9/2012 September

Materials Solutions Locations Dow Corning’s new Solar Energy The newspaper for the European Chemical Industry Exploration and Development Parks and their Operators Face Research Center in Belgium. chemical and Great Challenges.

Page 6 life science markets Pages 10, 11

N ewsflow Locations European chemical industry parks and their operators are facing great Supply Chain Management Weighs Heavy challenges; increasing and com- plex demands of globally active The Pharmaceutical Ingredients and Custom Synthesis Industry Prepares for Future Pharma Market Challenges chemical companies on the one hand, ongoing global competition among chemical industry parks on the other. In an overview on Euro- pean chemical industry parks the pros and cons are discussed. Kokkola, one of Finland’s Industrial Parks is Scandinavia’s biggest che- Jean-Luc Herbeaux Roger Laforce Marianne Späne mical manufacturing site is presen- Head of Health Care Business, CEO, Zach System EVP Global Business Development, ted in this issue. Evonik Marketing and Sales, Siegfried More on Pages 10, 11, 12 ▶ Pharmaceutical companies today The pharma industry and its entire Streamlined operations via CPhI 2012 Madrid will be hosting this year’s need an agile, reliable and empower- supply chain are undergoing a lean manufacturing practices CPhI Worldwide Event, from Octo- “ “ “ ing partner with global resources” to paradigm change considering the” are today’s standard which is” ber 9-11. The global pharmaceuti- increase efficiency and keep them on increasing importance of emerging increasing the demand for contract cal ingredients industry is meeting; trying to stay informed about the the cutting edge of technology. countries now also seen as markets. manufactured drugs. latest industry trends and remain one step ahead of a rapidly chan- ging pharmaceutical market. We inquired opinions of some of the market players to hear the newest trends first hand. More on Pages 13, 14, 15 ▶

Pharma Second quarter and first half © pixelfabrik - Fotolia.com reports of “Big Pharma” players Elliott Berger showed that the crisis hit phar- Dr. Peter Pojarliev Alexander R. Wessels Vice President, Global Marketing maceuticals earlier than chemi- Director, Business Development, CEO, DSM Pharmaceutical and Strategy, Catalent Pharma Solutions cals. While France’s Sanofi a pro- Euticals Products jected 2012 sales loss, UK’s Glaxo SmithKline (GSK) has trimmed its outlook. Further companies pre- Among strategic partners open As global supply chains expand, the Partnering and open innovation sented in our pharmaceuticals “communication and common under- “safety of ingredients and finished “models are clearly becoming more overview are AstraZeneca, No- ” ” ” standing of the project goals and drugs, as well as the sustainability of significant in the drug development vartis, Bayer, Pfizer, Merck & Co, Bristol-Myers Squibb. expectations are key success factors. these supply chains, become critical. and delivery space as well.

More on Pages 2, 11, 18 ▶ Chemicals In July and August, second quarter and first half figures were presen- ted. For the industry’s majors in particular the numbers published so far this year have been on course or only slightly weaker. Even if che- mical output in the European Uni- on sank by 2.4% year-on-year from January to June, selling prices were Hendrik Baumann David DeCuir Thomas D’Ambra 3.4% higher, Cefic reported. Com- Commercial Director, Director, Albemarle Fine Chairman, CEO & President, panies presented in our chemicals CU Chemie Uetikon Chemistry Services AMRI overview are BASF, Dow Chemical, LyondellBasell, DuPont, Arkema, Suppliers to the pharmaceutical Recent issues in the pharma market Solvay, Rhodia, Bayer. As the custom synthesis market industry will be required to make coinciding with prolonged economic More on Pages 9, 20, 22, 24 ▶ “is extremely diversified, we will “ “ ” smaller campaigns of multiple drugs” recession in Western countries ”are probably see a market consolidation in their facilities rather than large leading to changes in how pharma in the next years. campaigns or even dedicated lines. companies consider outsourcing.

Read the related article and the complete statements in the Pharma section on pages 14/15.

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Research & Development, Production and Distribution of API worldwide. Don’t have your own CHEManager Europe? Wrong address?

CPhI Worldwide 2012 Send an e-mail to 9 - 11 October, Madrid chemanager-europe@ Learn more at booth 8D18 gitverlag.com ntgelt bezahlt · 78719 E ntgelt · DPAG· · Pressepost Weinheim · PF 11 05 64 69469 Under control of Wiley VCH Wiley

chemanager-online.com/en Page 2 Markets & Companies CHEManager Europe 9/2012

Content DECISIVE INFORMATION

THE PORTAL AND NEWSPAPER FOR THE EUROPEAN CHEMICALS AND PHARMACEUTICAL MARKETS

Front Page Pharma Chemical Ireland Strategy on Track 12 Austerity Measures Bite 18 Long Term Solutions Counteract Wide Range of Challenges The European Pharmaceuticals Economy Supply Chain Management Weighs Heavy 1, 14-15 Matt Moran, Director, PharmaChemical Ireland Dede Williams, Freelance Journalist The Pharmaceutical Ingredients and Custom Synthesis Industry Prepares for Future Pharma Market Challenges Nordic Clustering 12 The Kokkola Industrial Park is Scandinavia’s biggest Production 19–21 Chemical Manufacturing Site Markets & Companies 2–9 The Most Trusted Advisor 19 Emerson’s Steve Sonnenberg on the Importance of Trust The Best of Both Worlds 4 Pharma 13–18 Supply Chain Management Organisations Developing in Business Relations Towards a Coordinated Network Model Interview with Steve Sonnenberg, Vice President of Emerson ¡Bienvenidos a la Feria! 13 and President of Emerson Process Management CPhI Worldwide, the Leading Annual Networking Event of the Contract Manufacturing in India and China 5 Global Pharmaceutical Ingredients Industry, Returns to Madrid Government Policies Encourage Outsourcing of Western Interview with Andrew Pert, Brand Director CPhI Worldwide, Scrum in the Regulated Environment 20 Pharma Industry ICSE, P-MEC Europe, InnoPack, UBM Live Opportunity or Risk for Computer Systems Validation? Ayelt Komus, Professor, Koblenz University of Applied Sciences; Sabine A Showcase for Energy Efficiency 6 Komus, consultant with IDS Scheer Consulting and lecturer at the Kob- Materials Solutions Help makeSolar Energy a Competitive Changing Times 14, 15 Alternative to Traditional Energy Sources Pharmaceutical Supply Chain Experts Discuss Challenges Arising lenz University of Applied Sciences; Paul Noble, consultant, IQC Group Interview with Eric Peeters, Vice President, Solar Solutions & Wind Energy from a Changing Pharma Business Model Solutions, Dow Corning Interviews with Jean-Luc Herbeaux, Evonik; Roger Laforce, Zach System; Optimization of Product Protection 21 Marianne Späne, Siegfried; Alexander R. Wessels, DSM Pharmaceutical Implementation of Improved Hygiene Zones at Swiss DSM Fine China 7 Products; Hendrik Baumann, CU Chemie Uetikon; Elliott Berger, Catalent Site in Sisseln The Future of Fine Chemical Production Pharma Solutions; David DeCuir, Albemarle Fine Chemistry Services; Dr. Wolfgang Müller, Managing Director, Chemgineering Dr. Kai Pflug, CEO, Management Consulting and Dr. Bernhard Thomas D’Ambra, AMRI; Dr. Peter Pojarliev, Euticals Hartmann, Managing Director, A.T. Kearney China

© Nmedia/fotolia.com Thriving Generics 16 Chemicals 22 What’s Up For Sale? 8 Patent Cliff Revenues Fertilize Generics Companies M&A in the Chemicals & Materials Sector Dr. Jerry Isaacson, Head of Global Data Healthcare Industry Dynamics Carolyn Buller, Partner, and Global Chemicals Industry Group Leader, On a Sound Basis in Line with the Current Trends 22

online.com/en Sepawa 2012: On a Growth Course with Numerous Innovations

chemanager - Squire Sanders No Experimenting 16 Stick to Your Strengths with Biosimilars chemanager - The Latest from Socma 8 Hard Wood with a Soft Core 22 Expect More 17 online.com /en The Industry’s Pulse at Half-time 9 Siegfried Promises to Deliver on its Slogan as the Company The Chemicals Economy People · Publications · Events 23 Dede Williams, Freelance Journalist Keeps Adding Pieces to its Puzzle of Offerings Interviews with Marianne Späne, the company’s Executive Vice Presi- www.gitverlag.com dent, Global Business Development, Sales and Marketing, Siegfried Locations 10–12 At A Glance 24 HPAPIs and ADC Toxins 18 European Chemical Industry Parks 2.0 10, 11 Manufacturing Challenges for the Targeted Drugs of Tomorrow Index 24 Insights from Global Benchmarking Aline Devoille, marketing manager – synthetic molecules and Jean- Christoph Behrendt, Scopein Management Consultants François Marcoux, technical business development manager, Novasep Imprint 24

Lanxess Rises into German Warwick Reaches Agreement BASF Included in Three Indices

Stock Index DAX to Acquire IDC BASF was again included in the tection. In the current ranking, the global Dow Jones Sustainability In- Carbon Disclosure Leadership Index Warwick Chemicals, a manufac- a bleach activator used in laundry dex (DJSI World). The company has (CDLI) listed BASF with an outstand- turer of detergent chemicals for the and household product applica- been recognized for its sustainabil- ing place for the eighth time and the laundry and home care market, has tions. The business was acquired ity engagement in areas such as cli- company has been included in the reached an agreement to purchase by Dubag in February 2011 from mate strategy, risk and crisis man- Carbon Performance Leadership International Detergent Chemicals Henkel, which began producing agement as well as human capital Index (CPLI). The CDLI contains 51 from Dubag Celtic Holdings. The TAED for in-house use in 1984. The development. The DJSI World is one companies that disclose their data terms of the proposed transaction proposed transaction is expected to of the most recognized sustainabil- in a particularly transparent and were not disclosed. IDC is based complete in 2012, subject to review ity indices and represents the top 10 comprehensive manner. The CPLI in Cork, Ireland and manufactures by the relevant regulatory authori- percent of the largest 2,500 compa- lists 33 companies based on their tetraacetylethylenediamine (TAED), ties. ▪ nies in each industry included in the exemplary performance in climate Dow Jones Global Index. According protection activities – for example to the international investor group their climate strategy, their stake- Deutsche Boerse will include companies trading on the Frank- Azelis to Represent Carbon Disclosure Project (CDP), holder communication or their man- Lanxess in Germany’s leading stock furt Stock Exchange. According to BASF is among the ten leading com- agement system. index DAX 30 effective September Deutsche Boerse DAX measures Robinson Brothers in Rubber panies in the world in climate pro- ▪ 24, 2012. On September 5, Lanxess the performance of the 30 larg- shares closed at EUR 60.00. The est German companies in terms of Azelis has been appointed distribu- DAX (Deutscher Aktien Index) trading volume and market capi- tor for the Benelux region by Rob- consists of the 30 major German talization. ▪ inson Brothers, a leading UK based F.I.S. Moves into Biotechnology om .c fine speciality chemical manufac- a li o t o turer. Azelis will be able to offer F

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Valeant Pharmaceuticals Inter- an acquisition spree since its 2010 closely with Robinson Brothers to © North America with the acquisition products. This deal creates new op- national agreed to buy Medicis takeover by Biovail Chief Executive grow the market in Benelux with of Montreal-based Delmar Chemi- portunities, broadening the Group’s Pharmaceutical for $2.6 billion in Michael Pearson, a former McKinsey these products. cals, a Canadian company engaged expertise and adding to the existing cash, in a deal that will add Botox director, prefers growth through ac- in the scale-up and cGMP manufac- know-how the invaluable experi- competitor Dysport and other skin quisitions to heavily spending on re- ▪ ture of APIs, F.I.S. is positioning itself ence in research and development care drugs to its portfolio. Valeant, search. Valeant has been bulking up in the field of biotechnology. F.I.S. and manufacturing of biotechno- which is the largest publicly traded its skin care portfolio in the United purchased a stake in Areta Interna- logical and innovative therapeuti- drug maker in Canada, has been on States in recent months. ▪ tional, an Italian biotech company, cal products that Areta has built in Rockwood Holdings to which focuses on contract devel- more than ten years in the biotech opment and manufacturing of bio- domain. ▪ DuPont to Sell Car Paint Buy Talison Lithium

Unit to Carlyle for $4.9 Billion Specialty chemicals producer Rock- quarter sales of $905.6 million. Tal- wood agreed to buy Talison Lithium ison Lithium exports over 350,000 Rockwood Completes Chemetall Split DuPont struck a deal to sell its slow- would remove the lowest-margin for $729 million to boost its output of tons of lithium products annually. growing car paint business to pri- and slowest-growth business from lithium used in batteries and smart- Rockwood, whose peers include Rockwood announced that its tity and brand name for the surface vate equity firm Carlyle Group for the chemical company’s portfolio, phones. Demand for lithium batter- Kronos Worldwide, Sensient Tech- Frankfurt-based German subsidi- treatment business. The lithium and $4.9 billion cash as it seeks to fo- and allow DuPont to cut debt and ies has risen in recent years as they nologies, WR Grace and Co and Val- ary Chemetall has completed the special metals business will be re- cus on higher-growth areas such as make acquisitions in priority areas are more efficient and help cut car- hi, has said it expects battery-grade formal legal split of its operations named Rockwood Lithium. The unit agriculture and nutrition. The sale that also include advanced materi- bon emissions. Lithium business ac- lithium products to show double- into two independent legal entities. is already doing business under the of DuPont Performance Coatings als and biotechnology. ▪ counted for 14% of Rockwood’s June digit sales growth this year. ▪ Chemetall will remain the legal en- brand name Rockwood Lithium. ▪

chemanager-online.com/en chemanager-online.com/en Page 4 Markets & Companies CHEManager Europe 9/2012

The Best of Both Worlds Supply Chain Management Organizations Developing towards a Coordinated Network Model

SCM Development – The rise of new markets throughout the world means However, the companies are not which have a considerable influ- “going back” to local independence. ence on the SCM organization relate that all globally active companies must continuously adapt to the developing We are now seeing the first compa- to the degree of outsourcing of the changes. Ultimately, change never comes to an end. This especially applies to the nies which are combining and devel- SC. This concerns both the contract organization of supply chain management. A study which Camelot Management oping the “best of both worlds” in the manufacturing as well as logistics form of a coordinated network, with a and distribution. For a seamless Consultants carried out together with a team from the University of Warwick, UK of high level of collaboration to achieve flow in the SC, the company must the chemical, pharmaceutical and consumer goods industries, shows where SCM common objectives, agreed respon- integrate the external service pro- sibilities and joint transparency.­ This vider as if it was one of its own units. organizations in these industries stand at present. CHEManager Europe spoke to is not a return to local independence Interfaces must be jointly standard- Michael Jarosch, Partner and Head of Pharmaceuticals & Life Sciences Practice at but rather a further development to- ized. Coordination of the SC does not Camelot Management Consultants and Julian Amey, Principal Fellow, Warwick wards a coordinated network. end at the factory gate. The general objective for the sectors which were Manufacturing Group about the main findings of the study. The interviewer was What about the SCM basics such examined is to reduce complexity Dr. Sonja Andres. as simplification of processes, data and remain agile. This is something management, IT structures, etc. in which service providers must come the industries? to terms with.

M. Jarosch: Our view is very simple: What should e.g. a pharmaceutical Michael Jarosch, Partner and Head of Julian Amey, Principal Fellow, Warwick “Fix the Basics!” The companies company fundamentally take into CHEManager Europe: Mr Jarosch, and operative challenges and on the Pharmaceuticals & Life Sciences Practice, Manufacturing Group, University of Warwick/ UK questioned did not consider them- account in the structural optimiza- in the future, optimal organiza- other hand they have the full spec- Camelot Management Consultants selves to be very good with regard tion of its SCMO? tion of the supply chain will play trum of SC structures from local to to their degree of maturity in pro- an even more important role in the globally integrated supply chains. cess standardization/harmonization, M. Jarosch: Especially in the phar- success of a company on the global We have seen that with regard to Characteristic for the local/re- e.g. on entry into emerging mar- master data management and IT maceutical industry, local optimi- market. What are the trends in the their general improvement initia- gional decentralized SCM organiza- kets. The disadvantages are the support. However these are essen- zation of the supply chain is now no organization and management of tives there are differences between tion model is the independence of poor end-to-end transparency of tial prerequisites for both a centra­ longer sufficient, as a global “lean the supply chain and which gen- the sectors, for example with regard the local units, i.e. their commercial the SC, high stock levels and a less lized Hub & Spoke SCM organization end-to-end SCM” goes far beyond eral external factors need to be to their degree of maturity and their freedom and authorization to make competitive cost structure. The model as well as for a coordinated the concept of “lean manufac­ taken into account? efforts concerning the standardiza- decisions in the local production and central “Hub & Spoke” SCM has ad- SCM network. turing”. The need for improvement tion and harmonization of business distribution units. Here, SCM is fo- vantages with regard to costs, and with regard to virtualization of the M. Jarosch: Globalization and growth processes. This is therefore a wide cused on local optimization. There is efficient, harmonized SC and stan­ There are very different successful SC is especially pronounced in the strategies of companies in emerging field in order to learn from each hardly any global standardization. dardization. The disadvantages lie models for the management and pharmaceutical industry. On the markets, increasingly volatile global other, certainly taking into account The SC performance is not visible in the remoteness from customers, organization of the supply chain. other hand, a large proportion of demand as well as the trend to a the basic differences. over the entire chain. the weak “entrepreneurial spirit” How can a company find the op- growth is generated in emerging virtualization of the supply chain However, in all of these sectors, With the centralized “Hub & and inflexibility. With the coordi- timum SCMO for its business con- markets with special requirements. and a geographical shift in sourc- SCM is now an important element of Spoke” SCM organization model nated network SCM organization cept? In future, a rigid centralism will ing are significantly changing the company strategy and organization, we find a dependence of the local/ model, the advantages clearly lie in prove to be too inflexible. In the global footprint of companies and which is continually developing. In regional units on the directives of the balance between costs and ser- J.C. Amey: There is no such thing pharmaceutical industry, the SCM are having a dramatic effect on spite of this, there is comparatively a head office, with greater global vice as well as between coordina- as a “one size fits all” solution for must create a clear view of these supply chain management (SCM). little information about how compa- end-to-end transparency of the SC, tion and local agility. However, the SCM organization – even within a developments and the resulting In addition there are increasing re- nies currently set up their SCM and a high degree of standardization prerequisite for this is an effective particular industry. Each of the or- requirements, because only then quirements with regard to compli- their rationale. of processes, central control and a governance model. ganization models supports specific a development path for the SCM ance and supply chain security as The key question of the study was: uniform SCM culture with aligned performance objectives. organization can be defined on the well as the development towards Are SCM organizations prepared for behaviors. The study revealed that some basis of the current capabilities. We a more sustainable “Green Supply and capable of successfully facing up Finally, the coordinated network companies are converting their M. Jarosch: For each company, with its regard the skills of supply chain Chain”. These have all become a to the apparent trends? In the study SCM organization model has strong central, globally-oriented supply specific, strategic and operational management staff to be a critical permanent challenge for the core we developed a reference frame- interlinking, interdependence and chain management into a local/ objectives, it is therefore necessary bottleneck in supply chain manage- activities of SCM: the reliable, ag- work, which defines various SCM collaboration between the local regional organization. When does to individually examine how the ment, which in future will need to ile and efficient supply of markets organization models and explains and central SCM units. It is based on that make sense? market and competitive strategy, SC go far beyond analytical skills – and customers with products. The when these are successful with dif- jointly agreed objectives and com- configuration and company culture both globally and locally. Here, the organization and its necessary de- ferent strategies. The framework mercial freedom of the local units M. Jarosch: Many of the companies and behaviours can be consistently orchestration and decision-making velopment and adaptation to these model also helps to examine the within a defined framework. Special in all of the three sectors which we coordinated, aligned and developed process in SCM in optimization si­ trends form the basis of successful consequences of inconsistencies as local circumstances are taken into examined have developed towards with the SCM organization. On the tuations e.g. regarding inventories, SCM. well as the influencing and success account. a central SCM organization over the journey to this target organization, production costs and customer ser- factors for the structure and further past years. This is due to the need factors such as the history of the vice, will be exceedingly important Together with the University of development of the organization. What advantages and disadvan- for improved global transparency company (e.g. growth due to M&A), in the future Warwick, UK, Camelot has carried tages are there for chemical and and control of the SC, together with the degree of development of busi- out a study on the subject of “Sup- Mr Amey, what are the basic mod- pharmaceutical companies result- a harmonization of SCM processes, ness processes, IT support of the The study can be ordered free of ply Chain Management Organiza- els for the organization of SCM in ing from the different SCM struc- especially planning. The fundamen- SCM or the critical mass and skills charge at: http://www.camelot-mc. tion” (SCMO). What was this study the three sectors which were in- tures? tal prerequisite for this was that of the SCM staff, both globally and com/en/about-us/insights/surveys/ intended to discover or clarify and vestigated? SCM IT systems continued to de- locally must be taken into account. why were the chemical, pharma- J.C. Amey: The three basic organiza- velop and could provide this global Please direct inquiries for literature ceutical and consumer goods sec- J.C. Amey: We were able to assign all tion models have very specific ad- transparency. Can the involvement of 3-PL (Third references used in this article to the tors singled out for investigation? the participating companies in all vantages and disadvantages. For Nevertheless, companies still face Party Logistics) providers be an authors. three sectors to three basic models: the local/regional decentralized problems regarding the reliability option for the renewal, adaptation M. Jarosch: On the one hand, the chem- the local/regional decentralized, the SCM model, the advantages lie in of the supply chain. In particular, of change of the supply chain for 22 www.camelot-mc.com ical, pharmaceutical and consumer centralized “Hub & Spoke” and the the entrepreneurial spirit, local the agility of the SC tends to be re- the purpose of optimization? 22 www.wmg.warwick.ac.uk goods industries are primarily­ pro- coordinated network SCM organiza- SCM performance and considera- stricted by excessively rigid central cess industries with similar strategic tion model. tion of the needs of local markets, control. This often contradicts the M. Jarosch: The use of 3-PL service requirement for speed and flexibi­ providers is common practice in chemanager-online.com/en/ lity which is necessary for growth all of the three sectors which were tags/scm in emerging markets. examined. Fundamental decisions,

Fig. 1: Characteristics of the Coordinated Network Interdependence model. © Camelot Management Consultants & The University of Warwick. Fig. 2: 4 Step approach to SCM organisation design. © Camelot Management Consultants & The University of Warwick.

chemanager-online.com/en CHEManager Europe 9/2012 Markets & Companies Page 5

Contract Manufacturing in India and China Government Policies Encourage Outsourcing

Outsourcing – Today’s pharmaceutical industry is flooded with numerous The Chinese CMO market is currently generating revenues of CMOs, with Asian countries being the prime focus for big pharmaceutical com- $2.1 billion in 2010 and this mar- panies looking to outsource. This is primarily due to the advantage of low produc- ket is expected to grow at a CAGR tion costs in Asia in comparison to other regions. Unlike the market for contract of 17.9 % to reach $7.8 billion by 2018. The Chinese CMOs concen- small-molecule manufacturing, the market for contract biologics manufacturing trate upon manufacturing generic in China and India is still in its infancy. Western CMOs engaged in pharmaceu- APIs, bulk drugs and generics, but developments in the manufacturing tical chemical development, particularly early-stage intermediates and generic of biologics are also taking place in active pharmaceutical ingredients (APIs), face strong competition from suppliers China. in China and India and increased competition, particularly from Indian suppliers, Challenges and Key Concerns in advanced intermediates and custom APIs. for the Chinese CMO Market

One of the key challenges for Chi- nese CMOs is complying with the + Increasing Government Sanctions ble towards foreign investors, U.S. FDA and EMA’s cGMP standards Professionalism Passion are Favoring CMOs but there are still apprehensions and getting large-scale contracts over inadequate IP protection for (especially for biologics manufac- India and China represent the fast- Western companies. A notable ex- turing) from western pharmaceuti- est-growing countries in the CMO ample in this respect is the rejec- cal companies. As many of them are services sector having witnessed tion of a patent application from currently following national cGMP drastic changes in their government Novartis for its anti-cancer drug standards, the Chinese CMOs have and regulatory policies that encour- Glivec (imatinib) by the Intellectual to modify their facilities, improve age pharmaceutical outsourcing in Property Appellate Board of India their manufacturing processes, order to increase business and at- (IPAB). This drug was already pat- train their staff and implement IT tract foreign clients. ented in more than 40 countries systems to control their manufactur- around the world, including China. ing processes in order to meet these Regulatory Changes in India and China Adding to these concerns is the challenges. increasing threat of counterfeit China does not have a great track In India the Biotechnology Policy in medicines originating from India. record in IPR protection. Although Siegfried combines 2005 issued simplified procedures The World Health Organization the patent laws in China have re- for regulatory clearance and ex- (WHO) statistics show that up to cently been under revision to bring professionalism with passion emptions from import duties and 40 % of drugs sold in India could IPR protection more into line with service taxes, encouraging foreign be counterfeit. WHO also expressed global standards, there is still much investments within the country. concern over the manufacturing of to be done to improve IPR protec- Our professionalism plays a pivotal role in your project from start Furthermore, the introduction of such drugs and their export to other tion. Currently, China is on the prior- the new patent regime in India countries from India. WHO statistics ity watch list in the annual Special to Ƃnish ensuring that besides eZcellence in project management during January 2005 encouraged show that counterfeit drugs from 301 report of the Office of the United and absolute reliability you proƂt from a broad range of technical multinational pharmaceutical com- India constitute a significant pro- States Trade Representative (USTR) panies looking to outsource their portion of worldwide seizures. The for violations of IPR taking place in capabilities and capacities along the value-chain. manufacturing of branded drugs Organization for Economic Coopera- the nation. with the protection of Intellectual tion and Development (OECD) sta- Several Chinese drug manufac- Creating chemical processes and formulations is our passion. You Property Rights (IPRs). The amend- tistics show that 7.5 % of fake drugs turers only follow national cGMP ment of the Schedule Y article al- across the world have their origins guidelines, which are below the ac- can eZpect us to offer the relevant eZpertise  Mnow-how at each lows parallel phase clinical trials to in India. Such a high number of cepted global standards (U.S. FDA step of your project coupled with a Meen enthusiasm. be conducted along with reductions counterfeiting incidents makes the cGMP, or EU cGMP) and this may in custom duties for clinical trial pharmaceutical companies wary of create a regulatory risk for drugs samples being imported. outsourcing to India. originating from China. World Expect more with Siegfried as your preferred partner In China the State Food and Drug Compliance with cGMP guide- Health Organization (WHO) esti- Administration (SFDA) has clearly lines is quite varied across India mates show that close to 20 % of stated contract manufacturing as due to the existence of many state the world’s counterfeit medicines www.siegfried.ch Siegfried at CPhI Madrid 2012 a long-term goal for the country’s drug regulatory authorities. A pro- seizures have originated from China. economic growth. In early 2001, posal to create a Central Drug Au- A noteworthy example is the major You are most welcome to Article 13 of the new edition of the thority (CDA) that could regulate recalls of Heparin-based medicines our booth 8F23, Hall 8 “Drug Administration Law” was manufacturing on a national scale made by the U.S. FDA in the U.S. in issued. According to this, a drug was shelved due to protests from 2008 because of counterfeit Heparin from October 9–11, 2012 manufacturer may produce drugs small-scale manufacturers. The cur- API imported from China. Recently, only after getting approval of the rent regulatory framework is clearly China’s leading internet search en- drug regulatory department, which inadequate for ensuring compliance gine Baidu was accused of promot- is under the State Council. The new with cGMP guidelines. A notable re- ing counterfeit drug-selling web- October 5, 2012 – Metropol Zurich law legalized pharmaceutical con- cent instance is the U.S. FDA’s ban sites. These examples show that Siegfried AG and the University of Zurich invite you tract manufacturing in China. In on imports from two of Ranbaxy’s drug regulation and IPR protection Welcome to to join them for the 5th Siegfried Symposium. During August 2003, the SFDA clarified in Indian manufacturing sites, citing framework is still not effective in the 5th Siegfried the Symposium we will award the Siegfried Medal the trial version of the “Regulations violations of cGMP guidelines. China. to this years winner Prof. Gregory Stephanopoulos on Processing Drug for Export” that Effective tax rates in India are Another challenge for CMOs from Symposium Chinese drug manufacturers’ may also very high and make it difficult China is maintaining profitability and have also the honor of welcoming the winners conduct contract manufacturing for to run businesses profitably. Total while paying a high amount in taxes. of the Sandmeyer Prize. a pharmaceutical company outside tax payments made by a business Total tax payments made by a mid- China. consist of a combination of profit sized business consist of a combina- tax (percentage of profits), labor tion of profit tax (percent of profits), The Siegfried Medal The Indian CMO Market tax (percentage of profits), and oth- labor tax, and contributions to labor er taxes (percentage of profits). Ac- funds and other taxes. According to 6he medal is for eZcellence in the Ƃeld of chemical pro- India is an important emerging cording to World Bank data, total tax World Bank data, total tax payments cess development. This gold medal and the prize money CMO destination. A combination of payments as percentage of profits as a percentage of profits are as of C*(|  .s go to Professor Gregory Stephanopou- factors such as the availability of are as high as 64.7 % in India. This is high as 63.8 % in China. This is just low-cost skilled labor, low manu- a point of concern for businesses op- a little lower than India’s 64.7 % and los from Massachusetts Institute of Technology for his facturing costs, government and erating there, as in Eastern Europe still clearly higher than in Eastern contributions toward efƂcient biotechnological processes regulatory support, experience in overall tax payments rates range Europe. The taxes there average out for pharmaceutical API production. He is renown for his generics manufacturing, strong fi- between 37-59 % of profit and for at the range of 45 %. nancial condition of CMOs operating many attractive destinations the worM in metabolic engineering and the development of in India and the availability of ad- rates are in the range of the mid- microbes for the production of speciƂc essential biological equate numbers of cGMP-compliant 40s. 22 Contact: molecules liMe amino acids or secondary metabolites liMe terpenes. His worM has manufacturing sites in the region Kevin McHugh been implemented toward the pon scaleq synthesis of the AIDS drug CriZivan make India a popular outsourcing The Chinese CMO Market Press Officer destination of choice for CMOs. Ac- GBI Research, Bolton, United Kingdom and the anti-cancer drug taZol. cording to GBI Research’s analysis, China is set to become the global Tel.: +44 1204 543 528 the Indian CMO market was worth hub for Contract Manufacturing [email protected] $1.3 billion in 2010 and is expected Organizations. Production costs in www.gbiresearch.com to grow at a CAGR of 21 % to $6.0 China are among the lowest in the billion by 2018. world and these low costs along with excellent infrastructure and

Challenges and Key Concerns for facilities provide a competitive Sponsored by: the Indian CMO Market edge to Chinese CMOs. The direct and indirect personnel costs for A key concern over India’s drive the manufacturing of API in China to become a major CMO hub is its are nearly 10 % of those in Western (or further information please contact MS. -arin HØsler Siegfried AG poor IP protection and regulatory countries and overall costs to pro- CH- ZoƂngen Phone      or e-mail Marin.huesler"siegfried.ch framework. Indian IP protection duce a drug are 40 % of that in the www.siegfried.ch www.unizh.ch laws have undergone significant U.S.. Extremely low costs are one of chemanager-online.com/en/ changes in recent years and are the key reasons for production being tags/markets becoming increasingly favora- outsourced to China.

chemanager-online.com/en Page 6 Markets & Companies CHEManager Europe 9/2012

A Showcase for Energy Efficiency Materials Solutions help make Solar Energy a Competitive Alternative to Traditional Energy Sources

Green Energy – As part of Dow Corning’s global research network, the new Global Silicones Council proved that the use of a relatively modest quan- €9 million Solar Energy Exploration and Development (SEED) research center in tity of silicone and related products Belgium contributes to the development and discovery of new silicon-based reduces the carbon footprint of materials that are advancing renewable energy and energy efficiency. Research many essential products and ser- vices. On average silicones, silox- activities within the SEED have recently started. Built with the latest technologies anes and silanes can help save nine in energy efficiency, the research center also acts as a demonstration of what times the amount of greenhouse gases required to produce them. can be achieved in sustainable innovation using silicon-based materials in high More specifically, sealants for win- performance building. Michael Reubold asked Eric Peeters, who served as vice dow and insulating glass units can president Solar Solutions & Wind Energy Solutions until recently and took on his help save 27 times the amount of greenhouse gases required to manu- new role as vice president Electronics Solutions for Dow Corning on September facture them. 1, about the strategy behind the investment in the SEED. We are working with our custom- ers to develop innovative solutions that help enable energy-efficient ar- chitecture and improve energy use, CHEManager Europe: Mr. Peeters, and have applied several of these renewable energy and energy ef- technologies in our new SEED facil- ficiency are key factors for a sus- ity. For example, our new Vacuum tainable future. What does sus- Insulation Panels – VIP – cover the tainability mean for Dow Corning? entire construction, providing high insulating value in materials up E. Peeters: We see sustainability as to five times thinner than conven- essential to our future success. It tional insulation products, and ena- will help us meet the needs of our bling maximal use of internal space. customers, employees, and local Building-integrated photovoltaics – laboration with the academic world and bringing innovative solutions innovative products and in pushing communities. We are working hand- BIPV -, a set of PV modules mounted as well, whether that’s directly with that will benefit society. the PV roadmaps forward. in-hand with our customers to de- as sun screens in front of the win- Universities or Research Institutes. velop materials and technologies dows, reduce the need for cooling in At Dow Corning we have a combina- Asian and U.S. solar panel manu- What is your expectation for the that support their own sustainabil- the office area and simultaneously tion of both. I share the view that facturers are top-ranked; the Eu- growth of the global photovoltaic ity goals and help them tackle some serve as power generators. Dow industry and institutional research ropean photovoltaic industry con- market? of the most pressing challenges of Corning’s structural glazed facade partners can work together on ac- tinues to lose ground to overseas our society – from safer, more com- technology allows the use of large, tivities around pilot plants, and re- competitors. Why did you build the E. Peeters: We are very optimistic fortable and more energy-efficient modern glass units, enabling more ally implementing technology in the SEED research center in Europe about the future of PV and its po- buildings to technologies that make natural daylight in the building industry. Academia tends to focus on and not in the U.S. or Asia? tential to help address the world’s renewable energy, including solar, Eric Peeters, Vice President, Solar Solutions & while improving energy efficiency things that are quite far out whereas enormous energy challenge. Relying more available and affordable. We Wind Energy Solutions, Dow Corning and weather resistance. the industry tends to focus on the E. Peeters: This investment demon- on fossils fuels is simply not possible also are seeking cost effective ways next quarter or the next govern- strates Europe’s strategic impor- in long term. By increasing the solar to extend the value of silicon-based E. Peeters: Our entire portfolio focuses Can materials solutions help make energy capacity by 25-40 % year on technology to people in emerging on improving performance and re- solar energy a competitive alterna- year, the industry will continue to economies. ducing the Levelized Cost of Energy. tive to traditional energy sources? We see sustainability as essential help increase the share of renew- Everything Dow Corning develops able, clean energy supply, securing What role does SEED play in this and supplies to the PV industry ad- E. Peeters: Absolutely. In solar, most to our future success. the future of our children and our strategy? dresses at least one of the following research is happening in the areas children’s children. drivers: reduced cost per kilowatt where the biggest cost is. The high- E. Peeters: Our new research facility hour, increased durability, improved est cost is silicon, the semiconduc- ment. That gap in between – the tance for Dow Corning. The invest- What’s your vision for the city of SEED further enhances our ability to performance, efficiency and reliabil- tor material used for crystalline PV. two to five year period of actually ment is one of several by Dow Corn- the future regarding energy gen- develop new silicon-based specialty ity and global availability of large There is still a lot of research go- bringing a new idea into the market, ing aimed at further expanding the eration, energy-efficient architec- materials which enable energy in- supply capabilities. ing on to making silicon cheaper, or and making it work – I think that company’s European network and ture and mobility? novation to serve the needs of Dow making it better. is where the area of collaboration supporting growth in the region. Corning’s European markets and The SEED research complex was The second category of high cost could be, that everybody would ben- Between 2005 and 2010 Dow Corn- E. Peeters: A city of the future will use customers, and bring additional designed and built to showcase the is in materials used to assemble the efit a lot from. ing has invested more than €140 clean and affordable energy, will expertise for global projects. It ex- possibilities of energy-efficient ar- module. Glass is quite expensive; a million in our European infrastruc- have efficient and safe infrastruc- pands our research & development chitecture enabled by silicones and lot of research is going into this area Collaboration with partners along tures and in 2010 an additional tures and make sustainable con- capabilities along the PV value chain silicon-based technology. Which to develop thinner, better glass. Wa- the value chain – either on a bilat- €40 million in a new distribution struction reality. But to accomplish as well as the next-generation of energy efficiency features does the fers are becoming thinner as well. eral basis or in clusters – is becom- center and in the SEED research this goal we need technologies and silicon-based technologies and ap- site display? Finally, the third category is in- ing more and more important for facility. Europe has set the trend applications that enable sustainable plications, used to improve energy stallation. Today the installation of chemical companies. Do you foster efficiency. E. Peeters: Silicon-based technologies a solar module costs more than the such partnerships? can significantly reduce the carbon purchase price of the module. There Europe has set the trend to What is the strategic focus of your footprint of products and applica- is huge improvement to be made, E. Peeters: As a speciality chemicals research portfolio for solar and tions. The Silicon Chemistry Carbon which can come partly from scale, company innovation with custom- enable energy innovation. wind energy solutions? Balance study commissioned by the but also from new, smarter materi- ers and research institutes is key to als and innovating with designs of our success. We are working with structures, including how they are several academic institutions on to enable energy innovation and solutions. As a speciality chemicals put together, which parts we assem- projects ranging from fundamen- we have the materials technology company Dow Corning is working ble in the factory, which parts we tal synthesis research to technol- and applications expertise to ad- very closely with customers and re- assemble in the field, which kind of ogy and applications for example dress the specialized needs of our search institutes leveraging our joint smart connection systems we use, the University of Cambridge, the customers in these large and sus- expertise to further advance silicon- et cetera. International Solar Energy Re- tainable growth markets. The PV based innovations that are enabling search Center in Konstanz, Ger- industry and companies like Dow sustainable solutions especially in Do you collaborate with industrial many or Imec, the Interuniversity Corning work in close partnership areas related to energy efficiency or institutional research partners Microelectronics Center, in Leuven/ with the equipment industry, his- and energy generation. on the development of innovative Belgium, a world leading research torically strong in the region, and material technologies for solar center in nanoelectronics. By work- many renowned research institutes and wind energy solutions? ing with these centers of R&D ex- that are located here to help mak- cellence Dow Corning can leverage ing solar a competitive alternative E. Peeters: We need strong collabora- the expertise and resources of both energy option. Europe continues to chemanager-online.com/en/ tion with customers, with our sup- industry and academia, accelerat- play an important role in acceler- tags/photovoltaics Dow Corning’s R&D group develops solutions for the PV industry. pliers, and we definitely need col- ing key research breakthroughs ating the development of new and

Solvay Acquires Sunshield Cerbios and Xspray Establish Bayer Sues Warner Chilcott Chemicals of India Long-term Partnership for Patent Infringement

To reinforcing its position in spe- Sunshield Chemicals generated Cerbios-Pharma and Xspray Micro- over particle design and production Warner Chilcott said German drug- cialty surfactants market, Solvay net sales of €13.5 million in its particles have signed a letter of in- - simplifying drug formulation, ex- maker Bayer filed a complaint announced that it has signed an most recent financial year ended tent to develop a long term, mutually tending delivery options and allow- against the U.S. pharmaceutical agreement to acquire a controlling March 31, 2012. This transaction beneficial collaboration whereby ing the addition of innovative prop- company, alleging that Warner’s interest in Sunshield Chemicals, enables Amit Choksey Group to fo- Xspray will be the preferred tech- erties that truly benefit patients. oral contraceptive drug Lo Loestrin an Indian company specializing cus more on their other activities nology provider and Cerbios will The technology uses supercritical FE infringes a Bayer patent. Ac- in surfactants, from Amit Choksey in the field of pigments and other be the preferred manufacturer for fluid as an antisolvent for controlled cording to the complaint filed in a Group. This acquisition will enable related products. This acquisition the joint development of HPAI (High precipitation of an active pharma- U.S. district court, Bayer is seeking Solvay’s Novecare business to ac- follows the opening of a major in- Potency Active Ingredients) products ceutical ingredient/drug substance. an injunction on the product along celerate growth plans in India for novation center in Savli (Gujarat with unique characteristics. The for- The development phases will be with unspecified monetary damag- the home and personal care, agro- State) and further reinforces the mulation and manufacturing abili- provided by Xspray in Stockholm , es, Warner said. New Jersey-based chemicals, coatings and industrial Group’s presence and commitment ties of Xspray’s Rightsize technology while the cGMP production for clini- Warner said it would defend the liti- applications markets. Solvay is in India. offer the opportunity to improve cal and/or commercial at Cerbios in gation as it believes the complaint determined to double its sales in drug substances through various Lugano. lacks merit. India by 2015. ▪ strategies, enabling full control ▪ ▪

chemanager-online.com/en CHEManager Europe 9/2012 Markets & Companies Page 7

Fine China The Future of Fine Chemical Production

Production in Asia vs. the West – Fine chemicals are chemical substances ple, Hengrui Medicine claims to have 300 re- that have a relatively high average price (similar to specialty chemicals), but they searchers, half of whom are sold based solely on a chemical specification, something they share with ba- have a doctoral degree. sic chemicals. Fig. 1 shows this classification along with some typical chemical In light of these trends, how Dr. Bernhard Hartmann Dr. Kai Pflug attractive are fine chemicals as an A.T. Kearney China A.T. Kearney China examples for each segment. investment area in China? Several aspects indicate a promising devel- Fine chemicals broadly share a ▪▪ Raw materials costs (these are ▪▪ Lower investment costs per in- pharma company Dr. Reddy’s (the opment for the segment. number of characteristics (Pollak, often higher in Asia because of stalled cubic meter of reactor ca- U.K. units of Dowpharma small As mentioned above, the do- 2007): added logistics costs). pacity, with the difference rang- molecules and U.S. pharma contract mestic pharma industry is growing ▪▪ Fine chemicals are produced in ▪▪ Stable energy supply (compared ing from a conservative estimate manufacturing, respectively). And at rapidly, generating similarly high small quantities and have an av- with the unstable supply particu- of 40 % up to 60 %. the end of 2010, DSM effectively sold demand increases for active phar- erage price above about $10 U.S. larly in India). ▪▪ Lower costs to comply with local half of its anti-infectives business to maceutical ingredients, a key sub- per kg. ▪▪ Economic stability (as the sus- environmental regulation. Sinochem by bringing the business segment of fine chemicals. ▪▪ Fine chemicals are single, pure tainability of Asian economic ▪▪ Fast-growing local market (i.e., into a joint venture. Apart from the domestic phar- chemical substances that can be growth is still questioned by in China, recent growth of the maceutical companies, there is also fully characterized and specified. some companies). pharmaceutical industry is about Consolidation and Technology Upgrades a strong and increasing presence ▪▪ Fine chemicals are generally pro- ▪▪ Shorter supply chain and easier 15 % p.a., and the low amount of of global pharma players similarly duced in multipurpose plants em- communication (as long as the medicine spent per head com- What can be expected for the near generating demand for APIs. By ploying multistep batch processes. majority of fine chemicals is still pared with the Western world future? There are a number of now, all top 20 global pharmaceu- ▪▪ There is a huge variety of fine produced for Western markets). makes further strong growth trends. Among API producers, there tical companies have production © Alex Klent – Fotolia © Alex chemicals, though of the ten ▪▪ Easier monitoring of suppliers very likely). is considerable consolidation. in China, and foreign direct invest- thousands of different molecules, (for Western pharmaceutical Primarily, this takes place by the ment increased by 34 % from 2008 each individual chemical compa- companies). Shifting Toward Asia domestic market leaders acquiring to 2009. efficiency and low toxicity. So the ny tends to produce only a small secondary players — examples are Costs are attractive as chemists market for low-end fine chemicals share. On the other hand, the benefits of Examining these advantages and the Sinopharma acquisition of China in China still have comparatively (such as low-end pesticides) will ▪▪ The number of applications for producing in Asia are getting more disadvantages of producing in Asia, National Medicines or the Shanghai low salaries. And the IP environment shrink, allowing only those domestic each fine chemical tends to be prominent: it is difficult to come to a conclu- Pharma acquisition of Shanghai is indeed improving as Chinese com- companies that are capable of up- quite limited compared to that ▪▪ Salaries (though increasing fast- sion regarding the overall situation. Zhongxi. At the same time, compa- panies more and more own their grading their technology in time to of more basic chemicals, and for er than in the developed world) However, it is telling that in the past nies start focusing on marketing and own intellectual property. profit from the positive outlook for each individual fine chemical, are still up to 90 % lower, which few years, a number of fine chemi- sales rather than just on the pro- Finally, the competitive land- fine chemicals. there is only a limited number of leads to substantially lower over- cals units were sold and/or shifted duction of active ingredients. This scape of fine chemicals producers suppliers. all labor costs even if adjusted for to Asia. For example, in 2006 the is particularly pronounced among is improving. The industry is simul- worker productivity. Salaries are pharma custom synthesis unit of generics producers such as Harbin taneously consolidating, and the Authors: Dr. Kai Pflug, CEO, Man- The pharma industry is by far the quite relevant in fine chemicals Rhodia was bought by Shasun, an Pharmaceutical, which has started market share of SOEs is decreasing agement Consulting and Dr. Bern- largest customer of fine chemi- production as the small amounts Indian API and intermediate pro- experimenting with direct sales. (from 29 % in 2007 to 20 % in 2009), hard Hartmann, Managing Direc- cals, globally accounting for about produced and the complex batch ducer. In the same year, the Chinese As in most segments of the Chi- leading to a more level playing field. tor, A.T. Kearney China two-thirds of demand. Related life production process make it company Bluestar bought Adisseo, a nese chemical industry, improve- science areas (agrochemicals and labor-intensive compared with producer of fine chemicals for ani- ment of ecological compliance is Domestic Advantage animal health) account basic chemicals. mal nutrition. In 2008, two of the also a trend i, as seen in the imple- 22 Contacts: for more than half leading global chemical companies, mentation of a specific design code A final boost for fine chemicals Dr. Kai Pflug of the remainder, Dow and BASF, sold some of their as well as the relocation of several in China comes from government Management Consulting – Chemicals while there is also pharma production to the Indian major API producers. support as outlined in the 12th Hong Kong, China a broad range of Finally, fine chemicals producers Five-Year Plan. The plan foresees Tel.: +86 1 36 81 87 39 92 other applica- in China are actively upgrading their China’s fine chemical production [email protected] tions, e.g., in technology and investing in creating value to reach 1.6 trillion RMB in www.mc-chemicals.com catalysts, dye- and protecting their intel- 2015, up 100 % from the 2008 level, stuffs, electronic lectual property. For exam- and a self-sufficiency level of 80 % chemanager-online.com/en/ chemicals, fla- in 2015 (from 70 % in 2009). So tags/china vors, food additives, etc. while the whole fine chemicals seg- ment has bright prospects, it is the Where To Produce domestic companies that are likely to benefit most. On the other hand, Is it preferable to select production in some areas such as agrochemi- sites in countries such as India and cals, the share of high-end imported China or in countries with more materials has been increasing in the mature economies? A number of past few years as grain growers in- contradictory factors influence the creasingly pay attention to safety, overall balance. Factors favoring production in Europe or the U.S. include:

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The Latest From SOCMA What’s Up For Sale? DHS Secretary Says Permanent M&A in the Chemicals & Materials Sector Reauthorization of CFATS a Priority Despite recent challenges the U.S. Department of Homeland Security (DHS) has faced with implementation of its Chemical Facility Anti-Ter- Mergers & Acquisitions – Re- volume and 56% in value on 2010. UK-based buyout house Permira and rorism Standards (CFATS), a high-ranking agency official says it is a top Private equity deals, which had Austria-based VCP Vienna for $1.7 priority to work toward permanent reauthorization of the program. cently, Squire Sanders commissioned slumped dramatically from 2008 to billion. Strong secondary buyout In his keynote address at the 2012 Chemical Sector Summit in Balti- a report from their partners at Merger- 2009, also saw an encouraging re- (SBO) activity has also been lifting more, MD, National Programs and Protection Directorate (NPPD) Under market on mergers and acquisitions covery. There were 55 private equity the sector. SBO volume totalled 15, Secretary Rand Beers said DHS has made a lot of progress over the years Carolyn Buller buyouts worth $6.7 billion in 2011, worth $4.5 billion, in 2011 and two and built up the CFATS framework in a short period of time. Despite Squire Sanders activity in the chemicals and industri- up 34% in volume and 56% in val- SBOs were among the top ten largest an internal assessment that pointed out DHS’s shortcomings in making als sector in 2011 and the first part of ue from the previous year. And the chemicals deals globally. progress with inspections and site security plan reviews under the pro- from the industry was inevitable and evidence so far for 2012 shows this gram, Beers said his department is learning from its mistakes and moving 2012. The results were very interest- unsurprising. However, M&A activ- upward trend continuing. What Can We Expect forward to make substantive improvements. And while it is difficult to ing, bearing out what had been seen ity did come to a virtual halt with project the level of funding that will ultimately be approved by Congress by Carolyn Buller, a specialist lawyer in both deal volumes and values falling Emerging Markets Attractive… We can assume that corporate dis- for the next fiscal year, Beers said DHS will work toward permanent dramatically – down 31% and 61% But So Too Is North America posals and private equity exits will reauthorization of CFATS. the chemicals sector at first hand over respectively on the previous year. continue to drive chemicals and ma- the past few years. As the report demonstrates, So, what is driving the recovery? terials M&A through 2012, despite there has been a slow and steady An increasing interest in emerging continued anxieties about the Euro- As industry-watchers will know, recovery underway since that time. markets for one thing - the desire to zone. So far in 2012 we have seen the chemicals and materials sector, In 2011 chemicals and materials grow business in emerging econo- some 200 chemicals and materials which can be cyclical, was directly M&A increased substantially from mies has been a distinct character- deals worth $22.3 billion globally, affected by the disintegration of the the previous year – with 409 deals istic of the chemicals and materials with still about 38% of total deal global credit markets three years completed, worth a combined $93.8 industry in the past few years. Some volume coming from the $15 -100 ago. The withdrawal of investors billion. That was a rise of 16% in of 2011’s largest deals showed this million range. So we are on track clearly. When Solvay of Belgium for a similar level of activity to 2011. acquired France’s Rhodia, part of However there are issues partic- the rationale was to strengthen the ular to the industry and its various company’s exposure to high-growth sub-sectors which are worth consid- markets such as China and Brazil, ering as we go forward. Opportun- where it generates 40% of sales. ism has characterised much M&A Eastman Chemical Company’s $4.6 activity in the agrochemicals sector. billion acquisition of Solutia will But for specialty chemicals we are enable strategic expansion into the very likely to see vigorous competi- Asia-Pacific region, with the com- tion for increasing market share. pany anticipating a compound an- A decade ago, specialty chemi- nual growth rate of up to 10% in cals presented the ‘promised land’ the next few years. More than 30 of higher margins and less capital % of Solutia’s sales came from the investment. Many companies rushed Asia-Pacific region prior to the ac- to significantly increase their spe- quisition. Such big-ticket deals are cialties investments. The result is not the norm in the sector but they no surprise: specialties are now DHS Under Secretary Rand Beers told Chemical Sector Security Summit attendees that permanent reflect well the trend that is also af- seeing pressure on margins, as the reauthorization of CFATS is a top priority. fecting the main mid-market. (The competition to boost market share biggest proportion of M&A deals, becomes more and more intense. Currently, CFATS is authorized through Oct 4, 2012, and funded through where values have been disclosed, All businesses are exposed to fiscal year 2012 at $93.3 million. The U.S. House of Representatives- have been taking place in $15- 100 rising costs, such as energy, but passed Homeland Security appropriations bill for 2013 provides $45.4 million range – some 39% in 2011). none more so than the petrochemi- million for CFATS, $29.1 million below the amount requested by the ad- In addition, players from the cal sector, where high and volatile ministration and $47.9 million below the previous year’s level. In an emerging markets themselves have commodity prices may reduce their accompanying report to the bill, the Appropriations Committee said the also been driving many of the M&A attractiveness. On the other hand reduction in funding is due to “significant managerial problems, program deals in the sector. Investors from the development of unconventional delays and poor budget execution.” the Asia-Pacific sphere played a role sources such as shale gas should The U.S. Senate Appropriations Committee approved its own homeland in the upswing in M&A in 2011, with greatly contribute to the appeal of security appropriations bill in May, which preserves almost $87 million for state-backed entities from the region North American targets. the CFATS program - nearly double the amount of funding in the House snapping up companies specialis- In fact, the shale phenomenon bill. However, the full U.S. Senate has not voted on the bill. ing in raw materials, technology has been a major game-changer. With the fiscal year quickly coming to an end, it is expected that Con- and innovation. Take ChinaChem’s In the past it has been taken for gress will approve a short-term Continuing Resolution, extending fund- acquisition (through its subsidiary granted that the centre of the global ing for federal agencies across the board at 2012 levels through the China National Agrochemical Corp) chemical industry would be moving November election and temporarily extending expiring authorizations of 60% of Israel’s Makhteshim Agan to the Middle East, and away from for programs such as CFATS. When Congress reconvenes for a lame duck Group (MAI). In turn MAI, a branded Europe and the US, driven by the session, legislators could pass yet another Continuing Resolution or begin off-patent agrochemical producer, abundance of relatively inexpen- work on an omnibus appropriations bill for the remainder of fiscal year bought DuPont’s non-mixture diruon sive oil feedstock in the Arab World. 2013 containing similar program extensions. herbicides business. While this deal This idea has now been turned on The internal audit of CFATS, which was widely publicized by the media illustrates the company’s ambitious its head. The shale gas phenomenon in December, was a game changer in terms of long-term or permanent expansion plans, it also re-empha- has created an abundance of ethyl- reauthorization of the program, according to congressional staff at the sises the central importance of the ene and its derivatives, and set the Summit. North America market to the global stage for an abundance of inexpen- As a result of the problems plaguing DHS’s implementation of CFATS, chemicals sector – the region is the sive raw materials in the US. Congress will likely maintain close oversight of the program by extend- most important target in terms of It’s not only the US that will ben- ing it on a year-by-year basis, the congressional staffers said. They also M&A value (46% in 2011-Q1 2012), efit from shale discoveries. Argen- stressed that CFATS needs to be operating in a way that Congress can and the second most important tar- tina is on the cusp of large-scale feel more confident about, and continuity in the program and its leader- get in terms of deal volume (28% production, and China’s reserves ship is critical. compared to 34% for Western Eu- could prove to be the world’s largest. Beers and other DHS leaders, such as NPPD Deputy Under Secretary rope). As for bidders, North America Both countries are actively looking Suzanne Spaulding, also focused on the positive aspects of the CFATS again appears dominant in terms of for international partners. program. Spaulding told Summit attendees that CFATS has already taken M&A value (54% in 2011-Q1 2012), We expect that this will translate measurable steps toward a safer America, citing thousands of facilities and neck-and-neck with Western Eu- directly into M&A opportunities for that have removed high-risk chemicals so as not to require regulation, rope for deal volume (both at 32%). this year and especially in 2013. or made other changes to meet CFATS requirements. Indeed, energy independence a top SOCMA President Lawrence D. Sloan, who delivered opening remarks Disposals and Exits are Key priority for all major economies, at the Summit, said that “while these challenges (to CFATS) are all serious, after the volatility of commodity they are not insurmountable.” Having a comprehensive set of security The MAI-DuPont deal last year is a prices and the political turmoil in standards such as CFATS is in our nation’s best interest, he said, and good example of a corporate disposal, several oil-rich nations in the past SOCMA still supports a long-term extension of the program to provide and this highlights another big trend few years. stability moving forward. in the recovery of the chemicals and Who would have predicted even materials sector. Corporate disposals two years ago, new refineries being 22 Contact: have produced approximately half built or old refineries reopening in Society of Chemical Manufacturers and Affiliates (SOCMA) of all M&A targets between 2005 the US? Now in 2012 that scenario Washington, D.C., U.S and 2011, with spin-offs from ma- is commonplace. Tel.: +1 202 721 4100 jor chemicals players such as Dow www.socma.com and DuPont hitting the market - and Author: Carolyn Buller, Partner, frequently going into the hands of and Global Chemicals Industry overseas buyers: examples from the Group Leader, Squire Sanders past year are Brazil’s Braskem SA acquiring Dow’s polypropylene busi- ness and India’s Indofil Chemicals 22 Contact: Company buying Dow’s European Carolyn Buller dithane fungicide business. Squire Sanders Private equity exits were a signifi- London, UK cant feature in the market too last Tel.: +1 216 479 8528 year. Stand-out deals were Clariant [email protected] of Switzerland buying the majority www.squiresanders.com of Germany’s Sued-Chemie – owned SOCMA is a U.S.-based trade association dedicated solely to the batch, by One Equity Partners of the US – custom and specialty chemical industry. Since 1921, SOCMA has repre- for $2.6 billion, and China’s Wanhua chemanager-online.com/en/ sented a diverse membership of small, medium and large chemical com- Industrials Group acquiring a 58% tags/ma panies and has now a global membership of more than 210 companies. stake in Hungary’s BorsodChem from

chemanager-online.com/en CHEManager Europe 9/2012 Markets & Companies Page 9

The Chemical Industry’s Pulse at Half-time Q2 Results of Major European and North American Chemicals Manufacturers, Business Confidence is Beginning to Wane

Market Overview – With the come before special items (EBIT) company booked a net loss of €12m. Along with Solvay, Germany’s rose 11 % to €2.5 billion, even if This was blamed on the divestment Bayer was among the more optimis- euro crisis biting ever harder, the US EBIT of four business segments tum- of its vinyls activities, however. In tic chemical players at Q2 report- economy still staggering under a for- bled. Business drivers in the second presenting quarterly results, CEO ing time. Following a better-than- midable debt burden and even the quarter were the agricultural solu- Thierry Le Henaff expressed con- expected first half, when currency tions and oil & gas segments, while cern about the “challenging eco- effects pushed group sales forward Chinese growth engine sputtering, the chemicals, plastics, performance nomic environment,” which he said by 10 % and EBITDA pre-excep- chief executives of European and North products and functional solutions was marred by the European sov- tionals rose by 6.7 %, CEO Marijn deteriorated. ereign debt crisis and volatile raw Dekkers raised the full-year fore- American chemical producers would In his results presentation, CEO materials markets. cast. Management now expects a have been forgiven for conjuring up a Kurt Bock said BASF is still target- Belgium’s Solvay reported flat “high-single-digit percentage” rise spectre of doom and gloom in present- ing a year-on-year increase for sales sales revenue of €3.3 billion for the in EBITDA for 2012 despite the fact and earnings in the second half of - Fotolia.com Wendler © Joachim second quarter, despite a 6 % rise that healthcare is likely to see grow ing their respective business forecasts 2012, compared with the 2011 in volumes. Selling prices were up only in emerging markets and storm for the remainder of 2012. period. But as management does 2 % and the currency effect was 4 % clouds are forming on the Chinese not expect an upturn in demand positive. EBITDA (recurring earn- horizon. But this largely did not happen when against the year’s first six months, ings before interests, taxes and North American and European Q2 and H1 figures were presented to achieve this goal a boost from amortization) rose 8 % against Q1 chemical companies will begin re- in July and August, even if the com- cost-saving and the group’s STEP 2012 but were down 6 % against porting Q3 results in late October. pany chieftains did exercise a rea- excellence program -- designed to the 2011 period. The specialty sonable degree of caution about the add €1 billion to earnings annually polymers and consumer chemicals outlook, and surveys on both sides of up to 2015 -- will be needed. The life science and agriculture seg- be toward the lower end of its ex- businesses were driven by “strong Author: Dede Williams, Freelance the Atlantic saw business confidence STEP scheme is being accelerated, ments offset weakness in some in- isting outlook range of $4.20-$4.40 pricing power.” The integration of Journalist starting to wane. Most chemical Bock said. dustrial markets. Sales increased per share. recently acquired Rhodia will help companies had nothing immediate World’s number two and North by 7 % to $11 billion, with selling Volatile feedstock markets Solvay weather any storms on the to complain about. For the industry’s America’s number one chemi- price 6 % higher and volumes 1 % plagued France’s Arkema in Q2. While horizon and hold REBITDA steady chemanager-online.com/en/ majors in particular the numbers cal player Dow Chemical saw its sales lower. CEO Ellen Kullman said Du- succeeding in lifting sales by 15.4 % at the pro forma 2012 level, said tags/chemicals published so far this year have been turnover decline by nearly 10 % to Pont expects full-year earnings to and EBITDA by more than 20 %, the CEO Jean-Pierre Clamadieu. on course or only slightly weaker. $14.5 billion in Q2, with volume Even if chemical output in the sales down 5 %. Pre-tax profit re- European Union sank by 2.4 % year- ceded to $984m from $1.3 billion on-year from January to June, sell- in the same period of 2011, while ing prices were 3.4 % higher, says EBITDA hovered around $2 bil- the industry association Cefic in its lion. CEO Andrew Liveris blamed Chemicals Trends Report. In the first sluggish demand in the euro zone five months of this year, the region’s and China for the earnings weak- net trade surplus increased by €3.6 ness. Prolonged maintenance turna- billion year-on-year to €19.9 bil- rounds also pressured volumes. As lion. Up to May, chemical sales were at BASF, the plastics business was nearly 6 % higher than in pre-crisis among the weakest. 2008. Dow likewise does not expect Export-oriented North American the global business environment to chemical players are increasingly recover substantially in the second worried that problems in the euro half year. Liveris said the US group, zone as well as in China and in other too, will accelerate its cost-saving parts of Asia, as well as Latin Amer- and efficiency programs. This will ica, could compound their home- mean implementing disciplined made woes. First-quarter growth price and volume management, in the US was “mediocre” and the further reducing costs and capi- second quarter may have been even tal spending, while continuing to worse, says the American Chemistry de-leverage the balance sheet and Council. Chemical companies such generating strong cash flow. as Dow and DuPont, however, con- While based in The Netherlands, tinued to benefit from their presence LyondellBasell, which was recently in international markets. added to the US Standard & Poors The euro’s weakening had posi- 500 index, has a broad footprint on tive and negative influences on Eu- two continents. In Q2, the company ropean chemical business. A cheap- benefited from its considerable up- er euro would increase feedstock stream presence in petrochemical prices in already volatile markets markets. Performing strongly in the but it could also make regional pro- US in particular, it also improved ducers more competitive interna- olefins margins in Europe. EBITDA tionally even as the lower valuation rose 11 % year-on-year to $1.77 bil- reduces euro-denominated sales lion, while sales fell by 15 % to $11.2 6FDQWRH[SORUH revenue. billion. Amid global uncertainty, CEO WKHIXWXUHRI Jim Gallogly said LyondellBasell will ÁRZPHDVXUH PHQW Major Chemical Companies Report Q2 Results “continue efforts to improve its rela- tive cost position” in Europe. The world’s largest chemical pro- US-headquartered DuPont, also a ducer, BASF, increased sales revenue giant in many international mar- 5.5 % to €19.5 billion in Q2, despite kets, saw Q2 net profit fall 3.3 % slackening global growth. The Ger- year-on-year to $1.2 billion. A bet- man group’s euro-denominated in- ter performance by the company’s Because size

Lanxess Acquires Germany’s and safety matter Bond-Laminates 6,75$16)&²WKHPDUNHW·VPRVWFRPSDFW&RULROLVVROXWLRQ

Lanxess is strengthening its prod- tom-made plastic composite sheets uct portfolio of lightweight materi- that are reinforced with materials VLHPHQVFRPIF als by acquiring German company such as glass fibers. Lanxess has Bond-Laminates. Financial details been working with Bond-Laminates were not disclosed. Founded in since 2006 on several successful 1997, Bond-Laminates, Brilon, projects with the automotive in- North Rhine Westphalia, specializes dustry. %XLOGLQJRQDVWURQJWUDGLWLRQRILQQRYD 8QLTXHVXSSRUWWRROVSURYLGHGLUHFW ‡ 6HQVRU)ODVKŠ²DPLFUR6'FDUG in developing and producing cus- ▪ WLYHWKLQNLQJ6LHPHQVKDVGHVLJQHGWKH DFFHVVWRDOORSHUDWLRQDODQGIXQFWLRQDO ZLWKEDFNXSGDWDVHWWLQJVFHU QH[WJHQHUDWLRQRI&RULROLVIORZPHWHUV GDWDFHUWLILFDWHVDQGDXGLWWUDLOV WLILFDWHVDQGDXGLWWUDLOVXSORDG DEOHWRDQ\3& IRUH[FHOOHQFHLQSHUIRUPDQFHVDIHW\DQG 7KH6,75$16)&LVDPRQJVWWKHILUVW Eckert & Ziegler XVHUIULHQGOLQHVVWKH6,75$16)& &RULROLVIORZPHWHUVWRRIIHU6,/FHUWLIL ‡ 5REXVW6HQVRU)UDPH²ZLWK FDWLRQRQWKHV\VWHPPHHWLQJWKHKLJK 7KLVGLJLWDOO\EDVHGIORZVROXWLRQIHDWXUHV KLJKUHVLVWDQFHWRSURFHVVQRLVH HVWVWDQGDUGVRIVDIHW\DQGUHOLDELOLW\ DQGYLEUDWLRQVIRUH[FHOOHQW to Buy Vitalea Science PDUNHWOHDGLQJFRPSDFWQHVVYHU\KLJK DFFXUDF\ DFFXUDF\RIORZSUHVVXUHORVV :LWKWKH6,75$16)&SURFHVVRSWLPL Eckert & Ziegler Strahlen- und used in pre-clinic and clinic studies H[WUHPHO\VWDEOH]HURSRLQWDQGEHVWLQ ]DWLRQKDVQHYHUEHHQHDVLHU²RUPRUH Medizintechnik has entered an for exploring the behavior of drug FODVVGDWDXSGDWHZLWK+]KLJKVSHHG LQQRYDWLYH agreement with Vitalea Science for candidates in the organism. Due to VLJQDOWUDQVIHU the purchase of all of its stock and the AMS device’s ultra-sensitivity it assets. Vitalea Science is a pioneer- is able to detect C14 tagged mol- ing Bioanalytical Contract Research ecules in microdose levels. Vitalea Organization that provides services also provides AMS services for the to researchers and clinicians in drug characterization and identification $QVZHUVIRULQGXVWU\ development supported by validat- of non-medical carbon based com- ed Accelerator Mass Spectrometry pounds. (AMS) technologies. This method is ▪

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eine S onderpubli Kation von CH eManager Ireland 3 Sites & Services Finland

3. Jahrgang September 2012 Stando rte ¦ Konzepte Ireland is Currently Facing ¦ dien Stlei Stu ngen Online: German-language Quarterly The Kokkola Industrial Park is Significant Economic Challenges Supplement on Industrial Parks and Scandinavia’s Biggest Chemical but is Open for Business Technical Services Manufacturing Site

Spezial: Sicherheit – heute so wichtig wie morgen

Standorte Konzepte Dienstleistungen CO-Pipeline – wichtiges Internationales Interesse an HAZOP – Risikoanalyse f www.chemanager-online.com/themen/industriestandorte ü Page 12 Etappenziel erreicht deutsch r Page: 12 en Chemiep arks sichere Chemieanlagen

European Chemical Industry Parks 2.0 Insights from Global Benchmarking

No Walk in the Park – European chemical companies at the chemical park and, at the same time, have to chemical industry parks and their op- organize their site operations in a erators face great challenges. On the customer-oriented, flexible and cost Christoph Behrendt one hand, they have to meet increased effective manner, defining their core Scopein Management competencies while outsourcing Consultants and more complex demands of glob- non-core services. ally active chemical companies. On This is valid for both the Euro- pean chemical industry parks with ▪▪ How can competitiveness of the other hand, ongoing globalization a high degree of integration and existing chemical sites be in- leads to intensified competition among long production history as well creased, in particular by regional chemical industry parks that try to at- as for the developing chemical cooperatives generating further production clusters in Southeast synergies? tract international investors. Clear stra- Asia, China and the Middle East ▪▪ What are the key competitive ad- tegic positioning, synergy-targeted that were designed on the draw- vantages of the considered Eu- ing board after decade-oriented ropean parks compared with the infrastructure, and comprehensive and master plans. global peer group; which Unique customer-oriented site services portfo- Chemical industry parks gain Selling Points (USPs) could be lios are basic requirements for future competitive advantages by continu- proactively developed and which ously orienting themselves toward weaknesses of the park competitiveness. key investment criteria of global should be addressed? chemical producers. ▪▪ How could chemical Focusing on the European chemi- industry parks con-

Strategic positioning based on in- cal park operator landscape, four tinuously measure - Fotolia.com Bagusat Tanja © vestors’ key criteria combined with core questions have to be addressed: the investors’ operational excellence in site op- ▪▪ How can European chemical in- confidence and erations is decisive. Chemical park dustry parks successfully position satisfaction for operators have to contribute added themselves in global competition an ongoing site value to the competitiveness of the for future investors? development?

Global Site Benchmarking Approach of investors’ feedback as in investor ist. Instead, each site offers a port- confidence surveys or more quanti- folio of favorable and less favorable Comparison with the world’s lead- fied cost structure analyses related factors to be evaluated according to ing chemical industry parks shows to Costs of Goods Sold (COGS) or the projects’ specific requirements. the own competitive situation. This industry cost curves for specific The challenge for globally operating approach, however, creates a val- production set-ups. It helps site op- chemical companies is to find the ue-add beyond grasping the gap to erators to make the most effective best-fit investment location facing best-in-class peers. It guides to new and efficient investment decisions to the heterogeneity of chemical pro- ways of goal-oriented and sustain- further develop relative competitive duction locations. At the same time, able site development, based on an advantages and to close identified it is an opportunity for chemical in- extensive site benchmarking data- gaps. dustry parks and their operators to base that provides best practices, present themselves at their best. The role models, site benchmarks and Evaluation Framework for Global Site Benchmarking is key to other valuable inside views into Global Site Benchmarking both, identifying optimization levers analyzed chemical sites in Europe, for increased competitiveness for the U.S., China, Southeast Asia and Based on defined site-success fac- the own site and having a detailed the Middle East. tors for high site competitiveness and structured set of information re- The benchmarking approach and attractiveness, chemical indus- garding strengths and weaknesses functions as facilitator to opti- try parks could be objectively evalu- of other worldwide leading chemical mally apply instruments like best- ated from an investor’s or existing industry parks. in-class analysis per site success resident’s perspective. These site- Figure 3 shows a global bench- factor, strengths and weaknesses success factors and the more than marking comparison of chemical profiles, site service performance 70 underlying benchmarks are de- sites’ success factors on top level. Fig. 1: Evaluation Framework for Global Site Benchmarking. evaluations, structured collection rived from companies’ investment decision processes for new produc- Chemical Industry Parks in Europe tion sites and represent the first part of SCOPEIN’s Global Site Bench- European chemical production sites marking evaluation framework. provide very stable production con- The second part consists of an ditions thanks to their long produc- assessment of the Site Service Per- tion history and highly professional formance, i.e. the site infrastruc- site operators. Here, site service ture and services available within providers offer a very comprehen- the battery limits or nearby the site sive site service portfolio and reli- (figure 1). able infrastructure for chemical The Site Service Performance production companies according to evaluation is based on a holistic the Plug & Play principle, leading to function model for chemical indus- a high degree of customer satisfac- try parks. All required site servic- tion. A further main advantage of es and energies by the producing European sites is the availability of chemical companies are evaluated well-qualified personnel on all levels and analyzed applying criteria such as well as reasonable Environment as site service coverage, availability, Safety and Health (ESH) regulations. price and cost level, quality as well In general, investment cost levels as site service efficiency and flex- are higher than at the Asian sites ibility (figure 2). because of higher material, con- struction and engineering costs, but Insights into Global Site Benchmarking far lower than expected cost levels in the Middle East. The most important and still valid conclusion drawn from benchmark- Chemical Industry Parks in the Middle East ing the worlds’ leading chemical industry parks is that the “ideal Most Arabic states in the Middle chemical site for all kinds of invest- East are actively looking for foreign ments with best-in-class chemical Fig. 2: Chemical Industry Park’s Function Model. production conditions” does not ex- Continues Page 11 ▶

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◀ Continued Page 10 up to 39.5 %, due to high federal tax, site services as well as infrastruc- has to be considered. ture provision. investment and technology partners following their economic develop- Chemical Industry Parks in Southeast Asia Outlook ment strategies, among others the settling of downstream chemistry. Investments in chemical industry Continuous improvement of sites’ Most chemical industry parks in parks in Southeast Asia, especially competitiveness and attractiveness the Middle East region are cen- in Jurong Island in Singapore, ben- enable European chemical industry trally managed and developed by efit from a world-class administra- parks to be best prepared for in- governmental institutions or state tional environment that offers very creased competition for potential in- companies that are specifically re- favorable tax incentives and shows a vestors from investment locations in sponsible for the construction and very effective site commercialization China, Southeast Asia and the Middle operation of basic infrastructure and clearly defined site development East. The identification of improve- facilities (land provision). Large in- strategy. Tax holidays up to 10 years ment and development potentials vestment programs in world-class and reduced income taxes could be based on the defined site-success- chemical site infrastructure, such highlighted. Site service provision factors model supports a targeted as in Qatar, generate very favorable and project handling are considered development of the individual park conditions for investments and op- as advanced as the Asian sites, but and the achievement of sustainable erations. Concerning the economic do not always meet high European European sites’ competitiveness. and administrative conditions, for- levels. Located close to one of the eign companies need a local spon- world’s largest seaports, the region’s Author: Christoph Behrendt, sor to establish joint ventures that leading chemical site Jurong Island Scopein Management are characterized by a statutorily is well connected to the global cus- Consultants fixed share distribution among the tomer and sourcing markets. Major partners. disadvantages are the electrical en- The favorable logistical location ergy prices that are as high as at 22 Contact: in the Middle East between Eu- several chemical sites in Europe, Christoph Behrendt rope and Asia and the availability e.g., chemical cluster Antwerp, but Scopein Management Consultants of deep-water port access at major double the price of other Southeast Duesseldorf, Germany chemical sites are prerequisites to Asian chemical sites. Concerning Tel.: +49 211 730 6220 optimally serve the export-oriented qualified employees, comparable to Fig. 3: Competitiveness assessment of worlds’ leading chemical industry parks [email protected] chemical production, especially be- the Middle East and China, there is www.scopein.de cause of a very small local customer a strong need for internal company with a very developed and profes- development in becoming a chemi- other things, site strategies, produc- market. Cheap feedstock, access to training on the job, because of miss- sionally managed park like the cal park. The heterogeneity in the tion network development plans, chemanager-online.com/en/ the world’s largest crude oil and ing dual education system. The Ger- Shanghai Chemical Industry Park, Chinese chemical sites’ landscape availability of qualified labor, sat- tags/locations natural gas reserves, good raw ma- man education system still functions the sites are at very early stages of is still extensive concerning, among isfying labor productivity level and terials availability and cost levels as as a role model for several initia- well as very favorable electrical en- tives started in Asia and elsewhere. ergy prices compared with all other global sites are key investment ad- Chemical Industry Parks in China vantages for the region. Major challenges for investing Especially the large and dynamic companies are the limited avail- customer market for chemicals as ability of skilled labor and high in- well as low investment and labor vestment cost induced by extreme costs put Chinese chemical industry climatic conditions. Special materi- parks in a favorable position when TIME FOR CHANGE als, technologies and maintenance compared with other sites. Labor services are required to achieve cost levels amount to less than 10 % global utilization rates of the plants. to 20 % compared with European sites. Nevertheless, intellectual prop- Chemical Industry Parks in the U.S. erty protection remains an issue in China, although legislation has been In general, American chemical in- adjusted to international standards. dustry parks offer a very favorable Furthermore, the low degree of pro- environment for investments and duction integration at the considered operations of chemical plants. The sites is not really addressed by a pro- cost situation regarding all major active intercompany production net- utilities such as electrical energy, work planning and site commerciali- steam and especially natural gas zation by the Chinese site operators. are at a world-class level. In addi- In addition, there are monopolistic tion, labor costs are approximately structures of site services supply, on the same level as in Europe, however, in total they have no influ- whereas labor productivity is very ence on favorable production costs high in comparison with the rest for electrical energy, wastewater of the world. When considering the treatment or maintenance services. economic and administrative envi- Especially when considering ronment, a rather high income tax more rural chemical sites compared

Leading in Sustainable Ibuprofen Production

BASF in a celebration honored twen- of the world’s most significant Ibu- ty years of operations in the manu- profen plants. The FDA-audited and facturing of Ibuprofen. In Bishop, GMP-compliant production site is Texas, BASF operates a world class part of the OSHA (U.S. Department production plant for manufactur- of Labor’s Occupational Safety and ing ibuprofen, deploying an award- Health Administration) Voluntary ng lk i red winning, environmentally friendly Protection Program (VPP) and is u ie b n d t production technique that avoids recognized with the “VPP Star site” e f t e

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Pharma Chemical Ireland Strategy on Track Long Term Solutions Counteract Wide Range of Challenges

Ireland – PharmaChemical Ireland (PCI), representative of the chemical and Meanwhile companies continue nology (PAT), Supply Chain and new to drive down the cost of supply business models were discussed in pharmaceutical industry in Ireland, have launched two strategy documents to through smart application of lean detail. There was an extensive range date. The first, “Innovation and Excellence- PharmaChemical Ireland Strategic Plan“ manufacturing techniques. There of speakers drawn from the indus- was launched in New York at DCAT in March 2010. It was followed by “Ireland- are many examples of Irish sites try, regulatory bodies and service Matt Moran significantly reducing their cost of providers from as far afield as India. PharmaChemical Ireland the Location of Choice for Scientific Investment” launched in Washington DC last goods via operational excellence. This coming together of expertise year. PCI’s mission is ambitious: Bringing together all relevant stakeholders in the The industry continues to attract underpinned the valuable critical Awareness of Problems is Key to Solutions investment in development and mass of knowledge and experience state, namely industry, the Government, the research community and the public high end manufacture including that resides in this country support- at large to effectively communicate the unique attractiveness of this country as Recent media coverage points to biopharmaceuticals vindicating the ing a strong and vibrant life sciences a leading location for the supply and development of such products. “It has been the penny having finally dropped strategy adopted by PCI. In fact if sector. with regard to the impending pat- you total the recent announcements Finally, the pharmaceutical sec- well documented that Ireland is currently facing very significant economic chal- ent cliff. Though it may be news to it amounts to well over €1 billion. tor is undergoing a sea change at lenges. However, my message is clear – Ireland is open for business. We have many the public at large it comes as no (see table below) the moment as major companies surprise to the sector in Ireland. In keeping with the theme that seek to stay in the market. An inevi- unique strengths and our economy will return to growth this year.” Enda Kenny PCI has established a standing the sector needs to innovate to stay table consequence of this has been T.D. (Taoiseach) said. committee on strategy and this competitive, PCI hosted their Third a series of mergers and acquisitions challenges however it is also fair to committee continues to oversee the Biennial Conference in collaboration resulting in global overcapacity in say that the industry is well aware Company Investment in € Type of Investment implementation phase. This com- with The International Society for the sector. Now more than ever it of these and that through Pharma- Pfizer Pharmaceuticals 200 million Biopharmaceutical mittee brings together the indus- Pharmaceutical Engineering (ISPE) is critical that Ireland sends a posi- Chemical Ireland is responding to try, Government and its agencies and the Parenteral Drugs Associa- tive message to the industry. Our these challenges strategically. All MSD Ireland Ballydine 100 million Development Facility and the research community. The tion (PDA), titled “Transforming Ire- healthcare policy supports access evidence points towards this strat- Allergan 330 million Biopharmaceutical industry continues to hold the view land Through Innovation”. A wide to innovative medicines and medi- egy being firmly on track. Genzyme/Sanofi Aventis 150 million Biopharmaceutical that the only way that the sector range of speakers explored in detail cal technologies that are developed Amgen 150 million Biopharmaceutical will meet the challenges presented how the industry can apply innova- in Ireland. It is vital that Govern- Author: Matt Moran, Director, by the patent cliff is to embrace tion practically. High level speakers ment continues to take a long term Pharma Chemical Ireland Eli Lilly 300 million Biopharmaceutical the development plus manufactur- from the regulatory word- includ- view of the overall cost of health- MSD Ireland Brinny 29 million Biopharmaceutical ing model thereby expanding the ing Irish Medicines Board Chief Ex- care. Medical treatment funding is mandate of existing companies in ecutive- Pat O’Mahony and Christine regarded as investment in the na- 22 Contact: this country (see below). The in- Moore from the FDA – outlined how tion’s health and economic prosper- Matt Moran dustry recognises the fact that it industry can embrace regulatory ity. Such an approach will send a Pharma Chemical Ireland needs to work closely with the re- change to its advantage and to the positive signal to pharmaceutical Dublin, Ireland search community to assist in this benefit of the patient. The high level companies. It is critical that Gov- Tel.: +353 1 605 1567 process and also to uncover new of compliance by the sector here re- ernment policy is well aligned in [email protected] opportunities for commercialisa- mains a key strength and an ongo- this regard, if companies are been www.pharmachemicalireland.ie tion of research. The industry also ing reason why companies continue asked to support the sector by in- needs to try and access the health to invest in Ireland. vesting in innovation in manufac- system to help the development of Common thematics were ex- turing they would expect the Irish an effective clinical research base plored via key note addresses and citizen to be able to avail of these resulting in translational research focussed workshops. Topics such as innovations in the marketplace. chemanager-online.com/en/ Over 600 new jobs will be created as a result of these investments, sending a clear message that the and the evolution of a clinical trials operational excellence, Quality by In conclusion it is fair to say that tags/locations sector remains committed to Ireland for the long term. infrastructure. Design and Process Analytical Tech- the sector here does face a range of

Nordic Clustering The Kokkola Industrial Park is Scandinavia’s biggest chemical manufacturing site

Finland – Germany and other Cen- industrial establishments have op- erations in the immediate vicinity tral European countries are pioneers in of the harbor. But it is not only the “clustering” their chemical production advantageous geographical loca- sites, but the Scandinavians already tion that makes Kokkola harbor an important transfer site. The port is showed their will to catch up. In Fin- home to the only All Weather Termi- land the Kokkola Industrial Park (KIP) is nal (AWT) in the Nordic countries, which is at the same time the largest the largest centralization of inorganic in Europe. In the terminal, ships can chemistry in the Nordic countries. In- be loaded and unloaded in a cov- frastructure and geographical location ered space, which means that the cargo will never be left to the mercy offer various advantages for investors of weather. and chemical manufacturers – Kok- The inorganic chemical industry sees the benefits of Kokkola’s In- kola’s biggest plus. dustrial Park and started investing a couple of years ago. “In Kokkola For over 100 years Europe has been things move very fast. The speed at world leader in manufacturing and which we had our new plant up and exporting chemicals, but during running was amazing. The coopera- the last decade a shift is notice- tion between Kosek and Woikowski able. Asia is attracting new inves- and the city of Kokkola was seam- Germany or in the Netherlands and tors with double-digit growth rates less,” says Clas Palmberg, Managing range from 650 to 2000 ha. and is about to claim the throne of Director Oy Woikoski AB, Finland’s worldwide chemical manufactur- oldest specialized gas producer and Outlook ing. Even though Asian production The Kokkola Industrial Park covers an area of 600 ha and therefore ranks among the ten biggest European Chemical Clusters. distributor. The internal connections sites are becoming more and more between the companies at KIP are In the future it will be crucial for the established, there are still some ad- ganisations will become the proper- plications, chemical processes or infrastructure is well developed and interlaced in a way that leads to a European chemical Industry to focus vantages for the European chemi- ty of the company. For this reason, laser and material technology. meets the requirements of a modern cost efficient value chain. The broad on clusters like Kokkola Industrial cal sector. With a highly skilled labor we have centralized a significant Alongside their focus on R&D and globally orientated production product portfolio, ranging from co- Park. In terms of costs the Asian force, many decades of experience proportion of our R&D opera- facilities, the Kokkola Industrial site. The airport is just 15 minutes balt and zinc products to calcium competitors are nearly unbeatable and state-of-the-art production sites tions in Kokkola,” says Jöran Sopo, Park benefits from its long tradi- away from the plant, offering the chloride, limestone or ammonia, and the one big thing that keeps Europe managed to defend its po- Managing Director OMG Kokkola tion in chemical manufacturing. opportunity to ship chemicals flex- speaks a clear language and illus- European companies competitive sition among the most successful Chemicals. With 375 employees the The chemical industry is a reputa- ible to all parts in the world. Not as trates the optimized value chain. is their level of connectivity. The chemical-producing regions in the OM Group is the second biggest em- ble employer in the region and the flexible as the air route, but much The European Chemicals Agency chemical production in Europe is world. Especially modern produc- ployer in the Industrial Park, man- supply of committed labor is good. more cost-efficient is Kokkola’s is also situated in Finland and, as predominantly organized in clusters tion plants, which are often centered ufacturing mainly cobalt products. Due to this long tradition, the given outstanding railway connection. In part of the EU’s Subsidy Area 2, there and investments in this area need to in clusters, strengthen Europe’s po- In total 2000 employees are based goods traffic, the same track gauge is guaranteed potential for financial be intensified to face the challenges sition. in Kokkola. Research and develop- is used all the way to China, which support. Another important partner of this changing market. ment indeed plays a very important Top 10 Products makes delivery to the Russian and for Kokkola Industrial Park is the Kokkola Industrial Park – role for the Kokkola site. The new € ▪▪ Sulphuric acid Asian market possible. European Chemical Site Promotion 22 Contact: Scandinavia’s figurehead 500.000 chemical test plant, Chemp- ▪▪ Calcium chloride Kokkola’s harbor can be seen Platform (ECSPP). The organization Ville Honkala lant, offers a wide field of functions ▪▪ Hydrochloric acid as a link in trade between east and was founded in 2005 and since then Project Manager Approximately 20 companies run from the preparation of solid raw ▪▪ Potassium sulphate west. It offers quick connections to supports chemical clusters all over Kokkola Industrial Park plants in Kokkola, another ten sup- materials to gas cleaning and vari- ▪▪ Phosphoric acid Russia, and from there to the rest Europe. Currently the ecspp operates Kokkola, Finland port them for key activities. The ous extractions of solid and liquid ▪▪ Limestone of the world. Cargo to be shipped to in ten countries, with 30 members Tel.: +358 44 7809098 reasons for their investments are materials. Companies can also link ▪▪ Ammonia Russia is loaded in the harbor di- and 70 chemical sites. The Kokkola [email protected], www.kip.fi manifold and range from logistical their own research departments to rectly into railway carriages which site is among the ten biggest clus- ▪▪ Potassium salt advantages to legislation issues. “In the technology center Ketek, which will cross the border between Rus- ters in Europe, covering an area of ▪▪ Cobalt products chemanager-online.com/en/ Finland, research results derived is especially designed as a R&D en- sia and Finland ten hours later. 600 ha. The only chemical sites with ▪▪ Zinc tags/locations from joint efforts with research or- vironment, to work on polymer ap- Several large-scale international a larger scale are either located in

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www.twitter.com/ CHEManager_EU CHEManager Europe 9/2012 Pharm a Page 13 Opinions Strategy Synthesis Pharma Supply Chain Experts Siegfried Adds More Pieces to Manufacturing Challenges for Discuss Challenges arising from its Puzzle of Offerings for the the Targeted and Potent Drugs a Changing Business Model. Pharmaceutical Industry. of Tomorrow.

Pages 14, 15 Page 17 Page 18

¡Bienvenidos a la Feria! CPhI Worldwide, the Leading Annual Networking Event of the Global Pharmaceutical Ingredients Industry, Returns to Madrid

Face Time – More than 29,000 attendees from over 140 countries visited the CPhI Worldwide in Frankfurt, Germany, last year and met face-to-face with staff from almost 2,000 international exhibitors. There’s no doubt that CPhI allows at- tendees to stay informed about the latest industry trends and remain one step ahead of a constantly changing pharmaceutical market. However, while the show has grown and grown since its inception in 1990, it has also faced its fair share of criticism from the industry regarding its size — something the show says reflects industry growth. The show’s brand director Andrew Pert is therefore always on the lookout for new ways to better connect with the industry’s needs and tailor- ing the show accordingly. CHEManager Europe asked him about the organizer’s efforts ahead of this year’s 23rd edition at the Feria de Madrid, Spain, to take place October 9-11.

Andrew Pert, Brand Director CPhI Worldwide, ICSE, P-MEC Europe, InnoPack, UBM Live

CHEManager Europe: The CPhI has We are also very excited to intro- Will CPhI become even more inter- amount of time into creating stra- industry, which has been evident In terms of the search for the continued to gain international duce the CPhI mobile app in Madrid! national regarding exhibitors and tegic partnerships with key interna- through the changes in the types of perfect location, CPhI Worldwide interest and attendance. Tell us It will make searching for suppliers visitors? tional organizations. This includes entries over the past nine years in has recently moved between the a little bit about that, as well as easier by offering real-time naviga- an extended partnership with the which the awards have taken place. European cities of Frankfurt, Mi- why attendees should be excited tion and pointers for guests who A. Pert: We are very excited to talk India Brand Equity Foundation The returning Best Innovation lan, Madrid and Paris with plans for Madrid. are on site at the event, as well as about how the events continue to (IBEF) and Pharmexcil to promote in Pharma Awards category will to return to Frankfurt in 2013. Do functionality to connect and network expand internationally. We have fif- the progress in the Indian Pharma feature five finalists competing for you think about other cities that A. Pert: Not only is Madrid a popular with other attendees via social me- teen Global Pavilions this year that market. UBM Live is also pleased gold, silver and bronze. This catego- might provide a good location for venue with exhibitors and visitors, to partner with Scottish Enterprise, ry has expanded over the years to a global pharmaceutical show like but we are also going into 2012 with PharmaChemical Ireland, Egypt include not only chemistry innova- CPhI? many records already broken. It is a Expo &Convention Authority, Phar- tions, but also to showcase exhibi- great time to be a part of CPhI, ISCE, We are always open to exhibitor and ma Portugal, Matrade in Malaysia, tors with groundbreaking innova- A. Pert: Location choice is really about P-MEC Europe and InnoPack and we visitor input for future planning. Ministry of Industry and Trade of tions in formulation, drug delivery, staying focused on making the event are looking forward to being onsite the Russian Federation, and the chemical manufacturing of APIs valuable to attendees. Even as we at the Feria! We have more exhibi- CCPIT Sub-council of Chemical In- and intermediates, and biomanu- continue to grow, we do everything tors than any previous year, many of dia. Also on the navigation front, we highlight suppliers from specific re- dustry and CCCMHPIE in China to facturing of biopharmaceuticals we can to ensure that the events are them returning, and 108 new com- have put a great amount of research gions. This is also a record for us, name a few. and intermediates. The Sustain- accessible and easy to participate in. panies have joined us. Event attend- and effort into expanding the zon- due to the fact that we are intro- able Stand Design Award returns Part of that involves working with ance retention is the highest ever this ing format to include new zones that ducing global Pavilions for Russia What other items are notable this to celebrate one exhibitor that has venues that meet the needs of our year at 84 % and our zones have also better match exhibitor profiles and and Malaysia, two regions that have year? minimized their environmental im- attendees. We do continuously re- seen growth with 9 new exhibitors make locating products and services been experiencing rapid growth in pact through the materials, labor, view new venue ideas throughout in the biopharmaceuticals zone and easier for guests. The new zone of- the pharmaceutical industry. They A. Pert: The CPhI Innovations Awards and resources used in their stand Europe, but many have insufficient doubling of exhibitors in the ICSE lo- fering includes: will be complemented by the return return with a twist this year. The at the events. Finally, the Best Sus- space or do not meet other require- gistics and supply chain zone. of Pavilions for Argentina, Brazil, line-up has been rebranded as the tainable Packaging Design Award ments, such as having availability ▪▪ CPhI Worldwide: APIs; Generic China, Egypt, France, India, Ireland, CPhI Pharma Awards and features has been introduced to recognize during October. Bigger is not always better: What APIs; Custom Manufacturing; Korea, Morocco, Portugal, Scotland, As a global event, a very impor- is more important than exhibitor Fine Chemicals; Intermediates; UK and North America, which now tant key factor in venue selection space when developing future CPhI Excipients/Formulations; Biop- features SOCMA. The North Ameri- We have put a great amount of is the feasibility for overseas visi- Worldwide events? harmaceuticals; General; can Pavilion is also having a record research into expanding the zoning tors to reach the city. Among other ▪▪ ICSE: Logistics & Supply Chain; year with a 10 % increase in partici- format to include new zones that considerations, we need to be sure A. Pert: The most important thing to us BioServices; Analytical & Lab Ser- pating exhibitors. that convenient flights are available, as an event organizer is our exhibitor vices; (Pre) Clinical Trials, CRO & better match exhibitor profiles. that we can work within the dates and attendee return on investment Clinical Data Management Zone; What does that mean for your we have identified, consider visa (ROI). Throughout the years the New Exhibitors; North America global expansion plans? an additional category, for a total one exhibitor that offered a specific requirements for people travelling events have grown, which has al- Zone; General Floor; of three award categories: two re- material, machine, or supply dur- outside of Europe, ensure there are lowed us to continuously shape them ▪▪ P-MEC Europe: LABWorld; A. Pert: In order to support our glob- turning and one new. The rebrand- ing 2011 that facilitated sustainable a sufficient number of hotel rooms based on feedback from our visitors ▪▪ Innopack: Labelling. al expansion we have put a great ing reflects the diversification in the packaging and processes. in a particular city, and look into and the experiences we have had. We public transportation connections recognize that it is no small under- between the airport and the venue. taking for our visitors to participate In addition to these practical points, in an event of this magnitude, so we we also survey our exhibitor and Publishing Manager need to be sure that they are more Dr. Michael Reubold visitor attendance regularly, and Tel.: +49 6201 606 745 than worthwhile to our visitors. Media Consultant these cities continually receive posi- Corinna Matz-Grund [email protected] Tel.: +49 6201 606 735 Editor tive feedback. [email protected] Dr. Birgit Megges Which new services for visitors Tel.: +49 9617 448250 Of course, as time goes on, new and exhibitors do you offer prior see you in [email protected] venues will be built, existing ones to the Madrid event? will be expanded and flight pat- terns will change, so we keep a live A. Pert: As we prepare for Madrid in eye out for new venue possibilities

2012, we are taking many concepts ottoterremoto©Fotolia at all times. We are always open to live through new technologies and exhibitor and visitor input for future improvements in existing features. Madrid planning. Leading into the show, UBM is offer- ing webinars to help exhibitors and This year’s CPhI Worldwide is taking place in Spain. attendees prepare for the event, as From Oct. 09 –11, Madrid is the place to be if you do business in well as offering a new CPhI Global the pharma industry. We’re looking forward to seeing you there! Meetings programme that acts as a matchmaker for scheduling custom- Do you have a story to tell? Or just want to find out more about what CHEManager Europe and CHEManager have to offer? ized meetings into your diary. The Pre-Connect series will return a day Then just drop us a line – we’d love to hear from you. before the full event goes live and www. chemanager- online.com/en will feature information on the top chemanager-online.com/en/ industry trends and regulations, in- tags/cphi cluding ways to enter new markets.

chemanager-online.com/en Page 14 Pharma CHEManager Europe 9/2012

Changing Times Pharmaceutical Supply Chain Experts Discuss Challenges Arising from a Changing Pharma Business Model

CPhI – As a transforming model of titled „How the new connected era drugs with variable quality and the form healthcare,“ says Kristin Peck, away from highly innovative treat- izations and contract manufactur- is reshaping biopharma“, which outcome monitoring is at least ques- Pfizer‘s executive vice president for ments toward highly effective solu- ers. It is crucial for long-established healthcare in countries around the made clear that due to better con- tionable. Often data are monopolized worldwide business development tions, especially solutions that shift companies to see new business mod- world could make its way to the core of nectivity via the internet, improved by the suppliers, which leads to an and innovation, in an. accountability toward the consum- els as a chance and not as a threat the pharmaceutical industry, pharma diagnostic tools and the dissatis- unsustainable imbalance between ‘Connected health‘ offers a wide er.“ If ‘connected health‘ becomes for the status quo. The model of faction of patients, healthcare and supply and demand. Since the world variety of advantages, especially for reality, the biopharma industry and healthcare is adapting to the needs supply chain partners like CROs, CMOs, biopharma are now facing a trans- population is growing constantly consumers and physicians. The bi- all its suppliers need to reposition of the consumers and pharma com- and CRAMs have to be prepared to ad- formation from centralized medical many countries are observing an ag- opharma industry on the other hand themselves within the market. panies should do exactly the same. distribution to a more personalized ing population. As a consequence, the is not yet ready to serve this new Even though the situation for bi- CHEManager Europe asked just their business models. approach. The ambition of this ‘con- demands toward the pharmaceuti- market. Even though the industry‘s opharma companies is challenging, experts from the pharmaceutical nected health‘ approach is simple: cal industry change and the pharma commercial model already started there are also lots of opportunities ingredients and custom synthesis Technology has changed many in- Identify the right treatment for the companies need to react. The idea of to change, there is much to be done for improvements. Especially R&D industry to share their opinions on dustries over the past decades. The right patient at the right time. ‘connected health‘ was born out of to face the upcoming challenges. can profit from a better connected this topic prior to the industry global biopharma and healthcare industry The current model for healthcare this challenging situation, trying to „Pharma companies will need to be pharmaceutical industry. Virtual networking event, CPhI Worldwide is also currently preparing for some around the globe is characterized revolutionize the model for health- able to overcome the commercial workplaces, set up via the internet, in Madrid, Oct. 9-11, 2012. Read massive changes, which could lead by inflexibility, centralized distribu- care. „Connected health will give rise and market-access risks that could offer the chance for open collabora- what they think about the prospects to an era of ‘connected health‘. Mc- tion and high costs. Medical mass to a number of new business mod- accompany this shift,“ guesses Kris- tion among biopharma companies, for their businesses given the chal- Kinsey recently published a report production generates standardized els that have the potential to trans- tin Peck. „The Implication is a shift academics, clinical-research organ- lenges – and opportunities – ahead.

J.-L. Herbeaux (Evonik): The pharma- ceutical industry has undergone significant changes in the last years, which call for large-scale revisions in business models. Several overlapping factors have made this necessary, including increased cost pressure due to tightened health care policies and higher competition, more stringent regulatory requirements and lower blockbuster potential arising from weaker development pipelines. All this is compounded by the so-called patent cliff, which threatens origi- nators with sudden and significant loss of revenues and prompts fur- ther acceleration of change. Increased efficiency is the trend that has evolved out of this chal- Jean-Luc Herbeaux, Roger Laforce, Marianne Späne, EVP Global Business Alexander R. Wessels, Hendrik Baumann, lenge among pharmaceutical com- Head of Health Care Business, Evonik CEO, Zach System Development, Marketing and Sales, Siegfried CEO, DSM Pharmaceutical Products Commercial Director, CU Chemie Uetikon panies as well as their suppliers and partners. To that end, businesses are looking toward outsourcing and lev- This, combined with our oral drug Evonik has extensive experience ever increasing regulatory frame- are still underrepresented in China. increasing the demand for contract eraging a few select partners that formulation development services and knowledge covering a broad work within the EU and in single The production of low-cost APIs at manufactured drugs. are both flexible and provide ena- carried out of our global technical spectrum of solutions for the phar- countries such as Italy? large volumes and high quality is To bridge these gaps, CMO’s will bling technologies. laboratory network, means that we maceutical industry. Companies today The triad markets USA, Europe one of the major challenges of our need to demonstrate long-standing Evonik offers the strength and can now assist our customers in de- need an agile, reliable and empower- and Japan show a trend towards part of the supply chain in the next track record(s) coupled with exten- breadth that comes with working veloping and launching more effec- ing partner with global resources to personalized medicine and new decade. It will open new business sive technical know-how, to gain with one of the world’s largest spe- tive drug formulations for both oral increase efficiency and keep them on treatment areas for its ageing popu- opportunities if we take this chal- customer confidence. Siegfried has cialty chemical companies. We cover and injectable applications. the cutting edge of technology. That’s lations. Cancer treatment, geriatric lenge. Such innovations will feed done so by strengthening its posi- a large part of the value chain, from Our Eudragit and Resomer func- exactly what Evonik does. drugs treatments against metabolic back to our markets. tion as a well experienced drug sub- manufacturing of API’s (including tional polymer systems complete diseases like antidiabetics, antiobes- The bulk part of pharmaceutical- stance and drug product develop- HPAPI) and functional excipients to the offering. These two leading ex- R. Laforce (Zach System): No doubt, the ity or neurodegenerative drugs. chemical production today is still ment and manufacturing company development of drug formulations cipient platforms are used safely by pharma industry and its entire sup- Growth for many anticancer will batch operated. The API factory of with superb compliance record. We and specialty manufacturing of drug customers the world over to impart ply chain are undergoing a paradigm be more linear and not exponential the future will be more modular and offer a fully integrated service, and products. controlled release functionality to change considering the increasing like blockbusters, quantities lower, more processes and entire produc- we are continuing to invest in ad- Thanks to our strong global R&D sophisticated oral and parenteral importance of emerging countries the chemistry more sophisticated. tion units tend to become continu- ditional capabilities that our clients laboratory and production network, dosage forms. now also seen as markets. Countries The combination of synthetic APIs ous. Sophisticated manufacturing require including: high potency and we support pharmaceutical compa- Our broad competencies in APIs with large populations like the en- with biomolecules and protein based systems using continuous or semi- bridging technologies such as spray- nies in developing better manufac- and drug delivery systems combine tire Asian-Pacific Rim are profiling drugs will increase. These changes continuous techniques are only the drying & micronization. turing routes for their high value to support clients in new ways. For themselves for regulatory, IP and ac- need to be captured by the phar- beginning. Under Siegfried’s ‘transform’ APIs. We ensure their successful example, Evonik is now active in cess to their markets. Such markets maceutical chemical companies Data streams on a global level strategy, we fully forward integrat- and economic scale-up and secure the design and production of anti- show different characteristics. Rich and will lead to a change of their demand more stable and higher ed our drug product service offering supply through clinical trials all body drug conjugates (ADCs). This and medium class people can afford strategies. performing lines to manage global through acquiring ‘AMP’, who offers the way to commercial launch and is a new type of targeted therapy more expensive drugs, but a large The collaboration of US, Euro- level supply chains. a full range of aseptic fill services beyond. where the antibody binds directly part of their population needs ultra- pean and Japanese companies with The European Fine Chemical is which complements our solid oral Thanks to the recent acquisition to, for example, specific markers low cost drugs with totally different industries in emerging markets obviously not doomed but has still dosage capabilities. Also, we have of Birmingham Laboratories in Ala- at the surface of cancer cells. The distribution systems (buy a pill a needs to further strengthen, since a lot to offer to the pharmaceuti- begun to backward integrate man- bama (USA), Evonik now also has ADC is then internalized within the day). These patients have the same the major innovation drivers are cal world. It will contribute with a ufacturing with investment in Nan- the competencies and facilities to cancer cell and the active ingredient right for the same quality as better still in the USA, Europe and Japan, wealth of know-how grown for more tong, China to offer both non-GMP offer full development and manufac- released exactly where it is needed, situated ones. where more solutions are needed in than a century of chemical culture. substances and GMP substances as turing services in the area of inject- thus reducing side effects and wid- Does this mean that the Europe- emerging countries. Interestingly, a secondary cost structure strategy able controlled release formulations. ening the therapeutic window. an API industry is doomed with the multinational pharma companies M. Späne (Siegfried): Today, the phar- for our clients. maceutical industry faces multiple Pharma companies both in- challenges, such as a marked de- novative and generic, realize that cline in bringing NCEs to market, outsourcing combined with crea- coupled with generic competition, tive partnership models will create regulatory and health system payer greater value. Pharma preferred The Art of Cytotoxic Manufacturing pressures combined with continued partner relationships will allow weak economic growth, especially in both organizations to fully contrib- Helsinn Advanced Synthesis S.A., Biasca, Switzerland offers its partners up-to-date the largest market the US. Pharma- ute their core strengths such as technologies and the highest quality standards for manufacturing APIs, ceutical companies in future will R&D, manufacturing and market- HPAPIs and now Cytotoxic compounds. have to be willing to change cur- ing. Many clients we work with op- Through its Chemical Know-how, R&D expertise and rent business models which apply erate under the ‘preferred supplier solid CMC approach Helsinn is the right partner from innovative marketing, R&D & sup- program umbrella’ which manages the development, through registration, validation ply chain practices to mitigate & their outsourcing choices. Finding and commercial manufacturing. replace revenue losses from patent these ideal outsourcing relation- expiration and lack of blockbuster ships, are what will make the key medicines. difference for most pharmaceutical New Cytotoxic Plant: The model shift will rely more on companies. outsourcing service partnerships to Recently, Siegfried re-established Helsinn Advanced Synthesis S.A. is already evaluating solve technical problems, improve its corporate logo as ‘expect more’. projects for the New Cytotoxic Plant. efficiency and productivity, and ulti- We believe we are that innova- Development and manufacturing activities are mately to streamline the value chain. tive, flexible, integrated partner a starting in May 2012! We foresee companies de-risking pharmaceutical company seeks, their R&D efforts through increased to reduce costs and enhance tech- [email protected] product in-licensing and partner- nologies, to streamline their supply Tel. +41 (0) 91 873. 94. 00 ships together with outsourcing of chain needs. Visit Helsinn Advanced Synthesis SA activities previously largely kept in-house such as manufacturing of A. R. Wessels (DSM Pharmaceutical Prod- CYTO-CORNER, at CPhI Worldwide, Madrid, regulated intermediates, APIs and ucts): DSM’s stake in the pharma October 9-11, 2012 finished products. Streamlined oper- outsourcing market is based on a Booth # 8D30 (Hall 8) and win an iPad ations via lean manufacturing prac- tices are today’s standard which is Continues Page 14 ▶

chemanager-online.com/en CHEManager Europe 9/2012 Pharma Page 15

◀ Continued Page 15 the same limited numbers of prod- capabilities explicitly to meet these to reconsider their own business pharma taking positions in the CRO businesses to geographic diversifi- ucts and projects. This will have an needs. Our recent investments in models, to ensure they provide the industry, providing a valuable pool cation to shore up their businesses. global portfolio of resources to con- influence to the profitability of the drug development expertise and tal- most appropriate service offerings of talent that outsourcing providers Cost reduction programs affecting tinuously serve changing customer contract manufacturers and last but ent, OptiForm API optimization tech- for the changing industry. can use to meet the evolving needs their labor forces are spreading needs and bring real value as the not least to the supply chain. From nology, OptiMelt hot melt extrusion Pharma companies have invested of customers. Significantly, this through the western world. pharma industry shifts business our point of view, it is a global and capabilities and OptiDose flexible considerable effort into evaluating means that the balance of expertise The industry is changing or is models. There is a need for sub- not a “western” problem. oral delivery technology, combined R&D strategies and programs over is beginning to shift from customers forced to change to maintain the stantive, long-term partnerships In addition some of the larg- with global capability improvements the past couple of years, which has to suppliers. pace of growth. Our customers between pharma and outsource est pharmaceutical markets – for in oral and biomanufacturing, are led to massive layoffs of scientific In recent years, the lowest priced are looking for establishing low partners. example Germany or Japan – are expressly designed to meet this de- R&D staff and many facility closures, offering was often a key deciding risk supply chain with strategic As a contract manufacturer and under heavy price pressure from mand for tailored partnership solu- particularly within Europe and the factor when awarding contracts to partners in the sourcing area and technology provider, we make a the public health insurance system. tions. USA. On the one hand, this could outsourcing companies. However, manage a pool of few and reliable commitment to employ expertise The goal is to have a fixed price mean fewer overall opportunities pharma customers’ changing needs suppliers who can offer specialties across our organization to achieve system for any medicine which is D. DeCuir (Albemarle Fine Chemistry Ser- for CROs and CMOs, compounded are driving the development of new and comprehensive services meet- success for our customers. DSM of- controlled by the government or vices): Increased efficacy in the de- by an increasing focus on biophar- business models, including increas- ing their needs. Open communica- fers an integrated approach to sus- fixed annual price reductions are sign, manufacture and distribution maceuticals that means even less ing focus on services being delivered tion and common understanding of tainable manufacturing using bio- requested (irrespective whether it of pharmaceutical products will budget is available for traditional on time and within budget; the need the project goals and expectations technology, chemistry, and pro¬cess is a new drug or a generic). As a likely mean that dosages of new small-molecular discovery and de- for collaborative advice and more are key success factors. Suppliers in technology. With its biotechnol- result, pharma companies may lose products will decrease as the prod- velopment. However, I believe these strategic partnerships; the need to their turn are in a need to diversify ogy and (bio)chemistry capabilities their interest to launch new API’s in ucts become more effective, but also, changes could lead to greater de- ease the burdens of project man- in terms of geography, products and DSM has an extensive toolbox for such markets as they cannot keep older effective products will stay on mand for outsourcing: many phar- agement; and the need for more services. developing the most economic and their profitability. the market longer. This means that ma companies are now focusing on flexibility, adaptability and quality. Euticals Group acts as a fully- sustainable solutions. And DSM has A look into the pipelines of the new “designer drugs” will require increased outsourcing to accomplish The ability of providers to adapt and fledged API, fine chemicals and con- extensive expertise in technology, leading pharma companies shows increasingly smaller campaign many of their R&D objectives, hav- respond to these industry changes tact manufacturing organization. We IP and operations developed over a another interesting trend: The major sizes due to increased efficacy and ing eliminated key functions, staff will play a vital role in improving are a major player globally based period of many, many years. API development direction is cancer, that effective generic drugs will be and facilities. the success rate and outcomes at with 11 facilities located in Italy, While there is great discussion diabetes and CNS. The landscape is longer lived, and will compete for Furthermore, these eliminated all stages of the drug discovery and France, Germany, UK and the US. around the concept and practice of scattered and only few NCE’s are or time in manufacturers’ facilities. staff and resources are available development pipeline. Our core business is and will remain At AMRI, we have specifically de- the manufacturing and process de- veloped our new service offering in velopment. We are also aiming at response to the changing industry. the forward vertical integration in AMRI Smartsourcing is designed to dosage forms. provide customers with the ability With our diversity in services, to customize our resources, tech- production facilities and our phi- nologies, geographic footprint and losophy – customers come first; we record of accountability and ac- are an ideal partner in a constantly complishment. Our customers can changing market environment. create an ideal offering to meet the Achieving what we promised and needs of their research programs, meeting customers’ needs in timely without the need to compromise on manner help us build strong rela- quality, productivity or timeliness. tionships and help our customers overcome an increasingly challeng- P. Pojarliev (Euticals): For a second con- ing market environment secutive quarter, overall sales and earnings for many pharmaceutical companies have declined. The im- pact is a result of the healthcare reforms in most of the European Elliott Berger, Vice President, Global Marketing David DeCuir, Thomas D’Ambra, Dr. Peter Pojarliev, countries in the last 4-5 years, the and Strategy, Catalent Pharma Solutions Director, Albemarle Fine Chemistry Services Chairman, CEO & President, AMRI Director, Business Development, Euticals increasing generic competition and loss of revenues of expired top-sell- ing products. Companies hit from sustainability, the quest for sustain- will be successful, most of them in Consequently, the suppliers to the to outsourcing companies. We are the economic environment and its chemanager-online.com/en/ able development will certainly be a small dosages or as individualised pharmaceutical industry will be re- seeing experienced discovery and repercussions are using everything tags/cphi key theme in the coming years. The medicine, which means small vol- quired to make smaller campaigns development scientists from large possible ankle from acquisition of world will soon be faced with the umes for the API producers. of multiple drugs in their facilities challenge of accommodating nine Last but not least many of the rather than large campaigns or even billion people who all want to live CMO’s will face dramatic changes dedicated lines. healthy and prosperous lives. It is in the legal environment, which will Increased complexity of drug therefore essential to find solutions finally increase their costs of goods, products will mean more opportu- to scarcity, security and other con- key words here are GDUFA (US FDA nity for CMOs since these products straints – it is the only way to main- fees) and FMD (EU directive). As will be more difficult to make and tain stability and prosperity. the custom synthesis market is ex- require additional steps manufac- For pharma there is the oppor- tremely diversified, where no single tured under cGMP; even as large tunity to achieve sustainability with company has more than 3 % market pharmaceutical companies increas- an outsourcing partner and manu- share, we will probably see a market ingly outsource production in order facturing expert like DSM, whether consolidation in the next years. to concentrate on core activities. they are licensing technologies to The above mentioned scenarios Companies who can do process optimize their own biomanufactur- will influence the business model development and manufacturing, ing or leveraging our green chemis- of each single CRO and CMO. We instead of either of these steps, will try to extend the life cycle of proven still believe that a diversified prod- receive a disproportionate share of drug compounds. uct and project portfolio including the outsourcing revenue in the fu- In the biopharma space growth “bread and butter” products in com- ture. As always, reliability in supply is still high and opportunities are bination with operational excellence will be a key differentiator. all around. However, consolidation will be key for future success. Also Aging populations with growing in the small molecule API sector par- we are convinced that the right prosperity and access to informa- ticularly in the western countries is small-midsized capacity, excellent tion about pharmaceuticals will something that we see happening. customer service and high flexibil- inevitably mean a larger pharma- Consolidation is being forced not ity are the success criteria for the ceutical market in the future. This only from a capacity perspective, future. alone bodes well for pharma custom but also for reasons of quality and manufacturing companies. Howev- safety. As global supply chains ex- E. Berger (Catalent Pharma Solutions): er, it will be increasingly difficult to pand, the safety and traceability of Partnering and open innovation bring new products to the market ingredients and finished drugs, as models are clearly becoming more since those new products will in- well as the sustainability of these significant in the drug development creasingly have to prove that they supply chains, become critical. The and delivery space as well. Resource are better and more cost effective almost doubling of the number of constraints, a need to focus scarce compared to existing products. This warning letters that the FDA has talent on core competencies and pri- means that while new products will issued this year seems to indicate ority areas, as well as increasingly be fewer, they will be longer lived. and address growing concerns from challenging molecules in pharma The most exciting aspect to this a regulatory perspective. pipelines, are driving large and new supply chain is the customer’s The DSM “Quality for Life” seal is small companies to partner with increasing ability to compare medi- at the heart of what we do in dem- specialized technology and expert cations on efficacy, price and quality Save yourself the surprises onstrating our systematic quality services providers. Catalent has metrics that will necessitate positive program. Quality for Life assures seen a significant increase in coop- changes for high quality producers when you’re looking for a partner. customers that the ingredients they eration at earlier stages of drug de- of APIs. Lower cost but lower qual- Come straight to us. are buying from us are safe in terms velopment, particularly in complex ity products will not be tolerated of quality, reliability and traceability. oral dose forms with challenging by the increased scrutiny of both We love your problems. Moreover, they are manufactured in bioavailability, release, or targeted regulatory agencies as well as a a safe and sustainable way. delivery profiles as well as in meth- better informed patient population. od development, scale up and manu- This bodes well for reliable Western Visit us at H. Baumann (CU Chemie Uetikon): The facture of complex products. We can producers of high quality API with Real problems, real answers. We’re the perfect match CPhl worldwide limited number of new chemical also see this trend in biopharmaceu- flexible assets. for your strategic pharmaceuticals partnership. Why? entities (NCE’s) in the pipelines of ticals and biosimilars, as well as in Because we work hand in glove with our customers Booth 4 A32 the big pharma companies on the clinical trial supply solutions. T. D’Ambra (AMRI): Recent issues within across all organizational boundaries. And thanks to this close-knit spirit of cooperation among all those involved, one hand and the decreasing in- Larger companies are looking the global pharma market, includ- we have an exceptionally deep understanding of our vestments/fundings of small and to supplement their capabilities ing failure to fill pipelines to com- customers’ needs. This way, we can join together in venture pharma companies on the with specific niche expertise, while pensate for a number of key patent developing sustainable, step-by-step solutions. If you’d like to know more good reasons for a long-term partner- other hand, will change the custom mid-size and smaller companies are expiries, coinciding with prolonged ship with us, go to www.evonik.com/pharma. manufacturing and fine chemicals looking to partner for integrated economic recession in Western business significantly. As a result solutions. Catalent has focused on countries, are leading to changes the outsourcing volumes of those developing a broad range of expert in how pharma companies consider pharma companies will decrease, solutions and new drug delivery outsourcing. As a result, CROs and while CRO’s and CMO’s fighting for technologies as well as global supply CMOs are under increasing pressure

chemanager-online.com/en Page 16 Pharma CHEManager Europe 9/2012

Thriving Generics Patent Cliff Revenues Fertilize Generics Companies

Market Transition – When we think about the patent cliff, an image along the lesterol drug Lipitor. The company the FDA for review, with a decision has been much weaker than many rejected acquisition. It has since be- recently released its first quarter expected by June 28. Eliquis was had expected or hoped. Despite gun an auction-type process to sell lines of a massive waterfall, with companies’ revenues in free fall comes to mind. earnings, and reported Lipitor co-developed with Bristol-Myers three promising, late-stage pipeline itself, and it has reportedly drawn What we usually forget to consider, though, is that the waterfall is nourishing a sales of $1.4 billion, a 42 % plunge Squibb for the prevention of strokes programs for treating infectious dis- bids from Sanofi and Merck & Co., as fertile, green valley below. While big pharmaceutical companies are scrambling from the same period in 2011. The in patients with arterial fibrillation, eases, cardiovascular disease, and well as potential interest from Merck, drugmaker can hardly complain, and also has blockbuster potential. diabetes, HGSI’s share price has suf- Pfizer, Roche, AstraZeneca, Takeda, to bolt-on smaller biotechs with marketed drugs to protect themselves, generics though, as the drug recorded cumu- Finally, Pfizer is flush with cash af- fered since the March, 2011 approval and Bristol-Myers Squibb. AstraZen- manufacturers are reaping windfall profits. lative sales of $128 billion for Pfizer ter selling its infant nutrition unit to of Benlysta. On April 19, HGSI dis- eca, with a weak portfolio of diabetes through the end of 2011. Meanwhile, Nestle for $11.9 billion, and ready closed a rejected take-over bid from products and a dire need to bring in Watson Pharmaceuticals was the for another round of acquisitions GlaxoSmithKline of $13/share, or new sources of revenue, is an obvious While the industry has been nerv- ceutical companies, meanwhile, have first to begin selling generic Lipitor that could range from small, bolt-on about $2.6 billion, causing the com- candidate to purchase Amylin. While ous about the patent cliff for years, been forced to respond to the chal- in November, 2011. As a result of biotech purchases to another phar- pany’s shares to rocket to an 81 % any of these companies would likely it is turning out to be a blessing in lenge by refocusing their attention strong generic Lipitor sales, as well maceutical mega-merger. single-day increase. Although the bid benefit from the blockbuster exena- disguise. Patients are benefitting the and honing their business strategies. as other generic launches including was rejected, we believe that GlaxoS- tide franchise, Takeda and Sanofi are most by gaining access to the innova- generic versions of Concerta and Rising Stars mithKline will eventually acquire its other drug makers who we believe tive drugs of the past few decades at Pfizer vs. Watson Lovenox, Watson’s first quarter rev- target. The company has gone hostile might go after Amylin with intensity. generic prices. Biotech companies are enue increased 74 % to $1.5 billion, Through a continuing wave of lu- with a $13/share bid with the belief When the process is completed, we benefitting from a frenzied M&A envi- As an example of this phenomenon, compared to $877 million for the cor- crative biotech buyouts, two small that their partnership with HGSI, will not be surprised to see Amylin ronment, and generics companies are it’s worth looking at the biggest loss responding period in 2011. Increased companies with approved drugs are which covers Benlysta and two of sell for well over $4 billion, perhaps reporting record profits. Big pharma- of the edge of the cliff, Pfizer’s cho- sales drove an 87 % increase in net now the focus of major pharmaceuti- HGSI’s late-stage clinical assets, will approaching $5 billion. income, from $112 million in Q1 cal M&A efforts. Human Genome Sci- deter other potential bidders. 2011 to $209 million in 2012. As a Another company on the phar- Outlook result of its newfound financial heft, maceutical auction block is Amylin Watson was able to expand its geo- Pharmaceuticals, which possesses With deals like these on the horizon, graphic reach with the purchase of 10 years gempex 10 years gempex a series of lucrative diabetes drugs, the biggest development regarding the European generics firm Actavis. most notably two drugs related to the patent cliff will be watching gempex 10 years gempex 10 years Watson announced the €4.25 billion the exenatide franchise. Exenatide, large pharmaceutical companies’ ($5.6 billion) acquisition on April 25, 10 years gempex 10 years gempex sold in a twice-daily version as Byet- attempts to maintain growth in the and should lead to 2012 pro forma gempex 10 years gempex 10 years ta and a once-weekly version as By- face of expiring patents. But regard- revenue of $8 billion for the com- 10 years gempex 10 years gempex dureon, is an incretin mimetic, GLP- less of how or whether Big Pharma bined company in 2012, compared gempex 10 years gempex 10 years 1 receptor agonist that helps type 2 stays atop its mountain or goes over to $4.6 billion for Watson in 2011 and 10 years gempex 10 years gempex diabetics control their blood sugar. the cliff, generics firms will continue $6 billion in 2012 based on annual- The other approved drug is Symlin to reap the profits of major pharma- gempex 10 years gempex 10 years ized first quarter revenue. Mylan, (pramlintide), an analogue of the hu- ceutical patent expirations. another major generics company, 10 years gempex 10 years gempex man hormone amylin (the company’s reported an 18 % increase in earn- Qualität+++ Anniversary ohne Grenzen +++ namesake) that helps type 2 diabet- ings for the first quarter compared 0 ics control glucose with the poten- Author: Dr. Jerry Isaacson, Head to 2011, to $0.52/share from $0.44/ 1 tial for weight loss. Amylin had been of Global Data Healthcare Indus- Als global agierendes share. This gain was due to a 9 % in- involved in a long-term partnership try Dynamics crease in revenue from $1.45 billion Unternehmen10 years being kennena GMP expert und with Eli Lilly for the promotion and in Q1 2011 to $1.58 billion in 2012. erfüllenfor all upcoming wir Kunden- questions und – sale of the exenatide franchise, but Behördenanforderungenour obligation – that agreement ended in a messy di- 22 Contact: New Strategy überall auf der Welt. vorce last year after Lilly began co- Alice Robinson promoting a competing portfolio of Global Data Pfizer and other big pharmaceuti- www.gempex.com diabetes products along with partner Bolton, UK cal companies, meanwhile, appear Boehringer Ingelheim. Tel.: +44 1204 543 537 to be on course to successfully navi- As a result of the break-up be- [email protected] gate the rapids. Although Pfizer saw tween the two companies, Amylin www.globaldata.com its earnings drop 19 % in the first found itself with complete owner- quarter compared to 2011, there ship of its approved drugs, making are bright lights on the horizon. it an attractive takeover target. The The FDA is set to decide on its rheu- company went public with its inten- matoid arthritis drug tofacitinib by ences Inc. (HGSI) received approval tion to be acquired after rejecting a August 20, and the drug has the po- for its first drug, Benlysta, last year. $22/share, $3.5 billion buyout bid tential to eventually generate up to The drug was the first new therapy from Bristol-Myers Squibb in Feb- chemanager-online.com/en/ $1.5 billion in revenue per year. The approved by the FDA for lupus in al- ruary. Amylin shares jumped more tags/generics © ednorog13 - Fotolia.com company has another drug before most 50 years, but so far the launch than 50 % the day it announced the

No Experimenting Stick to Your Strengths with Biosimilars

Pharmaceuticals – Of the many challenges inherent with biosimilar develop- nity within the attractive biosimi- from cost barriers associated with nificant growth (see figure 1). Also, trastuzumab. Watson will work in lars market has continued to grow, entering the market. many companies are focusing deals collaboration with Amgen on future ment, the inability to predict market expectations may top the list for decision makers. giving way to over 200 companies Thus far, the term “buy or build” on complex monoclonal antibody development of the product from While uncertainty is a function of all nascent markets, in the biosimilars world, it has investing in development activities. has aptly characterized the decision products (see figure 2). phase III studies through commer- almost seemed to become the norm. In the US, although biosimilar legislation was Regulatory bodies across the globe companies looking to invest in the Although many partnerships cialization. have established abbreviated ap- biologics market must make. Very have focused on providing experi- Investing resources or “building” approved as part of the Patient Protection and Affordable Care Act in March of 2010, proval pathways for biologic prod- few companies are without gaps in ence, technology or capacity, a few in-house capabilities has been com- it wasn’t until the Supreme Court of the United States upheld the law this past June ucts providing both increased com- one of many important aspects of recent deals have focused specifi- mon among some of the more es- petition and cost containment for biologic development including ex- cally on a specific biosimilar candi- tablished companies in the pharma- that biosimilar developers knew for certain the abbreviated pathway would remain. health systems. Additionally, steps perience, capacity and commerciali- date. In June of 2011, Merck paid ceutical industry. Dong-A of South towards regulatory harmonization zation know-how resulting in having $720 million to license HD203, a Korea and Meiji Seika of Japan are Setting aside uncertainty, many ing and sales may be necessary to through the use of a global refer- to either “buy” into partnerships to biosimilar etanercept developed by investing in a new facility located in other challenges exist for potential drive uptake. Provided companies ence product could reduce the high help fit needs, or “build” in-house the South Korean company Hanwha. Songdo, South Korea that will focus competitors looking to enter the bio- have in-house capabilities to devel- costs of major clinical programs. capability. Looking at the deal ac- In a similar deal, Watson Pharma- on the development of biosimilar similar market. Regulated markets op and commercialize biosimilars, Cost-effective manufacturing op- tivity from over the past ten years, ceuticals entered into a licensing antibodies. Another South Korean require expensive, complex regula- prior experience working with large portunities such as single-use tech- manufacturing, supply and distribu- agreement with Synthon focusing tory dossiers to gain approval, and molecules may be lacking. nologies may provide further relief tion deals since 2008 have seen sig- on the Dutch company’s biosimilar Continues Page 17 ▶ in markets void of automatic substi- But despite these challenges, API Companies Involved Deal Type Detail Year tution, additional costs for market- over the past few years opportu- adalimumab PharmaPraxis, Ministry of Manufacturing, Supply & Distributi- Pharma Praxis to Develop Biosimilars and Supply to Domestic Market 2011

150 Health, Brazil on Manufacturing, Supply & Distribution denosumab Daiichi Sankyo Co Ltd, Astra- Commercialization License Copromotion agreement in Japan for denosumab for the treatment of bone 2011 Development/Commercialization License Commercialization License Zeneca plc disorders stemming from bone metastasis. 120 Other infliximab Hospira Inc, Janssen Biotech Manufacturing, Supply & Distributi- Hospira was involved in the manufacturing of Centocor Ortho Biotech’s Remi- 2011 Inc on cade (infliximab) injection 90 rituximab Coherus BioSciences Inc, Daii- Development/Commercialization Exclusive agreement to develop, manufacture and commercialize biosimilar 2012 chi Sankyo Co Ltd License forms of etanercept and rituximab in certain Asian countries. rituximab Gedeon Richter Ltd, Stada Arz- Commercialization License STADA acquired non exclusive distribution rights for Europe and the CIS area 2011 60 neimittel AG (excluding Russia) for the biopharmaceutical active ingredient rituximab from Gedeon Richter. 30 rituximab Spectrum Pharmaceuticals Inc, Development/Commercialization Spectrum Pharmaceuticals signed a binding letter of agreement with Viropro 2011 Viropro Inc License for the development of its proprietary biosimilar formulation of the monoclo- nal antibody drug rituximab 0 rituximab, tras- Emcure Pharmaceuticals Ltd, Manufacturing, Supply & Distributi- Roche had signed a manufacturing contract with Emcure for Herceptin (trastu- 2012 Fig. 1: Since 2009 there has been a spike in biologic product based deals, specifically those focusing on tuzumab Roche Holding AG on zumab) and MabThera (rituximab). manufacturing, supply and districution. © Thomson Reuters Newport Premium Fig. 2: Companies continue to partner around monoclonal antibody products, a trend that will continue. © Thomson Reuters Newport Premium

chemanager-online.com/en CHEManager Europe 9/2012 Pharma Page 17

Expect More Siegfried Promises to Deliver on its Slogan as the Company Keeps Adding Pieces to its Puzzle of Offerings

Dedicated Investments – One services both in the US and in Eu- opportunities to lower our costs at rope. all times. For sure, we are not in a year ago, Siegfried launched its new position to compete on costs alone. slogan, ‘Expect more, create more Do AMP and Siegfried fit together? Therefore, we try to offset the com- value as an integrated supplier’. Since petition by working with our Asian M. Spaene: AMP works with partner and our USP as an integrat- then, a lot of things have happened. unique and interesting cus- ed supplier with an effective supply For instance, the Swiss pharma out- tomers that ideally comple- chain and great quality practices. ment Siegfried’s current cus- Unfortunately, this is not always sourcing partner completed upgrading tomer portfolio. Essentially, enough to obtain new business. the Zofingen, Switzerland facility for this provides us with a great Based on these circumstances, high containment drug products and potential for new business op- we have chosen to invest in our portunities. Our customers have own factory in Nantong, China –

acquired Alliance Medical Products in expressed interest in forward inte- about two hours outside Shanghai © AKS - Fotolia.com - AKS © Irvine, CA. Birgit Megges asked Mari- gration, and we are convinced that – which will mirror our Zofingen AMP’s customers will appreciate site. We plan to offer non-GMP sub- anne Spaene, the company’s Executive backward integration into API for stances beginning in 2014 and GMP Vice President, Global Business Devel- some of their products. substances from 2015 onward. We opment, Sales and Marketing, how Siegfried and AMP as one com- are very excited about this oppor- Marianne Spaene, Executive Vice President, pany provide a US-focused customer tunity, as we can offer a secondary these pieces fit into Siegfried’s puzzle Global Business Development, Sales and the possibility to expand into Europe cost structure strategy and we will of offerings to meet and even exceed Marketing, Siegfried and other regions. The 2012 CPhI gain access to new markets such as convention coming up in October will China, India and others. their customers’ expectations. Swiss agency for authorization and be a great format for us to share with supervision of therapeutic products. customers the unique opportunity How can Siegfried manage all of CHEManager Europe: How would Thanks to this piece of the high-po- they now have with our integrated these projects simultaneously? you judge the response your new tency puzzle we can offer our cus- sterile filling facility. In addition, we line there is real growth potential. improving and sustaining our exist- slogan created in the markets you tomers a fully integrated continuous are planning a combined customer At the same time we recognize that ing overall portfolio with optimized M. Spaene: The key is a good team are serving? supply chain for high-containment road show with AMP experts within there is no guarantee that a phase-3 processes. We naturally have to that shares the same strategy and is products starting with API develop- the next months. It is great to see development will become commer- stay competitive and constantly of- enthusiastic to be part of the growth M. Spaene: We are pleased with the ment through to commercial manu- that AMP and Siegfried have a com- cial. Currently, there are many prom- fer lifecycle improvements. Also, we and success of the organization. We slogan ‘expect more’, as it repre- facturing of drug products. mon desire for doing business to- ising opportunities at the evaluation see an increasing interest in our recognize that it is not an easy path sents Siegfried as a broad and full- In addition, we now offer mi- gether, and both sides collectively stage: we are assessing our custom- oral formulation and manufacturing to follow. However, we have dem- fledged service partner. Combined cronization technology at both our enjoy the forthcoming opportunities. ers’ interest in the forward integrated capabilities, either in terms of co- onstrated that our talented team with our redesigned website and ex- global headquarters in Zofingen opiate business and in sterile high- development, lifecycle management is strong enough to overcome such hibition booth, the slogan has been and at our U.S. site in Pennsville, NJ, What, in particular, makes AMP containment drug products. Market or contract manufacturing. As men- hurdles. Our people continue to be very well received by our customers. which further supports our prom- such a good fit? analysis tells us that around 80 % tioned, we have expanded our Malta focused, very dependable and self- Our message is clear, and everyone ise to customers. Moreover, we are of cytotoxic products are applied in capacity in tableting, packaging and motivated. With a team like Sieg- understands Siegfried’s position. expanding our warehousing, pack- M. Spaene: AMP is a unique fit for Sieg- sterile form. We therefore have suf- warehousing to cater for this growth. fried, you can expect more. When a company makes a statement aging and tableting capabilities to fried because they are true special- ficient opportunities on our plate. as strong as ‘expect more’ to reflect enhance oral applications produc- ists in producing sterile drug prod- You mentioned cost optimiza- its primary corporate message, then tion in Malta. ucts, including sophisticated ophthal- Other Siegfried business segments tion. Is this possible with a purely expectations will be nothing short of mics, and they offer a full range of are also developing positively. How Western-hemisphere dominated the competition. As we combined the Didn’t your stakeholders and cus- aseptic-fill services for pharmaceuti- do you view their growth potential? company? slogan with concrete promises for tomers expect more, a bigger step cal, biotechnological and medical de- chemanager-online.com/en/ expansion in 2012, we had to under- forward? vice companies. In addition to auto- M. Spaene: We are growing our opi- M. Spaene: It is an incredible chal- tags/siegfried line the commitment with actions. mated filling, they provide small-run ate portfolio via new products and lenge and we actively consider all I have to thank my team, because M. Spaene: Naturally, they expect manual filling for special cartridges, they walked that “extra mile” to more, and I am pleased to say that bottles, vials and syringes. We plan meet and exceed customer expec- they will receive more. At the end of to expand and augment their exist- tations wherever possible. June we acquired Alliance Medical ing development and contract manu- Products, a sterile filling facility in facturing focus. We intend to do this What actions are you referring to? Irvine, CA. This acquisition clearly by developing a portfolio to include demonstrates our commitment as our own IP combined with co-devel- M. Spaene: We strengthened our posi- an integrated service provider. opment and other creative business tion as an integrated supplier through In addition to our existing oral models customized to our customers’ investment in supporting technolo- formulation and manufacturing requirements. Precious Metals gies for our business. Recently, we capabilities in Malta, we now of- Chemistry completed upgrading the Zofingen, fer sterile/aseptic development and AMP reports sales of about US-$ 20 Switzerland facility for high contain- manufacturing competencies in the million. Do you expect significant ment drug products, and mid-year we USA. Combined with our current short-term growth potential? Visit us at CPhI Madrid obtained approval for development chemical facilities in Pennsville and Hall 4 - Booth H25 and production of highly potent drug in Zofingen, this additional site al- M. Spaene: Absolutely! With some inter- compounds from “Swissmedic”, the lows us to provide fully integrated esting phase-3 projects in the pipe-

No Experimenting

◀ Continued Page 16 BI was contracted to develop and for biosimilar epoetin alpha. Sandoz manufacture large-molecule prod- currently has three biosimilar candi- company, Samsung, has also invest- ucts for Novartis, Amgen, and Gen- dates in late stage trials including a ed in building a plant for biologic zyme, among others. Over years version of the monoclonal antibody manufacturing. Samsung partnered working on different products at rituximab. with US based Quintiles and has a large scale, the company gained Moving forward the trend to- formed a joint venture with Biogen valuable experience few companies wards deal making in the global Idec to enter the biosimilars market can claim to share. In 2009, BI lev- follow-on biologic market is not with plans to construct a facility in eraged this experience through a expected to change. Companies will Incheon, South Korea. strategic alliance with Indian manu- continue to partner and jockey for facturer Kemwell. Under the terms position in both regulated and less Which Way to Go? of the agreement, Kemwell built a regulated markets, hoping to see a new biologics facility which would return on whatever investment was But which strategy will provide include BI’s Hex technology plat- made. At the time when uncertain- the lowest amount of risk? The an- form for cell line development. The ties are no longer and norms have swer, of course, is uncertain. While agreement provides opportunity for been established, the competitive both strategies can help companies BI to drive business through scal- landscape may look very different meet the challenges inherent with ing up potential production from the than it does now. But which path will biologic development, the path to smaller Kemwell plant. provide enough stability to navigate success will most likely not be the One of the pioneers in the biosimi- the immediate challenges? The most same for each competitor. Indeed, lars market is Novartis’ generic arm, effective strategy to ensure a long perhaps the most important element Sandoz. Known for developing and term stake in the biosimilars mar- We do not employ chemists. of strategy design when investing commercializing the first biosimilar ket may be the one that has already in the biosimilars market is to not in multiple regulated markets (Om- brought success to your company. We employ perfectionists. drift from proven in-house success. nitrope), Sandoz has also been a When is the last time you thought about chemistry while enjoying a cappuccino? Never? In other words, stick with what you leader in developing other biosimi- 22 Contact: Yet the high pressure seals in modern coffee machines are produced with the help of our Rhodium and Ruthenium catalysts. Come on. Think of us the next time you enjoy a coffee. know best. lars, including versions of filgrastim Andrew Bourgoin Boehringer Ingelheim (BI) is one and epoeitin alpha. But where other Thomson Reuters Employee: Nao Kobayashi / Sales Manager of the most well known contract major generic companies such as Portland, ME, USA manufacturers globally. As early Teva and Hospira have turned to Tel.: +1 207 871 9700 33 as 1997, BI was contracted to do partnering for development opportu- [email protected] nity, Sandoz has remained dedicated www.thomsonreuters.com development on biologic products, www.chemistry.umicore.com Innovation made. Easy. when it reached an agreement with to in-house talent and capabilities. In MedImmune to manufacture the 2010, Sandoz subsidiary LEK opened chemanager-online.com/en/ monoclonal antibody palivizumab a new protein manufacturing facil- tags/biosimilars (Synagis). Over the next decade ity to help supply the global market

chemanager-online.com/en Page 18 Pharma CHEManager Europe 9/2012

HPAPIs and ADC Toxins Manufacturing Challenges for the Targeted Drugs of Tomorrow

A Spoonful of Safety – Demand and ever more potent molecules. It As the development of ADCs ena- implies using an appropriate confine- bles the therapeutic use of more po- in the pharmaceutical industry has ment strategy based on engineering tent molecules, a shift to lower OEL sharply increased for the manufacture controls, collective and personal pro- is currently observed for several new of targeted and potent drugs that im- tection equipment, continuous train- molecules of interest, and ever-higher © Denis Dittrich - Fotolia.com ing for all personnel on site, establish- levels of containment have to be met. prove efficacy and reduce side effects, ment of standard operating proce- While the certification applies to spe- such as antibody-drug conjugates dures (SOP), monitoring occupational cific areas within a factory, these usu- hygiene, and implementing medical ally include a broad range of facilities (ADCs). By combining a monoclonal surveillance of the employees. such as R&D laboratories, kilo labs, antibody (mAb) and a highly potent and high containment manufactur- small molecule toxin (usually a cyto- Safely Manufacturing Highly ing areas and their associated quality Potent Compounds control laboratories. Indeed, all areas toxic compound), ADCs directly target where HPAPIs are handled, including cancerous cells. There are no official guidelines for QC laboratories, have to comply with the control and monitoring of safe the appropriate confinement level. In the body, the mAb specifically handling of HPAPIs, which is left to The outsourcing of HPAPI analysis binds to an antigen on the outer the companies’ appreciation. There- is not common, and most analyses particularly well adapted to reach- Antibody-drug conjugates and new targeted drugs, such as ADCs, surface of cancerous cells and the fore, this mastery can be obtained should preferably be performed in ing high purity for moderate scale other types of vectorization of toxins fully benefits from the mastery of ADC is absorbed inside the cell via only through an extensive and long- house. In addition, the high level of productions (rarely exceeding a few and HPAPIs require specific technol- synthesis and purification technolo- endocytosis; the cleavage of the lasting experience in the area and purity requires adequate detection hundred kilograms per year at pro- ogies depending on the type of pay- gies. Since these molecules lay at the linker (that is designed to be labile only a few manufacturers hold the and rejection of highly potent impuri- duction scale for HPAPIs, with even load (maytansinoids, auristatins, an- interface of chemical and biological within the cell medium) releases appropriate expertise to handle ties, which requires the manufacturer smaller volumes for ADC toxins). thracyclins, pyrrolobenzodiazepines, domains, their development and the toxic substance, leading to cel- these compounds. External assess- to operate highly effective analytical The main advantage of preparative calicheamicins, taxanes, etc.) and manufacturing fully benefit from lular death. This therapy is very ment of HPAPI production safety is equipment and measurement meth- HPLC is the very predictive assess- linker/vector used (amino acids and the cross‑fertilization occurring only promising because of its high se- provided by specialized companies ods. Frequent hygiene monitoring is ment of the results on large scale, peptides, pegylated and polymeric in CMOs with expertise in both ar- lectivity and significantly reduced such as SafeBridge Consultants Inc. adequate to ensure that the neces- based on automated screening re- chains, other complex side chains). eas. When it comes to ADC toxins, a side effects. Indeed, theoretically, The company’s certification is the sary containment is achieved at all sults obtained from just a few ex- Innovative and tailored solutions for careful choice of the manufacturing healthy cells should not be affect- only independent evaluation system times, and all operators involved in periments and sub-gram amounts of downstream purification and isola- partner is key to success. ed by the treatment, and that is of to date and assesses the manage- HPAPI manufacturing undergo regu- material, due to a direct scalability. tion may involve low-pressure chro- upmost importance for the patient. ment, the evaluation, the contain- lar health checks. As a consequence, an accurate es- matography (affinity chromatogra- Lower dosage can be used since the ment, the control, and the communi- timation of productivity and costs phy, ion exchange, gel permeation, Authors: Aline Devoille, market- treatment is delivered only where cation elements of HPAPI operations. Reaching High Purity in at large scale is obtained very early etc.), tangential flow (ultrafiltration) ing manager – synthetic molecules needed. In standard (nontargeted) When it comes to HPAPI manu- Confined Environment in the process development phase, technologies that have to be oper- and Jean-François Marcoux, tech- chemotherapy treatment, an accept- facturing, finding a partner operat- while minimizing the handling of the ated according to biopharmaceu- nical business development man- able therapeutic window has to be ing SafeBridge certified facilities en- Advanced purification methods are highly potent compound. In addition, tical and HPAPI standards. Since ager, Novasep found for the medication to affect sures that a high level of mastery of required to deliver active ingredi- advanced computer simulation tools the cytotoxic payloads are usually malign cells with a minimal impact such manufacturing constraints has ents at the desired level of purity. allow for a rapid, reliable develop- complex and fragile molecules pre- on healthy cells; hence molecules been demonstrated. To date, only 11 Efficient purification at large scale ment and straightforward validation senting several chiral centers, they 22 Contact: exhibiting particularly high cytotox- companies have met the consult- is often key in getting cost-efficient of the process. Furthermore, com- require mild and efficient technolo- Dr. Aline Devoille icity have to be discarded. Targeted ants’ current industrial standards access to semi-synthetic starting pared with traditional low-pressure gies. Tangential flow filtration (TFF) Novasep therapies enable a safe use of these (source: SafeBridge Consultants Inc., materials from various sources in- chromatography, preparative HPLC is well suited for small molecules Pompey, France same molecules as toxins or ADC February 2012). SafeBridge has es- cluding fermentation broths and offers considerably improved unit isolation, concentration and for Tel.: + 33 383 496 497 “payloads.” However, from a manu- tablished a potency rating system in natural extracts. Two factors imply productivity and therefore a small- formulation of large molecule APIs. [email protected] facturing point of view, these ADC which compounds are classified into the use of advanced purification er system and much less stationary As for HPLC, the limited size of TFF www.novasep.com toxins require higher containment four categories depending on their technologies for the production of phase are required. As a conse- equipment is well adapted to imple- levels than typical highly potent Occupational Exposure Limit (OEL), HPAPIs: 1) their intrinsic complex- quence, the column can be easily mentation in confined areas. active pharmaceutical ingredients the maximal exposure acceptable ity (whether these molecules are ex- located in a confined area and the (HPAPIs) to ensure a safe production for employees over an eight-hour tracted from biomass or synthesized handling of the packing material Conclusion environment for the operators while work shift. For each compound, an from scratch) resulting in mixtures and the cleaning of the system are preventing product contamination exhaustive potency assessment has containing very closely related im- much easier. Preparative HPLC has In a world where molecules reach- and protecting the environment. to be carried out before any work purities, and 2) the very high level proven to be robust and reliable at ing the market are ever more com- The main challenge in HPAPI starts, and the highly potent com- of purity typically required. Pre- commercial scale. It constitutes the plex and need to meet very stringent manufacturing resides in the ability pounds are classified in category 3 parative chromatography is almost purification method of choice for the purity standards, the right combina- chemanager-online.com/en/ of the producer to operate safely and (OEL< 10 µg.m-3.8h-1) and category a must and, from an economical production of commercial HPAPIs tion of technologies is more impor- tags/apis adapt to the constraints of innovative 4 (OEL< 30 ng.m-3.8h-1). point of view, preparative HPLC is and ADC toxins in particular. tant than ever. The manufacturing of

Austerity Measures Bite The European Pharmaceuticals Economy

A Pill a Day – Unlike chemicals, the payments from January and July in Italy are foreign-owned, and the margin in 2012 to be flat at the 2011 single-digits. In Europe, negative has also been a hindrance. For Q2, were said to total €1.5 billion. In European pharmaceutical business level of 32.1%. growth is likely in some markets. U.S. giant Pfizer reported higher- pharmaceuticals sector does not have Spain, the pharmaceutical industry association EFPIA says the budget Swiss pharmaceutical giant AstraZeneca reported Q2 revenue than-expected earnings, thanks in cycles. Even in a sluggish economy, believes it is owed a similar sum. cuts will make it harder for them to Novartis saw net sales fall 4% to down 21% to $6.7 billion. Loss of part to research budget cuts. Net sick people will still need medicine. The Spanish industry association stay in business there. $14.3 billion in Q2. Sales growth in exclusivity on several key brands quarterly income was $3.25 bn, or Farmaindustria has predicts that This month, the government of recently launched products – which accounted for 15% of the decline, $0.43/diluted common share, com- But the widening European debt and the country’s consumption of phar- France will reveal details of its new contributed 29% to the group to- the company said. Operating profit pared to a net profit of $2.61 billion currency crisis seems to prove that maceuticals will fall 15-20% in 2012 healthcare budget, which is ex- tal – more than offset lost income slipped 37% to $1.9 million, due to or $0.33 per diluted common share against 2011. It adds that the indus- pected to call for cuts of around €2 from a patent expiration. Core op- negative foreign exchange parities. a year earlier. Global sales revenue a sick economy can indeed infect an try has borne the brunt of govern- billion in 2013. In 2012, the French erating profit fell 3% to $3.9 billion. Core earnings per share (EPS) were fell 9% year-on-year to $15 million. otherwise healthy industry. Drug mak- ment austerity measures. Many drug drug market is forecast to shrink for But Novartis’ 2012 performance is down 6% to $1.53. For the full year, U.S. revenue decreased by 15% to ers traditionally spoiled by success are producers are reported to be in a the first time. still on track and the outlook for interim CEO Simon Lowth is main- $5.7 billion, due to a patent expi- very difficult financial situation and The European pharmaceutical the full-year unchanged, said CEO taining core earnings guidance at ration, international revenue by now facing unprecedented hurdles as are taking steps to restructure and industry says the impact of price Joseph Jimenez. $5.85 to $6.15 per share. 5% to $9.3 billion, reflecting unfa- governments rein in healthcare spend- reduce staff, says Farmaindustria. reductions is magnified because Bayer’s healthcare sub-group, In the 2012 first half, Sanofi re- vorable foreign exchange parities. governments across the continent Germany’s largest pharmaceuti- ported a year-on-year net sales in- U.S. number two, Merck & Co, reported ing and many of the region’s southern Drug Pricing Issues Compound peg their reimbursement prices to cals player, saw Q2 sales revenue crease of nearly 8% to €17.4 million. better-than-expected earnings in Q2, countries cannot pay at all. Industry’s Problems southern Europe’s level. This exac- rise 10% year-on-year to €4.6 bil- Operating profit rose 55% to €3.8 thanks to strong revenue from vac- erbates any shortages as products lion, with volume sales up 3.3% billion, EPS to €2.26 from €1.70. cines and treatments for diabetes and The crisis hit pharmaceuticals earlier Company executives say drug pric- are sucked out of the south and re- and prices up 0.8% Currency ef- For the full year, CEO Christopher HIV. As sales rose 1% to $12.3 billion, than chemicals, and quarterly reports ing is becoming an equally important exported north to countries such as fects accounted for 6.2% of the rise. Viehbacher said EPS may be 12% net profit totalled $1.8 billion, or 58 of Europe’s “Big Pharma” players issue. “It’s been a higher level than Germany, where prices are higher. The pharmaceuticals segment lifted to 15% below 2011 at constant ex- cents per share, compared with $2 showed that some were better able we had expected,” Tony Zook, head of turnover 10.5% to €2.7 billion boost- change rates. The guidance takes billion or 65 cents per share in the than others to absorb the resulting AstraZeneca’s commercial organiza- European Drug Companies Feel the Pressure ed by portfolio changes and foreign into account, among other things, 2011 quarter. Despite the negative income shortfall. While for France’s tion, told the press in July. Novartis exchange shifts. North American the expiration of two US patents, the foreign exchange impact, Merck is Sanofi a projected 2012 sales loss pharmaceuticals head David Epstein In Q2, Glaxo SmithKline saw turnover re- sales added 24%, Asian sales 22%, performance of key drug platforms, holding its full-year earnings forecast of €300m from European austerity told financial analysts that Europe cede by 4%, to pounds 6.5 billionn, while European revenues sank by cost control measures and national at a flat $3.8 billion. At Bristol-Myers measures will be balanced by growth has become the toughest pricing while per-share core profit declined 2.4%. Pharmaceuticals EBITDA be- healthcare reimbursement policies. Squibb, second-quarter net sales fell elsewhere, the UK’s Glaxo SmithKline market “anywhere in the world.” 5% to 26.4 pence. The earnings fore special items rose 12% to € 809 18% to $4.4 billion due to a patent (GSK) has trimmed its outlook. Italy’s national health budget has tally thus fell short of analysts’ ex- million. Strong Dollar Hits U.S. Pharma Profits expiration. U.S. sales dropped back The problems already visible at been slashed by €11 billion over the pectations for the second consecu- With forward visibility unclear, 27% to $2.6 billion for the same the beginning of the year, worsened past five years, and leaks of a recent tive quarter. GSK’s sales in Europe Bayer CEO Marijn Dekkers now U.S. drug makers do not face pric- reason, with pre-tax earnings down as 2012 progressed. Greek hospi- government plan suggest further fell by 8%, reflecting a 1% decline expects revenue growth in phar- ing constraints on a national level 41% to $1.06 million. Quarterly EPS tals have faced drug shortages for cuts of €1billion. The pharmaceuti- in volume and a 7% slip in selling maceuticals to be “only in the low as a public healthcare system is declined 27% to $.038. months as some international sup- cal industry association Farmindus- prices. Due to the disappointing per- single-digit range.” While demand still a “foreign” concept. However, a pliers have pulled the plug after un- tria fears that 10,000 industry jobs formance, CEO Andrew Witty has in emerging markets, especially sluggish economy hurts companies paid bills piled up. The misery has could be lost in the next five years. revised the full-year outlook down- China, is seen to continue robust, in their home market and abroad. Author: Dede Williams, Freelance spread to Portugal, where missed Some 61% of drug manufacturers ward. He now expects the operating US growth could sink into the low Most recently, the stronger dollar Journalist

chemanager-online.com/en facebook.com/CHEManager CHEManager Europe 9/2012 Production Page 19 The Most Trusted Advisor Emerson’s Steve Sonnenberg on the Importance of Trust in Business Relations

Customer Is King – For Steve Sonnenberg, Vice President of Emer- son and President of Emerson Process Management, the word “trust” plays an important role for the company’s strategic direction. CHEManager’s Dr. Volker Oestreich visited the Emerson Global User’s Exchange in Dusseldorf from 29th to 30thMay and talked with Steve Sonnenberg about Emerson’s ambitious goal to become their cus- tomer’s “most trusted advisor”.

Steve Sonnenberg, Vice President of Emerson CHEManager Europe: In the US, the and President of Emerson Process Management Emerson Exchange has grown over the past couple of decades to an mitted that Emerson would focus important event with thousands on two important things in the of participants. The first Emerson future: First, that Emerson would Global Users Exchange dedicated continue to invest in areas that to Europe and the Middle East here we believe will bring our investors in Dusseldorf has attracted about value and secondly, that Emerson 1,000 participants. Are you satis- would strive to be an organisation fied with this event? that listens and acts on what we hear. It’s only by listening and un- S. Sonnenberg: Yes we are, everybody derstanding our customer’s prob- here at Emerson did a great job and lems that we can work to provide I would like to thank our Emerson a solution. Exchange Board of Directors. They have volunteered countless hours, Can you give an example for this weeks and months to make this “listening & understanding” phi- event a reality. Like all of us, they losophy? S. Sonnenberg: After the downturn of Thailand occurred. Emerson and Companies normally try to earn supplier puts greater focus on ease- already have full-time jobs, so their 2009 and now the European debt its customers were directly affect- revenue, not trust. of-use and improved usability than work was a labour of love to bring S. Sonnenberg: Well, you can’t listen crisis, it is clear that the world is ed by the flooding, since shipments Emerson. a world-class conference to all visi- if you don’t ask, so we asked our indeed a very small place economi- were delayed. How did your react S. Sonnenberg: The thing about trust But creating great technologies tors, by users, for users. customers. One thing that came cally. Markets around the world can to this tragedy? is that it’s not a milestone. It’s not and products by themselves is not And since this event has such a out clearly was that Emerson of- affect each other in profound ways a static position you strive for and enough. To get the full value, they personal character, we want to pro- fers great technology and has very and very quickly. With a nervous S. Sonnenberg: There was much we did then once you get it, you keep it. need to be integrated with exist- vide our customers and business good people, but our response times economy, it is common for compa- not know at that time, as the flood- Trust is a daily commitment. It’s ing assets and often this involves partners, who are our shareholders are sometimes too slow. This is one nies to become fiscally conservative. ing had just happened days before. earned each day and it’s at risk of many different types of technolo- in a manner of speaking, with an up- reason Emerson is investing so ex- Emerson’s position on investment But we did know that our production being lost. It’s true each day in our gies working together. That’s why we date on our company’s performance tensively in manufacturing and ser- takes a very long-term view. In fact, shipments would be affected due to personal relationships and it’s true are placing even greater emphasis and strategic direction. I believe it vice facilities around the world. So it has been our policy to invest, even the supply of electronic boards. So each day in our business relation- on integrated application packages is important for our shareholders we can respond faster and better. in the darkest of times, to ensure in the spirit of transparency, I an- ships. in which we pre-bundle solutions to know the things our company is My leadership team and I are also we come out of those downturns nounced this delay during the open- It’s actually become a pretty com- across multiple product groups to focused on, not out of arrogance, but identifying other areas we can im- in a position of strength. We chal- ing of our Emerson Exchange event, mon word, which many of us use in minimise the work our customers instead out of a sense of steward- prove on, ranging from our quoting lenged ourselves to do this in 2009 in front of 3,000 people. Not exactly everyday speech. Like a lot of things have to do. ship. Because our customers don’t process to delivery. and 2010 and as you will see, it has the way you want to open a confer- today, you could argue that the word simply buy products, they are plac- helped us to do just that − recover ence with your customers. trust has become overused. But if What are your personal highlight ing their trust in our company. Alongside your “listening & un- from a position of strength. Emerson We are now receiving full ship- you look at what’s happening in poli- technologies presented here at derstanding” philosophy you said is not being timid when it comes to ments of almost all of our boards tics, the news or financial sectors, Emerson Exchange in Dusseldorf? What exactly is Emerson focused investments play an important investment in this industry; in fact, and we plan to reduce our overdue is trust still alive and well? I’m not on? role in the company’s strategy. we are investing at unprecedented backlog in the next several months. so sure. S. Sonnenberg: Among lots of new How much courage is necessary to levels. I am proud of the 1000’s of Emer- Being trustworthy includes the technologies, let me just mention S. Sonnenberg: Two years ago, dur- make investments in such nervous son employees that worked tire- small things as well as the big ones. two of them: Our Combustion Con- ing our Emerson Global Users Ex- times, with an ongoing financial Which markets are you focusing lessly through these many months to It can be as small as being on time to trol System with True-Energy tech- change in the United States, I com- crisis not only in Europe? on? minimize the negative impact to our a meeting, or following up on a task nology and our recently introduced customers. Implementation of risk from that meeting or as big as deliv- Rosemount Wireless Acoustic Trans- S. Sonnenberg: Emerson is very much mitigation plans, started prior to the ering on time a very large, complex mitter, which allows the operator to a global company, but in the past flooding, have been significantly ex- order. It means only committing to monitor steam trap leakage. Both few years, we have placed an even pedited since to ensure that we will a product delivery date that we are innovations can help customers, Sartorius Opens Production bigger emphasis on becoming more have one of the most robust supply confident we can hit. This is why we who want to improve their energy local. We have added manufactur- chains in the industry. are adding production and support management. The creation of en- Facility for Bioreactors ing facilities in Russia, Sweden, locations all around the world − to ergy – steam and electricity to run Turkey, Germany, Saudi Arabia, You announced the delay “in the give us the ability to meet the sched- plants – can account for 30 %, even Sartorius opened its new plant for Mexico, Brazil and Dubai. We have spirit of transparency”. A new Em- ules you demand and do it with the 40 % of the operating budget. That’s the manufacture of bioreactors in also added regional service centres erson guideline? confidence of knowing we will keep enormous! Imagine putting a per- Guxhagen, northern Hesse, Germa- in multiple locations in Europe, our promises. centage point or two to the bottom ny. After one year of construction as well as Abu Dhabi, Qatar and S. Sonnenberg: Well, it’s pretty simple. line just by not wasting energy or and approx. €18 million invested three in China. 2012 will continue Emerson has one, very clear goal: Does this philosophy influence being smarter about how to create in the plant, Sartorius now manu- to see major investments in re- To be our customer’s most trusted your products as well? it. A plant may be wasting millions factures bioreactors and further gional manufacturing and custom- advisor. We don’t want to just supply of dollars every year in energy man- production equipment for custom- er support centres, including new cool technologies and services and S. Sonnenberg: Our customers are in agement and these two technologies ers in the biopharmaceutical indus- or upgraded facilities in cities all give a positive spin. We want to be everyday contact with our products, can put it back on the bottom line. try. Covering a total area of nearly over the world. Regardless of the transparent and genuinely desire to so of course we are focused on earn- 10,000 square feet, the new building location, they all share a common be part of the inner circle of all of ing trust through satisfaction. We try 22 www.emersonprocess.com complex provides space for a high- moved from its former bioreactor theme −position Emerson to be the our stakeholders: We want to be the to satisfy our customers by using our tech manufacturing hall and offices production facility in Melsungen, most responsive, supportive local people you turn to with your tough- Human Centered Design approach. for around 240 employees. With this where it had reached maximum partner to customers. est challenges, with the confidence In 2009, we introduced the idea of new site in Guxhagen, Sartorius has capacity limits. ▪ that you will get our best, each and “Conquering Complexity” and apply- Just a few days before your last every day. And to achieve this, we ing the science of Human Centered chemanager-online.com/en/ Emerson Exchange event in the have to earn our customer’s trust Design to every product we develop. tags/emerson BASF to Invest €20 Million U.S. in October, the tragic flood in each and every day. I’m proud to say that no automation in Technology Upgrade

BASF will modernize and service ing 1,4-butanediol (BDO), which its acetylene facility at the Lud- is based on acetylene. BASF will 360° + 2 x 22,5° wigshafen Verbund site, Germany. make use of this period to upgrade In the course of these efforts the its plant technology. In 2012 alone, – safely company will also perform routine the company is investing more than www.rs-seliger.de maintenance at its facility produc- €20 million for this purpose. ▪

chemanager-online.com/en Page 20 Production CHEManager Europe 9/2012

Scrum in the Regulated Environment Opportunity or Risk for Computer Systems Validation?

Sprint to the Finish – Agile ing to GAMP 5, “it is now recognized formulation and prioritization of that other models and approaches user requirements. The customer methods such as Scrum are beginning are equally acceptable.” Risk-based tries using the product at the end to dominate in software development approaches and economy are the of a sprint cycle and can give feed- Sabine Komus Ayelt Komus over the classical “waterfall” approach- focus of the new GAMP version, back quickly. These trials can be in- Koblenz University Koblenz University Paul Noble and agile models are not excluded. terpreted as User Acceptance Tests, of Applied Sciences of Applied Sciences IQC Group es, to which computer validation has User requirements must no longer and ensure that the users are in- been oriented. Basic features of agile be finalized before functional and cluded at an early stage and obtain ments during the project, without sprint team manages itself. A “Daily encompassing a software release, as technical specifications are written extensive knowledge of the product. methods, such as short internal and sacrificing quality, cost control, mo- Scrum,” lasting 15 minutes, is used displayed in the common V model of (already a common practice). independent development cycles, are tivation or especially user needs. to compare current results with the software development. Problematic ▪▪ Emphasis upon Refactoring ▪ often viewed as contrary to or problem- Instead of orientation upon high- tasks and its difficulties or problems. characteristics of these approaches ▪ Complete Documentation Refactoring is an important ele- level and extensive planning, as well At the closing of the sprint, the re- include the assumption that prob- It is sometimes argued that Scrum ment of agile methods to improve atic for computer validation principles. as their documentation, there is a sults are presented, which should be lems and goals can be thoroughly does not require or need documen- software structure. Its aim is to Is the concern justified? An analysis of heavy emphasis upon interaction potentially deliverable. analyzed to yield detailed, docu- tation. One of the ground rules of the improve readability, simplify code with the users during incremental mented development plans up front. Agile Manifesto, upon which Scrum maintenance, and improve flexibil- the basic features and potentials of the practical and focused development Advantages over “Waterfall” Approaches Scrum circumvents many of the is based, is that a complete product ity of program code without alter- Scrum method with regard to computer cycles. typical problems of these methods: has priority over complete docu- ing its function. Via refactoring it is validation sheds light on this question. The basic principle of Scrum is to Disappointing practical experience mentation. That doesn’t imply that possible to continually improve the divide the development process into with “waterfall” or top-down ap- ▪▪ Lack of Prioritization no documentation is needed. quality, which is certainly central to short development cycles, so-called proaches is commonly raised as With “waterfall” approaches, re- Sprints should start with require- the goals of computer validation. Basic Features of Scrum sprints, which have pre-defined justification for agile development quirements generally all have the ments, user roles and concrete uses, tasks to address pre-selected goals methods. “Waterfall” methods fol- same or similar priorities, whereas which are specified in the form of Conclusions The goal of Scrum is to respond fast of the project. Sprints are limited low a basic principle of sequential, priorities of tasks are reassigned User Stories. It is expected with the and flexibly to changes in require- to no more than 30 days, and the non-iterative development phases with every sprint in Scrum. Lack Scrum method that a processed Regulators do not prescribe specific of focus upon priorities often re- work package is included when validation methods. GAMP 5 accepts sults in implementation of required closing a sprint. Complete process- other methods besides the classical functionalities relatively late in the ing is indicated by DoD (“Definition V model, a “waterfall” approach, to project. If time and money become of Done”), which includes a de- development. Agile software devel- limited near the project closing, then tailed description. The method can opment methods, such as Scrum, are important functions can suffer more be adapted to include documenta- therefore not excluded from GMP. from lack of resources than less im- tion requirements for validation By the evaluation of the risks and portant features. and their approval with the DoD. It opportunities with agile methods, it should be recognized that the Scrum should be recognized that in reality, ▪▪ False Precision method can mitigate a typical prob- software development is not prac- All requirements are expected to be lem with “waterfall” approaches: ticed optimally on either a technical, known at the beginning of a project An uncontrolled accumulation of economical or regulatory basis. so that accurate and detailed project incomplete documentation is inhib- Agile methods strive to achieve estimates and plans can be made. ited via short development cycles results and quality with the help of This leads often to detailed and and their approvals. simple rules and less bureaucracy. extensive product specifications, They must be integrated into the which are based upon unrealistic ▪▪ Extensive Test Documentation Quality Management System when assumptions from lack of practical Because requirements can frequent- used in regulated industries. It is experience, and thereby deliver a ly change during a Scrum develop- recommended to add special sprints false sense of precision. There is a ment, a complete documentation of for covering formal documentation danger of creating very detailed but testing is a valid concern. Here, ad- requirements, without changing the Fig. 1: Scrum process with a sprint and daily scrum. © Wikimedia Commons, http://en.wikipedia.org/wiki/File:Scrum_process.svg outdated documentation. The same aptation of the method to validation basics. A combination of agile with applies to tests, which can be based requirements needs consideration. conventional methods (hybrid mod- upon an outdated design and not re- els) can also be considered. flect the actual risks. This is an espe- In the many sprint cycles to be ex- Scrum appears to be a relevant cially critical concern for regulated pected, specification, implementa- option for regulated industries. products. Scrum does not start with tion and testing activities are needed In several aspects its focus upon the premise that all requirements to meet good manufacturing prac- results, clarity and transparency C´MON TO THE are known. tice (GMP) expectations. Of special correspond better with the basic importance are the acceptance tests goals of computer validation than CHEMANAGER PORTAL ▪▪ Inflexibility for a cycle. Formally documented conventional methods, as they are Progression through sequential tests are demanding, and changes to often practiced. project phases is inflexible when requirements demand retesting. It is INDUSTRY CURRENT NEWS responding to changes. This leads to therefore important, especially for TOPICS situations where changes needed for agile methods, to determine when Authors: Ayelt Komus, Professor, new requirements, which are rec- the product design has achieved Koblenz University of Applied ognized during later project phases, relative stability. At this point (and Sciences; NETWORKING BUYERS are not implemented, and the prod- in later iterations), a sprint cycle Sabine Komus, consultant with GUIDE uct is already obsolete upon release. should be conducted with the goal IDS Scheer Consulting and Another consequence of this inflex- of obtaining formal test documen- lecturer at the Koblenz University

© julien tromeur | fotolia.com ibility is that lessons learned dur- tation and validation compliance. of Applied Sciences; ing the project cannot be applied. Such special sprints need to focus Paul Noble, consultant, IQC Group By comparison, Scrum is via sprints on formal aspects only. It has to inherently flexible for learning ef- be assured that the perspective of fects and changes. a formal test documentation later 22 Contact: on is not used as an excuse for not Prof. Dr. Ayelt Komus Possible Reasons Against Using substantially finishing, documenting Sabine Komus Scrum in Regulated Industries and testing products at the end of Fachhochschule Koblenz each sprint. Koblenz, Germany It is commonly argued that using [email protected] the Scrum method inhibits achiev- Further Reasons for Using Scrum [email protected] ing the requirements for validation in Regulated Industries www.komus.de in regulated industries. This rea- 09-10/2012

21. Jahrgang · 16. März – 12. Juni 2012 Die Zeitung für D ie märkte D er chemie unD life sciences soning is analyzed in the following Close contact between developers Dr. Paul Noble

Chemiekonjunktur Chemikalien Produktion

Branche erwartet 2012 globales Chemiedistributeure stellen Single-Use-Technologien sind Wachstum von 4%, Dynamik in sich den Herausforderungen mit in der biopharmazeutischen Schwellenländern bleibt hoch Optimismus und neuen Ideen Produktion auf dem Vormarsch Seite 6 Seiten 16–20 Seite 23 6/2012 June www.triplan.com Verstärktes Denken in paragraphs. and users, as well as the emphasis IQC Group Wertschöpfungsketten Ihr Universum im Engineering. Dechema will mit neuer Struktur das Netzwerk über Branchengrenzen hinweg intensivieren

Besuchen Sie uns auf der ACHEMA in Frankfurt a.M. vom 18.–22. Juni, ie Dechema Gesellschaft für chemische Technik und Biotechnologie hat versammlung zustimmungspflichtig Halle 9.2, Stand B28. und wir haben ein einstimmiges Vo- sich eine neue Struktur gegeben. Mit der Ausgründung der Dechema tum für die Umstrukturierung erhal- D Ausstellungs-GmbH und der Übergabe des Karl-Winnacker-Instituts an ten. Das zeigt, dass wir gegenüber Chemicals Production upon refactoring, are further good Reinheim, Germany die Stiftung Dechema-Forschungsinstitut wurde die Neustrukturierung Anfang den Mitgliedern sehr überzeugend deutlich machen konnten, dass die Specialty chemicals make soccer The newspaper for The New concepts and technologies 2012 vollzogen. Dr. Michael Reubold und Wolfgang Sieß sprachen mit Dechema- neue Struktur viele Vorteile hat. Zu balls faster and pharmaceuticals for energy and resource-efficient Geschäftsführer Prof. Dr. Kurt Wagemann darüber, inwieweit die strukturellen den Vorteilen für den Verein gehört, more effective. chemical and manufacturing processes. dass er sich seinen gemeinnützigen Aktivitäten ohne Einschränkungen TRICAD MS®: Pages 8–11 life science markeTs Pages 13–21 widmen kann, aber mit der Beteili- Die CAD-Lösung auf MicroStation. gung an der Ausstellungs-GmbH nun auch in der Lage ist, von neuen kom- merziellen Aktivitäten zu profitieren. N ewsflow Country Focus Und dabei gibt es keine Interes- Germany is our featured country ▪ senskonflikte? in this issue. The chemical pow- A Catalyst For Change? ewsflow erhouse of Europe is host of the ▪ N Prof. Dr. K. Wagemann: Nein, wir haben Achema 2012, the global flagship V Models are Needed for Validation arguments for using Scrum, also in [email protected] With the Integration of Rhodia, Solvay Strives to Become a Major Player in Chemistry hier für eine saubere Trennung zwi- conference and exhibition for che- Commerzbank-Studie schen den gemeinnützigen und den mical engineering and biotech- wirtschaftlich orientierten Aktivitäten nology coming up June 18-22 in try. We also want to be a model of innovation will play an important two companies’ assets we are al- gesorgt. Wir haben uns ganz bewusst Combining Cultures – On Frankfurt. And some of the most sustainable chemistry. It is our firm role, certainly helped by the fact ready benefiting from purchasing dafür entschieden, alle Kongress-, Prof. Dr. Kurt Wagemann, Geschäftsführer, Dechema promising future concepts for May 11, 2012 Jean-Pierre Clamadieu Tagungs- oder Workshop-Aktivitäten belief that chemistry has the abil- that the merged companies have synergies as well as cost efficien- chemical production and infra- succeeded Christian Jourquin as CEO einschließlich der Weiterbildung wei- spielt – und das ist nicht nur im Be- essant, wenn wir z. ity to find solutions for some of the very significant R&D resources. The cies that will contribute to EBITDA ▶ structure (e.g. the model of chemi- terhin nicht kommerziell orientiert zu reich der Chemieproduktion – wird lungsaktivitäten in anderen Ländern of the Solvay group, since the con- challenges that society faces. The remaining €400 million should be over the next few years. cal parks) have been developed in Solvay family shareholders strongly achieved through operational ex- behandeln. Diese bleiben im Verein man sich Gedanken machen kön- beginnen wollen. Dann istGermany die Ko as well. solidation of Rhodia in last year’s third bzw. im Institut, denn wir sehen die- nen, ob die Ausstellungs-GmbH ent- operation mit Partnern vor Ort, aber support management on this. They cellence. When the merger process is com- sen gesamten Bereich, wo sich Leute weder allein oder zusammen mit auch mit deutschen Partnern,More mit on Pages 13, 15, 16, 18, 19, 20, 21 ▶ quarter one of Europe’s leading chemi- clearly believe that the integration pleted, what will the company’s of Solvay and Rhodia should be a How will you achieve these targets, portfolio look like? treffen und über wissenschaftliche Partnern Aktivitäten entfaltet. denen wir zusammen in einen neu cal players. The former Rhodia CEO also Inhalte diskutieren, als eine zentrale en Markt gehen, wesentlichM&A einfa News catalyst for change. especially in view of the recession- took a seat on the Solvay board of di- gemeinnützige Aktivität an. Es wird Die Dechema pflegt im wissen- cher. Wir werden künftig vielDuPont häufi is sorting out bidders for its ary tendencies in parts of Europe J.P. Clamadieu: I believe we already schaftlichen Bereich bereits inten- ger als es in der Vergangenheitcar paint mög unit. Four private equity rectors. CHEManager Europe asked How solid a company is the new and the slowdown expected in have quite a broad portfolio. A In GAMP 5, the industrial guide- regulated industries. www.iqc-group.com siv internationale Aktivitäten und lich war, mit Organisationenfirms are still in the race to buy the Solvay financially? China? recently conducted analysis has Die in Deutschland bestehende enge Clamadieu about shareholders’ and Verflechtung von akademischer und Partnerschaften. Hat denn die zusammenarbeiten, die nichtautomotive den paint business and enabled us to clearly assess the neue Struktur darauf einen positi- gleichen Status als gemeinnützigehave been given access to more management’s vision for the newly J.P. Clamadieu: In 2011, Solvay and J.P. Clamadieu: There will certainly be performance of each individual Rhodia together generated pro bumps in the road. But that’s the business and to identify growth en- industrieller Forschung findet man in ven Einfluss? Gesellschaft haben wie wir.detailed Das wird financial information. The merged Belgian-French group. vielen anderen Ländern nicht. durch die Ausstellungs-GmbHshort-list we includes a consortium of forma sales of nearly €13 billion name of the game. I don’t expect gines. It shows that 90% of our sales Prof. Dr. K. Wagemann: Wir sind inter- sentlich leichter sein. Blackstone and Bain Capital, a pai- and EBITDA of over €2 billion. the going to be easy but I also don’t are transacted in markets where we keinen wissenschaftlichen Kongress national gut vernetzt, sowohl auf ring of KKR and LP-Onex, Carlyle CHEManager Europe: Mr. Clama- Implementation of our new strat- think we will have to wait until 2016 are among the top three global play- oder Workshop im Bereich der Aus- europäischer Ebene über die ent- Globalisierung hat auch andEinfluss Apollo. The value of the busi- dieu, what is your vision for the egy should put us in a position to to start experiencing growth. If you ers. Our three fastest-growing seg- stellungs-GmbH geben. Diese wird sprechenden Föderationen für Che- auf die Forschungslandschaftness has und been estimated as high as new Solvay? increase EBITDA by 10% year-on- look at our Q4 2011 results you will ments now account for about half of sich, so ist unsere Erwartung, neuen mieingenieurwesen, für Biotechnolo- das Bildungswesen. Es gibt$4 billion. zwi year in average to €3 billion by see that some businesses are far- our overall trading activity. J.P. Clamadieu: Our vision as one 2016. This is challenging, but in ing very well, and in fact did not Themen, vielleicht auch neuen Regi- gie und für Korrosion, als auch welt- schen Staaten einen immer häufi More on Page 2 ▶ onen der Welt widmen. Sie wird ihre weit, gerade haben wir z.B. das geren Austausch von Studenten of the world’s top ten chemical our view achievable. Around €600 see a crisis. While the targets are companies is to be a strong lead- million of the improvement should demanding they are by no means Kompetenz im Ausstellungsbereich jährige Jubiläum unserer japani- und von Forschern. SehenInvestments Sie für Jean-Pierre Clamadieu, CEO, Solvay er in the reshaping of this indus- come from organic growth. Here, unachievable. After combining the Continues Page 11 ▶ vielleicht auch Dritten anbieten. schen Schwestergesellschaft mitge- eine deutsche GesellschaftMitsui die Not Chemicals and Sinopec feiert. China ist ein anderes wichti- wendigkeit, dass man diese Inter line increasingly relied upon as the have set up a 50-50 joint venture In welchen Regionen sollen denn ges Stichwort. Dort haben wir mit nationalität weiter fördert?to build a $315 million plant that neue Aktivitäten begonnen wer- der Achemasia eine Messeaktivität, will produce ethylene-propylene- den? die wir in enger Kooperation mit Prof. Dr. K. Wagemann: diene terpolymer (EPT). The plant, chinesischen Partnern durchführen. kann sich heute als wissenschaft to be located in China‘s Shanghai Prof. Dr. K. Wagemann: Zu den Regio- Wir pflegen auch sehr gute Bezie- lich-technische Gesellschaft nicht Chemical Industry Park, will have Learning From The Cliff nen, die uns interessant erscheinen, hungen zu unserer Schwesterorga- ausschließlich auf deutsche Mitglie capacity to produce 75,000 tons gehören definitiv Südamerika eben- nisation AIChE in den USA. Darauf der stützen. Wir haben mittlerweile of EPT a year and is set to start so wie die Golfregion. Überall dort, wird die neue Struktur keinen Ein- doch eine ganze Reihe von auslän As the Global Pharma Business Changes, NNE Pharmaplan Bridges the Gap Between Countries commercial operations in the first wo Prozessequipment eine Rolle fluss haben. Sie wird primär inter- dischen Fachkollegen, die sich hier in Deutschland engagierenquarter und wir of 2014. können froh darüber sein.SABIC Ich den invests in capacity expansion Pharma Engineering – While the ply engineering and project man- ness in emerging markets, especially for its polycarbonate (PC) multiwall ke, wir sind auf diesen Austausch agement. India and China. However, there is ▪ upheaval in the pharmaceutical indus- mit dem Ausland angewiesen.sheet business at its manufacturing a solid growth in Central Europe facility in Vadodara, India. The com- try has brought with it a lot of prob- ▪ How has the market changed over as well. There are many mid-sized pany will open a state-of-the-art standard for computer validation, Wie beurteilen Sie denn die For the last decade? companies that aren’t affected by Close Contact in Scrum lems, one sector that is benefiting from schungs- und Arbeitsbedingungenproduction line to help meet rising patent expiries; these companies für diese ausländischen Fachkräfcustomer demand in the region for the overhaul is pharma engineering. G. Mølgaard: If I had to pick one el- are robust and forward-looking, and Top-Executives gesucht? te in Deutschland? Es wirdthe immer high performance Lexan Ther- Companies such as NNE Pharmaplan ement that has led to significant they are excellent to work with. wieder bemängelt, dass wirmoclear Defizi multiwall sheet products changes over the last decade, then are the ones pharma companies call chemanager-online.com/en/ Als eine der führenden Personalberatungen für die Chemie wirt- te haben, weil andere Länderused for at roofing and glazing in the I would pick the patent cliff. This Are requirements different in schaft unterstützen wir seit über 30 Jahren er folgreich Konzerne traktiver sind. building & construction sectors. on when they are looking to expand cliff has been building up over the emerging countries? Ashland has responded to strong und Mittelständler bei der Besetzung von Führungspositionen. to new regions, build new facilities or last 10 years; we’ve been through Sie vertrauen auf unsere Bran chen exper tise, unsere intensiven Prof. Dr. K. Wagemann: demand for polyvinyl pyrrolidone megamergers that transpired so G. Mølgaard: Most companies, re- revamp existing ones. Brandi Schuster persönlichen Kontakte und auf unsere individuelle Betreuung. glaube ich, das Meinungsbild(PVP) mitt by adding new low-viscosity, companies could have access to gardless of location, are looking to lerweile. Wir haben natürlichpharmaceutical-grade nach Plasdone spoke to Stefan Berg of NNE Pharma- yet another blockbuster. Now, most upgrade their facilities. These com- wie vor die Situation, dassPVP manche capacity at its manufacturing companies have realized that this is panies have been around for many plan, general manager of the Central US-amerikanische Universitätfacility einen in Calvert City, Kentucky, not the way of the future, and this years, and they know that keeping Weltstatus hat. USA. Ashland currently produces Europe region, and Gert Mølgaard, has been the catalyst for change the status quo won’t be enough to PVP also at its manufacturing site corporate vice president of strategic within the pharma industry. This is remain competitive in the future. the classical V model is no longer ex- Agile requirements management e bezahlt · D 12264 e ntgelt · DPAG· · Pressepost Weinheim · PF 11 05 64 69469 in Texas City, Texas. truly the end of the blockbuster era, Gert Mølgaard Stefan Berg For example, China just brought in ▶ Die Fortsetzung sowie das Kurzinterview mit Instituts­ development, about the opportunities and we need to forget about it and NNE Pharmaplan NNE Pharmaplan new GMPs at the beginning of 2011. Erfahren Sie mehr über uns unter www.barfeld.de oder 0208/45045-0 direktor Prof. Dr. Michael Schütze über die Stiftung ahead and the company’s strategy for look forward at the opportunities Looking to Russia, they want to build

Wiley VCH Wiley Dechema­Forschungsinstitut lesen Sie auf ahead. G. Mølgaard: Pharma companies are G. Mølgaard: Yes, there is currently a their own independent pharma in- tags/scrum a worldwide footprint. diversifying, which is something we large demand for innovative solu- dustry, and they expect the stand- + + + + + + How has the patent cliff specifi- like, because it gives us the oppor- tions within biotech, such as single- ards to be the same as in Western CHEManager Europe: What are the cally affected your business? tunity to showcase our offerings. use technology, prebuilt modular Europe. This means that Western biggest challenges facing pharma We provide services in biotech, facilities and the ability to revamp knowledge and standards are in engineering in 2012? S. Berg: Pharma companies have sterile manufacturing, medical and upgrade existing facilities. For high demand there. come to the realization that they devices, diagnostics, automation, us, this underscores the importance We’re also seeing a lot of in- ntgelt bezahlt · 78719 ntgelt e S. Berg: Challenge is probably not the have to make some changes – go- manufacturing IT, process ana- of working with our customers long novation coming out of emerging right word. There are a lot of op- ing into mergers or restructuring lytical technology, etc. At the same term in order to get to know them markets. There is a lot of interest portunities to be had in pharma en- their own businesses, for example. time, because we focus on pharma well. in getting into biosimilars and even gineering; our customers are strong This in turn creates work for us. and biotech, we have very specific the creation of new drugs based on and in the mood to invest. If there Every merger, every restructuring know-how. Market globalization is another existing drugs. clusively specified. Rather, accord- anticipates direct user input for the is any challenge at all, it is finding is good news for us. Pharma com- hot trend. skilled workers. But even that is not panies know that their business will Do you think the growth we’re cur- What regions are becoming more an issue everywhere, but rather in be completely different in the future rently seeing in biotech is sustain- G. Mølgaard: It’s clear that our market interesting for your customers? specific disciplines, such as in sup- than it is now. able long term? is shifting toward increased busi- G. Mølgaard: Besides China and India, there is a lot of interest in Brazil, and that certainly won’t be the end of it. We will get into more countries Loading made easy as we see the market needs coming; ntgelt bezahlt · 78719 e ntgelt · DPAG· · Pressepost Weinheim · PF 11 05 64 69469 · PF 11 05 64 · 69469 Weinheim · Pressepost · DPAG· · DPAG· · Pressepost Weinheim · PF 11 05 64 69469 but we are also careful to not take – safely on too many countries at once. www.rs-seliger.de Continues Page 14 ▶ Wiley VCH Wiley

chemanager-online.com/en

ì CHEManager Huntsman to Expand MDI Plant ì CHEManager Europe Huntsman announced it has com- Urethanes is expected to continue ì LVT LEBENSMITTEL Industrie missioned engineering design stud- to grow strongly well into the next ì CITplus ies to increase its global capac- decade, and the proposed invest- ity for the manufacture of meth- ment in the United States will com- You can fi nd us online, too! ylene diphenyl diisocyanate (MDI) plement our previously announced through investment at its Geismar, planned expansion in China”. www.CHEManager-online.com/en Louisiana site. Anthony P. Hankins, Huntsman Polyurethanes operates President of Huntsman Polyure- worldscale MDI facilities in Geis- thanes, said: “We are studying sev- mar, Louisiana; Caojing, Shanghai; eral options for expansion of the and Rozenburg, Rotterdam. www.gitverlag.com Geismar facility to ensure we can satisfy the strong demand in resi- the economics of investing in our dential and commercial insulation. US facilities has improved signifi- With the benefits of US shale gas, cantly. The global market for MDI ▪

chemanager-online.com/en CHEManager Europe 9/2012 Production Page 21

Optimization of Product Protection Implementation of Improved Hygiene Zones at Swiss DSM Site in Sisseln

GMP in View – Within two years, Chemgineering – as general planner and contractor – converted a bottling plant at DSM to comply with current standards. The efficient collaboration of the project team and client guaran- teed success of the ambitious multi- million-euro project.

Royal DSM, a global science-based company active in health, nutrition and materials, delivers innovative solutions that nourish, protect and improve performance in global markets such as food and dietary supplements, personal care, feed, pharmaceuticals, medical devices, automotive, paints, electrical and electronics, life protection, alter- native energy and bio-based ma- terials. DSM’s 22,000 employees deliver annual net sales of around Chemgineering was initially as- ▪▪ cGMP-compliant implementation Conversion During Ongoing Operations Moreover, a new infrastructure health and safety (accident-free con- € 9 billion. signed to develop various versions of of DSM’s internal guidelines for and power supply system (e.g. heat struction site) were met to the fullest With about 900 staff members the GUPAS+ project both technically the filling of powder and liquid Because all measures had to be recovery system, cold sink) was in- satisfaction of the client. and an annual production volume and commercially. This involved, in products in Building 320 implemented during ongoing pro- stalled and connected. Finally, the After a two year planning and of 40,000 tons, the plant in Sisseln addition to a range of remodeling ▪▪ assessment and comparison of duction with only a few exceptions new systems and hygiene zones were remodeling phase, Chemgineering (Switzerland) as a branch of DSM work, setting up new and optimiz- different process versions for complete stoppages, the remod- put into operation and qualified. successfully completed the project Nutritional Products AG is one of the ing existing hygiene zones (clean ▪▪ planning and implementation eling and new construction had to During planning, compliance with in January 2012 and handed the most important production facilities rooms). of a hygiene concept according be done in several phases. the current cGMP standards was building over to the DSM operators. of DSM’s life sciences division. Following the conceptual design to DSM’s internal guidelines for Thus, existing building sections taken into account and implemented phase in 2010, Chemgineering was personnel, material and produc- and systems were dismantled in jointly with the client. During the im- Author: Dr. Wolfgang Müller, Man- From Planner to General Contractor appointed as the general planner for tion units multiple phases in order to facilitate plementation and construction phase, aging Director, Chemgineering the entire project to produce the ba- ▪▪ planning and implementation the installation of a pallet transfer elements including process optimiza- Planning activities with DSM began sic design; in 2011, to be entrusted of a pressure rating system for system with vertical pallet handling tion, automation and EMSR technol- 22 Contact: with a conceptual design phase in with the implementation of the pro- room ventilation technology. The existing bottling sys- ogy, building site management, ven- Dr. Wolfgang Müller 2009. In Building 320 of the DSM ject as the general contractor with ▪▪ adaptation of the new apparatus tem was also converted. tilation technology, clean room instal- Chemgineering plant in Sisseln an existing process full responsibility for costs, schedul- technologies (e.g. material han- New clean rooms (hygiene zones) lation and qualification support were Pratelln, Switzerland was to be optimized during ongo- ing and quality. dling) as well as the infrastruc- were integrated on three floors of implemented and optimized in close Tel.: +41 61 467 54 54 ing production: The solid and liquid The implementation involved the ture to the existing process and the building. During this process, collaboration with DSM. [email protected] intermediate products, delivered as fulfillment of numerous and diverse safety requirements 1800 m2 of new clean room flooring The complete conversion of the www.chemgineering.com bulkware, were to be packaged in requirements as well as compliance ▪▪ timely implementation of the pro- was laid. To create space for a new bottling plant was successfully ac- commercially available packages in with statutory regulations. The pri- ject without affecting other pro- ventilation system, old ventilation complished during ongoing produc- chemanager-online.com/en/ a GMP-compliant environment using mary objectives of the project in- jects, departments or the ongoing components (ducts, monoblocks, tion. The tough requirements for tags/gmp the existing filling technology. cluded: production in Building 320 etc.) were dismantled. product quality and occupational

chemanager-online.com/en Page 22 Chemicals CHEManager Europe 9/2012

On a Sound Basis in Line with the Current Trends Sepawa 2012: On a Growth Course with Numerous Innovations

ity. This will enable attendants to dustry solely focused on environ- Arved Fuchs in 1989 was the first For natural cosmetics, the IKW even gain a comprehensive survey of the mental issues — various renewable to reach both poles by foot within a stated a growth rate of 10 %. This state of the branch. The combina- raw materials resulted in “green single year. He will talk about his ex- tendency is also observed in many tion of exhibition and a diversified products.” Intensive research and perience with leadership in extreme contributions, dealing with the lat- lecture program offers an inspiring development were carried out on situations. est active agents and additives on a atmosphere. their biodegradation and their en- natural basis, such as sea buckthorn vironmental fate. Meanwhile, both Just Sunshine And Roses? and oat. With increasing customer Foam — A Dazzling Phenomenon the industry and consumers have reach for cosmetic products in those recognized that just the ecologi- Applicative sun protection is widely 60 and older, anti-aging agents and Opinions differ on the issue of foam, cal point of view is considered too accepted by consumers and is in specialty products for mature skin the focus topic of the eighth EDC. narrowly. Moreover, the life cycle the bag for holidays and leisure are further fields of attention. Until On the one hand, abundant foam of a product should be looked at in time. The effect of the UV light, today, close experience has played formation is essential for certain its entirety. Dr. Roland Schroeder, however, has not yet been under- an important role in the purchase products, particularly in the field chairman of the Sepawa specialist stood by far. In a special section of of cosmetics, but recently a consid- of care and wellness. On the other group LUV, explains: “A green prod- the event, which is organized by erable amount of online sales has hand, it compromises efficiency uct is not necessarily a sustainable the DGK (Deutsche Gesellschaft emerged. The online trade for per- considerably, e.g., that of automatic product. In every case, a sustainable für wissenschaftliche und ange- fumes and cosmetics has increased cleaning procedures. Dr. Horst-Di- product should have an appropri- wandte Kosmetik – German Society more than any category except eter Speckmann, chairman of the ate performance in addition to its for Scientific and Applied Cosmet- clothing. Surely, Christian Baudis, GDCh specialist group “Chemistry ecological compatibility.” ics), these fundamental issues will former CEO of Google-Germany of Washing” is looking forward to If one further takes into account be addressed. To give an example, and now manager of the German intensive discussions about the is- the total supply chain, one arrives sub-erythemal sun exposure will be branch of a video-marketing net- sues, such as how foams can be cre- at more intricate assessment cri- a topic, as it may have a negative work, will impart important insight ated, stabilized and then destroyed, teria. To assess the sustainability effect on the skin well before any to the auditorium with his lecture if necessary. of a product, the behavior of the erythema is visible. Will organic “Society 2.0 – How the Internet is “Though the addressed issues consumers must also be taken into components replace the inorganic Changing Us.” are of particular importance, there consideration, e.g., when dosing and ZnO and TiO2-particles? The latest “The demand for more and more are crucial details about foams and adjusting the temperature. results on the undoubted interac- better and innovative products is a their properties which have not The latest innovations for deter- tions between the immune system tremendous challenge,” underlines been understood yet,” Speckmann gents, the low temperature deter- and the effect of light will be pre- Prof. Dr. Klaus-Peter Wittern, first said. ”This is why, in many cases, gents and the supercompactates, sented. Finally, the conference will chairman of the Sepawa e.V. ”This © Valua Vitaly - Fotolia.com it is impossible to control the foam enable the consumers to make explore whether the sun protec- is why we need highly qualified and properties.” their own decision on this part of tion factor, which has been gener- motivated personnel, further on. He points out that many operat- the value-chain. ally accepted so far, will be reliably It is, therefore, important for the ing processes are based on empiri- The novel ingredients and addi- conclusive on a global basis. The Sepawa e.V. to promote our junior cal values. In his opinion, innova- tives of the sustainable detergents second field of topics of the DGK, scientific staff. Thus we can main- tions often fail because engineers and cleansing agents, such as en- “Hair Care from Root to Tip,” will tain the successful course of our are afraid that they would not cope zymes, chelating agents and cosur- also attract wide interest. branch.” Business and Science Meet – The attendants of the Sepawa/EDC Congress with the foam. The initial lecture factants, will be subjects of many “Foam — A Blessing and a Curse” contributions to the “Forum for All Set for Novel Trends in Cosmetics 22 Contact: in Fulda Oct. 23-25 can look forward to a diversified, well-filled program. During indicates the ambivalence and up- Innovations.” Here, some of these Monique Senicky the congress, the cooperation of the major specialist associations, the Sepawa and to-dateness of this issue. products will be presented for the The sustainable growth in the field Sepawa the GDCh, with the collaboration of the DGK, stands for the latest state of the art first time. of beauty care, which was 1.4 % from Thannhausen, Germany Sustainable — More Than Green Precepts of sustainability for the 2010 to 2011 according to the IKW Tel.: +49 8281 79940 24 in of beauty care and cleaning. With 184 booths, plus ceremonial addresses and internal courses of business are of- (Industrieverband Körperpflege und [email protected] high-level scientific lectures, participants can expect the right balance of business, The lecture block “Sustainabil- ten regarded somewhat skeptically, Waschmittel – Industrial Association www.sepawa.com ity and Product Safety” is organ- and sometimes it is difficult to con- for Body Care and Detergents), is information, scientific discussion and networking. ized by both the Sepawa specialist vey this idea. One of the surprises of also reflected in the presentations group LUV (Legislative-Umwelt- the event will be to detect the con- of the “Forum for Innovations,” the Hygienic and clean, neat and beau- the Sepawa/EDC Congress 2012. Verbraucher — Legislative-Envi- nection between these tendencies use-oriented part of the event. For- chemanager-online.com/en/ tiful, pleasant and glamorous — Scientific fundamentals will be ronment-Consumers) and the GDCh. and the internal dynamics of a team ty-four of 90 contributions in total tags/sepawa these attributes will be in focus at considered as well as sustainabil- For a long time, the detergents in- of an expedition. Keynote speaker deal with the field of personal care.

Hard Wood with a Soft Core

Wood is one of the most flexible suitable for use in harsh external The cooperation between Accsys materials our planet has to offer. environments, but Accoya now al- and Rhodia is only the newest part- It is used for sturdy constructions lows the use of wood which does nership in a wide network. BP, one or simply for decorative items, as not compromise in either perfor- of Europe’s major manufacturers of winter fuel or as a musical instru- mance or sustainability,” says Bryan acetyls-based chemicals, also sup- ment. Aside from its manifold range Crennell, Head of Marketing, Accsys ports the Accoya wood production of use, wood offers another invalu- Technologies. by supplying acetyls products. Paul able advantage: It is the world’s only The sustainably produced Accoya Clegg, CEO of Accsys Technologies, naturally renewable construction wood won numerous prizes for its commented: “The long term objec- material. Especially the slow grow- ecological benefits. Due to its en- tive of Accsys is to license its pro- ing hardwoods are popular when it vironmentally friendly production prietary acetylation technology for comes to massive woodworks, also and its good characteristics, Accoya the manufacture and sale of Accoya for industrial structures. The faster wood is seen as one of the most and Tricoya to third parties around growing softwoods, on the other seminal construction materials. “It the world. “ Tricoya is Accsys’ latest hand, are not suitable for bigger is very encouraging that as greater brand, including acetylated wood constructions, since their surface focus has been put on sustainable elements like chips, fibers and par- is not hard enough to resist bad building in recent years, wood is ticles – of course sustainably pro- weather conditions. playing an increasing role,” says duced and with all typical Accoya Accoya wood combines the ad- Crennell. characteristics. vantages of both sources. The mate- To distribute the new material rial is manufactured from New Zea- in Europe, Accsys entered into a li- 22 Contact: land grown Radiata Pine, which has cense agreement with Rhodia Ace- Bryan Crennell been chemically modified through tow. The license grants Rhodia the Accsys Technologies a proprietary acetylation process. exclusive rights for a 15 year period Windsor, UK Accsys Technologies developed the to produce and sell Accoya to over Tel.: +44 1753 757500 treatment to give the fast-growing 40 European countries except the www.accsysplc.com timber exceptional dimensional sta- UK, Ireland and Benelux. The agree- bility and Class I durability. “Tradi- ment also allows the construction of tionally, only endangered tropical multiple Accoya production plants in chemanager-online.com/en/ hardwoods or other environmen- various locations over a period of 25 tags/materials tally compromised alternatives were years.

Eastman Announces Partnership with North Carolina State University Oxea Expands Production Capacities

The Eastman Chemical Company establishes the Eastman Innova- pany.” Our partnership launches for Carboxylic Acids has entered into a multiyear agree- tion Center (EIC) laboratory. The a world-class, open innovation ment with North Carolina State lab will be located on Centennial collaboration with a leading uni- Oxea has further expanded its units such as air conditioners and University to conduct joint research Campus, NC State’s nationally rec- versity. That relationship will help production capacity for carboxylic refrigerators or specialty plasticiz- in chemistry, materials science ognized research campus. “We’re us bring differentiated new ideas, acids. Oxea now serves the con- ers, among others. Oxea currently and other scientific disciplines. As excited about the possibilities the technologies, and materials from tinuously rising global demand for operates four production plants part of the agreement, Eastman Eastman Innovation Center being early stage research to the market carboxylic acids with this increased for carboxylic acids world-wide will provide $10 million over six established at NC State brings,” more quickly than traditional ap- capacity. Carboxylic acids can be and additionally plans to bring on- years in support of the Eastman said Dr. Greg Nelson, senior vice proaches.” used for manufacturing energy- stream another new carboxylic acid Chemical Company Center of Ex- president and chief technology of- efficient lubricant esters for envi- plant in Oberhausen, Germany, at cellence (ECCE) partnership. It also ficer at Eastman Chemical Com- ▪ ronmentally friendly refrigeration the end of 2012. ▪

chemanager-online.com/en CHEManager Europe 9/2012 People · Publications · Events Page 23

Elements of Environmental Chemistry

Providing readers with This Second Edition in- the fundamentals of en- cludes new chapters vironmental chemistry on atmospheric chem- and a toolbox for put- istry, climate change, ting them into practice, and polychlorinated this book is a concise, biphenyls and dioxins, accessible, and hands- and brominated flame on volume designed retardants. In addition, for students and pro- new practice problems fessionals working in and a helpful tutorial the chemical and en- on organic chemistry Maintain 2012, October 16 to 18, Munich From October 16 – 18 service vironmental sciences. names and structures Pascal Soriot has been appointed CEO of AstraZeneca. He providers representing various branches of industry, potential customers Tutorial in style, this have been added to will join the AstraZeneca Board as an Executive Direc- and experts will meet at the leading European trade fair for maintenance. book fully incorporates improve both the scope tor on 1st October. A French national, Soriot (53) has Maintain is the industry gathering for strategies, methods and tools in real-world problems and extensive and accessibility of the book. served as Chief Operating Officer of Roche’s pharmaceu- industrial maintenance. It showcases service concepts as well as products end-of-chapter problem sets to im- ticals division since 2010. Prior to that Soriot was CEO and components. Specialists in nearly all manufacturing and processing merse the reader in the field. Chap- 22 Elements of Environmental Chemistry of Genentech. Pascal Soriot joined the pharmaceutical industries go to gather information about industrial services, repair, main- ters cover mass balance, chemical Hites, Ronald A. / Raff, Jonathan D. industry in 1986 and has worked in senior management tenance, and after-sales strategies for industrial plants and machinery. kinetics, carbon dioxide equilibria, Wiley-VCH, 2012 Pascal Soriot roles in the US, Asia and Europe. Maintain is being held at the MOC Veranstaltungscenter Munich. pesticide structures and much more. ISBN: 978-1-118-04155-0

ADIPEC 2012, November 11 to 14, Abu Dhabi ADIPEC, short for “Abu Dhabi Eric W. Norris has been appointed as manager for FMC International Petroleum Exhibition and Conference” is the largest exhi- Engineering Design for Process Safety Corporation’s Lithium Division. Norris joined FMC in bition for the Middle East oil and gas industry. Supported by Abu Dhabi 2001 as director of Investor Relations. He was named National Oil Company (ADNOC) and the UAE’s Ministry of Energy, it hosts This updated version of the release of flamma- director of Corporate Development in 2005, and a year over 1,600 exhibitors and attracts more than 45,000 attendees and is one of the most popu- ble or toxic materials, later was appointed director of FMC’s Healthcare Ven- considered the event where oil and gas industry professionals get together lar and widely used which could lead to a tures unit. Norris began his career in 1989 at Rohm to experience, discover, network, discuss and debate core industry issues. books from the Center fire, explosion, or envi- and Haas Company in technical sales and held roles in ADIPEC began as a biennial event in 1984 and has grown in stature, for Chemical Process ronmental damage, with Eric W. Norris strategic planning, marketing, business development and significance and size with every exhibition since. From 2013 the show Safety (CCPS) provides key information on fail- commercial management before being named Investor will become an annual event. plant design engineers, ure modes and potential Relations manager in 1998. facility operators, and design solutions. New SPS/IPC/Drives, November 27 to 29, Nuremberg Suppliers of electric auto- safety professionals topics covered include mation technology from around the world meet in Nuremberg, Germany. with key information inherently safer design, Dr. Mike Ironside has been appointed as General Manager of Hovione’s SPS IPC Drives is the exhibition for electric automation technology. It on designing chemical, safety instrumented sys- Technology Transfer Center (TTC) in New Jersey/USA. Dr. Ironside was covers all components down to complete systems and integrated auto- petrochemical, and tems, and layer of pro- previously with GSK in the UK and with AMRI and most recently with mation solutions. Products, trends and innovations within the industry hydrocarbon process- tection analysis. Anacor Pharmaceuticals, both in the USA. At Anacor he held the position are presented from November 27 to 29. The trade fair and adjoining ing facilities, while ad- of Vice President of Chemical Manufacture and Development. conference offer a good platform to search for the right solutions for dressing process safety concerns. 22 Guidelines for Engineering Design for Process Safety automation tasks. The book discusses how to select Center for Chemical Process Safety (CCPS) designs that can prevent or mitigate Wiley-VCH, 2012, ISBN: 978-0-470-76772-6 Guillermo Novo joins Air Products as senior vice presi- dent, Electronics, Performance Materials, Strategy and Technology. Novo will be responsible for the company’s Electronics and Performance Materials businesses, Technology organization, and corporate strategy and marketing. He will report to the chairman and CEO and serve on the company’s Corporate Executive Committee. Guillermo Novo Novo joins Air Products from Dow Chemical where he has most recently served as group vice president, Dow Coating Materials, a large specialty chemicals business. Guillermo Novo _Air Products_CMI0912 We make your research easy. Jennifer Stewart has become new Vice President and Managing Direc- NoW We make job huNtiNg easy. tor in the Europe, Middle East, and Africa (EMEA) region for Eastman Chemical. Jennifer’s predecessors Godefroy Motte and Joost Berting have been assigned other responsibilities at Eastman Chemical: Godefroy Motte is Eastman’s Senior VP Integrated Supply Chain and Chief Regional & Sustainability Officer, Joost Berting is Regional Business Director EMEA for the Specialty Fluids and Intermediates Business, and responsible for coordinating the integration process of the recently acquired Solutia or- ganization in EMEA, Asia Pacific and Latin America.

David Faghani, who served CU Chemie Uetikon as a Direc- tor of North America for over 14 years, will now continue his cooperation with CU as an independent representa- tive for Specialty Fine Chemicals, Pharmaceutical Inter- mediates, and New Chemical Entities (NCEs). As of April of 2012, David Faghani Incorporated “DFI” is a legal entity registered and based in New Jersey. CU’s new rep- David Faghani resentative office’s main focus will be to provide direct commercial support to CU’s customers in collaboration with CU’s agents and distributors and to further develop new business opportunities.

Dr. May Shana’a has been named group vice president, Technology and Growth Strategy, for Ashland Specialty Ingredients. Shana’a will be re- sponsible for leading Ashland Specialty Ingredients’ global R&D and ap- plications capabilities, with direct operational responsibility for the unit’s global research and technical centers. In addition, Shana’a will be in charge of business development, including leading the strategic growth plan for the business. Let your partners in research energize your career. Drawing on our expertise and relationships across the research and business communities, CINF Scholarship for Scientific Excellence goes to Christin Schärfer, Wiley-blackwell invites you to join Wiley job Network, the definitive job site for professionals Tu C. Le und Rodolpho C. Braga in the sciences, technology, business, finance, healthcare and the arts. At the 244th ACS National Meeting in Philadelphia, Pennsylvania, Christin Schärfer, Tu C. Le and Rodolpho C. Braga were announced the winners of this year´s “CINF Scholarship for Scientific Excellence” sponsored by • FIND premium jobs from the most respected names in your industry the German Chemistry information centre FIZ Chemie. The scholarship program of the Division of Chemical Information (CINF) of the American • ATTRACT hundreds of recruiters and employers in your field Chemical Society (ACS) promotes advancements in the field of computer- aided chemical information. It is given to junior scientists who deliver • CREATE job alerts that match your criteria exceptional research contributions to support computer-aided chemical preparation, research collaboration and the use of specialized knowledge. • OBTAIN expert career advice and candidate resources Sandra E. Peterson to Leave Bayer CropScience Sandra E. Peterson, Chairman of the Executive Committee and Chief Ex- ecutive Officer (CEO) of the subgroup Bayer CropScience, has asked for her contract, which runs until summer 2013, to be terminated effective November 30, 2012. The Supervisory Board of Bayer CropScience agreed Register and upload your resume/CV now to begin your job search! to her request. Born in 1959 in New York, N.Y., Peterson became CEO of Bayer CropScience on October 1, 2010. Before moving to Bayer CropSci- ence, she was a member of the Executive Committee of Bayer HealthCare from May 2005, heading up the Medical Care Division from January 2009. wileyjobnetwork.com Prior to that she was in charge of the Diabetes Care Division.

chemanager-online.com/en Page 24 At A Glance CHEManager Europe 9/2012

European Chemicals Sector: Production Down, Prices Up

EU Chemicals: Production Ups and downs - The European Chemical Industry Production index (2005=100) Council (Cefic) reports that EU chemicals production 115 20 recorded a 2.4 % decrease in the first six months of 18 2012 compared with the same period in 2011, accor- 16 110 14 ding to the latest Cefic Chemicals Trends Report. 12 10 Monthly data for June 2012 showed a 2.2 % decline 105 8 6 compared with June the year prior. First-half 2012 4 data point to EU chemicals production levels remai- 100 2 0 ning 5.8 % below the peak in 2007. -2 -4 Prices for chemicals in the European Union climbed 95 -6 -8 on a year-on-year basis in June, up 1.6 % during the -10 90 Production % Change (y-o-y), Right Hand Side (RHS) month against the comparable month in 2011. The Production index (2005=100), Left Hand Side (LHS) -12 -14 -16 price increase was led yet again by the overall price 85 -18 increase in basic inorganics. However, month on -20 2008 2009 2010 2011 2012 -22 month price data for June 2012 indicate a 1.2 % de- 80 -24 crease compared with May. Despite a monthly break Source: Ce c Chemdata International © CHEManager Europe in the upward price trend, overall prices for chemicals climbed by 3.4 % during the first half of 2012 against the comparable period in 2011. Extra-EU Trade Flows: Chemicals Latest trade data show the EU chemicals net trade Trade Flows (euro millions) surplus increased further through the first five months 14000 of 2012 by €3.6 billion compared with the same peri- 13000 od of last year, reaching €19.9 billion. According to the 12000 Game Changer – BASF has made a game-changing breakthrough towards sustainable snack packaging that can latest EU Commission survey from August 30, 2012, 11000 help companies and communities everywhere get closer to their goal of zero-waste. The chemical company 10000 confidence in the EU chemicals industry declined partners with the Seattle Mariners, one of the greenest teams in Major League Baseball a and a member of the 9000 slightly in August 2012, and gradually continued the Green Sports Alliance. BASF uses the iconic snack of the American pastime, peanuts, to debut prototype pack- 8000 downward trend reported since April 2012. This is in aging developed with its advanced biopolymer technology. The 100 % compostable snack bag delivers needed 7000 line with the EU industry as a whole where confidence 6000 shelf-life at a competitive price point, with a more sustainable ‘end-of-life’ solution than with conventional 5000 continued to decline since March 2012. packaging materials. 4000 3000 Year-on-year June Chemicals Output Lower 2000 1000 Monthly data for June 2012 showed a 2.2 % output 2008 2009 2010 2011 2012 0 decline for the EU chemicals industry compared with Visions in Plastics Extra EU Exports Extra EU Imports Extra EU balance June the previous year. Polymers production was Sustainability – In the 21st century, made from plastics protects goods Volume 3 down in June 2012 by 8.4 % against the comparable October 2012 Source: Ce c Chemdata International © CHEManager Europe climate change, limited natural re- and helps to keep food fresh for period the year prior. Petrochemicals and specialty sources and the increasing demand 1 longer and make it easier to trans- chemicals experienced a similar fall of 2.5 %in June for energy throughout the world are port. Further fields of application, in 2012. Basic inorganics and consumer chemicals, how- making sustainable production and which plastic products save energy EU Chemicals Business Climate ever, were the only two sectors where production consumption more urgent than ever. during their usage phase include the Production trend today versus expectations increased in June, up 1.7 % and 1.2 % respectively on These challenges are also of central automobile, the construction and the a year-on-year basis. 50 importance to the plastics industry. electrical and electronics sector. Good/ Chemicals production expectations for the next 6 month However, meeting these challenges In addition to its sustainable better 40 30 EU Trade Surplus up by €3.6 Billion also offers opportunities for the in- products, the plastics industry is 20 An EU net trade surplus with the NAFTA region con- dustry, as plastic products open up continually researching into new, many possibilities, from conserving more efficient process and products, 10 tributed significantly to the bump in the January-May Satisfactory 0 resources and energy to protection which save energy and resources about overall surplus, reaching €4.9 billion, up €1.5 billion the same -10 of the climate, consumers and the Automotive | Metal and Glas Substitution and therefore reduce their impact Materials | Photopolymer Films for Holography compared with the same period in 2011. The EU net Feedstock | Biobased Raw Materials for Polymers -20 environment. Construction | Carbon Nanotube Reinforced Materials on the environment during produc- trade surplus with the Rest of Europe was €5.9 billion Manufacturing | Resource Efficient Plastics Processing -30 Products made from plastics are tion and use. in the first five months of 2012, up €0.9 billion com- -40 important solutions to the problems: VIP – Visions in Plastics 2012 bad/ Chemicals production situation at present pared with the same period of last year. A €2.3 billion worse -50 for example, lightweight car compo- documents the creativity and inno- surplus occurred with Asia, excluding Japan and Chi- -60 2008 2009 2010 2011 2012 nents and building insulation mate- vation of the plastics industry by a na, which fell €0.4 billion compared with the first five rials make an important contribu- ings: solar cells, fuel cells and wind wide variety of topics. The special months of 2011. May 2012 trade data indicate a €19.9 tion to energy savings and reduction energy generators contain polymer supplement will be distributed with

Source: EU Commission and Ce c analysis © CHEManager Europe billion overall EU chemicals net trade surplus. of CO2 emissions. However, plastics materials and exploit infinite CO2- the October issues of CHEManager are not just essential for energy sav- free sources of energy. Packaging and CHEManager Europe. ▪ Prices for Basic Inorganics Climbed EU Chemicals Con dence Indicator (CCI) Year-on-year EU chemicals prices rose in June by Net balances of replay to the questionaire (in % points) 1.6 %, driven by the price for basic inorganics, which increased by 3.7 % during the one-month period. Index Industry con dence indicator Assessment of stocks of nished products Production expectations for the months ahead Assessment of order-book levels Prices for consumer chemicals rose by 1.1 %, while petrochemicals and pharmaceuticals prices edged ACC American Chemistry Council 9 Dow Corning 3, 6 LyondellBasell 9 40 30 down respectively by 1.6 % and 1.5 % in June as com- 20 pared with the year prior. 10 Accsys Technologies 22 DSM 14, 21 Management Consult. Chemicals 7 0 EU Sales in Jan.-May 2012 5.8 % Higher -10 EU chemicals sales for May 2012 were 1.9 % lower -20 -30 compared with May the year prior. EU chemicals sales Albemarle Fine Chemistry Services 14 DuPont 9 Roman Seliger 19 -40 recorded a 1.0 % decrease in the first five months of -50 2012 compared with the same period in 2011. Com- -60 -70 pared to full-year sales levels in 2008, the pre-crisis AMRI 14 Emerson Process Management 19 Scopein Management Consultants 10 -80 peak, the total value of sales through the first five 2008 2009 2010 2011 2012 months of 2012 was 5.8 % higher. The full report can

Source: European Commission © CHEManager Europe be read at www.cefic.org Arkema 9 Euticals 14 Siegfried 5, 14, 17

BASF 9, 24 Evonik 14, 15 Siemens 9 Imprint Publisher: Bank Account arbitrarily use the unmodified Bayer 9 FIS - Fabbrica Italiana Sintetici SpA 1 SOCMA Society of Chemical Wiley-VCH Verlag Ronny Schumann Commerzbank AG Darmstadt, work/editorial contribution for all GmbH & Co. KGaA Tel.: +49 6201 606 754 Germany purposes for itself and for busi- GIT VERLAG [email protected] Account No. 01715501/00, nesses that have an interest in the A Company of Routing No. 50880050 publishing company as defined The current price list is valid by company law as well as to John Wiley & Sons, Inc. Roland Thomé Bosch Industriekessel 21 GBI Research 5 Manufactures & Affiliates 8 Tel.: +49 6201 606 757 from 1st October 2011 transfer the right of use to third parties. This right of use applies [email protected] CHEManager­ Europe Geschäftsführer to both print and electronic media Jon Walmsley, appears 10 times in 2012. including the internet and data Bijan Ghawami Team Assistants Print run: 20,000 banks/data media of all types. Lisa Rausch (IVW Report Brabender Technologie 11 Gempex 16 Solvay 9 Tel.: +49 6201 606 742 All names, designation, or ­signs Director Q2 2012: 19366 tvA) in this issue, whether ­referred Roy Opie [email protected] Eighth year 2012 to and/or shown, could be trade Subscriptions names of the respective owner. Product Management Beate Zimmermann 10 issues €84 Dr. Michael Reubold Tel.: +49 6201 606 764 incl. postage Camelot Management Consultants 4 Global Data 16 Squire Sanders 8 Tel.: +49 6201 606 745 [email protected] single copy €13.50 Printed by [email protected] plus postage Druckzentrum Rhein-Main Freelancers GmbH & Co. KG Dr. Sonja Andres Students receive a discount of Alexander-Fleming-Ring 2 Editor-in-Chief 50 % upon presentation of a valid 65248 Rüsselsheim Catalent Pharma Solutions 14 Groupe Novasep 18 Thomson Reuters 16 Brandi Schuster Dede Williams Miranda Kennedy certificate. Subscription orders (on maternity leave) can be canceled within 1 week Tel.: +49 6201 606 755 Dr. Volker Oestreich Reuters content is the intellectual Philipp Praet in writing. Dispatch complaints [email protected] are possible only within 4 weeks property of Thomson Reuters or after publishing date. Subscripti- its third party content providers. Cefic 9 Helsinn Chemicals 14 UBM 13 Managing Editor Production Managers on cancellations are accepted 6 Any copying, republication or Dr. Roy Fox Christiane Potthast weeks before end of year. redistribution of Reuters content, Tel.: +49 6201 606 714 Claudia Vogel (Advertising) including by framing or similar [email protected] Oliver Haja (Layout) Orginal Articles means, is expressly prohibited Ramona Rehbein, Elke Palzer Specially identified contributions without the prior written consent Chemgineering Technology 21 HS Koblenz 20 Umicore 17 of Thomson Reuters. Thomson Media Consultants (Litho) are the responsibility­ of the author. Manuscripts should Reuters shall not be liable for Corinna Matz-Grund be addressed to the editorial of- any errors or delays in content, Tel.: +49 6201 606 735 Reprints fice. Instructions for authors­ may or for any actions taken in reli- [email protected] Dr. Katja Habermüller Tel.: +49 6201 606 719 be requested from the publishing­ ance thereon. „Reuters“ and the Clariant International 7 IPCMF Irish Pharmaceut. & Chemical Universtiy of Warwick 4 company. We assume­ no liability Reuters Logo are trademarks of Thorsten Kritzer katja-carola.habermueller@ for unsolicited, submitted ma- Thomson Reuters and its affilia- Tel.: +49 6201 606 730 wiley.com nuscripts. Reproduction, including ted companies. © 2011 Thomson [email protected] Reuters. All rights reserved. Subscription/Reader Service: ­excerpts, is permitted only with the permission of the editorial CU Chemie Uetikon 14 Manufacturers Fed. 12 Warwick Manufacturing Group 4 Silvia Amend office and with citation of the Fax: +49 6201 606 700 source.The publishing­ company [email protected] is granted the exclusive, space Printed in Germany and content restricted right to ISSN 1861-0404 Dow Chemical 9 Kosek 12 Zach System 14

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