polypropylene. However, the program strives to increase re- more ambitious recycling targets, difficult economic times have taken source efficiency as a way to create product stewardship guidelines on their toll on the industry. According jobs and new opportunities, drive the sustainable use of additives, in- to recent market figures that IHS down costs and boost competitive- vestment in R&D initiatives and the Chemicals presented at the 2O13 ness while minimizing energy con- promotion of a sustainable develop- VinylPlus Sustainability Forum, the sumption and greenhouse gas emis- ment culture. When it comes to waste construction sector’s downturn has sions. management, the industry aims to had a deep negative effect, shrink- In that sense, a number of Vi- recycle 800,000 tons per year of PVC ing margins and putting Europe nylPlus task forces are fully opera- by 2020 including 100,000 tons of in a risky position compared with tional, studying how to incorporate difficult-to-recycle waste. fast-developing economies such as renewable energy and raw materi- China, India or Turkey. als, the sustainable use of additives Recycling, The Program’s Cornerstone Speaking at that same event co- and the environmental footprint of organized by ECVM and VinylPlus, PVC production. A VinylPlus prod- When it comes to recycling, one of the European Union’s Director of DG uct label concept for PVC products January 21-24, 2014 Miami Beach, FL USA the main pillars of this program, the Enterprise Gwenole Cozigou said, has been developed in collaboration with the Natural Step — a nongov- PVC recycled within the Vinyl 2010’s and VinylPlus’ frameworks Fig. 1 ernmental organization providing input and guidance for the devel- Pb stabilizers EU-15 Ca-based stabilizers EU-15 opment of the VinylPlus program Pb stabilizers EU-27 Ca-based stabilizers EU-27 — and the U.K. expert certification body BRE Global. 140000

120000 Dialogue: The Recipe for Success

100000 A special trait of VinylPlus has been 80000 its bottom-up development — an Tonnes 60000 open process of stakeholder dialogue with industry, NGOs, regula- 40000 tors, public representatives and us- 20000 ers of PVC — as well as its critical partnership with the international 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 NGO the Natural Step (TNS). The System Conditions for a Sustainable

Source: VinylPlus © CHEManager Europe Society developed by TNS were used to define the program’s key chal- REGISTER PVC recycled (in tons) within the Vinyl 2010’s and VinylPlus’ frameworks. lenges and objectives, including the need to widely promote sustainable thinking at a global level. Stabilizers production data Fig. 2 Raising sustainability awareness EU-15 & EU-27 (plus Norway, Switzerland and Turkey) is indeed a key component of the Pb stabilizers EU-15 Ca-based stabilizers EU-15 program, recognizing that progress Pb stabilizers EU-27 Ca-based stabilizers EU-27 will be equally dependent on wid- 140000 ening understanding throughout industry, as well as in society gen- 120000 erally. In that regard, a number of 100000 communication projects have been supported to reinforce the Volun- 80000 Where R&D, Procurement, and Custom Manufacturing Connect. tary Commitment messages along Tonnes 60000 the value chain. VinylPlus is also engaged in external debates in- 40000 cluding the participation at Rio+20, www.informex.com In Partnership with: 20000 the United Nations Conference on Find Us: Sustainable Development. The Vi- 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 nylPlus Voluntary Commitment was included in the Rio+20 Registry of Commitments. Source: VinylPlus © CHEManager Europe #myinformex “Your cradle-to-cradle approach Stabilizers production date (in tons) EU-15 and EU17 (plus Norway, Switzerland and Turkey). is exactly what is needed. So, if you

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The East Is Green Asia’s Role in the Commercialization of Bioplastics

Going Green, Going East – A recent study by Nova Institute their product portfolios to local de- entirely unknown to them. So be- forecasts global biopolymer capaci- mands, the last one is too frequently sides improving cost/performance Developing more sustainable mate- ties to grow from 3,500 kt in 2011 ignored. Chinese companies such as issues, a key lever for developing rials and meeting demand patterns to approximately 12,000 kt in 2020. Huawei, Haier, Lenovo and Geely the Chinese bioplastics market is in Asian growth markets are two of New production capacity in Asia are becoming truly global brands investment in customer education. alone will be larger than combined and increasingly receptive to more Looking ahead, the key drivers for today’s major challenges for Euro- additions in the rest of the world. innovative technologies. They re- bioplastics in China are seen as pean chemical companies. While Asia To better understand the drivers be- quire dedicated marketing efforts twofold: A stricter legal framework hind these projections, it is essential and application support from West- would push the market in the short- will play a critical role in any large- to analyze feedstock availability, in- ern chemical suppliers. to mid-term, whereas increasing scale commercialization scenario of dustry infrastructure, customer in- In the light of these develop- consumer demand and related bioplastics, its regional differences are dustries and government policies in © svort - Fotolia.com ments, SusTech Consult conducted green strategies of end-users will some of the region’s key countries — a primary survey among more than pull the market in mid- to long-term. striking when considering parameters notably Japan, Thailand and China. 100 plastics processing companies such as feedstock availability, industry in China to analyze their views Strategic Implications Japan: R&D Cluster on current and future use of infrastructure, customer industries and bioplastics. Bioplastics in Asia are no low- government policies. With its high dependency on oil- hanging fruit. While Thailand is based naphtha imports, Japan Survey Results on the way to become one of two Bioplastics receive an increasing strives to strategically diversify its or three global supply hubs for amount of attention by both industry raw material supply. Its tradition- Thailand: Production Hub plastics consumption is larger than Companies participating in the sur- bioplastics, the Asian demand per- and consumers as one of the main ally strong chemical companies, that of all European countries com- vey were 75% Chinese entities and spective is significantly more dif- drivers toward a bio-economy. The innovative customer industries and Other investments in Thailand — bined. It must play a crucial role in 25% Sino-foreign joint ventures ficult to assess. Educating Asian term bioplastics, however, encom- environmentally conscious consum- like the 75 kt PLA monomer plant any large-scale commercialization from different value chain posi- customers along the value chain passes a range of polymers that ers provide fertile ground for de- of Purac — give evidence of the scenario of bioplastics. Current bio- tions: original equipment manufac- on bioplastics is a strategic priority. can either be bio-based (at least velopment and launch of bio-based country’s ambitions in becoming plastic capacities in China are yet re- turers (OEMs), branded converters Within this, evolving global brand partially), biodegradable or both. As material alternatives. Automotive the major production hub for bio- markably small at approximately 300 and custom molders. Primary focus owners from China constitute a of today, these materials account for powerhouse Toyota is on the global plastics in Asia. Two competitive kt and focus almost entirely on bio- of the survey was on durable appli- widely unexplored target group approximately 1.5% of global plas- forefront in committing to the use advantages stand out: Thailand’s big degradable materials such as starch, cations. for European bioplastic producers. tics demand, but it is estimated that of bioplastics in applications such agricultural base as a major global PBS and PLA. Local market demand A first finding: Compared with they could substitute up to 85% of as vent louvers or radiator end cassava and sugar exporter and is at present almost negligible. other aspects of “green plastics” For in-depth graphics, conventional polymers. tanks. supportive government policies ad- But interpreting the ongoing Chi- such as hazard-free materials, ener- please see the article online. Biodegradable plastics such as Chemical industry players Mit- dressing strategies, standards and nese paradigm shift “from rapid de- gy efficiency in production or recy- starch blends or polylactic acid (PLA) subishi Chemical, Mitsui or Teijin incentives in the National Roadmap velopment to more inclusive growth,” cling solutions, bio-based polymers Bruno Rudnik, managing have dominated early bioplastics mar- are all engaged in bio-based mate- for the Development of the Bioplas- there are at least three major end- are currently still of low importance director, SusTech Consult ket development with applications in rial research projects. Japan, how- tics Industry. user effects driving the market po- to plastics processors in China. No- food packaging, catering products, ever, lacks the natural resources Thailand also boasts a strong up- tential for bioplastics in the country: table exceptions were identified in 22 Contact: shopping bags or agriculture. More and agricultural space to become stream chemical value chain includ- ▪▪ Increasing purchasing power and IT, rigid packaging and consumer Bruno Rudnik, Managing Director, SusTech Consult recently the concept of replacing a bioplastics production center on ing numerous starch, sugar and glu- rising environmental consumer goods segments. SusTech Consult conventional oil-based plastics such its own. Large-scale investments cose plants as well as the largest plas- awareness Only 5% of companies inter- Munich, Germany as PE, PP or PET with their bio-based of Japanese companies are there- tics processing industry in Southeast ▪▪ More sophisticated, value-added viewed had used bioplastics in the Tel.: +49 89 2033 9865 counterparts has gained commercial fore taking place in feedstock-rich Asia. In terms of sheer size, however, products being manufactured in past. And if so, mainly for testing or [email protected] importance. These “drop-in” solutions regions of the world. Mitsui has all eyes are on China. China special series purposes. Major rea- www.sustech-consult.de focus on durable applications in rigid entered a joint venture for bio-PE ▪▪ Proliferation and globalization of sons for not using bioplastics are packaging, health care, consumer production with Dow Chemical in China: Key Market (To Be … ) Chinese brands. high material prices and poor per- goods or automotive sectors and will Brazil, and Mitsubishi Chemical is formance properties. Furthermore, dominate future capacity additions in constructing a bio-PBS plant with its China is the largest plastics processer While the first two points have a striking 18% of respondents stated bit.ly/Bioplastics1 the bioplastics industry. local partner PTT in Thailand. in the world. Since 2010, its annual made Western companies adjust that the concept of bioplastics was Products From Plants Enabling Sustainable Materials with Biosuccinium Succinic Acid

Bio-Based Building Blocks – first large-scale commercial plant cinium helps to drive the emergence dustry and the plastics industry in impurities than the bacteria-based Reliable Company, Reliable Product Quality for the production of succinic acid of new applications (fig. 1). general. technologies that are being used in The need to reduce dependency on from renewable resources. The fa- An upcoming market is polybu- Other applications include those alternative routes for bio-based suc- Reverdia combines DSM’s expertise in fossil resources, a growing world popu- cility, in Cassano Spinola, Italy, has tylene succinate (PBS), a biodegrad- where adipic acid is the current con- cinic acid (figure 4). Reverdia uses materials sciences, life sciences and lation and an increased concern for the an annual capacity of about 10,000 able polymer, for which the market ventional chemical, a large market this yeast technology to produce biotechnology with Roquette’s know- tons and is a step in the company’s is expected to grow rapidly, partly with many opportunities such as Biosuccinium at best-in-class carbon how in plant-based raw-material pro- environment are driving companies to strategy to even larger production driven by global policymaking on (nonphthalate) plasticizers, coating footprint and economics. The best- cessing. These two large international supplement oil-based chemicals with facilities in the near future. The lo- single-use consumer products. When and composite resins, and polyester in-class carbon footprint is also sup- companies have been developing, cation of a second large-scale plant PBS is based on Biosuccinium, it can polyols for polyurethanes. Biosuccini- ported by the Copernicus Institute at producing and supplying bio-based plant-based, sustainable, high-quality is open, and global opportunities are have a renewable content as high um improves the bio-based content of Utrecht University in the Netherlands. products globally for decades. chemical building blocks. being evaluated. as 50% and even 100% if bio-based these products as well as the carbon It conducted a Life Cycle Assessment Reverdia benefits not only from 1,4 butanediol (BDO) also is used. and environmental footprint (fig. 2). study, which compared various pro- the capital and expertise of both Reverdia, the joint venture between Applications PBS also shows interesting physi- Biosuccinium has now been produced duction methods in detail, assuming mother companies but also from Royal DSM and Roquette Frères, cal properties, like high elongation/ for several years and has been tested all other things are equal (especially their production facilities. Biosuc- produces Biosuccinium sustainable Biosuccinium succinic acid pro- flexibility, good temperature resist- and validated in several of these ap- the energy mix and feedstock usage). cinium formerly was produced in succinic acid, with proprietary green vides impetus for an entire range of ance and easy processing. It can be plications by numerous customers. The study found that the yeast-based a demonstration plant on the Lest- technology. It enables customers to more renewable, sustainable bio- applied in a pure form, but it also fermentation process at low pH, with rem site of Roquette in France, and produce bio-based, high-quality based products. While conventional represents an ideal blend partner Best-in-Class Carbon Footprint and Economics direct crystallization, as used by the production facility in Cassano materials while at the same time markets for succinic acid include in compounds. Copolymerization Reverdia to produce Biosuccinium, is again backward integrated with substantially improving their envi- pharmaceuticals, food, coatings with different types and content of Reverdia developed and commercial- has significantly lower greenhouse a Roquette biorefinery for on-site ronmental footprint. and pigments, Reverdia sees that co-monomers can obtain a range ized a unique, proprietary, low pH gas emissions than other fermenta- production of the starch feedstock. In December 2012, Reverdia the production of a high-quality, of properties, which provides many yeast technology to convert sugars tion routes or petrochemical routes The Cassano site benefits from the started operations of the world’s bio-based succinic acid like Biosuc- opportunities for the packaging in- into succinic acid. The novel process (fig. 2). The results of this LCA study experience gained in the demon- is simple, stable, very energy-effi- are published as an early view in stration plant where Biosuccinium cient, and generates less waste and Wiley Online Library (August 2013). was produced for more than two years. Reverdia’s first large-scale commercial plant is using the same low pH yeast technology as was used in Lestrem and can therefore also deliver on product quality promises.

For more photos and graphics, please see the article online.

Marieke Smidt, marketing manager, Reverdia

22 Contact: Marieke Smidt Reverdia Geleen, Netherlands Tel.: 31 6 53 185 264 [email protected] www.reverdia.com

bit.ly/succinic-acid Biosuccinium market opportunities Reduction in carbon footprint with Biosuccinium

chemanager-online.com/en CHEManager Europe 10/2013 PEOPLE · PUBLICATIONS · EVENTS Page 23

Biorefineries – Industrial Processes and Products

This book is devoted to biorefineries and biobased industrial technologies, and, as such, is directed towards the technological principles of biorefineries, green processes, plants, concepts, current and forthcoming biobased product lines, as well as the economic aspects. Since the hot topics of green chemistry and green processes are of a multidisciplinary interest, this book will benefit the whole spectrum of the process industry, in- Rx-360 Symposium, Oct. 30, Lisbon cluding chemical engineers, process engineers, Alexander “Xander” Wessels has joined Archroma, the new Rx-360 is a not-for-profit consortium led by volunteers from the Pharma- apparatus construction engineers, chemical in- company consisting of the former Textile Chemicals, Paper ceutical and Biotech industry including both manufacturers and suppli- dustry, chemists in industry, and biotechnologists. Specialties and Emulsions businesses of Clariant as new ers. The purpose is to enhance the security of the pharmaceutical supply The editors and authors are all internation- CEO. Wessels has almost 25 years of chemical, pharma- chain and to assure the quality and authenticity of the products moving ally recognized experts from industry and academia, including Dr. Patrick ceutical and process industry experience and has spent through the supply chain. Rx-360 Symposium will provide attendees an Gruber, the former Vice President and Chief Technology Officer at Cargill the past seven years at DSM, where in his most recent update on the consortium’s activities, provide perspectives on supply Dow, winner of the U.S. Presidential Green Chemistry Award and holder of position he was President and CEO of DSM Pharmaceuti- chain security from leading global logistics providers, and highlight ways more than 40 patents. Alexander Wessels cal Products. Previously, he held various management and to combat falsified medicines, focusing on the EU’s FMD as well as en- executive positions at Unilever, Quest, ICI, and Campina. forcement resources. 22 Biorefineries - Industrial Processes and Products The Dutch native holds an MSc in Molecular Sciences from Wageningen 22 www.rx-360.org Birgit Kamm, Patrick R. Gruber, Michael Kamm University in the Netherlands, and both an MSM and MBA from the Kran- Wiley-VCH nert Business School of Purdue University (USA) and Tilburg University (NL). 2013 ISPE Annual Meeting, Nov. 3-6, Washington, DC 1. Edition July 2010, Price: €135 Pharmaceutical quality metrics will be a key discussion topic between ISBN 13: 978-3-527-32953-3 Dr. Stefan Peterli has been appointed to CEO of CU Chemie Uetikon start- industry leaders and international regulatory agencies at the 2013 An- ing Oct. 1. The Ph.D. chemist has more than 20 years of experience in the nual Meeting of the International Society for Pharmaceutical Engineering research-based and generic pharma and chemical industry. Peterli (48) (ISPE). The session, entitled “Quality Metrics Outcomes: Conversations Planning and Integration of Refinery filled leadership positions in marketing, sales, business development, as with the FDA,” will take place during the Executive Series track on 4 No- well as research and development and project management. Jointly with vember. The industry’s first public conversations on quality metrics took and Petrochemical Operations CFO/COO Thomas Seeler he will lead the fine chemical and API manufac- place at ISPE’s second annual CGMP Conference in June 2013 during a turer to accelerate international expansion of the Lahr, Germany based capacity-attendance workshop-style session. The continuing discussion Divided into three main sections, this book fa- enterprise. Prior to his appointment at CU Chemie Uetikon, Peterli was a will feature presentations from the ISPE Quality Metrics working groups miliarizes readers with the area of planning in member of the management team of Pharmazell. Earlier he worked for on potential metrics for Batch Failure Rates and OOS/Lab Failure Rates, petroleum refining and petrochemical industry, Dipharma, Lonza and Siegfried, respectively. among other new ideas. while introducing several planning and mode- 22 www.ISPE.org ling strategies encompassing single site refinery Frank B. J. Wright has been appointed to the management plants, multiple refinery networks, petrochemi- team of Altana’s subsidiary Byk-Chemie from Oct. 1. The 3rd South America Surfactants HPC Markets Conference, Dec. 2-3, Sao Paulo cal networks, and refinery and petrochemical addition of Wright, previously managing director of the Tailored to provide an overview of the surfactants market in Latin Ameri- planning systems. It provides an insight into rheology business of Rockwood underlines the particular ca, the event provides specific updates on the home & personal care mar- possible research directions and recommenda- importance attributed to the acquisition of the business ket, sustainability trends, latest technological innovations & raw material tions for the area of refinery and petrochemi- by Altana. Wright will actively accompany and support solutions and shares perspectives from leading Latin American producers, cal planning. Several appendices are included the integration process of the rheology business into the retailers and end users. Four sessions will present trends marking the to explain the general background necessary, Frank Wright Byk Additives and Instruments division. In his function as Brazil and LATAM home care markets: Opportunities & Development including stochastic programming, chance con- new managing director of Byk, Wright’s responsibilities Of Home Care Market in Brazil, Challenges in the Institutional Clean- straint programming, and robust optimization. will include the management of the new Oilfield business line and the ing Market, Latin America Surfactants Outlook, Competitive Strategy in existing Industrial Applications business line. South America Surfactants Industry. Attendees will gain insights on the surfactants market in South America and meet leading oleochemicals 22 Planning and Integration of Refinery and Petrochemical Operations Martijn van Koten joins Borealis’executive board as executive vice & surfactants producers, intermediate & feedstock suppliers, personal Khalid Y. Al-Qahtani, Ali Elkamel president operations effective Nov. 1. He succeeds Herbert Willerth & homecare manufacturers, FMCG producers, equipment & technology Wiley-VCH who will forthwith, as deputy CEO, focus on Borealis’ Middle East and suppliers, and more. Price: € 79.90 Asia activities. Van Koten joins Borealis after a distinguished career 22 www.cmtevents.com ISBN 13: 978-3-527-32694-5 of more than 19 years at Shell, which has given him broad experience covering the disciplines of Manufacturing, Technical Service, R&D and 9th Plastivision India 2013, Dec. 12-16, Mumbai Strategic Development, in his most recent role at Shell he served as India’s second largest plastics show Plastivision India 2013, organized Managing CO2 Emissions VP Manufacturing East, based in Singapore. Van Koten has a Masters by The All India Plastics Manufacturers’ Association (AIPMA), will wit- degree in Chemical Technology from Delft University of Technology, ness the participation of over 1,500 companies from India and 30 other in the Chemical Industry The Netherlands. countries and expect visits by over 100,000 businessmen and other key stakeholders. AIPMA has invited business delegations from ASEAN coun- This reference and handbook on this hot topic Olivier Brandicourt has been appointed chairman of the tries, Middle East, Africa, Latin America and Eastern Europe. The trade covers the technical and administrative aspects board of management of Bayer HealthCare and member show features finished plastics products, plastics processing machinery, of CO2 emissions, with special reference to the of the Bayer executive council effective Nov. 1. Since mold-making, design and application development, and automation and chemical and petrochemical industry. It dis- March 2013, Prof. Wolfgang Plischke has led Bayer engineering equipment. cusses energy efficient design, cultural aspects HealthCare on an interim basis in addition to his exist- 22 www.plastivision.org and future developments, answering questions ing duties as a Bayer Board Member. Brandicourt has along the way as: 25 years of experience in the pharmaceutical industry,

Techtextil Middle East Symposium, Jan. 19-21, Dubai How can I measure and demonstrate the CO2 Olivier Brandicourt including executive responsibilities in France, the United With the launch of the Techtextil Middle East Symposium and the associ- emissions linked to my production? States, Canada and the UK. He has been a member of the ated Techtextil Pavilion, the Messe Frankfurt is expanding its successful How can I benefit from CO2 neutral invest- Executive Leadership Team of Pfizer for the last three years. Brandicourt conference brand. In 2014 Techtextil, the leading trade fair for the techni- ments using the UNFCCC frame? holds a medical degree with a subspecialty in infectious diseases and cal textile and nonwovens sector will take its first steps into the growing How can I reduce or avoid CO2 emissions by tropical medicine, as well as a master’s degree in biology from Paris 12 markets of the Middle East. Both events will be held concurrently with technical measures and new processes? University, France.

Intersec 2014, the Leading International Trade Fair for Safety & Security. If CO2 emissions cannot be avoided, how is

Over 1,000 exhibitors and more than 22,000 trade visitors are expected the capture and storage of CO2 technically and economically feasible? Jason Fox has been named director of Evonik’s Oil & Gas Group, which to take part in the 16th edition of the fair. The original Techtextil, is held What are the upcoming technical developments regarding CO2 reduction? the German specialty chemicals company formed to boost the resource- biennially in Frankfurt, Germany. Techtextil events in China, India, Rus- efficiency of products it supplies to the oil and gas industries. Fox joins sia and the USA are leading fairs or most important forums for technical 22 Managing CO2 Emissions in the Chemical Industry Evonik after more than 10 years at oilfield chemicals company Nalco textiles in their individual regions. Hans-Joachim Leimkuehler Champion. He earned a bachelor of arts from the University of Calgary 22 www.techtextil.com Wiley-VCH and a master of business administration from Athabasca University in Price: €139 Canada. ISBN 13: 978-3-527-32659-4 © anyaivanova/Fotolia

MEET US AT THE CPhI Worldwide Oct. 22–24, Frankfurt, Germany

www.gitverlag.com

chemanager-online.com/en Page 24 AT A GLANCE CHEManager Europe 10/2013

Camelot Management Consultants Pharma Management Radar Survey

In August and September 2013, the Pharma Manage- ment Radar expert panel, consisting of more than 80 executives from globally active pharmaceutical companies based in 16 countries, was interviewed. After the surprisingly positive estimation of the current business climate registered in the first Management Radar survey published half a year ago, the experts generally remain satisfied. This particularly applies to the generics executives, all of whom rate the business climate as “mostly good.”

Markets Bouncing Back Considering the business climate in the next 12 months, the overall estimation has brightened up slightly, especially among innovators who had been considerably more pessimistic at the beginning of this year. It seems as if at least some of the innovators had found a way to cope with the “additional benefit/ outcome topic” and thus have developed a slightly more positive assessment in the course of the year. While the pharmaceutical industry is still suffering from the Eurozone crisis in various regions, some of the established markets outside Europe seem to be coming back: Demand expectations for Japan and Every Second Counts – When rescue helicopters take off, a few seconds can make all the difference. Whether they’re responding to North America — which may also be positively affec- a car accident in a city center, flying on a rescue mission in the mountains, or battling strong winds at sea—the extreme conditions ted by re-elected President Obama’s health-care re- place very high demands on the material. The Eurocopter EC135 has proven its reliability in air rescue operations thanks to its optimal form — are showing some considerable growth. safety and stability. The rotors are stable, yet flexible and lightweight; the engines are reliable and powerful. Another safety element is invisible: the front windscreen made from Plexiglas from Evonik. It provides a panoramic view and protects pilots from UV rays, offering Development Of Global Demand them clear visibility and maximum safety during a rescue mission. A striking difference between generics’ and innovators’ demand expectations can be found in emerging regions such as China and Africa, where the generic segment is much less optimistic. This clearly has to do with the fact that in these regions innovative products are Coming Up in the November issue of CHEManager Europe available mainly for wealthy self-pay patients who can afford even higher prices than are paid by the health- ▪▪ Interview with Danish author and academic Bjørn Lomborg care systems in developed countries. However, the ▪▪ Successful Switch to Membrane Technology: WeylChem PPC in Thann, France by Lejla Skaljic,Weylchem poor majorities of these emerging regions can’t afford ▪▪ The Influence The Proliferation Of Shale Gas On The Global Petro Industry by Michael Mbogoro,Frost more than a minimum price, thus making the situation ▪▪ The Chemical Industry in China and the Middle East: Cooperation or Conflictby Dr. Kai Pflug, Management Consulting — Chemicals rather unattractive for the producers of generics com- ▪▪ Downstream On an Up in Azerbaijan: Investment Opportunities in the Petrochemical Industry by Zaur Mammadov, pared to that in the established markets. Sumgait Chemical Industrial Park ▪▪ Next Generation Manufacturing: Holistic Business Approach Supports ‘Industry 4.0’ Principles by Scott Bolick, SAP Regional Investment Plans ▪▪ Minimize Carbon Footprint and Maximize Supply Chain Value by Laura Rokohl, AspenTech When it comes to regional investment plans for the ▪▪ And much more! next 12 months, the executives’ answers differ considerably from their demand expectations. Eastern Eu- Hot off the press on Nov. 14 rope, Russia and North America have lost some of their Advertising deadline is Nov. 4! investment attractiveness. The top destinations for future investment are now China, Northern Europe and Brazil, when taking generics and innovators together.

Looking at the two segments separately, India is the Volume 4 October 2013

most important investment region for generics, whe- 1 reas innovators prefer China and Northern Europe. It This issue of CHEManager Europe contains shows that there is a slight shift back toward the esta- the special supplement

blished markets. The BRIC markets seem to have lost a Ihlenfeld, unpict/Fotolia; Plastics Europe; Evonik.

/Fot

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Victori

in Picture: ©

Ma Industry Trends

 Automotive | Innovative Lightweight Construction Asked for the most important industry trends in the  Urbanization | New Energy Concepts for Metropolitan Areas  Manufacturing | Innovative Processes for Optical Applications  Materials | Thermoplastic Composites and Fiber-reinforced Plastics pharmaceutical industry, two-thirds of the generics  Lighting | Polymers Increase Energy Efficiency, Safety and Freedom of Design executives name the influence of biosimilars. Given that the biosimilars business requires far more R&D than the traditional generics business, it is logical that the R&D aspect is seen as an important trend by as many generics as innovators. This trend is going hand- in-hand with the development of alternative business models, which also plays a major role for generics. The Index latter are driven by pricing pressure that makes ven- dors constantly look for new marketing and distribu- Abbott 15 ECPI European Council for Plasticizers NNE Pharmaplan 13 tion methods in order to stabilize their business. Abbvie 15 and Intermediates 20 Nova Institute 22 Addivant 20 ECTA 12 Novartis 15, 17 — Michael Jarosch and Dr. Axel Sinner, Camelot Aesica 15, 16 Egis 8 Novasep 1, 16 African Development Bank 9 ESAD 12 Novozymes 1 See also page 16 Akrikhin 8 ECHA European Chemicals Agency 20 Oxea 4 AkzoNobel 2, 4 Evonik 12, 15, 16, 23, 24 Packaging Coordinators 18 Aldorfit 7 ExxonMobil 12 Pepperl + Fuchs 19 Altana 23 FDA 15 Pfizer 15, 23 Antares Vision 18 FDA Smart 17 Pharmastandard 8 Antwerp Port Authority 12 Ferro 12 Plastics Europe 21 Imprint Archroma 23 Fresenius Kabi 16 Polpharma 8 Ashland 5, 8 Frost & Sullivan 13 Porter Novelli 19 Publisher: Bank Account arbitrarily use the unmodified AstraZeneca 18 Wiley-VCH Verlag Roland Thomé Commerzbank AG Darmstadt, work/editorial contribution for Gempex 4 Praxair 12 Athabasca University 23 GmbH & Co. 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