Long-Term Investment Lonza’S Aim Is Continuous Growth with Above-Average Profitability

9/2007 9/2007SeptemberSeptember

Management Production Shareholders Pay The N ewsPa P e r Enthusiasm for New Tech- for Return nologies – Ultrasonic Level on Assets for T he chemical aN d Measurements in Decline? Page 4 life scieN ces markeT s Page 21

y making several changes, Lonza strengthen our microbial bio- At the end of July, you present- S. Borgas: By taking over the tech business and help to extend ed a strategy for this business bio-pharma business of Cam- has focused its portfolio on Lonza’s leading position as a area. Could you explain this brex, we have strengthened the life-sciences market. After custom manufacturer. The oth- briefly? our existing microbial busi- B er one will form an independent ness and, in 2007, Lonza was previously divesting itself of its special Newsflow business unit for us under the S. Borgas: Our aim is to the market leader in microbial portfolio and chemical/industrial chem- name of Lonza Bioscience. position Bioscience as the lead- bio-pharmaceutics. In addition Ineos completes Borealis deal. Fol- ing supplier of services and bio to our large- and small-scale ical business, the Swiss company took lowing clearance by the European Lonza Bioscience, the larger of materials for the life-sciences existing capacity in Visp, Swit- Commision, Ineos has completed over the bio areas of the US-company the businesses purchased from industry. Lonza’s new business zerland, we have gained fur- the purchase of the Borealis petro- Cambrex, is a new business area area completely met all of our ther medium- and small-scale Cambrex in February 2007. So this year, chemicals business in Norway for for Lonza. What expectations do expectations in the first half production capacity as well as €290 million. The business includes for the first time, life sciences make up you have? of 2007 and, after excluding skills in the field of bio-pharma a 50 % interest in the Noretyl ethylene short-term integration costs, services. We have already re- over 90 % of the total turnover. Birgit cracker at Rafnes and three polyole- S. Borgas: Lonza Bioscience achieved a high margin. The vised our strategy for this area fin plants based at the nearby Bamble Megges and Michael Reubold asked deals in specialised consum- integration is running to plan. and communicated this in mid site. The cracker was commissioned in er goods for bio-production, We have divided Bioscience into May. Stefan Borgas, CEO of Lonza, about the 1977 and expanded by 100,000 t/a in such as media, serums, cell four business units: cell therapy, We will consolidate our US 2005, and currently has a capacity of integration of the new business areas cultures, analytical test kits and rapid testing systems, media, activities in this field in Hop- 557,000 t/a in addition to a propylene so on. Then there is the classic and cell discovery & molecular kinton, Massachusetts. This will and the strategy behind concentrating capacity of 80,000 t/a. contract manufacturing busi- biology. In order to ensure the take place in close collaboration E www.ineos.com on the life science markets. ness in a brand new technology: development of the bioscience and with the full agreement of cell therapy. Here we grow new business, we intend to open up our customers. We will addition- Cognis to sell Pulcra. Shortly after CHEManager Europe: Mr Borgas, therapeutics that in 5 – 10 years new business areas and access ally invest over US$30 million in separating the process chemicals Lonza took over the bio areas of will perhaps be able to cure some very promising technology Hopkinton, in order to support business from the core business Cog- Cambrex six months ago. What illnesses such as Parkinson’s platforms. our plans for growth in produc- nis is intensifying efforts to divest the was the strategy behind this or bone marrow incompatibil- tion and microbial process de- division, which is called Pulcra since acquisition? ity that have so far remained How will the area of microbial velopment. Through this expan- July 1. In order to find a partner or an untreatable. And Lonza would bio-pharmaceutics be organised sion we will be able to create up investor, Cognis has hired the M&A S. Borgas: We took over two ar- then be there as a production in the future, and how are you to 250 additional jobs. specialist Lincoln. Pulcra had sales eas from the American compa- Stefan Borgas expert, which is a further option integrating these locations into of €258 million in 2006 and has ny Cambrex. The first one will CEO of Lonza for the future. your existing business? E Continues Page 11 production sites or service centers in germany, Turkey, Italy, Spain, Mexico, Brazil, China, India, Indonesia and the US. Pulcra’s products are mainly used in the textile and leather industries. Competence And Dedication Rules Of The Game E www.cognis.com

Bayer to withdraw from NYSE. Bayer In Custom Manufacturing Size is Not All that Matters Distribution of Pharma Chemicals Requires Expertise follows Ciba, BASF and Eon as all companies are delisted from the New York r. Karl-Gerhard Seifert, who Reubold asked him about his ith external sales of Brenntag manage the Stock Exchange. The company expects € successful coexistence of some €15 million annual savings. The has been working in the strategies for AllessaChemie 6.1 billion in 2006 two such different fields management expects the delisting by chemical industry for 35 and AllessaSyntec, and how and over 300 sites as commodities and phar- early October. D W maceutical chemicals? E www.bayer.com years, resigned from his function as he appraises the current situ- around the world, Brenntag is a lead-

Managing Director for AllessaChemie ation of the global fine chemi- ing international company in the dis- W. Gierling: Brenntag’s OM Group buys Borchers. North many years of experi- American OM Group will buy additive in January. He is now an “active chair- cals industry. tribution of industrial and speciality ence with pharmaceuti- specialist Borchers from Lanxess. The man”, who discusses the strategy and cals customers in Europe transaction is due to the agreement chemicals. Building on its considerable CHEManager Europe: Dr. enables us to identify of German authorities. The closing future development of the company Seifert, you have been a market penetration in basic chemicals, customers’ needs well in of the deal is expected for the end with the managing directors. He is also driving force during both advance and offer serv- of September. Borchers employs 90 Brenntag is now focusing on its spe- management buy-outs, ices to optimise sourcing people and had total sales of €36 a member of the Advisory Board of which have resulted in ciality chemicals business in Europe, and production proc- million in 2006. AllessaSyntec. Dr. Seifert played an the formation of Alles- esses. With regard to E www.lanxess.com saChemie in the year and the field of pharmaceuticals is basic chemicals, we al- active role in the management buy- 2001 and AllessaSyntec in ready offer tailor-made Nestlé integrates Gerber. Nestlé fin- one of the strategic growth segments. outs (MBOs) leading to the creation of 2004. What has been the solutions for many of ishes the acquisition of US baby food starting position in both Michael Reubold asked Wilhelm Gier- our customers: in terms company Gerber after all government both companies. He combines a distin- cases, and were those of specifications, pack- authorities agreed. Nestlé acquired ling, European Business Development guished track record in international comparable? age size, labelling and Gerber from Novartis in April for US- Dr. Karl-Gerhard Seifert Wilhelm Gierling Chairman of AllessaChemie and member of Manager Pharma at Brenntag’s Ger- European Business Development Manager documentation, right up $5.5 billion. Nestlé is quickly looking senior management in the chemical the Advisory Board of AllessaSyntec K.-G. Seifert: The start- Pharma at Brenntag to disposal and auditing to integrate the new business, which industry and an excellent knowledge ing positions were simi- man central office in Muelheim/Ruhr of the manufacturer. For includes 4,500 employees. The take- lar, but not completely compa- CHEManager Europe: Mr. Gier- customers who require support over was effective September 1. of global finance and investment glomerate Hoechst AG (1988 – 1997), about the strategy for expanding their rable. AllessaChemie had been ling, in the distribution of with the synthesis of active in- E www.nestle.com environment. Prior to Allessa, he as CEO of Clariant (1997 – 1999) and formed in 2001 mainly as a cus- pharmaceuticals business, and the par- chemicals, there are very few gredients or want assistance tom manufacturing company full-line distributors with a bal- in developing formulations, we served as a member of the Board of head of Morgan Grenfell Private Equi- ticular demands this market makes on anced portfolio of industrial and Management of former German con- ty Ltd, Germany (1999– 2000). Michael E Continues Page 9 chemicals distributors. speciality chemicals. How does E Continues Page 14

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[email protected] Page 2 MARKETS & COMPANIES CHEManager Europe 9/2007

CONTENT

Front Page Meeting Pharma’s Future Challenges ...... 12 – 14 The Perfect Plant ...... 23 The Fine Chemical Industry Needs to Ensure that it is Able to Savings Through Higher Productivity and Improved Capacity

Long-term Investment ...... 1, 11 Supply the Pharma Market J. Harrison Lonza’s Aim is Continous Growth with Above-average Profitability A. Meudt, D. Feldker, W. Stahl, M. Widmann, D. Symonds, Glasslined Steel in Pharmaceutical Production ...... 24 Interview with Stefan Borgas, Lonza C. Fernandez, J. Die, P. Seufer-Wasserthal Universal chemical resistance combined with ideal cleaning properties Competence And Dedication ...... 1, 9 J. Reinemuth In Custom Manufacturing Size is Not All that Matters Energy 16 Interview with Dr. Karl-Gerhard Seifert, AllessaSyntec Using Energy More Efficiently...... 16 Pharma 2 5 – 2 9 How Chemistry and Chemicals Can Help Rules Of The Game...... 14 H. Pütter Distribution of Pharma Chemicals Requires Expertise Capitalise On Opportunities ...... 25 Interview with Wilhelm Gierling, Brenntag Global Pharma Market to Double by 2020 Logistics 17 – 2 0 A New Game Plan ...... 26 Strategic Thinking for the Life Sciences Industry Markets & Companies 1 – 7 Criterion For Equipment Service ...... 17

Uniform Standard for all European Service Stations of Cotac Europe GMP in the Centre of the European API Conference ...... 26 Shareholders Pay For ROA ...... 4, 5 Then Why Are We Still Living In a Margin-Only World? Key To Competitiveness ...... 17 Chips and “Snips” for Personalized Medicine...... 27 M. Rothschild, O. Braun Chemical Industry: Supply Chain Collaboration is Useful Trend Report: Life Sciences and Diagnostics H.-J. Bertschi A Global Public Health Crisis ...... 6 Ultimate Time and Cost Savings ...... 27, 28 Counterfeit Medicines Can Harm and Kill, WHO Takes Action Pharmaceuticals at the Right Temperature ...... 18 Outsourcing Drug Production D. Bagozzi Air Transportation of Pharmaceuticals Managed by Cargolux P. Mougin R. Bechthold

Cyclicality, Complexitiy and High Asset Intensity...... 7 Fine and Custom Chemistry without Boundaries ...... 28 What Makes Chemicals M&A Deals Different Plastics Rather Than Wood ...... 18 Ultimate Flexibility and Service S. Jones, O. Rauch Pharmaceutical Logistics Chain Prescribe Plastic Pallets Low-cost Production of Ultra-pure Media ...... 29

Supply Chain Champions ...... 19 Chemicals 8 – 15 Setting Standards for the Industry Prof. U. Thonemann BusinessPartners 29

Fine Chemicals Custom Manufacturing ...... 8 – 9 Keep Cool ...... 20 Satisfying the Needs of the Pharmaceutical Industry, Part I – Industrial Locations 30 – 3 1 Challenges and Solutions for the Micro-distribution of Temperature Markets and Products Sensitive Healthcare Products P. Pollak Fit For The Future ...... 30 – 31 A. Olpeter Chemical Industrial Parks in China

Icing On The Cake...... 10 Pharma Event CPhI Worldwide 2007 Comes to Milan Production 2 1 – 2 4 At A Glance 32 Dr. M. Reubold

Dueling Technologies ...... 21 Latest Research in Organic Electronics ...... 32 From Bench To Market ...... 10 The False Debate OEC-2007 in Frankfurt Interview with D. Bignell Long-term Investment ...... 11 Index ...... 32 Lonza’s Aim is Continous Growth with Above-average Profitability Maintenance Strategies for pH Systems ...... 22 Interview with Stefan Borgas Merck to Use pH Technology Imprint...... 32

Clinical Imaging Research Oxea Expands in New Markets

A new Clinical Imaging biomedical imaging in humans PET, an advanced medical Oxea, supplier of oxo-chemi- lion annual sales in Europe lubricants and plastics. The Send your Research Centre (CIRC) will using an extensive suite of imaging solution being devel- cal products, has opened new and North America. Oxea company was established be set up by the Agency for state-of-the-art imaging tools oped by Siemens. subsidiaries in Mexiko and manufactures solvents, poly- in March as a result of the articles and Science, Technology and from Siemens Medical Solu- Singapore. The company is ols, olefin derivatives and merger of European Oxo and Research (A*Star) and the tions. looking for additional mar- oxo-derivatives such as car- selected businesses of Cela- ideas to: National University of Singa- The centre will be one of kets in South America and boxylic acids and alkyl amines nese Chemicals. pore (NUS) to undertake clini- the few clinical research sites Asia, since it generates the for wide-ranging uses in the cal research and advanced in the world to use the MR-  www.a-star.edu.sg better part of its US-$1.7 bil- production of coatings, dyes,  www.oxea.com

Total Expands Leuna Refinery BASF Expands Catalyts Business

Total announces the construc- refinery. With a capacity of at the Normandy refinery in BASF is expanding its pro- tion, India is expecting a 20 % company includes €110 mil- tion of a 1-million t/a desul- 11.4 million t/a, the facility late 2006, the construction duction sites for automotive growth this year. To meet the lion for the catalyst business. furization unit at its Leuna has extensive deep conver- of a desulfurization unit and catalysts in China and India in demand, BASF will double The catalyst business came refinery in Germany. Sched- sion capacity allowing it to steam methane reformer at order to meet high demand in its capacity in Shanghai and to BASF due to the Engelhard uled for commissioning in process sour crude oil with- the Lindsey oil refinery in the these two countries. Accord- almost triple its capacity in acquisition last year and had fall 2009, the new unit will out producing heavy fuel oil. UK and desulfurization capac- ing to a BASF spokesperson, Chennai, India. No financial sales of €2.4 billion in the first Dr. Roy Fox supply the domestic market The investment is in line with ity extensions at the Feyzin, in the first six month of 2007, information about the invest- half year. with ultra-low sulphur home Total´s strategy of upgrading Flandres and Provence refin- sales numbers for new cars in ments were given, however Tel.: +49 6151 8090 128 heating oil. The €120 million its refinery base. In follows eries in France. China were up 26 %. In addi- the investment plan of the  www.basf.com [email protected] investment will enhance the on from the commissioning performance of the Leuna of a distillate hydrocracker  www.total.com Preclinical Services Facility in Quebec DSM Invests in Finnish Start-up Charles River Laboratories shall provide drug discovery ing part will be dependent on DSM Venturing announced ments in Sciona and Integra- markers and pathways, drug intends to build a new facil- and development services to market demand. The Sher- that is has made an equity gen, the deal is DSM’s third targets, and diagnostic con- ity in Sherbrooke, Quebec, pharmaceutical companies. brooke facility is ultimately investment of €2 million in investment in personalized tent. The investment follows a Canada, to support the com- When completed, the facility expected to employ 1,000 Jurilab, a Finnish company nutrition, one of DSM’s emerg- joint discovery program in the pany’s expanding preclinical will be app. 300,000 square people. specialized in the discovery of ing business areas selected in area of hypertension started a service business. Located in feet. Approximately 25 % will gene-disease associations and their company strategy. Juri- year ago. the newly constructed Sher- be constructed by the first their applications in health- lab has know-how in the iden- brooke Biomedical Park, quarter of 2009. Timing of care. Following the invest- tification of metabolic disease  www.dsm.com Charles River’s newest facility construction of the remain-  www.criver.com

Dr. Michael Klinge Tel.: +49 6151 8090 165 Drug Royalty Announces Acquisition Lanxess: New Plant in India

[email protected] Drug Royalty (DR) announced certain royalty recognition for the treatment of chronic Lanxess is to build a new ion uled to to start in 2010, with maceutical industries. The ion the purchase of 25 % of Enzon levels be met. Peg-Intron is hepatitis C. exchange plant in Gujarat, In- 200 employees being taken exchange business is part of Pharmaceuticals worldwide a Peg-enhanced version of dia. Construction work on the on. The plant will manufac- Lanxess’ performance chemi- interest in Peg-Intron for Schering-Ploughs alpha inter- €30 million site at the new ture products for industrial cals segment, which achieved US-$92.5 million. DR will also feron product, which is used Jhagadia Chemical Park is set water treatment and the gen- total sales of €1,812 million provide a US-$15 million mile- both as a monotherapy and to begin in the second quarter eration of ultra-pure water for in 2006. stone payment in 2012 should in combination with ribavarin  www.drugroyalty.com of 2008. Production is sched- the semiconductor and phar-  www.lanxess.com

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©2006 Dow Corning Corporation. Xiameter is a Trademark of the Dow Corning Corporation. Ad#A989 AV06084 page Markets & CoM panies CHEManager Europe 9/2007 Shareholders Pay For ROA Then Why Are We Still Living in a Margin-only World?

o one – particularly management accounting experts – would dispute N the old saying, “You can’t manage what you can’t measure.” Yet consider for a moment what is perhaps the most critical financial goal of manufacturing firms: return on assets (ROA). Investors rate the management performance of CEOs and CFOs of manufacturing firms largely by their ability to wring profits from the assets under their control.

As such, ROA is perhaps the pre- Michael Rothschild Oliver Braun mier metric of quarterly and annual results. But how many manufacturing firms are able to measure and their day-to-day, deal-by-deal choices Following this logic, it’s my conten- report on ROA at the transactional and trade-offs. Consequently, ROA is tion that, despite decades of massive level of detail? How many provide really nothing more than a high-level, investment in sophisticated informa- their middle-management ranks after-the-fact, end-of-the-quarter or tion systems, when it comes to the accurate, timely, detailed reporting end-of-the-year rearview mirror re- management accounting challenges of ROA by invoice line item, produc- port card on CFOs and CEOs. ROA facing managers of complex, asset- tion run, customer order, production can’t be managed because it can’t intensive manufacturing enterprises, line, etc.? Virtually none. be measured at the transactional an enormous gap remains between ROA may be the central financial level where profit-making business management’s need for actionable, goal of manufacturing firms, but decisions actually get made. If truth profit-optimizing information and even today’s “advanced” manage- be told, there is no effective linkage the capabilities of today’s “advanced” er returns in industries including US-$ 2 trillion sector of manufactur- a company finances its assets by both ment accounting systems, including between the key financial goal of systems. chemicals, steel, semiconductors, ing, I estimate that this problem caus- equity and debt, the more debt it car- sophisticated ABC costing and ERP manufacturing firms and their daily Further, I would argue that, as electronic components, paper, pack- es an annual profit shortfall of more ries, the more assets it can acquire systems, aren’t capable of calculat- operating decisions, because the stra- a direct consequence of this weak- aging, plastics, and several others, than US-$ 100 billion. In short, inade- with the same equity. This financial ing, reporting, or modeling ROA at a tegic ROA goal hasn’t been translated ness in management accounting often fall well below an acceptable quate and superficial measurement of leverage works wonders in boom level of detail sufficient to allow man- into a pragmatic, tactical measure of systems used by complex, asset-in- rate of return on investor capital. ROA allows misguided management times, but a high assets/equity ratio agers to know the ROA impacts of business activity. tensive manufacturers, sharehold- Viewed on the global scale, in this decisions that, in turn, are causing can lead to disaster when times get US-$ 100 billion per year to be frit- tough. tered away. That’s real money. Banks and other lenders allow roughly the same range of debt lev- What About Profit? erage for all competitors in a given business segment since all the players Before we drill into the details of this face similar operating risk. For exam- problem, let’s go back to basics. First, ple, as a group, electric utilities are consider how most well-trained busi- allowed to borrow heavily because ness people think about and define their revenues are highly predicta- the ultimate goal of any business: ble and their hard assets are easy to profit. If you were to ask a dozen ex- attach. Advertising agencies, by con- perienced managers seated around a trast, tend to carry little or no long- conference table to suggest the “best” term debt because their revenues are definition of profit, a few would un- highly uncertain and their key assets doubtedly mention gross margins, walk out the door every evening. and others would say operating earn- So even though the assets/equity ings or profit after tax, earnings per ratio, or debt leverage, is one of the quarter, earnings per share, return three components driving ROE, from on assets, or return on equity. Still an operational and competitive stand- others would show their sophistica- point the assets/equity ratio isn’t ter- tion by spouting an alphabet soup of ribly interesting. Debt leverage is a acronyms: ROS, EBITDA, ROCE, ROIC, matter of long-term financial strat- RONA, EVA, etc. Isn’t it remarkable egy, not daily business operations. that such a hodgepodge of labels, And since lenders tend to allow direct each with its own underlying defini- competitors similar ratios of debt tion, could reasonably be suggested leverage, there’s no way to consist- as the proper definition of profit? ently beat the competition’s return on Despite the confusion, none of equity by borrowing more heavily. these terms is wrong per se. Each one To run a business for optimal prof- can be a useful definition of profit un- itability, management must focus der certain circumstances. But there’s on the interaction between the two a hierarchy of profit definitions, and remaining ratios of the DuPont Profit not all definitions of profitability are Formula: profit/sales and sales/assets. created equal. Some measures of Multiplied together, these two ratios profit are far more important than compose ROA – the final measure of others. a management team’s effectiveness As any Wall Street analyst or in squeezing profits from the assets finance professor will attest, the under their control. ultimate measure of profitability is Of these two vital operating ratios, return on equity (ROE), the ratio of profit/sales, or margin, is the focus the current year’s profit divided by of enormous attention in every com- shareholders’ equity (all accumulat- pany. Indeed, whatever method is ed past profits), or profit/equity. The employed, much of management higher the ROE ratio, the faster total accounting boils down to an effort to shareholder equity – and stock price measure margins accurately. To cal- – will grow as each year’s profits are culate the profit margin generated by added to the stockpile of shareholder each unit shipped or each dollar of wealth. revenue sold, companies expend huge Unfortunately, even though achiev- resources attempting to accurately ing and sustaining a high ROE is the calculate the full cost of each prod- ultimate goal of any financial strat- uct type made. Financial controllers egy, the ROE ratio itself is too abstract and management teams pound away and removed from day-to-day busi- at costing studies, standards setting, ness operations to be of any practi- activity-based costing, margin anal- We are active in pharma cal use in measuring and managing ysis, overhead allocation, etc., all in profitability. To gain real control a relentless effort to make detailed over profitability, the profit/equity profit/sales figures as close to perfect ratio needs to be broken down into as possible. Formula for success Years of experience, a wealth of know-how Brenntag Holding GmbH its components. Brenntag is a leading distributor for the Longstanding partnerships with pharmaceuti- Pharma Europe Speed Counts pharmaceutical industry. We supply our cal customers enable us to understand the The Dupont Formula customers with a wide range of basic and industry’s needs, optimizing procurement Stinnes-Platz 1 No such claim can be made for the specialty products. It is our objective to and production processes. Brenntag provides 45472 Mülheim an der Ruhr The most elegant explanation of the equally crucial sales/assets ratio. make life easier for our clients by offering a natural and synthetic ingredients, used as Germany three components driving ROE is the Sales/assets, or the velocity ratio, comprehensive product line, global sourcing starting materials, processing aids, excipients, Phone: +49(0)208/7828-7013 famous “DuPont Profit Formula.” In measures the speed at which sales combined with technical support with inno- active ingredients and pharmaceutical inter- Fax: +49(0)208/7828-149 a nutshell, this formula shows how are generated from a company’s as- vative developments and distribution services. mediates. Market proximity and an experienced e-mail: [email protected] three financial measures interact set base. The arithmetic is simple and You can count on our traditionally high sales team position Brenntag to help custo- www.brenntag.com to yield the ultimate result of ROE unforgiving. Sales/assets, or velocity, standards of quality, safety and regulatory mers and suppliers capitalize on growth (see Figure 1, page 7). Control over is just as important as profit/sales, or compliance. opportunities rapidly and efficiently. all three ratios leads to control over margin, in determining a company’s the return on equity. ROA. Margin x Velocity = ROA. Low- Visit us: CPhI | Milan | 2nd – 4th October 2007 | Hall 12 | Booth 12F11 By far, the simplest to control is the margin products can yield exactly the nonoperating ratio, assets/equity. If a same ROA as high-margin products if company carries no long-term debt, those low-margin products are easier all of its assets must have been pur- to make and flow through the assets chased with shareholder equity, and its assets/equity ratio equals 1. But if E Continues page 5

[email protected] CHEManager Europe 9/2007 Markets & CoM panies page Shareholders Pay For ROA Then Why Are We Still Living in a Margin-only World?

E Continued page 4 in foregone profits at complex, asset- But most of the profitability gains intensive manufacturing firms. made possible by converting ROA at higher velocities. Conversely, high- Although the DuPont Profit For- from a year-end report card for sen- margin products won’t deliver a su- mula applies to all businesses, it’s ior executives into a robust daily perior ROA if those high margins are worth noting that a failure to accu- measurement and planning system offset by slow production velocities. rately measure and manage veloc- for all managers remain to be har- Maximizing a company’s ROA (and ity, or sales/assets, isn’t important in vested. I estimate that it will take ultimately ROE) requires managers to all businesses. For example, many nearly a decade before the leading understand in great detail the trade- service businesses require very few manufacturing organizations who offs between margin and velocity assets. In service businesses, there have already implemented this ap- product by product, order by order, is often no physical linkage between proach and the thousands who will customer by customer, etc. Knowing the volume of sales produced in a follow in their footsteps learn how to this, you would reasonably assume given time period and the value of fully exploit actionable ROA metrics that management teams of com- the assets owned. In service firms, as and put that missing US-$ 100 billion plex, asset-intensive manufacturers in all businesses, controlling margins a year on their bottom lines. None- already work just as hard measuring matters greatly, as does controlling theless, substantial profit and ROA and controlling the velocities of the the volume of sales produced. But if gains have already been achieved by products they make as they do meas- there’s no hard linkage between sales Fig. 1 advancing the tools of management uring and controlling the margins of and assets, monitoring sales/assets accounting to the point where com- those products. But this isn’t the case. isn’t terribly meaningful. time, Product A will generate US-$ prices? Do you really know how to dozens of leading manufacturers plex, asset-intensive manufacturers My experience, which stretches back At the other end of the economic 600 (3 x US-$ 200), while Product B commit your capacity optimally or have been eager to implement an can measure and manage at a trans- over a decade in a variety of indus- spectrum, however, in industries will also generate US-$ 600 (6 x US-$ what your best price bid should be on innovative management accounting actional level the ROA results share- tries at nearly 100 manufacturing where asset-intensive manufacturing 100). From an ROA standpoint – gen- a given day to a particular customer system that fully integrates velocity holders demand. firms around the world, indicates that firms struggle to maximize financial erating profit within a given period of for a specific product quantity? In a and margin metrics at the transac- management teams lack the man- results for shareholders, velocity mat- time from the assets – Products A and nutshell, unless you can measure, tional level. By allowing managers to agement accounting systems needed ters just as much as margin in deter- B are equally profitable. Product A’s report, and model both the velocity model the ROA implications of their to measure and control velocity in mining financial performance. This is higher margin does not translate into of production (sales/assets) at critical choices, before they make those conjunction with margin in order to especially true for “highly complex” a higher ROA. manufacturing steps and the margin choices, these companies have made maximize ROA. manufacturers who produce an ex- In the real world of modern man- (profit/sales) of each transaction to significant adjustments to their prod- E Contacts: Yet the CEO and CFO are extreme- tremely wide variety of products for ufacturing where complexity rules, compute transaction-level ROA, you uct mix, customer mix, asset mix, and Michael Rothschild, Oliver Braun ly focused on producing better ROA an array of customers from a number what are your optimal ROA choices simply can’t gain effective manage- pricing levels. Substantial increases Maxager Technology, Inc. results. Nonetheless, virtually no of different production facilities. In if are you making 2,000 or 20,000 ment control over your ultimate ROA in profitability, typically in the range Zumikon, Switzerland one down in the managerial ranks industries such as chemicals, steel, varieties of products on 40 different performance. of 3 % to 5 % of revenues, have been Tel.: +41/43/2880-671 of manufacturing firms, where all semiconductors, electronic compo- production lines in production runs Having long recognized that choic- reported, which has translated into [email protected] the day-to-day decisions are made, nents, packaging, and paper, a single of various quantities for 200 differ- es based solely on margin can’t, by notable improvements in ROA per- [email protected] knows precisely how their choices company will often produce hundreds, ent customers, all paying different definition, lead to maximum ROA, formance. www.maxager.com will impact ROA. In almost all manu- if not thousands or tens of thousands, facturing firms, the metric used by of distinct product items. marketing managers, sales manag- Integrated steel producers, for ers, production planners, and others instance, can adjust their multi-hun- to rank and evaluate daily operat- dred-million-dollar rolling mills to ing trade-offs is margin and margin make sheet steel in literally thousands only. of different thicknesses, widths, coat- Production velocity data exists ings, etc. In addition to producing flat somewhere in the manufacturing sheet steel for cars and appliances, organization, usually at the plant integrated steel makers also make level. But it has been too complex a bars, tubes, plates, rebar, etc. And challenge to link detailed production within each of these broad product velocity data to margin information categories are thousands of specific untries.SAP O&M MO25/07 in a rigorous way. Lacking access to product items – each with its own robust management accounting sys- unique characteristics, pricing, mar- DUPONT tems that can seamlessly integrate gin, production velocity, and, there- margin and velocity data, managers fore, ROA. have no choice but to rely on tradi- To optimize the ROA generated tional “margin only” metrics. each year from their hugely expensive production assets, management Decisions Based On Margins teams must make a bewildering array AP AG in Germany in APAG andseveral other co of choices with great precision every In a phrase, shareholders pay for day. Those choices can be grouped RUNS ROA. As I mentioned earlier, even into four key areas, which are shown though ROA doesn’t equal margin, in Figure 2. the vast majority of operating deci- Let’s take a very simple example sions are based on margin. Further, of a product mix choice (see Figure even though Margin x Velocity = ROA, 3). Would we rather accept a new or- virtually no manufacturers have der for US-$ 1,000 of Product A with systems that can properly take into its US-$ 200 margin above material account the role of velocity in driving costs or an order for US-$ 1,000 of ademarksandregistered trademarks S of SAP. ROA. In my view, the absence of man- Product B with its US-$ 100 margin? agement accounting tools that deal On a margin-only basis, we clearly with the pivotal role of velocity and prefer Product A. But what if we management’s consequent inability to know that Product A, because of its adroitly manage velocity in conjunc- physical properties, is half as fast as tion with margin are the root cause B when running through the rolling of roughly US-$ 100 billion per year mill? In one minute of rolling mill 7 SAP 7 AG.SAP andthe SAP logo are tr

1. What products should wie make? Product Mix

2. Who should we sell them to? Customer Mix

3. Where should we produce them? Asset Mix PontNemoursde ©200and Company.

4. How much should we charge? Strategic Pricing

Fig. 2 are registered trademarks E.I.of du ® andHomeWrap ® DuPontOval Logo, Tyvek

Fig. 3: With margin on the vertical axis and production velocity on the horizontal axis, this profit topographical map shows contour lines that represent levels of cash/profit per minute and ROA. The bubbles can represent products, customers, markets, sales regions or production facilities. The profit topo map shows a dramatically different view of profitability than a “margin only” approach. High-margin products, customers etc. may be significantly less profitable and generate lower ROA than ones which are produced faster and generate higher profit per minute (e.g. C vs. D).

[email protected] MARKETS & COMPANIES

Page 6 MARKETS & COMPANIES CHEManager Europe 9/2007 A Global Public Health Crisis Counterfeit Medicines Can Harm and Kill, WHO Takes Action

harmaceutical products are a fundamental component of P both modern and traditional medicine. It is essential that such products are safe, effective, and of good quality. Counterfeit medicines are part of the broader phenom- enon of substandard pharmaceuticals – medicines manufactured below established standards of quality and therefore dangerous to patients’ health and ineffective for the treatment of diseases. The difference is that counterfeits are deliberately and fraudulently mislabeled with respect to identity or source. Counterfeiting occurs both with branded and generic products and counterfeit medicines may include products with the correct sale in pharmacies did not con- i.e. less than 1 % of market reduced to a minimum. Phar- tain any active ingredients.) value. maceuticals, however, are not ingredients but fake packaging, with Occasionally, there can be “high  Many countries in Africa a standard commodity, since the wrong ingredients, without active quality” fakes that do contain and parts of Asia and Latin consumers and prescribers are the declared active ingredi- America have areas where unable independently to assess ingredients or with insufficient active ent. In all cases, contents of more that 30 % of the medi- their quality, safety and efficacy ingredients. counterfeits are unreliable be- cines on sale can be counter- and the consequences of inef- cause their source is unknown feit, while other developing fective regulatory oversight can Counterfeit medicines repre- or vague and always illegal. markets have less than 10 %; be deadly to patients. sent an enormous public health Fake drugs can cause harm to overall, a reasonable range is challenge. Anyone, anywhere patients and sometimes lead to between 10 % and 30 %. A Lucrative Business in the world, can come across death.  Many of the former Soviet medicines seemingly packaged Any kind of product can be republics have a proportion of Counterfeiting of medicines is in the right way, in the form of and has been counterfeited: counterfeit medicines which a hugely lucrative business due tablets or capsules that look expensive lifestyle and anti- is above 20 % of market value to the continued high demand right, but which do not contain cancer medicines, antibiotics, – this falls into the developing for medicines and low produc- the correct ingredients and, in medicines for hypertension and country range. tion costs. (The majority of the the worst case scenario, may cholesterol lowering drugs, hor-  Medicines purchased over the counterfeiters apprehended be filled with highly toxic sub- mones, steroids and inexpensive Internet from sites that con- so far carried out their activi- stances. In some countries, this generic versions of simple pain ceal their physical address ties in ordinary households, is a rare occurrence, in others, killers and antihistamines. In are counterfeit in over 50 % small cottage industries, or in it is an everyday reality. developing countries the most of cases. backyards.) The absence of Counterfeit medicines range disturbing issue is the common deterrent legislation in many from random mixtures of harm- availability of counterfeited Internet Sales countries also encourages ful toxic substances to inactive, medicines for the treatment counterfeiters since there is no useless preparations. (In 2001, The issue of domestic production of drugs in developing countries has provoked lively discussion since the end of the 1970s. of life-threatening conditions In industrialized countries fear of being apprehended and in South-East Asia, a Wellcome Several international organizations supported efforts to establish pharmaceutical industries in these countries in order to such as malaria, tuberculosis and to some extent in poor- prosecuted. Trust study revealed that 38 % reduce dependence on imported drugs and improve access to quality drugs. and HIV/AIDS. er countries, Internet-based When prices of medicines of 104 anti-malarial drugs on (Photo: Ethiopian Pharmaceuticals Manufacturing Factory (EPHARM), Addis Ababa, Ethiopia, © WHO/P. Virot) The regular use of substand- sales of pharmaceuticals are are high and price differentials ard or counterfeit medicines a major source of counterfeit between identical products can lead to therapeutic failure medicines, threatening those exist there is a greater incen- or drug resistance. In some who seek cheaper, stigmatized tive for the consumer to seek cases, it can lead to death. or unauthorized treatments. medicines outside the normal Fine Chemicals Some Internet pharmacies supply system. In many coun- REACH-Handbook Estimates are completely legal opera- tries the official supply chain The IndustryDr.and Corneliathe BoberskiBusiness (Publisher) tions, set up to offer clients fails to reach many communi- Peter Pollak The US based Centre for Medi- convenience and savings. They ties, especially in rural areas. cines in the Public Interest require patient prescriptions Poverty, and the lack of an of- Fine Chemicals: The IndustrWiny and athe Businessfree iscopy!a predicts that counterfeit drug and deliver medications from ficial supply chain, are major comprehensive reference on one of the most exciting and sales will reach US$75 billion government licensed facilities. factors in creating markets for challenging segments of the modern chemical industry. It globally in 2010, an increase of Illegal Internet pharmacies sell counterfeit products. Quick readers of CHEManager and/or CHEManager Europe win a handbook containing documents, more than 90 % from 2005. medications without prescrip- comprises descriptions of the leading fine chemical checklists and guidelines for implementing REACH compliance. Although precise and de- tions and use unapproved or Combat Counterfeit Medicines companies, the products, the markets, and the technologies tailed data on counterfeit counterfeit products. In some on a global basis.ISBN: 978-3-86586-126-9 medicines is difficult to obtain, cases, Internet pharmacies are In order to mobilize aware- Employees, suppliers,www.forum-verlag.comconsumers, investors, students and estimates range from around operated internationally and ness and action in the fight educators, media representatives, public officials, and anyone 1 % of sales in developed coun- sell products that have an un- against fake drugs, in Febru- Email your full business address to: [email protected] else with an interest in fine chemicals will find valuable tries to over 10 % in developing known or vague origin. ary 2006, WHO created the Catchword: REACH countries, depending on the first global partnership known information and concrete examples to help explain the Or find us at the CPhI 2007 in Milan to enter the drawing. 978-0-470-05075-0 - 234pp. geographical area. Counterfeiting Grows More as the International Medicinal intricacies of theTheindustr winners willy. beAuthor published inDr the. POctobereter issuePollak, of CHEManagerone of Europe. March 2007 - $99.95 $84.96 Currently, the sources of Sophisticated Products Anti-Counterfeiting the foremost authorities in the field, examines not only information available include Taskforce (IMPACT). IMPACT Use Promotion Code POLL7 where the industry is now, but also where it is heading. reports from non-governmental Trade in fake medicines is is comprised of all 193 WHO to receive 15% off featured title. organizations, pharmaceutical more prevalent in countries Member States on a voluntary Ordering Information companies, national drug regu- with weak drug regulation basis and includes interna- To order: Call 1-877-762-2974 in North America latory and enforcement author- and enforcement, scarcity or tional organizations, enforce- ities, ad hoc studies conducted erratic supply of basic medi- ment agencies, national drug or +44 (0) 1243 779 777 in Rest of the World www.wiley.com on specific geographical areas, cines, unregulated markets regulatory authorities, customs and occasional surveys. and unaffordable prices. But and police organizations, non- Counterfeiting is greatest in as counterfeiting becomes more governmental organizations, Meet us at CPhl 2007 in Milan Miryam Preußer Corinna Matz-Grund Dr. Michael Reubold those regions where the regu- sophisticated, these products associations representing phar- Tel.: +49 6151 8090 134 Tel.: +49 6151 8090 217 Tel.: 001 201 748 8810 (USA) latory and legal oversight is are also being exported or re- maceutical manufacturers and [email protected] [email protected] [email protected] www.gitverlag.com weakest. exported and, thus, are increas- wholesalers, health profession-  Most industrialized countries ingly present even in better als and patients’ groups. These with effective regulatory sys- controlled markets. groups have joined to improve tems and market control (e.g. Some policy-makers have coordination and harmonization USA, most of EU, Australia, argued that drug regulation across and between countries Canada, Japan, New Zea- represents an unnecessary so that eventually the produc- land) have a low proportion, barrier to trade and should be tion, trading and selling of fake ACTIVE medicines will cease. PHARMACEUTICAL

INGREDIENTS Upcoming events on this topic  Contact: Generics / Orphan Drugs / International Conference: Developing Effective Legislation to Com- Daniela Bagozzi bat Counterfeit Medical Products, Lisbon/Portugal, 10 – 11 December World Health Organization, Geneva, Advanced Intermediates CU Chemie Uetikon GmbH 2007 Switzerland Raiffeisenstraße 4 Tel.: +41 22 791 4544 77933 Lahr / Germany Annual General Meeting: Providing the Results of IMPACT’s First Year, [email protected] Lisbon/Portugal, 12 – 14 December 2007 Telefon: +49 (0) 7821 / 585-0 www.who.int International Conference Using Technology to Combat Counterfeit Chemicals – Telefax: +49 (0) 7821 / 585-230 Medical Products: Technology developers meet manufacturers and The WHO publishes reports Made in Germany E-Mail: [email protected] Internet: www.uetikon.com regulators, Singapore, 13 – 15 February 2008 of counterfeit medicines from around the world on its website  www.who.int/impact (e.g. fact sheet N°275).

[email protected] CHEManager Europe 9/2007 Markets & CoM panies page Cyclicality, Complexity and High Asset Intensity What Makes Chemicals M&A Deals Different?

recent KPMG firms’ workshop with chemical industry profession- A als highlighted that, in addition to the generic challenges of transactions in the manufacturing sector, particular issues which make deals in the chemical industry challenging include: The cyclicality of the business, the high asset intensity of the industry, and the complexity of production sites – with potential environmental issues and resulting carve-outs.

M&A activity in the Chemical indus- Simon Jones Olga Rauch try appears to be correlated to the performance of financial markets as professional sales processes. Very Private Equity View can be seen by the comparison of the few assets are sold nowadays without Dow Jones index with the total value some form of auction. The chemicals sector is of interest of Chemical deals (figure 1). Multiples are expected to remain to many PE houses. However, many many PE houses are wary to invest the chemicals industry, in addition to are understood, the easier it is to The majority of M&A transactions at the current already high levels or PE houses are cautious with re- in the chemical industry presents an the generic challenges of any trans- price the target and win the deal. are in specialty chemicals and formu- increase slightly due to stiff bidding spect to the industry as only a few opportunity for those organizations action. In order to conduct success- lations. Private equity (PE) activity in competition and PE activity. High have the resources and background with the necessary experience and ful M&A transactions in the chemical this segment has further boosted M&A liquidity of private equity funds as to understand its business models. resources: fewer of their peers com- industry, an in-depth understanding E Contact: activity, thereby increasing company well as increasing activity of players Additionally, chemicals companies’ pete for these assets. of the target markets, its customers Dr. Simon Jones valuations, which has been beneficial from the Middle East but also India long investment cycles and pay- and product pricing mechanisms is Dr. Olga-Tatjana Rauch for potential sellers. Private equity and China is impacting prices of as- back periods are difficult to fund. Summary required. The underlying dynamics of KPMG Deutsche Treuhand-Gesellschaft AG, is estimated to have accounted for sets in the European chemicals M&A Understanding the cyclical nature these markets, as well as the interac- Frankfurt/Main, Germany about 23 % of deal value from 2000 market. of the relevant markets is critical, Deals in the chemical industry are tions and substitutions between dif- Tel.: +49/69/9587-2412 to 2006 (source: David Ingles Consult- and the expert will attempt to play not very different from deals in ferent types of chemicals, should be Fax: +49/1802/11991-4971 ing, July 2007). Companies active in Reach Impact the cycles. Investors are well ad- other manufacturing industries. assessed to identify market potential [email protected] “value-added” chemicals are attrac- vised to be very selective in this sec- At the same time, there are some and deal-breakers at an early stage. [email protected] tive to PE investors for a number of For many investors issues related tor. At the same time, the fact that peculiarities to M&A processes in The more thoroughly those factors www.kpmg.de reasons, including to environmental, health and safety  attractive levels of profitability due risks inherent to the chemical in- to innovative technology / products dustry is challenging in terms of the addressing niche applications with transaction and contract. Typically, a high entrance barriers PE fund will discount value if unex-  size of deal/enterprise value in pected issues arise; the less certainty, the appropriate range for a large the lower the price. number of mid-cap PE houses Reach, in force since June 1, 2007,  shorter investment cycles com- is seen by some to be merely a cost pared to commodity chemicals issue. Buyers of chemical businesses companies might reduce a purchase price be- Maximum flexibility. Absolute accuracy.  typically lower exposure to the cause of Reach. However, it is unlikely chemicals cycle, as customers are to be a deal-breaker. Siemens electromagnetic flowmeters often active in less cyclical markets Some Reach considerations in themselves, and companies are not M&A activity are: directly exposed to the volatility of  How far has Reach planning and the oil & gas markets. implementation progressed in the company? Identifying M&A Opportunities  What costs are expected and when for the Reach implementation? Consolidation is expected to continue  How will Reach impact the com- with some industry segments still be- pany’s business? Positively (higher ing very fragmented. In particular, revenues due to less competition for specialty and fine chemicals will of- a certain substance) or negatively fer opportunities with overcapacities, (lower revenues due to unregis- restructuring needs, and price pres- tered substances or discontinuation sure from China/Asia. Further focus of products)? on core businesses leads major chem-  How well are the effects of Reach ical players to continue making small accounted for in the implementa- or medium-sized adjustments of their tion planning (e.g. on IT systems, portfolios, providing attractive oppor- supply chain, tax, and account- tunities for potential buyers. Finally, ing)? succession in small or mid-sized family-owned companies may also present Integration/Carve-out an opportunity for M&A. Integration is challenging – as it is in Pricing And Cyclicality many industries. Speed, a well-prepared business and integration plan, Cyclicality and relocation are gener- and rigorous project management are ally regarded as part of the continued critical. challenges in the chemical industry. The chemicals industry is a com- A chemicals business may be subject plicated network of supplier and cus- to a number of cycles, including those tomer relationships; the industry is its of downstream industries (e.g. auto- own largest customer. Due to mergers motive, etc.). Industry and financing or acquisitions, suppliers may become cycles need to be taken into account competitors and/or customers. Other in the cash flow, which directly affects industries, such as the automotive the price a financial investor is willing industry, have linear supply chains, to pay for an asset. where materials flow only in one Valuation multiples have steadily direction, typically do not have these increased for chemicals assets over types of interactions. The integration the past few years, from typically 4 of a chemicals business may therefore to 5 times EBITDA to typically 8 to be more complex with respect to the 9 times EBITDA (in some segments carve-out of the acquired business even 10 to 12 times EBITDA). This and the restructuring of a new entity E20001-F210-P730-X-7600 increase in prices is attributed to as interactions in the market, within recent high levels of liquidity in the the business and operations may be market as well as the increasingly obvious; others more subtle.

Total value of M&A transactions and Dow Jones Index Fig. 1 sitrans f annual average 80.000 14.000

70.000 62.000 12.000 47.500 Siemens electromagnetic flowmeters keep on delivering 60.000 42.600 10.000 44.800 Flexibility and accuracy are critical in today’s production environment. 50.000 36.700 45.100 That’s why more companies choose Siemens electromagnetic flowmeters 37.600 8.000 40.000 for demanding applications. 30.200 28.300 24.600 6.000 Value ($m) Value 30.000 SITRANS F M electromagnetic flowmeters are engineered for harsh and hazardous

4.000 Index Dow Jones environments with high temperatures and aggressive medias. They also offer a 20.000 modular flexibility that combines the highest level of safety, quality and reliability 10.000 2.000 with low cost of ownership. 0 0 Want to know more? Talk to Siemens. We’ve got the technology to keep 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 your business flowing. Value Dow Jones Index Lose Less. Keep More. Note: M&A transactions in the Chemical industry > US$ 50 million For more information just fax us: (+49) 911/978-3321 (Infoservice AD/Z 1321) Source: David Ingles Consulting, Bloomberg, www.siemens.com/processautomation • www.siemens.com/flow KPMG analysis, July 2007 © GIT VERLAG

[email protected] Page ChemiC als CHEManager Europe 9/2007 CHEManager Europe 9/2007 ChemiC als Page Fine Chemicals Custom Manufacturing Competence And Dedication Satisfying the Needs of the Pharmaceutical Industry, Part I – Markets and Products In Custom Manufacturing Size is Not All that Matters

he marketing activities of a maceutical and the generics E Continued Page 1 chemical companies as custom- industry. Whereas the former ers and have a full pipeline of fine chemical company have requires primarily “exclusives”, with an existing portfolio of custom synthesis projects. to be structured in a way to i.e. tailored pharmaceutical fine products for its main customer In addition, we have devel- T chemicals (PFCs), which are Clariant. Our main target has oped a portfolio of our own allow the most efficient pursuit of its supplied under custom manu- subsequently been to use third- products using the logo Alles- main activities, namely custom manufacturing agreements, the latter party custom manufacturing san, and several of them have buys API-for-Generics, i.e. com- to stabilise the company and already been launched, with facturing of pharmaceutical fine chem- mercially available active phar- expand our business. more to come in the coming icals and supply of API-for-Generics. maceutical ingredients (APIs) AllessaSyntec, which has its months. from stock. The substantial roots in the central R&D depart- The turnover of AllessaSyn- This affects the business processes all differences between these two tec has been significantly the way from identifying business op- categories of products/services increased in the last three provided by the Fine Chemical years. Well-known companies portunities along a customer’s product industry are described in table “Even venture have contracted AllessaSyntec life cycle to pricing, and the selection 2. to develop processes and pro- The situation is further capital has to duce precursors of APIs, sophis- of target markets and distribution illustrated by examining/scru- ticated intermediates for the channels. As the majority of fine tinizing the four “entry gates” obey social electronics industry, or other or windows of opportunity that specialty chemicals, which usu- chemicals are still produced in-house emerge during the life cycle of responsibilities” ally require multistep, complex by the pharmaceutical and other spe- a drug (figure 1). syntheses and/or modern tech- The number of possible prod- nologies. cialty chemical companies there is a uct candidates, the chances of ment of the former Hoechst AG, AllessaSyntec operates a large number of flexible multi-purpose facilities that can be quickly interconnected to complex units to perform highly complex, multi-stage syntheses huge reservoir of opportunities. Part I success of the developmental at the time of the MBO was part Despite the formal independ- drug to make it to the mar- of Siemens-Axiva and focused ence of both companies they are K.-G. Seifert: AllessaSyntec has K.-G. Seifert: We are cur- global companies to work with companies, but I would certain- and guarantee the benefit of of this three-part series discusses the ketplace and the chances of a on process optimisation and approaching potential markets special strengths in the fields rently talking about co-opera- us as partners. A consequent ly welcome the reemergence of all participants: the company, customers and markets (mainly the specific Fine Chemical company production of complex interme- together. What is the particular of low-temperature syntheses, tions with companies who have customer focus and reliability a large, strong Fine Chemicals the workforce, and the public to get the business all change diates. Previous to the MBO, the point in the combination of Alles- phosgenations, high-pressure technologies to complement our are essential, too. concern in Europe, preferably welfare. global pharmaceutical industry), and substantially along the product market did not recognise this saChemie and AllessaSyntec? reactions and many more. The portfolio. But it is too early to in Germany. First beginnings the product the fine chemicals indus- life cycle. The first three op- potential sufficiently in the then plant formerly used to report disclose details. are already starting to be vis- Which requirements have to be portunities comprise a period of existing business environment. K.-G. Seifert: AllessaChemie directly to the R&D board ible. fulfilled and which other factors try provides for these markets. approximately 20 years, during The broad technology portfo- and AllessaSyntec are legally member of Hoechst AG, and Both AllessaChemie and Alles- “I would certainly are crucial for a successful man- which the drug is protected by lio of 50 years within Hoechst separate companies, who are therefore no costs and efforts saSyntec are based in the Rhein- Private Equity companies agement buy-out? patents. They are the domain of convinced us that we would connected by joint service were spared to achieve an ex- Main area. However, most mar- welcome the are playing a more and more custom manufacturing (CM), i.e. succeed in establishing the departments in Marketing and traordinarily high technological ket analysts think that a critical important role in the consoli- K.-G. Seifert: This depends on the antonym of outsourcing. At company as a stand-alone busi- Sales as well as Administration. standard. Just an example: low mass and the presence in North reemergence of a dation of the market. What do many factors. Especially impor- the beginning there are thou- ness in close cooperation with In their markets they are oper- temperature synthesis at indus- America and Asia are critical you feel about the participation tant are a reasonable financial large, strong Fine sands of development drugs The Pharmaceutical industry constitutes by far the most important customer base for the Fine Chemical industry. As the majority of fine chemicals are still produced in-house by the pharmaceutical and other spe- AllessaChemie. ating as cooperating partners, trial scale was started over 15 factors for success in the fine of venture capital at chemical structure and a valuable tech- in the R&D laboratories of the cialty chemical companies there is a huge reservoir of opportunities for Custom Manufacturing Organisations. Photo: Bayer HealthCare who complement each other years ago, long before others chemical market. What are the companies? world’s pharmaceutical industry How have both companies posi- very nicely in their technologies have utilised this technology. advantages of being a smaller, Chemicals concern in … with only a minuscule chance of goods sold (COGS), become niche technologies, External also prides itself of a number of companies, namely big (> 20 obviously is most attractive. tioned themselves in their mar- and production capabilities. Based on the know-how gained locally based company com- K.-G. Seifert: Having worked “The euphoria for any individual molecule to a major concern and therefore issues, such as legal and mar- of sizeable generics compa- companies, sales > US-$5 bil- Also, companies are easy to kets, and how has the business This enables our customers to early on, there are many ben- pared to large, globally acting Europe, preferably in myself from 1999 to 2000 for a make it to the marketplace and more cost effective second gen- ket aspects require support nies: Merck KGaA, Ratiopharm, lion/year), medium (50 – 100, identify. However, competition been doing so far? choose themselves which of the efits for the customers, be it the conglomerates? private equity company, I cer- about China is therefore ultimately requiring eration processes are urgently from third party specialists, e.g. Schwarz Pharma and Stada. Ja- US-$0.5 – 5 billion/year) and for business is very strong and technological strengths to use hardware used or the chemical Germany” tainly welcome the participa- substantial quantities of PFCs. wanted. This presents a chance specialized agents. pan ranks third. There are two small pharma (4 – 5,000, < US- procurement is well aware of K.-G. Seifert: AllessaChemie and eventually to combine. and process know-how. K.-G. Seifert: The Rhein-Main tion of venture capital in many fading quite a bit” The emphasis is on quickly pro- for a new supplier. Japanese pharmaceutical com- $50 million/year) have advan- its purchasing power. Only Fine has had to enter a restructuring Moreover, AllessaChemie Complementary to those area in Germany has tradition- cases. There are quite a few ducing small scale samples by The fourth gateway is linked Target Markets panies among the top twenty, tages and disadvantages and Chemical companies that have a process right from the begin- can produce large volumes up special technical abilities, the ally been the base of one of the Consolidation in the Fine Chemi- examples in which financial simple processes without eco- to the decline phase of the life namely Takeda and Astellas should be considered as target proven track record of superior ning. Regretfully, our staff had to several thousand tons per scientists of AllessaSyntec can leading chemical companies cals sector is in full swing. How investors have managed com- nology portfolio. The most nomical or ecological consider- cycle, when patent expiration is In a “customer category/geog- (formed by the merger of Fuji- customers. performance and maybe even to be reduced to about 1,000 year. AllessaSyntec is typically draw on the experience of over worldwide, Hoechst AG, of do you assess the current situa- panies more successfully than important factors for our com- ations. During the subsequent approaching. In order to fence raphy” matrix, pharmaceuticals sawa and Yamanouchi in 2005). In terms of potential busi- achieved “preferred supplier” people – as estimated for the end active in market segments from a thousand scale-ups during which AllessaChemie and Alles- tion, and which changes in the their predecessors. pany were having a team, which Peter Pollak, Ph.D. clinical development, chances off generic competition, it be- and the United States are the As the sourcing priority rapidly ness volume, “big pharma” status have a realistic chance of 2007. The production had to 10 kg to about 50 tons per year. the last decades – and not the saSyntec are small successors. industry do you expect in the However, as a manager is obsessed with the successful of a commercial success becomes a question of survival most attractive combination decreases in the sequence cap- ranks highest with a share of to be considered for new busi- be concentrated mostly at our This large range results in many least: they are flexible. High Technologies of Hoechst have coming years? who has participated for many development of both companies, In the Fine Chemicals industry, come gradually more tangible. for the originator company to for Fine Chemical companies tive production >> national fine about 55 – 60 % of the total PFC ness. Fechenheim site. In addition, advantages for our customers, personal and technological been successfully transferred years in the German model of and having a workforce which marketing is understood prima- Phase II of clinical develop- develop the most economic in terms of target markets. As chemical companies >> foreign market (mainly “exclusives”), Small or virtual pharma typi- we are still operating a plant for example in high flexibility flexibility forms the basis for to our company and are being K.-G. Seifert: The current trend employee participation and supports the management buy- rily as an operational function. ment constitutes a pivotal point. process. Business opportuni- there are only few domestic fine chemical companies it is “medium pharma” ranks sec- cally do not have established in Offenbach and a production regarding production and sup- the achieved successes. This expanded. We are running our for consolidation will, at least has successfully cooperated out wholeheartedly. As such, it comprises business Pharmaceutical companies lock ties surface both with the ethi- suppliers, the market is also at- a difficult market to penetrate ond with a share of about 40 % products and a limited new facility in Frankfurt-Griesheim. ply. flexibility has been preserved plants with highly dedicated and in my opinion, last a few more with workers’ representatives, development, sales, pricing, in the final route to be used for cal pharma company which tractive for non-U.S.-based Fine for the latter! Some softening of (mainly API-for-Generics), product pipeline. Therefore, Our business segment dealing and expanded by the current excellently trained workforce. years. We are currently observ- resulting in the prosperity of distribution and promotion. As manufacturing their new APIs. holds the patents and attempts Chemical companies the “insular attitude” has been “small pharma” comes last they offer few business possibil- with third-party manufacturing Which are the main features organisation. Our people have had tradition- ing that the euphoria about Chi- the companies, I do condemn the life sciences, first of all the The intellectual property of the to keep at least a portion of Nine of the top twenty noticed recently. with about 10 % (see table 3). ities on an individual company has been expanding from zero that in your opinion differenti- ally a high qualification and na is fading quite a bit, which is the practices of some financial pharmaceutical industry con- product, and generally also the the market, and with generic pharma companies are based Within the global pharma On a “business potential per basis. This is compensated by at the start of AllessaChemie ate AllessaSyntec from other Are you planning to expand your competence. We have the ability good for the European chemi- investors. Even venture capi- E www.allessa.com stitutes by far the most impor- manufacturing process, belongs houses which are preparing in the US, accounting for just industry, all three categories company” basis, “big pharma” the large number of companies to about €25 Mio. turnover in fine chemicals companies? What portfolio by investments, and if to decide and act quickly. Those cal industry. I cannot and do tal has to obey social respon- tant customer base for the Fine to the customer during this first for the launch of generic ver- over 50 % of the US-$350 billion (well over 1,000 in the US alone) 2007. We have acquired major are the core technologies? yes, where? all are criteria which convince not want to comment on other sibilities. Thus, we can serve CPhI: Hall 12, Booth E39 Chemical industry (see table 1), part of the drug life cycle. The sions. The latter are vying for sales. Europe, where four out and their lack of manufactur- the organization and tasks of supplier is bound buy an exclu- market share – and also looking of the top ten ethical pharma, ing assets and expertise. Also the marketing function, or, in a sive supply agreement. for competitive suppliers. This and the majority of the generics the number of approvals for Ethical pharma Generics broader sense, the company as The third gateway is located is then the domain of the API- companies are headquartered, New Chemical Entities, NCEs, a whole, should be designed in at the peak level of the drug pro- for-Generics producers. follows at the second place. originating from virtual phar- order to best satisfy the phar- duction volume. Drugs that are The combination of the CM The United Kingdom and Swit- ma companies has surpassed 3 maceutical industry’s needs. A introduced in the same thera- and API-for-Generics activities zerland are most important. that of the top twenty for the Volume Fine Chemicals Custom Manufacturing fundamental distinction has to peutic class by competitors start can lead to better capacity uti- In England, both AstraZeneca first time in 2003. A substantial be made between the needs of to negatively impact on the mar- lization. The production sched- and Glaxo SmithKline are large 4 desk work is required in order the ethical, or innovative phar- ket share. At this point, costs ules for exclusive products are purchasers both for custom to identify developmental drugs Satisfying the Needs of the Pharmaceutical Industry, Part I - Markets and Products rigid, on the other hand there manufacturing services and that have both a good chance of 2 Table 1: Size of Fine Chemicals Markets in Developed Countries is more freedom in planning API-for-Generics. Switzerland is success and a fit with the tech- E Continued Page drugs were not marketed by top customers are often located in directly from their headquar- agent’s interest in short term ing both the familiarity  Product categories. Contract campaigns for API-for-Gener- not only the home for Novartis nologies of a given Fine Chemi- twenty pharma companies in different countries, or even con- ters, or indirectly through a profit maximization. For this with the culture in general manufacturing projects, Total A.I. Captive Merchant 1 ics. Whereas it makes sense to and Roche, but also Sandoz, cal company. Also, its business above average, the competition 2005), but are important users tinents, and because transpor- local office – or with the help reason, agents generally are and the extent of business which require multi line and Life Pharmaceuticals $60 bn $35 bn $25 bn form separate business units the world’s number 2 generics is at risk, once the small phar- for business is smaller, its proof API-for-Generics. tation costs are almost negligi- of an agent or distributor. The hardly interested in business experience in particular. If multi level contacts are bet- Sciences Agrochemicals $10 bn $6 bn $4 bn Time for marketing “exclusives” and company. With the merger of 0 5 10 15 20 Years ma company licenses its new curement is less hard-boiled, ble. For managing their interna- total control of the supply chain development activities, which a European Fine Chemical ter managed through direct Various Specialty Chemicals $15 bn $10 bn $5 bn Development Maturity Pat. “generics” respectively, produc- Bayer Health Care and Scher- drug to big pharma. On the and last but not least depends tional business, Fine Chemical is the main argument in favour generate commissions after company wants to enter the contacts; API-for-Generics Total Fine Chemicals Industry $85 bn $50 bn $35 bn I II III exp. Distribution Channels tion should not be subdivided ing AG to form Bayer Schering Launch positive, small pharma’s share totally on outsourcing. companies have to choose the of an in-house solution. Also, it several years only. Japanese market for the first are preferably channelled A.I. = Active Ingredients except for large Fine Chemical Health Care in 2006, a German Source: Pollak © GIT VERLAG of the total business is growing Mid pharma plays a modest International commerce pre- most appropriate distribution avoids a conflict between the The main advantages of an time, the services of an agent through agencies, whose as- companies. pharmaceutical company made role in blockbuster drugs (all vails in the Fine Chemical in- channels. Basically, they can do principal’s goal of a long term agent are his long standing are almost mandatory. On sistance for local registration Table 2: Characteristics of “Exclusives” and “Generics” As most generic companies it again to the top tier. Germany Figure 1: Product Opportunities along the Drug Life Cycle E Continues Page but 4 out of 103 blockbuster dustry, because suppliers and it with their own means – either profit optimization and the network of customer contacts the other hand, if the same is a valuable asset. are only formulators and mar- and his knowledge of the local company has gained many Exclusives Generics keters, they rely more heavily conditions. This is particularly years of experience selling As in actual business life not all (= Custom Manufacture) (= API-for-Generics) on sourcing from third parties important if customers and its products and services to elements coincide, a compro- Business Model Project Driven Product Driven than ethical pharmaceutical More than the parts for higher efficiency suppliers are part of different the USA through an agent, mise has to be made. A solu- Products Advanced Intermediates End Products (Apis) companies, most likely about and improved purity. Intermediates from cultures, like East and West. it will consider setting up its tion is gaining ground, whereby Pricing “Buttom-Up” Market Price 70 % versus about 40 %. Because BASF for life sciences and lots more. Japanese trading houses, such own office. the key accounts are served Distribution Channels Direct Agent Global. Innovative. Valuable. Reliable. Customers Ethical Pharma Generic Pharma low prices are the raison d’être as Mitsubishi Corp., Mitsui,  Actual, respectively potential directly from the headquarter, Companies Companies for generics and the entry bar- www.basf.de/intermediates Sumitomo Corp. and Watan- size of the business. If there the other customers requiring Competitors Captive Production Asian Producers riers are low, marketing of API- [email protected] abe, have a vast experience in is only a small sales potential contract manufacturing serv- 1 – 2 Suppliers/Product for-Generics is an uphill fight bridging the gap. By represent- in a given country, let’s say in ices by the local office, and the Competitive Advantage Project Management Price, Quality, DMF against a ruthless competition, ing different companies, agents Taiwan, an agent is the distri- generic companies by special- Origin of Know-how Customer Supplier especially from Asian countries. are able to offer a large range bution channel of choice. The ized agents. Technical Assistance Close Cooperation Sporadic Also, customer loyalty is almost of products and services. They minimum sales proceeds that Legal Assistance Sporadic Intensive non existent. Marketing must are in a position to “open the are needed to justify a local E Contact: Production Planning On Order Min./Max. Stock first of all identify potential doors” at accounts that other- representative is about US-$5 Peter Pollak, Ph.D. target molecules among more wise would not be accessible, million per year. Fine Chemicals Business Consultant, Table 3: Breakdown of the Merchant Fine Chemicals Market than two thousand existing and particularly for small companies  Customer categories. Big Reinach, Switzerland forthcoming API-for-Generics with a limited product/services Pharma companies, which Tel.: +41 61 713 8158 Type of Company Position on the Drug Life Cycle on the basis of existing leads, range. The disadvantages are are mainly customers for Fax: +41 61 713 8159 Patented Generic Acess Point 41 the market size and growth, potential conflicts of interest exclusive products and [email protected] Phase II/III Phase IV the competitive situation (a.o. because of overlapping prod- which have extensive logistics Access Point 21 Access Point 31 the “first-to-file” doctrine), uct ranges of principals and departments of their own, Part II (Pricing) will be published “Big Pharma” $1.0 bn $5.0 – 5.5 bn $1.5 – 2.0 bn conflicts with existing business, Meet Us at the CPhI in Milano concerns regarding leakage of prefer to deal directly with in CHEManager Europe 10/2007 “Medium Pharma” < $0.5 bn $2.0 – 2.5 bn $3.0 – 3.5 bn the fit with in-house capabili- intellectual property. the supplier, regardless of its (October) “Small Pharma” > $0.5 bn $0.5 bn – ties, the patent situation, etc. For the selection of the most location. Mid sized and vir- The article is based on the book Subtotals $2.0 bn $8.0 bn $5.0 bn Booth No. G06, Hall 11, October 2–4, 2007 Building Blocks $5.0 bn2 Within the technical criteria, suitable distribution channel, tual pharma companies wel- ‘Fine Chemicals – The Industry Grand Total $ 20 bn products needing only pots- the following elements should come the logistic assistance and the Business’ by Peter Pol- 1 see figure 1 and-pans for their manufacture be considered: from agents, for example for lak, John Wiley & Sons 2007 2 do not require production under cGMP should be ignored in favour of  Knowledge of the country custom clearance and local (www.wiley.com/chemistry), Source: adapted from: Prochemics, Zürich (April 2004) those requiring one or more of destination, compris- transportation. ISBN 978-0-470-05075-0

[email protected] [email protected] Page ChemiC als CHEManager Europe 9/2007 CHEManager Europe 9/2007 ChemiC als Page Fine Chemicals Custom Manufacturing Competence And Dedication Satisfying the Needs of the Pharmaceutical Industry, Part I – Markets and Products In Custom Manufacturing Size is Not All that Matters he marketing activities of a maceutical and the generics E Continued Page 1 chemical companies as custom- industry. Whereas the former ers and have a full pipeline of fine chemical company have requires primarily “exclusives”, with an existing portfolio of custom synthesis projects. to be structured in a way to i.e. tailored pharmaceutical fine products for its main customer In addition, we have devel- T chemicals (PFCs), which are Clariant. Our main target has oped a portfolio of our own allow the most efficient pursuit of its supplied under custom manu- subsequently been to use third- products using the logo Alles- main activities, namely custom manufacturing agreements, the latter party custom manufacturing san, and several of them have buys API-for-Generics, i.e. com- to stabilise the company and already been launched, with facturing of pharmaceutical fine chem- mercially available active phar- expand our business. more to come in the coming icals and supply of API-for-Generics. maceutical ingredients (APIs) AllessaSyntec, which has its months. from stock. The substantial roots in the central R&D depart- The turnover of AllessaSyn- This affects the business processes all differences between these two tec has been significantly the way from identifying business op- categories of products/services increased in the last three provided by the Fine Chemical years. Well-known companies portunities along a customer’s product industry are described in table “Even venture have contracted AllessaSyntec life cycle to pricing, and the selection 2. to develop processes and pro- The situation is further capital has to duce precursors of APIs, sophis- of target markets and distribution illustrated by examining/scru- ticated intermediates for the channels. As the majority of fine tinizing the four “entry gates” obey social electronics industry, or other or windows of opportunity that specialty chemicals, which usu- chemicals are still produced in-house emerge during the life cycle of responsibilities” ally require multistep, complex by the pharmaceutical and other spe- a drug (figure 1). syntheses and/or modern tech- The number of possible prod- nologies. cialty chemical companies there is a uct candidates, the chances of ment of the former Hoechst AG, AllessaSyntec operates a large number of flexible multi-purpose facilities that can be quickly interconnected to complex units to perform highly complex, multi-stage syntheses huge reservoir of opportunities. Part I success of the developmental at the time of the MBO was part Despite the formal independ- drug to make it to the mar- of Siemens-Axiva and focused ence of both companies they are K.-G. Seifert: AllessaSyntec has K.-G. Seifert: We are cur- global companies to work with companies, but I would certain- and guarantee the benefit of of this three-part series discusses the ketplace and the chances of a on process optimisation and approaching potential markets special strengths in the fields rently talking about co-opera- us as partners. A consequent ly welcome the reemergence of all participants: the company, customers and markets (mainly the specific Fine Chemical company production of complex interme- together. What is the particular of low-temperature syntheses, tions with companies who have customer focus and reliability a large, strong Fine Chemicals the workforce, and the public to get the business all change diates. Previous to the MBO, the point in the combination of Alles- phosgenations, high-pressure technologies to complement our are essential, too. concern in Europe, preferably welfare. global pharmaceutical industry), and substantially along the product market did not recognise this saChemie and AllessaSyntec? reactions and many more. The portfolio. But it is too early to in Germany. First beginnings the product the fine chemicals indus- life cycle. The first three op- potential sufficiently in the then plant formerly used to report disclose details. are already starting to be vis- Which requirements have to be portunities comprise a period of existing business environment. K.-G. Seifert: AllessaChemie directly to the R&D board ible. fulfilled and which other factors try provides for these markets. approximately 20 years, during The broad technology portfo- and AllessaSyntec are legally member of Hoechst AG, and Both AllessaChemie and Alles- “I would certainly are crucial for a successful man- which the drug is protected by lio of 50 years within Hoechst separate companies, who are therefore no costs and efforts saSyntec are based in the Rhein- Private Equity companies agement buy-out? patents. They are the domain of convinced us that we would connected by joint service were spared to achieve an ex- Main area. However, most mar- welcome the are playing a more and more custom manufacturing (CM), i.e. succeed in establishing the departments in Marketing and traordinarily high technological ket analysts think that a critical important role in the consoli- K.-G. Seifert: This depends on the antonym of outsourcing. At company as a stand-alone busi- Sales as well as Administration. standard. Just an example: low mass and the presence in North reemergence of a dation of the market. What do many factors. Especially impor- the beginning there are thou- ness in close cooperation with In their markets they are oper- temperature synthesis at indus- America and Asia are critical you feel about the participation tant are a reasonable financial large, strong Fine sands of development drugs The Pharmaceutical industry constitutes by far the most important customer base for the Fine Chemical industry. As the majority of fine chemicals are still produced in-house by the pharmaceutical and other spe- AllessaChemie. ating as cooperating partners, trial scale was started over 15 factors for success in the fine of venture capital at chemical structure and a valuable tech- in the R&D laboratories of the cialty chemical companies there is a huge reservoir of opportunities for Custom Manufacturing Organisations. Photo: Bayer HealthCare who complement each other years ago, long before others chemical market. What are the companies? world’s pharmaceutical industry How have both companies posi- very nicely in their technologies have utilised this technology. advantages of being a smaller, Chemicals concern in … with only a minuscule chance of goods sold (COGS), become niche technologies, External also prides itself of a number of companies, namely big (> 20 obviously is most attractive. tioned themselves in their mar- and production capabilities. Based on the know-how gained locally based company com- K.-G. Seifert: Having worked “The euphoria for any individual molecule to a major concern and therefore issues, such as legal and mar- of sizeable generics compa- companies, sales > US-$5 bil- Also, companies are easy to kets, and how has the business This enables our customers to early on, there are many ben- pared to large, globally acting Europe, preferably in myself from 1999 to 2000 for a make it to the marketplace and more cost effective second gen- ket aspects require support nies: Merck KGaA, Ratiopharm, lion/year), medium (50 – 100, identify. However, competition been doing so far? choose themselves which of the efits for the customers, be it the conglomerates? private equity company, I cer- about China is therefore ultimately requiring eration processes are urgently from third party specialists, e.g. Schwarz Pharma and Stada. Ja- US-$0.5 – 5 billion/year) and for business is very strong and technological strengths to use hardware used or the chemical Germany” tainly welcome the participa- substantial quantities of PFCs. wanted. This presents a chance specialized agents. pan ranks third. There are two small pharma (4 – 5,000, < US- procurement is well aware of K.-G. Seifert: AllessaChemie and eventually to combine. and process know-how. K.-G. Seifert: The Rhein-Main tion of venture capital in many fading quite a bit” The emphasis is on quickly pro- for a new supplier. Japanese pharmaceutical com- $50 million/year) have advan- its purchasing power. Only Fine has had to enter a restructuring Moreover, AllessaChemie Complementary to those area in Germany has tradition- cases. There are quite a few ducing small scale samples by The fourth gateway is linked Target Markets panies among the top twenty, tages and disadvantages and Chemical companies that have a process right from the begin- can produce large volumes up special technical abilities, the ally been the base of one of the Consolidation in the Fine Chemi- examples in which financial simple processes without eco- to the decline phase of the life namely Takeda and Astellas should be considered as target proven track record of superior ning. Regretfully, our staff had to several thousand tons per scientists of AllessaSyntec can leading chemical companies cals sector is in full swing. How investors have managed com- nology portfolio. The most nomical or ecological consider- cycle, when patent expiration is In a “customer category/geog- (formed by the merger of Fuji- customers. performance and maybe even to be reduced to about 1,000 year. AllessaSyntec is typically draw on the experience of over worldwide, Hoechst AG, of do you assess the current situa- panies more successfully than important factors for our com- ations. During the subsequent approaching. In order to fence raphy” matrix, pharmaceuticals sawa and Yamanouchi in 2005). In terms of potential busi- achieved “preferred supplier” people – as estimated for the end active in market segments from a thousand scale-ups during which AllessaChemie and Alles- tion, and which changes in the their predecessors. pany were having a team, which Peter Pollak, Ph.D. clinical development, chances off generic competition, it be- and the United States are the As the sourcing priority rapidly ness volume, “big pharma” status have a realistic chance of 2007. The production had to 10 kg to about 50 tons per year. the last decades – and not the saSyntec are small successors. industry do you expect in the However, as a manager is obsessed with the successful of a commercial success becomes a question of survival most attractive combination decreases in the sequence cap- ranks highest with a share of to be considered for new busi- be concentrated mostly at our This large range results in many least: they are flexible. High Technologies of Hoechst have coming years? who has participated for many development of both companies, In the Fine Chemicals industry, come gradually more tangible. for the originator company to for Fine Chemical companies tive production >> national fine about 55 – 60 % of the total PFC ness. Fechenheim site. In addition, advantages for our customers, personal and technological been successfully transferred years in the German model of and having a workforce which marketing is understood prima- Phase II of clinical develop- develop the most economic in terms of target markets. As chemical companies >> foreign market (mainly “exclusives”), Small or virtual pharma typi- we are still operating a plant for example in high flexibility flexibility forms the basis for to our company and are being K.-G. Seifert: The current trend employee participation and supports the management buy- rily as an operational function. ment constitutes a pivotal point. process. Business opportuni- there are only few domestic fine chemical companies it is “medium pharma” ranks sec- cally do not have established in Offenbach and a production regarding production and sup- the achieved successes. This expanded. We are running our for consolidation will, at least has successfully cooperated out wholeheartedly. As such, it comprises business Pharmaceutical companies lock ties surface both with the ethi- suppliers, the market is also at- a difficult market to penetrate ond with a share of about 40 % products and a limited new facility in Frankfurt-Griesheim. ply. flexibility has been preserved plants with highly dedicated and in my opinion, last a few more with workers’ representatives, development, sales, pricing, in the final route to be used for cal pharma company which tractive for non-U.S.-based Fine for the latter! Some softening of (mainly API-for-Generics), product pipeline. Therefore, Our business segment dealing and expanded by the current excellently trained workforce. years. We are currently observ- resulting in the prosperity of distribution and promotion. As manufacturing their new APIs. holds the patents and attempts Chemical companies the “insular attitude” has been “small pharma” comes last they offer few business possibil- with third-party manufacturing Which are the main features organisation. Our people have had tradition- ing that the euphoria about Chi- the companies, I do condemn the life sciences, first of all the The intellectual property of the to keep at least a portion of Nine of the top twenty noticed recently. with about 10 % (see table 3). ities on an individual company has been expanding from zero that in your opinion differenti- ally a high qualification and na is fading quite a bit, which is the practices of some financial pharmaceutical industry con- product, and generally also the the market, and with generic pharma companies are based Within the global pharma On a “business potential per basis. This is compensated by at the start of AllessaChemie ate AllessaSyntec from other Are you planning to expand your competence. We have the ability good for the European chemi- investors. Even venture capi- E www.allessa.com stitutes by far the most impor- manufacturing process, belongs houses which are preparing in the US, accounting for just industry, all three categories company” basis, “big pharma” the large number of companies to about €25 Mio. turnover in fine chemicals companies? What portfolio by investments, and if to decide and act quickly. Those cal industry. I cannot and do tal has to obey social respon- tant customer base for the Fine to the customer during this first for the launch of generic ver- over 50 % of the US-$350 billion (well over 1,000 in the US alone) 2007. We have acquired major are the core technologies? yes, where? all are criteria which convince not want to comment on other sibilities. Thus, we can serve CPhI: Hall 12, Booth E39 Chemical industry (see table 1), part of the drug life cycle. The sions. The latter are vying for sales. Europe, where four out and their lack of manufactur- the organization and tasks of supplier is bound buy an exclu- market share – and also looking of the top ten ethical pharma, ing assets and expertise. Also the marketing function, or, in a sive supply agreement. for competitive suppliers. This and the majority of the generics the number of approvals for Ethical pharma Generics broader sense, the company as The third gateway is located is then the domain of the API- companies are headquartered, New Chemical Entities, NCEs, a whole, should be designed in at the peak level of the drug pro- for-Generics producers. follows at the second place. originating from virtual phar- order to best satisfy the phar- duction volume. Drugs that are The combination of the CM The United Kingdom and Swit- ma companies has surpassed 3 maceutical industry’s needs. A introduced in the same thera- and API-for-Generics activities zerland are most important. that of the top twenty for the Volume Fine Chemicals Custom Manufacturing fundamental distinction has to peutic class by competitors start can lead to better capacity uti- In England, both AstraZeneca first time in 2003. A substantial be made between the needs of to negatively impact on the mar- lization. The production sched- and Glaxo SmithKline are large 4 desk work is required in order the ethical, or innovative phar- ket share. At this point, costs ules for exclusive products are purchasers both for custom to identify developmental drugs Satisfying the Needs of the Pharmaceutical Industry, Part I - Markets and Products rigid, on the other hand there manufacturing services and that have both a good chance of 2 Table 1: Size of Fine Chemicals Markets in Developed Countries is more freedom in planning API-for-Generics. Switzerland is success and a fit with the tech- E Continued Page drugs were not marketed by top customers are often located in directly from their headquar- agent’s interest in short term ing both the familiarity  Product categories. Contract campaigns for API-for-Gener- not only the home for Novartis nologies of a given Fine Chemi- twenty pharma companies in different countries, or even con- ters, or indirectly through a profit maximization. For this with the culture in general manufacturing projects, Total A.I. Captive Merchant 1 ics. Whereas it makes sense to and Roche, but also Sandoz, cal company. Also, its business above average, the competition 2005), but are important users tinents, and because transpor- local office – or with the help reason, agents generally are and the extent of business which require multi line and Life Pharmaceuticals $60 bn $35 bn $25 bn form separate business units the world’s number 2 generics is at risk, once the small phar- for business is smaller, its proof API-for-Generics. tation costs are almost negligi- of an agent or distributor. The hardly interested in business experience in particular. If multi level contacts are bet- Sciences Agrochemicals $10 bn $6 bn $4 bn Time for marketing “exclusives” and company. With the merger of 0 5 10 15 20 Years ma company licenses its new curement is less hard-boiled, ble. For managing their interna- total control of the supply chain development activities, which a European Fine Chemical ter managed through direct Various Specialty Chemicals $15 bn $10 bn $5 bn Development Maturity Pat. “generics” respectively, produc- Bayer Health Care and Scher- drug to big pharma. On the and last but not least depends tional business, Fine Chemical is the main argument in favour generate commissions after company wants to enter the contacts; API-for-Generics Total Fine Chemicals Industry $85 bn $50 bn $35 bn I II III exp. Distribution Channels tion should not be subdivided ing AG to form Bayer Schering Launch positive, small pharma’s share totally on outsourcing. companies have to choose the of an in-house solution. Also, it several years only. Japanese market for the first are preferably channelled A.I. = Active Ingredients except for large Fine Chemical Health Care in 2006, a German Source: Pollak © GIT VERLAG of the total business is growing Mid pharma plays a modest International commerce pre- most appropriate distribution avoids a conflict between the The main advantages of an time, the services of an agent through agencies, whose as- companies. pharmaceutical company made role in blockbuster drugs (all vails in the Fine Chemical in- channels. Basically, they can do principal’s goal of a long term agent are his long standing are almost mandatory. On sistance for local registration Table 2: Characteristics of “Exclusives” and “Generics” As most generic companies it again to the top tier. Germany Figure 1: Product Opportunities along the Drug Life Cycle E Continues Page but 4 out of 103 blockbuster dustry, because suppliers and it with their own means – either profit optimization and the network of customer contacts the other hand, if the same is a valuable asset. are only formulators and mar- and his knowledge of the local company has gained many Exclusives Generics keters, they rely more heavily conditions. This is particularly years of experience selling As in actual business life not all (= Custom Manufacture) (= API-for-Generics) on sourcing from third parties important if customers and its products and services to elements coincide, a compro- Business Model Project Driven Product Driven than ethical pharmaceutical More than the parts for higher efficiency suppliers are part of different the USA through an agent, mise has to be made. A solu- Products Advanced Intermediates End Products (Apis) companies, most likely about and improved purity. Intermediates from cultures, like East and West. it will consider setting up its tion is gaining ground, whereby Pricing “Buttom-Up” Market Price 70 % versus about 40 %. Because BASF for life sciences and lots more. Japanese trading houses, such own office. the key accounts are served Distribution Channels Direct Agent Global. Innovative. Valuable. Reliable. Customers Ethical Pharma Generic Pharma low prices are the raison d’être as Mitsubishi Corp., Mitsui,  Actual, respectively potential directly from the headquarter, Companies Companies for generics and the entry bar- www.basf.de/intermediates Sumitomo Corp. and Watan- size of the business. If there the other customers requiring Competitors Captive Production Asian Producers riers are low, marketing of API- [email protected] abe, have a vast experience in is only a small sales potential contract manufacturing serv- 1 – 2 Suppliers/Product for-Generics is an uphill fight bridging the gap. By represent- in a given country, let’s say in ices by the local office, and the Competitive Advantage Project Management Price, Quality, DMF against a ruthless competition, ing different companies, agents Taiwan, an agent is the distri- generic companies by special- Origin of Know-how Customer Supplier especially from Asian countries. are able to offer a large range bution channel of choice. The ized agents. Technical Assistance Close Cooperation Sporadic Also, customer loyalty is almost of products and services. They minimum sales proceeds that Legal Assistance Sporadic Intensive non existent. Marketing must are in a position to “open the are needed to justify a local E Contact: Production Planning On Order Min./Max. Stock first of all identify potential doors” at accounts that other- representative is about US-$5 Peter Pollak, Ph.D. target molecules among more wise would not be accessible, million per year. Fine Chemicals Business Consultant, Table 3: Breakdown of the Merchant Fine Chemicals Market than two thousand existing and particularly for small companies  Customer categories. Big Reinach, Switzerland forthcoming API-for-Generics with a limited product/services Pharma companies, which Tel.: +41 61 713 8158 Type of Company Position on the Drug Life Cycle on the basis of existing leads, range. The disadvantages are are mainly customers for Fax: +41 61 713 8159 Patented Generic Acess Point 41 the market size and growth, potential conflicts of interest exclusive products and [email protected] Phase II/III Phase IV the competitive situation (a.o. because of overlapping prod- which have extensive logistics Access Point 21 Access Point 31 the “first-to-file” doctrine), uct ranges of principals and departments of their own, Part II (Pricing) will be published “Big Pharma” $1.0 bn $5.0 – 5.5 bn $1.5 – 2.0 bn conflicts with existing business, Meet Us at the CPhI in Milano concerns regarding leakage of prefer to deal directly with in CHEManager Europe 10/2007 “Medium Pharma” < $0.5 bn $2.0 – 2.5 bn $3.0 – 3.5 bn the fit with in-house capabili- intellectual property. the supplier, regardless of its (October) “Small Pharma” > $0.5 bn $0.5 bn – ties, the patent situation, etc. For the selection of the most location. Mid sized and vir- The article is based on the book Subtotals $2.0 bn $8.0 bn $5.0 bn Booth No. G06, Hall 11, October 2–4, 2007 Building Blocks $5.0 bn2 Within the technical criteria, suitable distribution channel, tual pharma companies wel- ‘Fine Chemicals – The Industry Grand Total $ 20 bn products needing only pots- the following elements should come the logistic assistance and the Business’ by Peter Pol- 1 see figure 1 and-pans for their manufacture be considered: from agents, for example for lak, John Wiley & Sons 2007 2 do not require production under cGMP should be ignored in favour of  Knowledge of the country custom clearance and local (www.wiley.com/chemistry), Source: adapted from: Prochemics, Zürich (April 2004) those requiring one or more of destination, compris- transportation. ISBN 978-0-470-05075-0

[email protected] [email protected] Page 10 ChemiC als CHEManager Europe 9/2007 Icing On The Cake Pharma Event CPhI Worldwide 2007 Comes to Milan

ave you ever been to Milan That’s a foretaste of what 200). The biggest Western ex- you might expect in Milan in a hibitors’ countries are Germa- during Fashion Week? Have few weeks, but since it’s CPhI, ny, Italy and the U.S. (around you ever booked a hotel there’s no way to avoid it. From 100 each), France (70), UK (60), H 2 – 4 October, the world’s largest and Switzerland (50). room or tried to get around town by and most important gathering But racking one’s brains taxi or public transportation that time for suppliers of pharmaceuti- about the vast number of Asian cal fine chemicals (PFC) will exhibitors and visitors is a moot of the year? You will love it – unless take place at Fiera Milano’s point. Accept the fact that you suffer from a fear of crowds, Rho Exhibition Centre. The [quote] “the Asia-Pacific market conference and exhibition on evolves more quickly than many also known as enochlophobia. But pharmaceutical ingredients and had anticipated” and that a big still, you tell yourself it won’t be that intermediates is a must-attend portion of the chemical industry event every year, and this time in the dawn of the 21st century unpleasant because during Fashion the organisers chose Milan as is shifting to China and India, Week, a big part of the crowd consists the location. in particular. With one third of The importance of the CPhI, the world’s population in these of pretty models. Think again! underlined by the attribute two countries quickly emerging “Worldwide”, lies in its compul- from developing to developed First, you won’t be surrounded sion for manufacturers of fine nations, this region is building by models on the train during chemicals and custom manu- up a demand for resources and rush hour – they go to their facturing organisations (CMO) products unprecedented in the shows by limousine. And second, to exhibit in order to get a big history of this planet. the fashion community won’t piece of the pharma cake. A However, as everybody be the only crowd that will be cake whose real indulgence is knows, this trend does not only there: The Champions League its icing, that is the consider- open new markets for the tra- match Internazionale vs. PSV able number of visitors from ditional chemical industry, but Eindhoven at Guiseppe Mea- big pharma who are involved in also generates new competi- zza stadium on 2 October will sourcing and buying decisions. tion. Have you ever wondered see another 70,000-plus crowd However, the size of CPhI what has become of the fellow afoot; or rather, in cars, busses Worldwide seems to have gone chemistry students from China and trains, and many of them in beyond the scope of being man- and India who once shared the hotels and restaurants, too. ageable. The fact that more lab bench with you? Chances Can it get any worse? Yes, it than half of the almost 1,800 are that they went back to their tive pricing, but also acknowl- Competition for PFC manu- ness climate for custom manu- didates for biocatalysis.” Saltigo can: Add another 20,000 visi- exhibitors is from Asia tempt- countries, became company edges the crucial role of other facturers and CMOs not only facturers.” accedes “in the near future we tors – most of them from Asia – ed several Western attendees founders or at least research factors that their customers arises from emerging countries, According to SAFC “the ma- expect to see an increasing to that already packed city and to request a name change to chemists, and that you might have to consider, including but also from their customers jor issue, as far as the drug use of enzymes, which can picture them trying to make it “CPhI China in Europe”. China meet them at CPhI and even consistency, quality standards, themselves. “Pharmaceutical pipeline is concerned, is the manufacture complex mol- in time to their business meet- represents by far the largest source chemicals from their strong GMP compliance, and companies getting under cost trend of large pharma to con- ecules more effectively than ings at the far end of town. You number of exhibitors (approx. companies. rapid access to customer serv- pressure will always turn to tinually decrease its R&D spend, traditional organic chemistry.” guessed it: it’s CPhI time! 730) followed by India (approx. For our CPhI preview, we ice and regulatory support.” insourcing to cover as much of while increasingly in-licensing And Archimica, too, expects asked industry experts a few Consolidation of the chemi- their fix costs as possible.” its technology from biotech.” “increasing importance of areas business- and market-related cal industry is closely linked So, how is the business cli- And Saltigo hopes “that the like organometallics, asymmet- questions to find out what’s to globalisation. Not only as mate and what is the phar- pharmaceutical industry will ric synthesis using especially on their minds these days. You Western companies are seek- maceutical industry doing? overcome its recent weakness enzyme-type catalysts.” Photo: Pixelio already read one of the state- ing to maintain their competi- Archimica currently observes in innovation and return to its There is a lot more to talk ments, marked as quote in tive edge by restructuring their “a positive development of the previous performance.” about, but we want to let the the passage above. The most portfolios through acquisitions PFC market, including another On the technology side, bio- industry experts speak for important topics according to and divestments, but also since outsourcing wave from several catalysts and biocatalytic proc- themselves. Enjoy reading the our survey are globalisation, “major western CMOs [are] big players.” Saltigo agrees that esses are on the rise. Codexis interviews on pages X/Y and consolidation, outsourcing, being acquired by Indian com- “most pharmaceutical compa- explains “benefits derived from feel free to comment on the regulation and innovation – all panies,” as Codexis points out. nies have announced major efficient biocatalysis technol- topics covered there by e-mail- adding up to the overall state of Therefore, “globalisation investments in biologics facili- ogy can be important drivers ing us at chemanager-europe@ the industry. remains key.” According to ties and cut back on investing in the decision to outsource. gitverlag.com. And last but not “Globalisation will continue SAFC, “international compa- in small molecules production. Pharma pipelines now include least, have a safe trip to Milan. to affect the fine chemicals in- nies now have to look very This has led to more outsourc- more complex chiral molecules, The team from CHEManager dustry,” according to Saltigo. carefully at their business ing of [active pharmaceutical which present synthetic difficul- Europe will be around, too. Staying with the topic of glo- strategies when setting up fa- ingredients] APIs and interme- ties using traditional chemis- balisation for another moment, cilities in India and China, with diates and an improved busi- tries. These are excellent can- Dr. Michael Reubold Pfizer CentreSource recognises particular emphasis on scale of CPhI Worldwide 2007 will take place in Milan, Italy, October 2 – 4 “the value of globally competi- operations and cost efficiency. For example, in India, it may now be too late for a company to enter the market in the hope From Bench To Market of gaining a cost advantage, Fluorinated Building Blocks, Peptides and Oligonucleotides with Indian manufacturing ReseaChem provides services in the areas of syntheses, costs now virtually equivalent Solvay Organics specialises in to those of the US and Europe. organic molecules for a wide isolations and NMR-analytics. While China remains attractive range of uses. Innovative mol- on cost, there are still on-going ecules, materials and solutions concerns regarding IP control are designed to help clients Custom synthesis services and quality. develop new applications. The Indeed, the quality of APIs In addition to the synthesis of organic compounds of any kind, we produce reference substances for main areas of operation that from China is a serious con- will also be presented at CPhI your analytic purposes, which are not commercially available. We offer a broad range of services in cern, and fake drugs that were 2007 are fluorinated building synthesis of single compounds for R&D purposes to explorative synthesis of compounds or libraries. In consumed in or exported from blocks, peptides and oligonucle- our laboratories we have the required infrastructure in order to carry out most organic syntheses at a China have been linked to a otides, as well as process devel- range of some milligrams up to kilograms. Especially in collaboration with Pitsch NucleicAcid a unique significant number of deaths. opment and custom synthesis of expertise in the synthesis, analysis and isolation of modified DNA/RNA building block is offered, drawn The WHO article on counterfeit active ingredients. from decades of research experience and the synthesis of different pestizide metabolites. medicines (page 5 of this issue) About 50 percent of all newly on the body’s cellular functions tide with a disulphide bridge, shows that this is not only a developed drugs and 20 percent and open up a number of treat- Eptifibatide is the active ingre- problem of China, but of virtu- of agrochemicals contain fluo- ment options. The technologies dient of Integrilin, an anticoag- Isolations/Purification ally all countries lacking proper rine. However, it is not easy to for their use and production are ulant used in heart surgery. For the structure elucidation of reaction by-products are degradation products in stability test as regulation. These countries are introduce fluorine into target still new and therefore require a Girindus offers a range of well as reference compounds for quality control in phytotherapeutics all substances are needed in being urged to implement inter- structures because fluorina- great deal of expertise. For ex- technology, expertise and equip- pure from. We have a great experience in different kind of isolation methods as well as soild phase national quality standards. tion reagents are highly reac- ample, typical oligonucleotides ment for process development to face your problem. Examples of our isolated substances are different theaflavines, cumarines or For the time being, the high tive, often explosive and can be such as 20-base DNA and RNA to pharmaceutical and cos- quality standards and the tight harmful to the environment. fragments require about 100 metics companies which have cannabinoides as well as degradation products in stability tests. net of inspections in the West- Their use also requires highly chemical reactions. developed an active ingredient ern hemisphere are a competi- specialist expertise and engi- Girindus, majority-owned by and wish to bring it from the Structural elucidation of organic compounds tive advantage for companies neering technology. Moreover, Solvay, is focusing on therapeu- laboratory to the market. These manufacturing in Europe and fluorination reactions gener- tic DNA and RNA oligonucle- include reactions which take We carry out the most common NMR examination methods (1D as well as 2D) as standard. With North America. Archimica sees ally cannot be scaled up from otides with all relevant modifi- place under special process- our 24 hours NMR service (spectra within 24 hours), we offer our customers a good opportunity to “that several big pharma firms laboratory to industrial produc- cations – for example phospho- technology conditions such as outsource their NMR analytics to a competent partner. In Europe we are unique with this kind of have collected disappointing tion. It is much more economi- thioates, 2’-modified RNA or high pressure or extreme tem- service! experiences with some low- cal and effective to incorporate PEG conjugates. Girindus will peratures, as well as demanding cost country manufacturers and fluorine into target structures be present at the Solvay-Organ- synthesis techniques such as tend to go back to European in the early stages of develop- ics stand to share their knowl- nitration, hydration or Suzuki Outsourcing suppliers.” Saltigo points out ment with the aid of building edge and provide information coupling. The company can ReseaChem understands the challenges customers face throughout their development and production that “keeping pace with chang- blocks. about production capacities at produce active ingredients and process, recognizing that each customer has unique needs. ing regulatory requirements is At CPhI, Solvay Organics will the American plant in Cincin- intermediates at virtually any an imperative for professionals therefore be presenting a whole nati and the German plant in scale – whether in laboratories, involved in supplying to and range of fluorinated – particu- Künsebeck. Large-scale pro- technical units or production We help to make your molecules! supporting the supply chain of larly aliphatic – building blocks, duction under GMP conditions plants. the pharmaceutical industry“, including esters, ketones and uses both solid phase synthesis and that “custom manufac- acrylates. In addition, applica- and a newly developed liquid Pestalozzistrasse 16 turing of pharmaceuticals will tion technologists with practical phase synthesis process. E Contact: CH-3400 Burgdorf always be based on regulatory experience will assist interested Peptisyntha, a subsidiary of Girindus AG, Bensberg, Cologne, Germany Fon: +41 (0)34 424 03 10 guidelines from agencies like parties and are happy to dis- Solvay Organics, offers produc- [email protected] Fax: +41 (0)34 424 03 12 [U.S. Food and Drug Adminis- cuss issues including the use of tion capacities for therapeutic www.solvay-organics.com www.reseachem.com tration] FDA or [the European highly innovative, chiral build- peptides, together with develop- www.girindus.com Medicines Agency] EMEA. It can ing blocks. mental expertise. Eptifibatide is www.peptisyntha.com [email protected] be expected that the regulatory Oligonucleotides and pep- a good example of Peptisyntha’s guidance will get tighter.” tides can have a targeted effect capabilities. A cyclic heptapep- CPhI: Hall 11, Booth L96

[email protected] CHEManager Europe 9/2007 ChemiC als Page11 Long-term Investment Lonza’s Aim is Continuous Growth with Above-average Profitability

as the leading company in our Do you see the fast-growing and areas. However, the actual basis maturing chemical industry for our success is of course the in Asia as an opportunity or a people at Lonza: the manage- threat? What strategy are you ment and specialists, as well as pursuing in Asia, and where do project employees. you see the potential for differ- entiation? What is the most interesting aspect for you in the life-sciences S. Borgas: The development in markets? Asia and in China in particular is a challenge for any company S. Borgas: The life-sciences that is globally active. We have industry is interesting because of course been accustomed it demands particular skills; the to this continuous pressure products are strictly regulated, for years and Lonza is well which means that you need established in this competitive experience in complex official arena. With our production plants in China and Singapore, we are “There is still directly represented in these markets. This means that we significant can supply the local markets directly with our products potential for and also profit from cheaper production costs, which par- Lonza Biologics cleaning unit in the USA innovation in ticularly pays off in the area of large volume mass products. want to achieve for Lonza in the stand our strategy and vision. the life-sciences However, this is on its own not next 2 years? They should also live our man- enough. Lonza must primarily agement culture, and be mutu- industry” stand out among its competitors S. Borgas: The next two years ally dependent and trusting of through innovative technologies will take place against a back- each other. These integrations and through a comprehensive ground of implementing our should be completed as quickly range of services. The condi- strategy and integrating the as possible so that more experts approval procedures. And tions exist for this. new plants and business units than ever before can give a new because these preparations are With this investment strat- into the existing Lonza com- impetus for growth to our core used in or on the human body, egy, we are reaching market pany. In addition to the whole businesses. their tolerability must be guar- leadership in the contract project management aspect, If we concentrate on these anteed, which again demands manufacturing business and, this is a giant challenge, par- elements and then do a lot of a great deal of knowledge. In in the other two areas of fine ticularly for Human Resources. things right, we will create addition, there is still significant chemicals and bio-science, are The change in our portfolio the conditions for continuous potential for innovation in the building up a number of strong means that at the middle of this growth with above-average life-sciences industry, whether niche businesses that we can year over one third of Lonza profitability. in medication, food supplements defend well. employees around the world or agro-chemicals. For Lonza, will have been in the group for this means that we can see good What are your prospects, and less than 15 months. We want opportunities for growth. what immediate aims do you all our employees to under- E www.lonza.com

E Continued Page1 to be better at this that anyone until 2012. There is no reason else in the world. why the value of the company In Baltimore, Maryland, we will shouldn’t grow in step with continue with both production You have already mentioned this. But we have clearly stated and bio-pharma services as long investment plans for the USA. that it is only worth investing as necessary, which we expect What is your additional mid- in Lonza in the long term. Our In your opinion, will be until the start of 2008. term investment strategy, and investors understand that, and This will allow us to ensure a what are your priorities? understand that particularly completely concurrent techno- well in the allegedly fast-mov- is performing logical transfer to Hopkinton S. Borgas: Up to 2011, we will ing USA. One further argument and the required quantities be investing over a billion Swiss for investment is in the design for all the products currently Franks in different projects for of the whole Lonza life-sci- manufactured there. growth, such as the construc- ences portfolio, which is not a matter of : With this new way of organ- tion of two production plants just based on a really risky ising our microbial business, for bio-pharmaceutics based CMO (contract manufactur- we can offer our customers not on mammalian cell cultures in ing organisation) model, but just a unique service in proc- Singapore, in expanding our also contains significant prod- ess development and produc- bio-pharmaceutical production uct business that attracts less IZX]cdad\^Zh4 tion but also a world-leading plant in Portsmouth, USA, and attention but provides better technology platform. in converting our plant in Por- stability. This portfolio not only rino, Spain, into a multi-pur- generates real synergies, it is :meZgi^hZ4 You have clearly restructured pose plant. Investments are also also an important element of Lonza in recent years. How will being made in new plants in our risk management. you position the company after Visp for producing medication 8dadg4 this purchase? conjugates and highly-active For many people, Lonza is a pharmaceutical ingredients, model profitable fine chemical S. Borgas: Lonza has been aim- and also in China in new plants company. What lies behind this Di]Zg4 ing its strategy towards the life- for producing pharmaceutical success? science industry for a few years now. In the past year, we almost S. Borgas: As already described, completely divested ourselves of “We want to be Lonza has consistently focused our non-life-science business: itself on the life-sciences area such as LOFO, the film business better at this than in recent years. This gives a in Weil-am-Rhein, Germany, clear profile to our company Novasep Synthesis gives you access to and Polynt, the chemical/indus- anyone else” and what we can offer. We focus trial chemical business in Italy, on the production value-crea- new molecular structures, unique routes and cost-effective solutions which we floated on the stock tion stage for our customers exchange. As a countermove, agents. In addition, there will in the life-sciences markets. for your APIs or your advanced intermediates we purchased companies that certainly also be one or two These markets are character- fit our core business. By also acquisitions to round off our ized by three things: continu- purchasing both the Cambrex portfolio. We spend approx. ally increasing, strict regulatory IZX]cdad\^Zh :meZgi^hZ 8dadg businesses, there has again 125 million Swiss Franks each requirements; demanding cus- Jc^fjZiZVbhd[X]Zb^hih!egdXZhh CdkVhZeHnci]Zh^h^hXdbb^iiZY been a considerable change to year on maintaining our exist- tomers and lengthy test proce- CdkVhZeHnci]Zh^hbVhiZghVcjc^fjZ Zc\^cZZgh!X]gdbVid\gVe]^hih idegdk^YZÆ\gZZcÇVcY the Lonza profile: this year, for ing plants. iddaWdm[gdbZVganhiV\ZidXdbbZgX^Va XdbW^cZi]Z^gXdbeaZbZciVgn Zck^gdcbZci"[g^ZcYanhdaji^dch# the first time, life sciences make hXVaZ/ iVaZcihidYZkZadeVcYXdci^cjdjhan L^i]egdXZhhZhgZXnXa^c\jeid up over 90 % of our turnover. The economy is moving ever 8]^gVaiZX]cdad\^Zh/VhnbbZig^X “It is only worth ^begdkZndjghnci]Zh^hegdXZhhZh ..hdakZci!CdkVhZeHnci]Zh^h faster and investors are increas- hnci]Zh^h!egZeVgVi^kZ [dgndjg6E>dgndjgVYkVcXZY VXih\gZZchdi]VilZVaahZZ½ How do you intend to ensure ingly looking for quick profits. X]gdbVid\gVe]^Zh investing in Lonza ^ciZgbZY^ViZh# aVk^ZZcgdhZ future growth in this contested What are the particular features =VoVgYdjhX]Zb^hign/ market? in your sector regarding profit- in the long term“ Vo^YZ!Y^VodbZi]VcZ!Y^WdgVcZ ability and ROI, and how do you Hnci]Zh^hVcYejg^[^XVi^dcd[]^\]an Di]Zg ctober 2 S. Borgas: We will ensure fu- convey these to your sharehold- O -4 ediZcibdaZXjaZh , , ture growth by concentrating ers? dures, as well as many unsolved EaZVhZX]VaaZc\Zjh n 2 a 8E]> 0 l 0

on specifically defined life sci- problems and thus a great need i 7 ence markets and, in these, S. Borgas: The planned invest- for innovation. By focusing in M B^aVc on the production value-crea- ments in new plant will bring in this way, we can also expand =Vaa. tion stage, the development of a return on investment of ap- our technological leadership 7ddi]:&% procedures and the production prox. 30 %, calculated as EBIT- into these areas in a targeted of substances. That is the core DA. This means that we can way. In order to generate value business of Lonza. We use high- show ourselves to be an inter- for our customers, we use our NdjgEVgicZg^cEZg[dgbVcXZ tech bio-technology and chemi- esting opportunity for investors. high-tech chemical and bio-tech lll#cdkVhZe#Xdb cal platforms, which we must All together, the Lonza EBIT technology platforms. In this also naturally develop. We want will grow at 15 – 20 % per year way, we can position ourselves cdkVhZe"hnci]Zh^h$cdkVhZe#Xdb

[email protected] Page 12 ChemiC als CHEManager Europe 9/2007 Meeting Pharma’s Future Challenges The Fine Chemical Industry Needs to Ensure that it is Able to Supply the Pharma Market

n the run up to CPhI Worldwide in vanced intermediates including: over 700 employees at seven termediates and further proc- route selection, process devel- manufacturing facilities in Italy, essed compounds. Both compa- Milan, Oct. 2 – 4, 2007, CHEManag- opment, scale-up, commercial France, Germany, UK and U.S. nies are similar in size and will er Europe asked industry experts production, analytical services, It has decades of experience in form a new European market I regulatory expertise and pro- custom synthesis of high-quality leader in this field with three a few business- and market-related fessional project management. intermediates and active phar- state-of-the art production sites, questions to find out what’s on their maceutical ingredients in close in Pratteln, Switzerland and in Seufer-Wasserthal: Codexis cooperation with our clients. Knapsack and Gersthofen, Ger- mind. The company representatives develops powerful biocatalysts At this years’ CPhI, we will many. who responded are presented in the for pharmaceutical manufac- highlight our latest develop- turing by integrating biology ments in organometallic and Ide: Degussa Pharma Polymers photo gallery on this page. This is and chemistry. Codexis tech- enzymatic chemistry, e.g. a new is manufacturing Eudragit what they replied. nology makes pharmaceutical and highly economic process polymers for coatings of solid chemical manufacturing faster, for the enzymatic production oral dosage forms and offering Topic 1: Business cheaper and greener. At this of chiral epoxides. Also, we will drug delivery technologies for year’s CPHI, the company will inform about our latest expan- targeted drug release. We are CHEManager Europe: What is highlight its expanding product sion in aseptic/sterile filtration supporting our customers by your core business and what line in custom biocatalysts and possibilities, the successful FDA a global network of technical do you highlight at this year’s pharmaceutical intermediates inspection at our site in Ton- service centers in the pharma- Strong Technology Platform Fit-For-Purpose Support Challenging Chemistries CPhI? which can reduce development neins, France. ceutical key markets. Dr. Andreas Meudt David Feldker Dr. Wilhelm Stahl time, cost and environmental This year we are present at Global R&D Director and Managing Direc- Vice President of SAFC Head of the Business Line Pharma tor of the business unit Molecules Synthe- of Saltigo Symonds: Pfizer CentreSource waste. Schrickel: SF-Chem’s core busi- CPhI with a big team of Sales sis Centre (MSC), Archimica Group is a global leader in pharma- ness consists in the manufac- and Marketing staff, supported ceutical chemical manufactur- Feldker: SAFC Pharma is fo- ture of intermediates and fine by our colleagues from the U.S., ing and custom and contract cused on cGMP manufacturing, chemicals, which are derived India and China. manufacturing services. We process development, contract from chlorination, sulphonation will be highlighting our inter- services for small organic APIs or methylation reactions. SF- What are your key differentiat- national capabilities in a vari- and advanced intermediates Chem runs two business units: ing factors in terms of technolo- ety of expertise areas including and development of large-mol- one for the supply of standard gies, assets, know-how or serv- steroid active pharmaceutical ecule APIs for the biologics in- catalogue products for broad ices? ingredients (APIs), fine chemi- dustry. The company provides applications and customers, and cal intermediates, fermentation fit-for-purpose support from the the other unit is focused on the Symonds: There are several and bioprocess technologies, preclinical stage through clini- manufacture and development factors that put Pfizer Centre- and a broad range of dosage cal development and commer- of specific custom projects. Both Source in a unique position. form production, packaging and cialisation. activities are based on the focus First, we are a leading innova- labeling services. This year, SAFC will focus on chlorine and sulphur derived tor in steroid synthesis and pro- on its large molecule API’s for intermediates. duction with a legacy that goes Stahl: Saltigo’s Business Line Biologics offer, extensively en- The highlight this year will back to our origins within the Pharma offers exclusive cus- hanced since last year through be the integration of SF-Chem previous Upjohn business. Our tom manufacturing services to multiple investments and acqui- and the German CABB to form a fully integrated, soya-derived emerging and established inno- sitions. new company. This merger will steroid production approach Can-Do Attitude Formation of a New Company Efficient and Cost-effective Processes vation-driven pharmaceutical lead to a strengthened player encompasses some of the most Martin Widmann Dr. Joerg Schrickel Doris S. Symond companies. We provide support Meudt: Archimica is a pri- in the fine chemicals industry efficient and cost-effective proc- Head of Global Business Unit Pharma Marketing Manager Chemicals, SF-Chem Vice president, Global Fine Chemicals, and supply for development and vately held pharmaceutical with the focus on chlorinated, esses in the market today, re- Solutions, BASF Pfizer CentreSource commercial APIs as well as ad- fine chemical company with sulphonated and methylated in- sulting in a broad platform for

• Drug Substance R&D services including: Technology Transfer, chemical process, analytical development and Regulatory teams • cGMP Advanced Intermediates, Active Pharmaceutical Ingredients (API) from few kgs up to multi-tens-of-tons • High Potency Active Ingredients (HPAI) from few 100’s grams (under cGMP) up to 100’s of kgs • Expertise in complex multi-step reactions under cGMP • High Containment production Suites for API manufacturing and isolation State-of-the-Art Facilities Global Network of Technical Service Faster, Cheaper And Greener • Successfully FDA inspected without 483 with excellent track record Carlos R. Fernandez Centers Peter Seufer-Wasserthal • An active pipeline of over 25 molecules under production in 2007 Vice president, Global Contract Manufac- Jonas Ide Ph.D., Vice President and General (72% API, 17% HPAI, 10% advanced intermediates) turing, Pfizer CentreSource Product Manager Eudragit, Manager, Codexis Pharma Services Degussa Pharma Polymers Exclusive Solutions Manufacturing corticoid and hormonal ster- turers of pharmaceutical prod- ing needs of the customer, and VISIT US AT oids. ucts around the globe. We ac- also produces gram to multi-ton CPhI, Milan 2-4 October 2007, Hall 14, Booth #14B41 company the entire life cycle of quantities of APIs. Informex, New Orleans 28 January - 1 February 2008, Booth #1307 Fernandez: On the dosage form products in the pharmaceutical manufacturing side of our busi- industry from the early develop- Feldker: From discovery and ness, we have a unique ability to ment stages and market launch optimisation, to the supply of For further information: tap into the broad global manu- right through to the commercial clinical trial and commercial e-mail: [email protected] facturing network of Pfizer, our production process. In so doing, material, SAFC Pharma can phone + 41 (0)91 8730110 fax + 41 (0)91 8730111 manufacturing.helsinn.com parent organisation, which en- we regard the requirements of streamline and support the drug sures our access to the state-of- our customers as a challenge development program at every the-art facilities and specialised and stand for highest quality stage of the clinical pipeline. expertise needed for complex and flexibility. Our customers With over 20 years of experi- activities that go beyond what benefit at every stage from ence in GMP manufacturing, many other custom manufac- BASF’s unique chemical exper- nine GMP FDA validated sites in turers can provide. This is im- tise and innovative strength. three continents, SAFC Pharma portant in high-containment On the one hand, we offer is a reliable partner with high and cytotoxic manufacturing, a comprehensive portfolio of expertise including high-po- sterile solutions and suspen- generic active ingredients and tency and cytotoxic API manu- sions, and manufacturing of highly functional excipients. facturing, solid state chemistry lyophilised product, among And on the other, we provide services, vaccine manufactur- other areas. tailor-made custom synthesis ing and gene therapy, API from services according to specific plants as well as potent fermen- Stahl: We focus on providing de- needs. This includes, for ex- tation and fungal APIs. velopment and manufacturing ample, phosgene and azide services for late stage develop- chemistry, asymmetric hydro- Meudt: Our main differentiators ment and commercial APIs and genation and low-temperature in technologies are in the field advanced intermediates. Our reactions. With service centers of organometallic, enzymatic key expertises are rapid scale- across the globe, we guarantee and heterocyclic chemistry. In up and challenging chemistries. our customers expert support terms of assets, Archimica has Saltigo has scaled up repeatedly and offer advice for developing a unique set of cryogenic as- more than 120 chemical steps products and processes. sets at all scales up to 10-m3 per year to produce at least reactors and can even combine several hundred kilograms. Seufer-Wasserthal: It is not al- more than one cryogenic reac- Another differentiating factor ways possible to find enzymes tor, allowing to perform com- is our expertise in handling in nature that are suited to cat- bined cryogenic steps. Also, we many challenging chemistries alyzing a specific chemical re- have large-scale hydrogenation at commercial scale, including action. Using proprietary tech- assets capable of operating at phosgenation, high-pressure nologies, Codexis rapidly gener- up to 80 bars. hydrogenation, metal hydrides, ates unique new enzymes that Most of our sites and as- low temperature and exother- improve chemical manufactur- sets are operating at very high mal chemistries. ing processes and significantly cGMP levels at FDA-inspected reduce manufacturing costs. sites. In terms of service, new Widmann: It is the can-do at- The company develops custom product development is handled titude that has made BASF the biocatalysts tailored specifi- partner of choice for manufac- cally to meet the manufactur- E Continues Page 13

[email protected] CHEManager Europe 9/2007 ChemiC als Page13 Meeting Pharma’s Future Challenges The Fine Chemical Industry Needs to Ensure that it is Able to Supply the Pharma Market

E Continued Page12 Ide: We are permanently expand- regulatory support services custom- Globalisation also remains key, as ing our global presence by opening ers require. the Asia-Pacific market continues to in our business unit MSC, in which new Pharma Polymers offices and evolve more quickly than many had our prime targets are a strong service cooperating with agencies. Recently Stahl: Custom manufacturing of phar- anticipated. International companies orientation and culture with regular we expanded our team in India and maceuticals will always be based on now have to look very carefully at progress updates, best-in-class tech- opened a new laboratory in Mumbai. regulatory guideline from agencies their business strategies when set- nical solutions and at the same time This laboratory helps us to support like FDA or EMEA. It can be expected ting up facilities in India and China, already preparing for later upscaling our customers in the field of formula- that the regulatory guidance will get with particular emphasis on scale of while focusing on rapid delivery of tion development and drug delivery tighter in the interest of patient safety operations and cost efficiency. For current customer needs. technology support. and protection. In addition, the Reach example, in India, it may now be legislation will have some negative too late for a company to enter the Schrickel: SF-Chem’s sound position Topic 2: Market impact for the fine chemicals indus- market in the hope of gaining a cost is based on the focus on chlorine and try. It will in particular add signifi- advantage, with Indian manufactur- sulphur derived intermediates and Which market trends, from your point cant cost disadvantage for EU based ing costs now virtually equivalent to the back integration into the reagents of view, are most importantly shaping companies doing business outside the those of the U.S. and Europe. Only a for chlorination, sulphonation and the fine chemicals industry? “Reach territory”. few years ago this would have been methylation reactions. The combina- We expect consolidation to con- seen as a highly unlikely scenario. tion of the primary starting materi- Symonds: The ways in which phar- tinue on a reduced level in the near While China remains attractive on als, chlorine and sulfur trioxide, leads maceutical outsourcers are dealing future, as still not everybody is happy cost, there are still on-going concerns to a variety of reagents like thionyl with suppliers today, particularly from with the business despite the recent regarding IP control and quality. A chloride, sulfuryl chloride, chloro- Asia, has proven to be an interesting upturn of the overall business climate. major advantage for Western com- sulfonic acid, dimethyl sulfate and development. In our case, Pfizer Cen- Also globalisation will continue to af- panies establishing a base in China other reagents, which are used and treSource recognises the value of glo- fect the fine chemicals industry. is that they can maintain absolute processed on-site. Supported by the bally competitive pricing. But we also control over these issues. necessary infrastructure and a recy- acknowledge the crucial role of other Seufer-Wasserthal: Recent trends cling system for off-gases, reactions factors that our customers have to have been predominantly driven by Meudt: We currently observe a posi- can be carried out in a safe, clean consider, including consistency, quali- globalisation, with the “non-regis- tive development of the PFC market, and highly efficient way – not only in ty standards, strong GMP compliance, tered” end of the Contract Manufac- including another outsourcing wave small scale but also in large volumes. rapid access to customer service and turing Organisation market moving from several big players. We also see All plants are therefore equipped to regulatory support, and other ele- to China, and major western CMOs that several big pharma firms have handle corrosive and hazardous ma- ments. In our steroid intermediate being acquired by Indian companies. collected disappointing experiences terials and one of the strengths of and API business, we are taking an This trend is likely to continue. Sur- with some low-cost country manu- SF-Chem is the know-how to proc- approach that we think gives our vivors will need a capability/technol- facturers and tend to go back to Eu- ess and use the materials in a safe customers the ‘best of both worlds.’ ogy/service niche. In addition, the ropean suppliers with more complex way. The use of the reagents leads We are leveraging the long-standing rapidly rising cost of raw materials developments and products. to a broad portfolio of products out Pfizer advantage in early-stage bio- and energy, along with the continuing of acid chlorides, chloroethylamines, conversion operations at the compa- focus on cleaner manufacturing, has Which issues of the pharmaceuticals chloromethyl ethers and ester, chlo- ny’s plant in Kalamazoo, Michigan, led to a rethinking of many existing industry are most critically affecting roalkyl ethers, aromatic and aliphatic by using proprietary fermentation processes. Methods that have worked your business? sulphonyl chlorides and sulphur tri- processes to create a broad inter- well historically need to be updated oxide amine complexes. mediate platform, at extremely large by more efficient processes. Stahl: Pharmaceutical companies get- scale and, in some cases, in a single ting under cost pressure will always Ide: Pharma Polymers is a strategic Catalysis is crucial to chemical syntheses. A catalyst is filled into an experimental reactor. processing step. Then, to achieve bet- Feldker: Certainly outsourcing from turn to insourcing to cover as much partner, providing customer tailored Photo: BASF ter economics for our customers, we large pharma will continue to be one of their fix costs as possible. How- technical service support packages: are leveraging our relationships with of the principal drivers for the fine ever, a few of them have started to from feasibility studies over for- Seufer-Wasserthal: In July, Codexis boronic acids and have developed trusted Asian suppliers to handle the chemicals industry, as the majors re- reduce the manufacturing capacities mulation development and proof of acquired BioCatalytics, creating the different new technologies for such labor-intensive synthetic chemical main focused on manufacture as their and focus their involvement on pro- concept via clinical sample manu- world’s leading biocatalysis company compounds. processing stages. Outsourcing only core competency. Research and bio- ducing the final steps in tax havens. facturing to drug delivery technology using specialised enzymes to acceler- these steps allows Pfizer Centre- tech will increasingly be outsourced Most pharmaceutical companies have licensing. Our international network ate and improve the economics and Schrickel: In 2007, SF-Chem com- Source to maximise value to custom- and the fine chemicals industry will announced major investments in bio- of technical service centers gives cus- environmental impact of pharmaceu- pleted the installation of a Hastelloy ers through Pfizer’s unique steroid need to ensure that it is able to meet logics facilities and will cut back on tomers on-site support at every stage tical manufacturing. This brings the production line with the addition of intermediates process – retaining in- pharma’s future challenges, both in of pharmaceutical development, with power of clean bio-based manufactur- a 8000-liter Hastelloy reactor. The house the value-added customer and terms of technology and capacity. E Continues Page14 the same high quality standard and ing technology to customers seeking whole production line now enables flexible performance anywhere in the alternatives to undesirable or unsus- the processing of not only acidic, but world. tainable chemical processes. In Feb- also alkaline media and to further ruary, Codexis introduced the Codex carry out processes with the isolation Have you made any significant addi- Biocatalyst Panels, a next-generation of particulate material from ultrafine, tions to your portfolio since last year’s research product enabling pharma- almost unfilterable suspensions. show? ceutical manufacturers to harness The Hastelloy line contains a re- the power of unnatural biocatalysts actor for reaction, one for crystal- Symonds: We are increasing our to increase R&D and manufacturing lisation, a sliding-centrifuge as well marketing focus on promoting our productivity while significantly reduc- as a high-capacity universal paddle strength in our broad fermentation, ing cost. dryer. This production line excels in recovery, and purification capabili- the isolation and drying of material ties. In fact, our flagship facility for Feldker: Since October 2006, focus- from ultrafine suspensions with a 2/3 this production activity is our facil- ing on enhancing our niche technolo- reduction in residence time. ity in Kalamazoo, Michigan, a Pfizer gy offer in the biologics market, SAFC “Center of Excellence” site for fer- Pharma completed the construction Ide: Since the last years show we mentation. of a new US-$20 million protein ex- have introduced the new Eudragit traction and purification site in St. NM 30 D polymer to the market. This Fernandez: We have a similar Louis, one of the world’s biggest fa- polymer is designed for formulating approach on the dosage form manu- cilities for plant-origin API’s. In April, matrix tablets. Its chemistry allows facturing side of our business. While SAFC acquired Molecular Medicine designing special release profiles with there is nothing distinctly “new” this Bioservices Inc., based in Carlsbad up to 24 hrs drug release. year, our approach to serving our California and focused on vaccine We also hosted two symposia on customers is maturing into an in- manufacturing and gene therapy. hot melt extrusion technology togeth- creasingly global effort. We can tap SAFC also announced the start of a er with the company Leistritz Extru- into Pfizer’s specialised manufactur- new US-$29 million site construction sion. These symposia underlined our ing network of facilities around the in Israel. Scheduled for completion expertise in the field of innovative world, offering production capabilities late Q1 2009, the facility will produce drug formulations. and expertise of some dozen different high-potency active pharmaceutical facilities in more than eight countries, ingredients (HPAPIs), including large- Did you or do you plan to expand your and the list continues to grow. molecule secondary metabolites and geographical presence? cytotoxins. In November 2006, SAFC Do you suffer Stahl: Over the past 12 – 18 months Pharmorphix’s solid form studies Fernandez: Pfizer CentreSource con- we have constantly improved our facility in Cambridge announced a tinues to expand its marketing efforts from production cGMP manufacturing capabilities 2,500 sq.ft. laboratory extension, to include more sites within the Pfiz- and capacities. Last year we have in- as part of a US-$600,000 expansion er network. In that sense our global vested in additional low-temperature program. SAFC’s Safebridge-certi- presence is expanding. bottlenecks? equipment further extending our ca- fied Madison HPAPI site will feature pacities to produce at temperatures a new US-$4.5 million large-scale Seufer-Wasserthal: Codexis will soon as low as –100 °C and introduced high kilo lab, scheduled for validation open Codexis Laboratories Singapore, pressure hydrogenation capabilities early 2008. SAFC also announced a the company’s first facility in Asia. that enable us to perform hydro- US-$10 million development package The Singapore lab will open this fall genations even at 200 bar. We have to increase cGMP commercial-scale as an expansion of the company’s re- € also announced a 10 million invest- API manufacturing capacity at its search and development operations. Siegfried provides first aid when you need to scale up your pharma fine chemicals capacity, or ment to upgrade an existing facility Arklow, Ireland site, and to expand The acquisition of BioCatalytics ex- to a cGMP multipurpose plant with capacity and enhance manufacturing panded the company’s presence in take care of production shortfall constraints. We are a capable and flexible outsourcing partner 4 individual trains with reaction ves- operations at its Buchs, Switzerland California. for cGMP, non-cGMP intermediates, and finished APIs. A rapid technology transfer and profes- sels ranging from 2500 to 8000 lit- facility. ers. This fully automated and recipe Schrickel: The combination of SF- sional project management ensures efficiency. That’s why Siegfried is known for reliability and controlled facility will be dedicated Meudt: Since last CPhI, we have Chem with CABB provides both Swiss quality – at an affordable cost. Try us out; we’ll deliver – when substance matters. to the production of APIs and high- added several new technologies partners access to a fine-mesh dis- value intermediates. The plant will in our core areas. To mention just tribution network in Europe, North become fully available by the end of one, we have developed and already America and Asia, as well as to each 2007. In addition we have qualified successfully up-scaled an enzymatic other’s specialised production tech- 3 another 60-m vessel volume for the route to chiral epoxides, which has nologies in the same core business of Siegfried (USA), Inc., Bernadette Dages, Phone 1-877-763-8630 production of sophisticated interme- already yielded several high purity chlorine and sulphur chemicals. This www.siegfried-usa.com diates under cGMP during 2007.We enantiopure Epoxides of carbo- and will result in a mutual benefit for both are also in the process of expanding heterocyclic products. Typical ee’s companies. Therefore it will be less Siegfried Ltd, Dirk Sartor, Ph. D., Phone +41 62 746 12 29 our process development group by up of such products are >99.5 %. Ad- an expansion than the more efficient www.siegfried.ch to 20 % according to match the grow- ditionally, we have a large pipeline use of the distribution channels of ing demand. of multi-heteroatom heterocyclic both companies.

[email protected] Page 14 ChemiC als CHEManager Europe 9/2007 Rules Of The Game Distribution of Pharma Chemicals Requires Expertise

E Continued Page 1 most significant differentiating Counterfeit drugs or drug formu- features that set you apart from lations with substandard active also offer consulting expertise your competitors? ingredients are increasingly and a comprehensive range of causing not only worldwide intermediates, excipients and W. Gierling: As a company, you economic damage but, more active ingredients. In some have to understand and observe importantly, they also put the countries, the proportion of the special rules of the game in patients’ health at risk. To what speciality chemicals accounts the industry with regards to extent does this topic affect the for up to 40 % of the respec- product safety and availabil- distributors of chemicals? tive sales in pharmaceuticals. ity, and you have to be flex- Expertise is a crucial factor in ible in addressing the custom- W. Gierling: The highest level being accepted by customers ers’ needs. Furthermore, you of product safety and quality and suppliers as a part of the need to be prepared to invest are a key component in all our value chain. To ensure this, we accordingly in personnel and activities. That is what the name concentrate on the expertise equipment. Brenntag has done Brenntag stands for. To answer and experience of our employ- this successfully in the past and your question more specifically: ees in Centres of Excellence. has thus established a clear the subject of falsified or infe- positioning for itself. rior standards of quality has not Pharma is one of three strategic been a major problem for us. To growth fields. What significance What influence will the EU chem- ensure that this also remains so does this market currently have icals legislation Reach have on in the future, we are systemati- for Brenntag, and what growth your business or your customer cally investing in the high qual- expectations do you have? relations, and how are you preparing yourselves for this? W. Gierling: The distribution Which products are affected by “There is still a market for pharmaceuticals the regulation? products which is currently ac- lot of upward cessible to us in Europe is es- W. Gierling: Active ingredients, € timated to be about 3 billion, raw pharmaceutical materials potential” and it is growing at a rate of ap- as well as substances which are proximately 4 % per year. From incorporated into the end prod- 2003 to 2006, Brenntag was uct are exempt from Reach, ity of our employees and facili- able to double its market share. since their use is already regu- ties. Ultimately, distribution In this heavily fragmented mar- lated in various other directives. is a crucial interface between ket, however, there is still a lot Brenntag has prepared itself in preliminary and end products, of upward potential: for the next good time for basic chemicals Photo: Pixelio and thus bears a correspond- few years we are intending to and intermediate products as ing level of responsibility in the grow at a significantly greater well as excipients which are overall production process. rate than the market. ers are able to utilise a global What services does Brenntag GMP site. In Germany, we are standards here, from which not used in other applications, and network of approved suppliers provide for pharmaceuticals already working in accordance least the customers also profit. we have set up an international E www.brenntag.com What special demands does the and profit from their know-how. customers? with GMP requirements and Reach implementation team. In pharmaceuticals market make Additionally, with excipients we have applied for certification. In the pharmaceuticals distri- this respect, we have done our CPhI: Hall 12, Booth F11 on the distribution of chemi- fully embrace the sound work- W. Gierling: Our products and Brenntag has already set high bution business, what are the homework. cals? ing relationship that we enjoy services range from providing with established manufactur- advice on synthesis and the W. Gierling: The pharmaceu- ers. With 30 depots throughout development of formulations, ticals market currently finds the EU, which lend themselves to the procurement, storage, itself in a period of structural to the correct and proper stor- packaging and transport of change and under increasing age of excipients, we are able to solvents and their disposal and cost pressure. On the one hand, combine purchase quantities as reprocessing. Filling and mixing for distribution this means and when the need arises. form a key part of our range of remaining competitive and sup- services – both in units of just a porting relocation processes on What are the main product few millilitres as well as in IBC an international level. On the groups in your portfolio, and containers. Furthermore, at other hand, demands made on which do you still want to five locations it is also possible the range of products – e.g. bio- develop? to fill under GMP conditions. technology and neutraceuticals Other services include analyti- – are increasing, and so is the W. Gierling: A good two thirds cal processes and manufacturer need to tap into new sources of of our portfolio consist of basic auditing, which we are increas- supplies. and process chemicals, which ingly being commissioned to do our customers source from by our customers. Speaking about sources of sup- over 100 local branches. The ply: what is your sourcing strat- remaining products are made ‘Good Manufacturing Practices’ egy for pharmaceuticals? up of excipients and intermedi- are soon to be legally enforced ate products for the synthesis throughout the EU, not just for W. Gierling: Our objective is to of active ingredients. Active inactive ingredients but also for a relieve our customers of some of gredients themselves represent number of excipients. Which of the burden in terms of procure- a smaller, but in some countries your facilities already meet the ment logistics, to enable them increasing share of our portfo- GMP requirements? to concentrate on the strategi- lio. Fundamentally, we want to cally important issues. In this continue to grow in terms of W. Gierling: Our sites in Den- way, Brenntag makes a signifi- complex intermediate products, mark, Switzerland, Austria cant contribution to increasing excipients and raw materials and Poland are GMP-certified. the added value. So our custom- for biochemical processes. In Spain too, Brenntag has a Expertise is a crucial factor – Brenntag concentrates on the expertise and experience of its employees in Centres of Excellence. Meeting Pharma’s Future Challenges The Fine Chemical Industry Needs to Ensure that it is Able to Supply the Pharma Market

E Continued Page 13 chiral molecules, which present es to the pattern of the drug we expect to see an increasing tional methods. Until recently, metric synthesis using espe- reason why we are increasing synthetic difficulties using tra- discovery pipeline, providing a use of enzymes, which can man- development times of biocata- cially enzyme-type catalysts, our efforts in these areas in investing in small molecules ditional chemistries. These are good partnership ‘fit’ at every ufacture complex molecules lysts and biocatalytic processes and more complex heterocyclic which we already have a very production. This has led to excellent candidates for bioca- stage. Through early stages, up more effectively than tradition- tended to be longer than their structures. This is the prime strong technology platform. more outsourcing of APIs and talysis. to Phase II, we are able to draw al organic chemistry. This will chemical counterparts. With the intermediates and an improved Cost focus and patent expi- upon vast quality knowledge, be due to recent methodological panel strategy of Codexis this business climate for custom ration on more complex struc- R&D and scale-up expertise to progress in designing enzymes has now changed completely. manufacturers. The degree of tures also open opportunities ensure everything is in order and tailoring their properties Choose the optimum process outsourcing will persist to drive for Codexis technology to drive when a candidate is in-licensed towards specific profiles. conditions and then create Contact: the development of the custom down production costs allowing by a pharma company. Another continuing trend an enzyme that meets those manufacturing industry one innovators to maintain a com- Once the technology has will be the application of flow requirements exactly; this will Pfizer CentreSource Saltigo way or the other. petitive position. been acquired by a pharma- reactor technologies and micro be the future. [email protected] [email protected] As Saltigo is only offering ceutical major and progresses reactors. We see already some www.pfizercentresource.com www.saltigo.com services to innovation-based Feldker: The major issue, as through the pipeline, it is then use for the production of early Feldker: We will continue to CPhI: Hall 14, Booth G49 CPhI: Hall 9, Booth F39 pharmaceutical companies far as the drug pipeline is con- down to the fine chemical in- intermediates applying highly expand upon and invest in our their power to innovate will cerned, is the trend of large dustry to ensure that it has the exothermic reactions which high potency offer as mentioned Degussa BASF continue to be the basis for our pharma to continually decrease capacity to supply the pharma will continue to spread over above with our investments in [email protected] [email protected] business. Therefore, we strong- its R&D spend, while increas- market. time and eventually also find our HPAPI facilities in Madison www.pharma-polymers.com www.basf.com ly hope that the pharmaceuti- ingly in-licensing its technology their way into cGMP production and Jerusalem. The other area CPhI: Hall 9, Booth F09 CPhI: Hall 11, Booth G06 cal industry will overcome its from biotech. Obviously this What technologies to develop once regulatory issues will have where we see a bright future is recent weakness in innovation has been happening for many and manufacture APIs and phar- been solved. in what we term ‘niche biolog- Codexis Archimica and return to its previous per- years, but what we are seeing maceutical intermediates do you ics’, underlined by the invest- [email protected] [email protected] formance. now is pharma undertaking the see as having high potential for Seufer-Wasserthal: The best ment in a new manufacturing www.codexis.com www.archimica.com in-licensing of technology at a the future? process is often in the end the facility in St. Louis and the CPhI: Hall 18, Booth K57 CPhI: Hall 18, Booth E49 Seufer-Wasserthal: Benefits later stage in the pipeline than cheapest process. When all acquisition of Molecular Medi- derived from adopting efficient previously, often in Phase IIa or Stahl: Many new reactions in- components – capital expense, cine BioServices Inc. SAFC SF-Chem biocatalysis technology can be even IIb, before committing to troduced by medicinal chemists energy cost, waste handling [email protected] [email protected] important drivers in the deci- an investment. have found their way into pro- – are considered, a well-op- Meudt: Archimica expects www.safcglobal.com www.sf-chem.com sion to outsource. Pharma pipe- SAFC’s business model has duction over time and this trend timised bioprocess compares increasing importance of areas CPhI: Hall 18, Booth G43 CPhI: Hall 18, Booth C11 lines now include more complex evolved along with these chang- will continue. In the near future very favourably to conven- like organometallics, asym-

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Knowledge for Generations Page 16 EnE rgy CHEManager Europe 9/2007 Using Energy More Efficiently How Chemistry and Chemicals Can Help

hemicals can not only increase chemical processes and prod- metal node, for example M++ have the answer yet, but there ucts themselves, in the energy or M4O6+, and a linker, often have been an increasingly fre- the energy efficiency of chem- consumption of their customers an aromatic di- or tricarboxylic quent number of suggestions on ical processes and products and suppliers, and in the energy acid joining these nodes togeth- this recently. A fuel cell vehicle C consumption of the public, and er. The nodes and linkers form with a full tank could supply its themselves, they also affect the energy therefore society as a whole. a three-dimensional network owner’s house and those of his consumption of clients and suppliers Processes in the chemical with free inner volumes that can neighbours with power without industry are subject to ongo- store the gases. Conventional any problem for a weekend (or and of society as a whole. ing energy-saving measures, synthesis is based on metal salts a blackout). A hybrid car could but their contribution towards or oxides which react with the be supplied with power from By 2020, Germany wants to improving efficiency is lim- corresponding carboxylic acids the socket and so save fuel. double its energy efficiency ited for two reasons. Firstly, in suitable solvents, often with Both concepts stand or fall compared to 1990 and in do- energy-intensive processes auxiliary bases, under pressure with the future efficiency chain ing so use 20 % less energy are already geared to making and at higher temperatures. of the national energy supply. than in 2005, according to a savings, and secondly the total Low solubilities, long reaction In the USA, the vehicle to the major interim finding by the energy requirement of the Ger- times and processing problems grid (V2G) concept for plug-in German Energy Summit held man chemicals industry just ac- mean that synthesis is often hybrid electric vehicles (PHEVs) in October 2006. In economic counts for 5 % of the national complicated. BASF has found a in the future only makes ecolog- terms, energy efficiency means total energy consumption, but simple and multi-faceted route ical sense if power generation the monetary value gained per there are some surprises. to MOFs – electrochemical syn- is modernised, but these ideas energy unit. In 2005, Germany The potential for efficiency thesis using sacrificial anodes. are now being taken seriously. needed for its gross domestic gains by chemistry is clearly A solution of the carboxylic acid The critical factor is when these product of 2,245.5 billion euros greater for its beneficiaries is pumped through an electroly- cars become active: At peak over 485 million tonnes of hard – on the one hand the chemical sis cell under current. The MOF times they feed into the net- coal equivalent (HCE), in other industry’s customers, such as immediately forms and can be work, at times of surplus they words 4,622 € per t of HCE. the automotive industry, and on separated. Since hydrogen is supply their own needs. Apart the other hand in sectors where the only by-product produced, from the power supply net- Energy Efficiency in the chemical processes play a key the solvent can be used again. work, a functioning communi- Chemical Industry role, i.e. in the glass, ceram- With the new process, it is cation network is also needed. ics, paper or metal industries. now possible to provide larger The term “virtual power sta- The figure for energy efficiency This is a message the chemi- sample quantities to interested tion” has been coined for small can be misleading. For exam- cal industry needs to share customers quickly and flexibly. suppliers and consumers join- ple, BASF with its high energy and get the message across to The development of this proc- ing together like this. Storing consumption would then be their customers. Industry as a ess shows, for example, how power in the form of hydrogen clearly more inefficient than whole, excluding chemicals, chemistry is opening up a new is the subject of the hydrogen Deutsche Bank, although in accounts for 20 % in Germany’s field for their customers. MOFs economy. In future regenerative fact the industrial compound total energy consumption. High are interesting media for the hydrogen should be available as network of BASF is a bench- efficiency deficits also occur in storage, separation or purifi- a fuel as part of the hydrogen mark for high energy efficiency. the public sector – transport, cation of gases. The storage of economy. Just a few years ago, Even within the chemical indus- domestic, trade and commerce, hydrogen and natural gas or the the Freiberg company Choren

try there are differences: basic and services – which use 75 % separation of CO2 from biogas put forward an attractive route chemicals account for around of the total energy. As the main are good examples – all highly for producing biofuels which 80 % of the energy consump- user of electricity and fuels, the interesting topics in terms of would significantly increase the tion of German chemicals, other public sector is also indirectly energy efficiency. yield of biofuels using hydrogen. chemical processes just 20 %, responsible for losses in the That this is plausible is shown although in fact basic chemicals conversion of primary energy Example 3: Electricity Storage by the stoichiometry and by the have optimised their energy to useful energy. The chemical fact that hydrogen is not just consumption the most. In com- industry again could score here Chemicals can also influence a reagent here but is also an mon parlance, the term energy at the beginning and end of the the energy efficiency of soci- energy carrier. Whilst hydrogen efficiency is used in different energy chain, but haves prob- ety as a whole. Regenerative resolves one storage problem as ways. The general public asso- lems communicating this fact. energies, particularly wind and a biofuel, it in fact causes one ciates it with a more intelligent water power, already account itself in the hydrogen economy. use of energy, buying modern Example 1: HCl electrolysis for 11.8 % of German electric- A concept put forward by the electrical appliances, an alter- ity generation. If Germany Japanese RITE Institute at the native lifestyle or switching to One example for increasing en- achieves its ambitious goals by Climate Conference in Kyoto renewable forms of energy. The ergy efficiency in the chemical 2020, a quarter of its electric- uses regenerative hydrogen to German Chancellor said in the industry itself is HCl electroly- ity will come from regenerative hydrogenate carbon dioxide Financial Times Deutschland in sis which recycles chlorine, for sources, but this will create a from power stations to metha- January 2007: “Basically it all example in the synthesis of iso- critical imbalance between elec- nol. The winner of the Nobel comes down to the fact that the cyanates, producing chlorine tricity production and demand. Prize in Chemistry, George bottom line is energy efficiency, and hydrogen from hydrochlo- Seasonal and daily variations in Olah, propagates methanol for economical use of energy, good ric acid. Bayer is a leader in production cannot be synchro- a “methanol economy”. It is im- technology with high degrees this technology which has an nised with demand by current portant not to develop technical of effectiveness and a balanced atom economy and energy ef- networks and storage capaci- solutions independently of poli- energy mix”. So if research, the ficiency that is hard to further ties. There are already a large tics. On the other hand, social economy, consumers and politi- increase. Furthermore, Bayer number of technically well- and political demands cannot cians pool their ideas and con- has had tremendous success in developed electricity storage be fulfilled without technical cepts to produce smart projects, this field. 315 m3 of hydrogen, facilities. The biggest German expertise. The end user with our national energy efficiency some of which cannot be recy- storage facility is the pumped his needs and financial prefer- will increase, our competitive- cled, are produced per tonne of storage power station in Goldis- ences must be included from ness will be sharpened and our chlorine. The idea of converting thal in Thuringia. Pumped stor- the start; only then tailor-made contribution to the conservation the hydrogen into electricity in age power stations are impor- and efficient solutions are pos- of resources and climate pro- a fuel cell and feeding this cur- tant worldwide, but their poten- sible. Chemistry plays a part in tection achieved. rent back to the cell was not tial for development is limited. the overall energy chain, from implemented for technical and Most other storage facilities are primary energy through to use- Contributions Towards economic reasons. Bayer has electrochemical, in other words ful energy for the end user. To Increasing Efficiency therefore taken another radical accumulators or batteries. The succeed here, chemists need step and converted the cathode most progressive power storage the active cooperation of the Chemicals contribute to energy in HCl electrolysis to a fuel cell. system in the megawatt range media and the politicians and efficiency in three areas: in Instead of producing hydrogen is the sodium-sulphur battery have to make their own role in from the Japanese company the energy field more compre- first and then converting it in NGK. There are a vast number hensible and clearer than ever a separate plant with oxygen of types of batteries for trans- before. to electricity, oxygen is directly port and consumer applica- reduced on an oxygen con- tions, from the kilowatt through sumption cathode which clear- to the milliwatt range. Our mo- ly reduces the energy required tor vehicle fleet has the largest for the process. Even if the hy- storage capacity in Germany; E Contact: drogen deficit and the energy with around 100,000 mega- Hermann Pütter demand for supplying oxygen watts it outstrips Goldisthal by GDCh Group are taken into account, the two decimals. Could this huge Applied Electrochemicals saving should run to approxi- system composed of 45 million [email protected] mately 30 % of the previous fig- cars and several million other ure. The first industrial plant vehicles be connected up to a References available from the in Brunsbüttel is running suc- large power buffer? We don’t author. cessfully, Bayer Material Science is now planning a plant in Shanghai five times the size at 215,000 tonnes per year. SHOWTIME all your CUSTOMERS need Example 2: If you are looking to use chemistry to manufacture products in these markets Metal Organic Frameworks for your PRODUCTS then InformexUSA is where you should be:

Q Agriculture Q Adhesives Q Photographic The way that chemicals can increase the energy Q Biotech/Biopharmaceutical Q Paints & Coatings Q Food additives efficiency of its custom- Q Electronic chemicals Q Household products Q Cosmetic ers can be shown by the Q Flavors & fragrances Q Pharmaceutical new substance class of metal organic frame- To be part of this show call Heiko Baumgartner on +49 6151 8090 137 works (MOFs). The pos- or email to [email protected] sible structures of MOFs are very multifarious.

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An MOF consists of a p4p_Showtime_190x135

[email protected] CHEManager Europe 9/2007 Logistics Page17 Criterion For Equipment Service Uniform Standard for all European Service Stations of Cotac Europe

ince January 2006 cotac Europe age is offered at all depots and – if required – heating by steam, has been operating a pan-Euro- hot water or electrically. pean network of tank cleaning In line with the expan- S sion strategy cotac is always facilities and service stations as an in- exploring new possibilities to dependent company. Pursuing a clear- broaden the range of services. “A few months ago the Rot- cut expansion strategy cotac aims to terdam station received the increase the number of locations and so-called STEK-permit, which allows the repair and mainte- to strengthen its leading position on nance of refrigerator units and the market as full service provider for reefer tanks”. Maintenance and repair of gas containers is also the chemical, pharmaceutical, petro- feasible. leum and food industries. To provide an even closer meshed network of locations Based on standardised struc- across Europe cotac aims to tures and new synergies all supply the service where it is technical services in tank clean- needed, near the customers ing, workshops and depots are both from the transport com- promoted in the European panies and the producing in- market under the brand name dustry. of cotac. As an independent Cooperation in the cotac provider cotac can operate on network is subject to thorough a more service-oriented level; checks of prospective partners all customers within the Euro- kind of transport equipment. age to the containers by corro- fer maintenance and repair or with regard to meeting the pean cotac network will ben- This includes road tankers, sion. “When cleaning we have even modification for all inter- requirements in service and efit from the same high quality tank containers, rail tank wag- to adapt to a variety of materi- national tank containers in use. operation as well as compli- standard and service as well as ons and Intermediate Bulk Con- als – from high-grade steel to Just recently Rotterdam han- ance with all quality and safety a uniform, transparent and at- tainers (IBC), used for the trans- synthetics and special material, dled a quite remarkable task, standards. “We are combining tractive price structure. port of chemicals and additives, used for the lining of tanks, to in shortening a large number our full-service package with The currently eight cotac among others. And, of course, avoid chemical reactions be- of aluminium silo containers by the most stringent safety and stations in Belgium, Germany, there are special cleaning bays tween equipment and cargo”, ten feet to a length of 30 feet. environmental standards”, France and the Netherlands as for foodstuff equipment. Bernd Kolbe, Operational Di- “Our customers can benefit Kolbe points out, “and all our treatment; some stations even cotac staff is brought up-to-date well as cooperations in several Inside cleaning will not only rector cotac europe, explained from one-stop-shopping for all stations are audited in accord- with vapour recovery facili- on all matters regarding safety, other countries (e.g. UK, Italy, prevent the contamination of the demanding service. types of services”, Kolbe said. ance with SQAS, the safety and ties. The European Cleaning protective labour legislation and Finland) are providing complex new loads by residues, but will Apart from cleaning cotac This includes the demanding quality assessment system”. Document will be issued upon the day-to-day operation. solutions focusing on cleaning, also prevent the formation of offers a broad range of addi- automatic interior grinding of All locations are equipped completion of each tank clean- maintenance and repair of all germs and bacteria, or dam- tional services: workshops of- tank containers. Container stor- with sophisticated waste-water ing. In periodical trainings the E www.cotac-group.com

New Intermodal Terminal in the Port of Rotterdam Statement and other destinations will be incorporated later in the year. The new rail hub will play an Key To Competitiveness important role in the pan-Eu- ropean intermodal network of Bertschi, a leading bulk logis- Chemical Industry: Supply Chain Collaboration is Useful tics service provider for the Eu- he Logistics Committee of chemical clusters, using Tar- role that producers expect ropean chemical industry. The ragona and Antwerp/Rotter- from them. On the other hand, new terminal will offer both EPCA (European Petro- dam/Rhein-Ruhr (ARRR) as service providers will have to local producers and the deep- chemical Association) is a examples. During the first half put greater emphasis on stra- sea market the opportunity for T of 2007, 53 senior representa- tegic questions and propose a broader modal shift, i.e. to unique forum where representatives tives of chemical companies, collaboration models more switch more of their flows from of chemical producers and logistics logistics service providers, pro-actively. the congested roads to rail and public authorities and institu- Many of the current logistics waterways. Further expansion service providers meet to explore tions, as well as researchers shortcomings, e.g. the actual of the current terminal han- opportunities for improving the from INSEAD, engaged in this driver and transport capac- dling capacity of 120.000 TEU’s study. The final results will be ity shortage in the chemical August, 31. 2007 Bertschi inau- termodal connections to south- is planned in the near future. competitiveness of Europe’s chemical presented at the EPCA Annual transport market are a result gurated a new rail terminal in ern Germany and Italy. Addi- industry, with a focus on optimising Meeting in Berlin on October of the prevailing traditional the Port of Rotterdam with in- tional links to Eastern Europe E www.bertschi.com 2nd 2007. confrontational relationships the supply chain. The study concludes that between shippers and service information sharing and the providers with frequent ten- CEVA Merger With EGL Europe’s chemical indus- set-up of an institutional plat- ders, encouraging fragmenta- try spends 8 to 10 % of its Hans-Jörg Bertschi form of producers, service pro- tion. Other industry sectors like CEVA Group announced the share of EGL common stock said, “Both EGL and CEVA pos- turnover or up to 35 % of its Chairman of the EPCA Logistics viders and authorities are the the automotive and consumer completion of its merger with they owned at the effective time sess unique strengths in logis- value-added on supply chain Committee key to the competitiveness of a electronics sector have led the EGL. As a result of this merg- of the merger. CEO Dave Kulik tics and supply chain manage- and logistics activities. As chemical cluster. Despite the way, showing that collabora- er transaction, EGL is now a commented, “Our combined ment and we are excited about optimisations in the past have customers and logistics service various case studies provided tion and competition can effec- wholly owned indirect subsidi- companies can offer customers leveraging these synergies focussed on production, a sig- providers. Recommendations in the report, the paradigm tively co-exist, to the benefit of ary of CEVA. CEVA, a leading a portfolio of world class sup- to provide greater flexibility, nificant potential still exists were made to actively promote shift on collaboration has not all stakeholders. global logistics company, is ply chain management services enhanced service offerings and in the supply chain – not only the results of the Think Tanks taken place yet. A significant Europe is still the largest a UK public limited company globally, while maintaining our more powerful solutions for our for margin improvements, but in the industry in order to gap between words and facts and most sophisticated global owned by affiliates of Apollo. commitment to operational customers.” also safety and environmental change attitudes and percep- still exists when it comes to col- market for chemical prod- EGL’s former shareholders are excellence and customer ori- performance. tions, to alert stakeholders of laboration. ucts. Leveraging supply chain entitled to receive US-$ 47.50 in entation.” Joe Bento, President In their 2004 and 2005 re- business opportunities and to The Think Tank recom- opportunities through intensive cash, without interest, for each Global Freight Management E www.cevalogistics.com. ports, two EPCA Think Tanks continue the Think Tank activi- mends that producers develop collaboration will become cru- concluded that there is a ties in specific areas. long-term relationships with cial for the European chemical huge potential to be achieved The EPCA Logistics Com- selected logistics providers, industry to defend its strong through supply chain collabo- mittee proposed to study the allowing them the possibility competitive position in the glo- Partnership in Cold Chain Products ration between producers, supply chain collaboration in of fulfilling the collaborative bal economy. Continental Airlines Cargo, the a “superior alternative to tra- the airline will also participate first US airline to implement a ditional cooling means such as in Envirotainer’s training pro- structured cold chain product, foam, gel packs or insulating gram, which was developed in Distribution Centre for European DIY Logistics has signed a new global con- blankets, which add expense consultation with the pharma- Following the completion of in Coesfeld/Germany. A newly- centre is a completely new standing strategy to secure its tract with Envirotainer, setting to shipments and waste space.” ceutical industry and aims to Europe’s most modern lacquer engineered European centre logistics concept which allows quality and services leader- the stage for expansion of its ClimateSecure provides an un- become a QEP-CEP accredited factory in 2006, J.W. Ostendorf which will provide more than the optimum supply of DIY mar- ship for the entire supply chain temperature-controlled product broken door-to-door cool chain airline. Continental will com- (JWO), as a further step in the 30,000m2 for integrated DIY kets with multiple consignment in order to further expand its line. The new agreement will for up to 72 hours or longer mence with the formal techni- unabated pan-corporate opti- logistics following completion structures from several suppli- international competitiveness. see the increased use of Envi- when dry ice and batteries are cal training and accreditation misation of its processes, has of the first building phase on ers. JWO, the market leader for rotainer’s active temperature- replenished in transit. The serv- program in Newark and Hou- initiated a large-scale project a 100,000m2-large site, will be interior paints and lacquers in controlled air cargo containers ice is designed for customers ston followed by locations in aimed at centralising its Euro- built in co-operation with Fiege the DIY sector, sees this as the for customers using Continental shipping high value and sensi- Western Europe. pean logistics at its main site by the beginning of 2008. The logical consequence of its long- E www.fiege.com Airlines Cargo’s ClimateSecure tive goods including pharma- service. The airline says using ceuticals, electronics, cosmet- these advanced ULD contain- ics, fine art and perishables. E www.cocargo.com ers provides its customers with As part of its new agreement, E www.envirotainer.com Bruhn SPEDITION Global Security Forum with FFI Representative To Finland, Scandinavia, Luc Clauwaert, in addition to sociation) and AFI (Airfreight reaches its destination on time. his function as Group Secu- Institute of FIATA). ACSIF’s aim FFI (Freight Forward Interna- the Baltic States and to Russia. rity Manager for ABX Logistics is to harmonise security stand- tional) is a grouping of seven Worldwide, has been appointed ards and improve efficiency and leading global forwarders and Directly and safe via the Baltic Sea and via road! member of the Executive Com- effectiveness in the regulation logistics service providers: ABX ǠGeneral Cargo Ǡ Bulk-Containers ǠTank-Containers mittee of ACSIF (Air Cargo of air cargo security. The forum Logistics, Kuehne + Nagel, Agil- Security Industry Forum) to will develop and defend indus- ity, DHL Logistics, Panalpina, Bruhn Spedition GmbH · Phone 0049(0)451 48 04-0 represent FFI. ACSIF is a new try positions that protect the Schenker and UTi. Fax 0049(0)451 48 04-910 · www.bruhnsped.com initiative created by IATA (In- integrity of supply chain secu- ternational Air Transport As- rity while ensuring that cargo E www.abxlogistics.com Lübeck · Antwerp · Hamina · Helsinki · Moscow · Nettetal · Oslo · Riga · St. Petersburg

[email protected] Page 18 Logistics CHEManager Europe 9/2007 Pharmaceuticals at the Right Temperature Air Transportation of Pharmaceuticals Managed by Cargolux

harmaceutical products are have been carried out. Switzer- land is the traditional market manufactured in many indus- for pharmaceutical and chemi- trial centres in Western Europe, cal products with a worldwide P distribution platform, fully the United States and Asia. Cargolux supporting the Cargolux serv- of Luxembourg transports the finished ice. The latest developments on this sector include regular products to worldwide destinations. shipments from Frankfurt, on Such shipments include products of behalf of important pharma companies with impressive daily requirements, such as insulin, overall yearly volumes. plasma, vaccines, and “emergency or Major forwarding companies are taking care of these ship- seasonal products” such as antibiotics, ments on behalf of Cargolux, and general medication. offering increasing experience for this type of cargo. The com- Pharmaceuticals require tem- pany has been well established perature controlled transpor- in the pharmaceutical commu- tation on ground and in the air nity, with more and more phar- and do not admit long transit maceutical companies shifting times. Major international for- their business to Cargolux, of- warders are involved in this fering better services compared transportation, as well as small- to traditional transportation er, specialized forwarders. schemes. The unbroken cool chain is shipments are immediately dis- Confirmation of the booking has Currently, Cargolux’s phar- Approx. three hours prior to assured as all cool trucks bring patched on refrigerated trucks to follow within 96 hours prior maceutical shipments are departure to Luxembourg, the the pharmaceuticals directly to and forwarded to the consignee. to shipping, and instructions to regularly generated by the thermo-trucks are pre-cooled Luxair’s Cargo Center in Lux- At selected airports, complete Cargolux have to be clear and company’s stations in Belgium, to the required temperature. embourg, with all processes ULD’s can be picked up at the precise. Germany, Switzerland, and Upon arrival in Luxembourg, being streamlined. In case of aircraft and immediately stored E Contact: Denmark, plus ad-hoc ship- the precious shipment is stored any discrepancy during stor- in the cool truck. Cargolux Airlines International S.A. ments from France, Spain, Italy at the same temperature dur- age or transportation, forward- In order to provide the re- Sales & Reservations and the U.K. ing their short transit time in ers and shippers are informed quired space for those ship- Luxembourg, Grand Duchy of Luxembourg Cargolux Brussels has most- plus some ad-hoc shipments to guaranteeing perfect tempera- Luxembourg, then loaded o/b pro-actively. ments and to prepare the Tel.: +352 4211 3216 / 3925 ly been involved in the trans- South America. In order to of- ture control. Cargolux’s B747-400 freighters Currently, those shipments thermo trucks in line with the Fax: +352 4211 3692 portation of human vaccines, fer a better service to their cli- Furthermore, regular insulin by expert load controllers and are mostly destined for the Unit- client’s request, the forwarders [email protected] destined for Asia, Australia, ents, the vaccines are directly shipments from Denmark for flown at the required tempera- ed States and Australia. Upon communicate their space and [email protected] New Zealand and the U.S., picked up at the client’s plant, South America and Lebanon ture, to the final destination. arrival at their final destination, service requirements in time. www.cargolux.com Plastics Rather Than Wood Pharmaceutical Logistics Chain Prescribes Plastic Pallets

ore and more pharmaceu- less than equivalent wooden provides a unique anti-slip top pallets, but are more durable. deck, the latest RFID technol- tical and cosmetic compa- Their material and structure is ogy, and high load capacity nies are choosing plastic more resistant to damage from through integrated metal pro- M handling equipment such as files. Craemer’s hygiene and pallets for their logistics chain. Plastic fork trucks and they have no conductive pallets have proven pallets are increasingly being used to splinters or nails that can cause themselves for applications potential quality and contami- where maximum hygiene and handle, store and distribute pharma- nation issues. safety is necessary and wher- ceutical and over-the-counter prod- Wooden pallets can absorb ever protection against static moisture, which could cause charges is required. Both pallet ucts. One reason may be the FDA’s tainting or contamination of types meet the highest demands increasing emphasis on ensuring that packed products or lead to in- of the international pharmaceu- consistent tare weights. Plastic tical and food industries. the efficacy and safety of drugs and pallets are non-absorbent, so cosmetics is maintained throughout they are much more hygienic Quality Design Ensures Long Life and less subject to contami- manufacturing and distribution. nation. Plastic pallets can be Craemer re-usable pallets far sterilized in a fully automated exceed the life span of wooden Re-useable plastic pallets offer washing and drying system or pallets and many competing a high-quality and an economic with solvents, steam cleaning plastic pallets now available on solution, providing the indus- or high pressure washing up the market. This is a result of tries with a safe, stable, and to 120 °C, making them ideally their design and the use of only long-lasting method of moving suited for clean room applica- pure, high quality plastics. products through process areas tions in the food and pharma- A recent study by the that would normally exclude ceutical industry. Fraunhofer Institute (Institute the use of wood pallets. RFID systems embedded in of Material Flow and Logis- a plastic pallet can be used to tics) examined the mechani- Advantages Of Plastic Pallets maintain and transmit data of cal properties of a number of investment calculations. (De- to provide full management in- the products that it is carrying, Craemer EURO H1 food quality tails of the document “Longlife formation. Plastic pallets provide an op- as well as to track the pallet. plastic pallets, which had been pallet: Study of the Fraunhofer Alexander Korell, Craemer’s tion with many advantages over This further helps to comply manufactured in 1995 and in Institute with the EURO H1” can Export Area Manager, reported, wood. They weigh up to 40 % with the FDA standards. Effective Logistics Solution: based on the highest hygienic service for several years. Fol- be supplied on request.) “Craemer was one of the first to Craemer Pallets standards and latest innovative lowing the German DIN 55423- manufacture pallets equipped technology. 6 standard, the pallets had to Pharmaceutical Supply Chain and with RFID transponders. Based By developing the world’s first A comprehensive range of go through the following test RFID Technology on our long-term experience “one shot” molded plastic pallet plastic pallets is offered: e.g. the procedures: with RFID, the company has in 1967 Craemer has 40 years Hygienic Pallet with an excellent  To evaluate loading deflec- The pharmaceutical industry become a partner of the phar- of experience in manufactur- load capacity, durability, runner tion responses during rack operates one of the world’s most maceutical and e-supply chain 7$/.( ing plastic pallets. Since then, stability, resistance to tempera- storage complex supply chains and is and has worked closely to im- 7KHULJKWFKHPLVWU\ the company has continued to ture changes, and easy clean-  Corner-fall tests carried out faced with a rising tide of drug prove inventory and transport provide quality pallet solutions ing and handling. The CR pallet on EURO H1 plastic pal- counterfeits. Therefore, compa- management for many compa- lets that had been stored at nies are turning to technology nies. Craemer has successfully temperatures of –25 °C and such as RFID to track products supplied high-quality pallets to +40 °C, to determine any fall and shipments more effectively international companies such damages. throughout their global supply as GlaxoSmithKline and Wyeth  Horizontal impact tests simu- chains. Craemer CR1 returna- Pharmaceuticals.” lating transportation and the ble plastic pallets are equipped Today, Craemer is one of the effects of braking on pallet with a transponder that enables leading European manufactur- loads of 850kg distributed pallets to interface with RFID ers and a full service provider over 28 FLC units. in a complete turnkey system of a diverse product range for  A continuous roller conveyor storage and transport. Crae- test with pallet loads of 850kg mer offers extensive and cus- mass with FLC to look at the tomized services. The company effects on the runners and has played a pioneering role in pallet feet. developing innovative solutions for many years. The results proved that Craem- Many companies have taken er plastic pallets are extremely the time to consider the benefits robust. The pallets had no signs of plastic pallets and are now 0RUHH[SHULHQFHG0RUHG\QDPLF0RUHYDOXH of structural weakness or ma- convinced of the cost efficiency :HPDNHWKHGLIIHUHQFH terial changes, even after long of multi-trip logistics solutions use. The Fraunhofer Institute using returnable plastic pal- confirmed a service duration for lets. the Craemer EURO H1 pallet of ZZZWDONHFRP at least 12 years, which should provide the basis for future E www.craemer.com

[email protected] CHEManager Europe 9/2007 Logistics Page19 Supply Chain Champions Setting Standards for the Industry

ize does not mean class. Only Supply Chain Cooperation every fifth consumer goods The close working relationship producer manages to master between the producer and its S dealers is an important aspect its supply chain, most show major of supply chain management. performance deficits. The virtues that Best practice is characterised by logistics providers and other make a champion are clear from four operative supply chain players, criteria: logistics costs, inventory of such as sales planners and IT specialists, being in direct con- finished goods, level of service and tact with the dealers. If, for delivery time. The champions are not example, the sales planners have direct access to informa- only better than the industry aver- tion on promotions planned by age in these four areas, they also set their most important customers, planning accuracy can be standards for the industry. This is the Prof. Ulrich Thonemann raised significantly as a result. outcome of a research project jointly Several cooperation projects, chain which is both effective e.g. Collaborative Planning, conducted by Prof. Thonemann of the and efficient. They attain an av- Forecasting, and Replenish- University of Cologne and McKinsey erage service level of 99 % with ment (CPFR), institutionalise a delivery time of less than 2.5 the cooperation on a more & Company. The scientists and man- days, logistics costs of 4.1 % and strategic level. Nevertheless, agement consultants studied the sup- inventory coverage of 11 days. not every cooperation project is Why is supply chain perform- profitable. Supply chain cham- ply chain management of 40 of the ance (so much) better at some pions precisely post calculate 74 largest German consumer goods companies than others? What cooperation projects of a high is the champions’ secret of suc- investment volume on imple- producers with a predominantly fast- cess? The study results reveal mentation in particular and moving product range. clear differences between ensure that they achieve the champions and followers in six anticipated advantages. The differences in supply chain areas: cooperation with trading management performance are partners; flexibility in produc- Flexible Production staggering. Only seven out of 40 tion; bundled responsibility for producers have a supply chain the supply chain; segmentation Supply chain champions under- that earns an “efficient” rating; of products and customers; stand the special importance of the other 33 producers partly establishment of planning proc- production and material costs show some significant perform- esses; as well as effective and for the supply chain. Efficient ance deficits. An example of the efficient controlling. Features production can often contribute differences: The service level on which are not directly related more to improving return than focussed on sales. Bundling of (Key Performance Indicators). in the interfaces with trade on vidual main fields of action for the position level ranges from to performance however – and reducing inventory or optimis- the planning processes in an These indices, each of which the other. Their utilisation is the respective company. Why very good 99.9 % to 90.5 % of therefore not distinguishing ing logistics, because the pro- independent supply chain or can be broken down to the cus- becoming increasingly impor- do the deficits lie? What are the the order positions – fluctuation features – are company size portion of production costs in logistics department is ideal. tomer/product level, include the tant. But caution is due: Many priorities? Everyone needs to be between permanent availability and product category. IT or the overall supply chain costs In one of the companies stud- service level, planning accuracy companies are lacking a solid active. No company can afford and acute bottlenecks. The best outsourcing are also not fun- is generally three or four times ied, the logistics area has wide- and the reliability of the deliv- basis for these mutually profit- to rest on its laurels – today’s five producers report an aver- damental success factors for higher than the proportion of ranging competences extend- ering products, as examples. able cooperative arrangements. champion can be tomorrow’s the penetration of a company, ing from order acceptance, to The indices also encompass the These companies, that we call follower. The supply chain is as but are only effective in com- planning demand and produc- trading partners, e.g. through followers, should firstly con- dynamic as the product range bination with the supply chain tion, through to scheduling. The systematic logging of shelf centrate on internal optimisa- of the company studied. processes. Let us take a closer neutral status of logistics can availability. tion. Only then is it possible to look at the success factors for go a long way to deescalating The considerable differ- build up advantages by means efficient supply chain manage- conflicts in the company. At the ences in performance and of a supply chain and to develop ment: same time, the broad range of their causes and effects show new cooperation models – this tasks of the department ensures one thing above all: Differen- is where the champions reign. E Contact: that an extensive information tiation by means of the supply The following applies for Prof. Ulrich Thonemann base is available for planning. chain is possible – consistent champions and followers alike: University of Cologne exploitation of the perform- The analysis of one’s own sup- Cologne, Germany Segmentation Strategy ance reserves offers major op- ply chain is the first priority. Tel.: +49 221 470 7935 portunities for consumer goods Benchmarks help here, as well Fax. +49 221 470 7950 The vast number of different producers. These lie in internal as best practice examples. The [email protected] customers and products with processes, on the one hand, and analysis gives rise to the indi- www.wiso.uni-koeln.de/scmms diverse requirements and the resulting complexity can rep- logistics resent an obstacle on the way age service and inven- to achieving an efficient supply level of 99.8 %, tory costs chain. Supply chain champi- whereas the av- combined. But ons therefore strive to reduce erage is 97.5 %. Any production is un- this complexity and pursue the outliers at the low end der pressure in many value contribution of additional would make themselves companies and frequently product variants on the basis of even more apparent for has to fill in at short notice to article and customer-oriented smaller companies or criti- maintain a low level of inven- cost attribution. cal categories (such as in the tory and avoid bottlenecks. The method of separately fresh goods sector). Supply chain champions optimising supply chain seg- A similar picture emerges therefore take two steps in ments and adapting processes when examining three fur- reforming their production for specific segments also hold ther objective performance processes. Firstly, produc- great potential. For especially dimensions: The inventory tion is designed to be more demanding customer groups or coverage of the best compa- flexible, through changes in important products, a higher nies is 6.5 days compared infrastructure or optimis- than average level of service with 30.6 days on average. ing lines, for instance. Once can be aimed for. Ideally, dif- The logistics costs (transport these measures are exhaust- ferentiation begins with the and storage) of the top run- ed, the remaining rigidity very design of the processes: ners is 3.2 %, whereas it is has to be intelligently man- High volume money-spinner 5.0 % on average. And the av- aged. Here it is necessary to products, for example, can erage delivery time of 3.5 days integrate production in rule- be planned with a higher fre- is only 1.7 days for the best based planning processes quency than marginal product companies. designed to ensure a certain ranges. level of planning security for Low Cost and Top Service production. Supply Chain Planning

The detailed evaluation of Integrated Supply Chain Good planning quality calls the results brings something Organisation for individual, separate plan- Are you looking for a logistics surprising to light: Compa- ning processes; these are fre- nies that do well in terms of The bundling of responsi- quently lacking. Sales planning performance indices in the bility for the supply chain has to deliver the most realistic specialist who does more service dimension (service is the cornerstone of ef- prognoses possible and must level, delivery time) do not ficient supply chain man- therefore be independent of necessarily pay for this agement. The clearer the the company’s financial plan- than just talk about networks? with high costs (inventory, responsibility and the ning. Supply chain champions logistics costs). Low costs fewer different depart- also set out clear rules and Ours is ready and waiting! The basis: our own rail traffic and transport and the top service are not ments there are in plan- binding agreements for deal- fleets. Multimodal terminals and warehouses. Value Added Services and mutually exclusive – the ning and control of the ing with unforeseeable events, widely claimed trade-off value creation chain, the such as unplanned promotional site capacities. Plus, logistics expertise with a special focus on your between service and costs lower the frictional losses quantities. This helps improve field. Are you looking for some new momentum for your logistics? is not empirically verifi- and therefore the more the acceptance of the planning Why not get in touch? able. It is more the case efficient the supply chain processes. that the two factors pos- will be. sibly supplement and Empirical evaluation Supply Chain Controlling reinforce each other. also shows that the Chemion Logistik GmbH Because seven sup- responsibility for Supply chain champions es- Bayer Chemiepark · Building X 6 · 51368 Leverkusen, Germany Telefon +49 (0) 214/30 – 33900 . www.chemion.de ply chain champi- the supply chain tablish a system of indices with ons have a service should not be company-wide unified KPIs

[email protected] Page 20 Logistics CHEManager Europe 9/2007 Keep Cool Challenges and Solutions for the Micro-distribution of Temperature Sensitive Healthcare Products

he simple fact is “pharmaceuti- (multiple countries) or even In order to keep the prod- central (e.g. European) basis. ucts in the required tempera- cal products need to be stored I would like to call the above ture environment during this and transported in a way that mentioned distribution of larger fine transportation, more use is T volumes as “macro-distribu- being made of actively cooled their integrity is not impaired”. This tion” and the distribution of transport solutions offering a is one of the key messages for health- smaller volumes to end-cus- good alternative for polystyrene tomers as “micro-distribution”. cool boxes. Unfortunately, these care companies, when distributing When looking at various models solutions are restricted to na- their temperature sensitive products. of micro-distribution, one has to tional or limited regional areas distinguish two basic process – there is not yet a pan-Euro- But what does this mean? streams: pean solution for instance. But  1. Product flow from manu- regardless of which distribution In the past, legal requirements facturing site to a DC and model is chosen (either actively such as 21 CFR in the United process flows within the DC cooled or passively cooled): it is States, EU directive 2001/83/EC  2. Product flows from the DC up to the product owner to en- Andreas Olpeter, Manager Sales & or the EU guideline 94/C63/03 Business Development, AS Healthcare to the customers sure the product integrity at all on “Good Distribution Prac- times. tices” unfortunately did not The transportation of prod- In order to fulfil this require- provide further references or ed with USP [1079] resulted in a ucts to a DC (= replenishment ment it has become an industry detailed guidelines as to how common approach, harmonised of stocks) and activities within standard to perform so called this should be secured. documentation and reference the DC are processes typically “type qualifications” or “black- Therefore, in recent years, standards in order to fulfil the under the direct control of the box qualifications” in this re- various industry-internal dis- requirements. healthcare company itself (or spect. For actively cooled discussion groups (e.g. PCCDG – if outsourced to a third party tribution, whereby the product – Pharmaceutical Cold Chain The Impact logistics provider, 3PL) under is transported in cool trucks Discussion Group in the U.S.A., indirect control of the product only and the corresponding C3 – Cold Chain Committee in Whilst a lot of solutions have owner. carrier’s HUB’s and depots are Europe or the Pharmaceutical been developed for the world- In most cases neither the also cooled, this results in a se- Logistics Forum – PLF in Eu- wide distribution of tempera- healthcare company nor the ries of test shipments. Should rope) evaluated these require- ture sensitive products up until logistics partner perform the these test shipments deliver ments and developed standards now, the main focus is on the “final” transportation of the positive results, the assump- and guidelines, covering topics transportation of products in products to the individual cus- tion is made that the delivery like larger quantities, e.g. pallets tomers themselves, but make process is suitable (in addition  Global distribution practices from one manufacturing plant usage of specialized carriers. to regular audits). However, this for temperature sensitive to another or – once finished Their networks enable cus- is not a 100 % guarantee for all products products are ready for sale tomer orders to arrive in time, parcels distributed this way. It  Transport packaging for such – from the manufacturing site may it be within 24 or 48 hours, will always be just a glimpse at products to a distribution centre (DC). or even – for urgent shipments the tip of the iceberg.  Temperature monitoring These centres serve as a plat- – within a couple of hours. With regard to passively  Qualification of shipping con- form for the fulfilment of cus- Transport of finished prod- cooled distribution, the corre- tainers tomer orders (hospitals, labora- ucts to a DC are usually in bulk shipments are “fragmented” – For certain products the cool long and at what temperature sponding cool-box is validated tories, pharmacies or wholesal- shipments (multiple pallets per i.e. products are removed from chain may not be interrupted during its journey through the using different configurations This, combined with more de- ers), whether this is done on a shipment, by air, sea, truck or their “closed” environment. at any point, meaning all DC DC. Of course, this data is ar- (e.g. summer/winter) setting tailed information now provid- national (one country), regional even by railway, or any kind of Pallets are broken down to areas must be set-up accord- chived and readily available, if the time limit during which the combination thereof), in order cartons, and cartons to single ingly. This is of course an ideal required at a later stage. required temperature can be to keep transportation costs packs. This results in a constant situation – but not an industry But what now? How to en- maintained (e.g. 48 hours). De- low. Logistics solutions and sys- and increasing complexity. standard, as it would be very sure the final process in micro- livery must now be made within The complete logistics solution tems have been developed for In addition, there are in- cost intensive. distribution, the transportation this time window. temperature sensitive products; ternal product movements During quality audits ques- of a customer order To make sure that this these enable a constant main- between different areas (from tions like “how long do you to the time limit is not exceeded, AS tenance of temperature ranges goods receipt to high rack stor- need for the picking/packing healthcare has integrated all during transport. The prod- age, to replenishment storage, process” are often answered major carriers into its IT en- ucts/pallets typically remain in to picking area and goods dis- with “it does not take vironment. As a result the Europe’s No.1 a closed environment (e.g. sea patch), before the products are very long” or “nor- movements of all parcels freight container, air freight finally handed over to a carrier mally the product is are tracked and moni- container or truck) during the for final transportation to a cus- back to a cool environ- tored. An IT-based event whole transportation time. tomer. ment within 30 min- manager delivers real plastic pallets This transport mode is one- Whilst high rack storages utes”. We all know time information about dimensional – from point A to and replenishment storages are that this statement any disruption of the point B. The harmonisation of normally cooled to the prod- leads to further transportation process, requirements for this kind of uct requirements (e.g. +2 °C questions, of- enabling immediate bulk shipment and the exist- – +8 °C), other areas might only ten resulting in corrective actions. Of ing solutions (availability of be kept at room temperature corresponding course, this shipment suitable trucks or containers (+15 °C – +25 °C). Therefore, in findings. model has certain dis- and temperature monitoring order to “maintain the quality In order advantages compared devices) helps the industry and and integrity of products at all to ensure the to actively cooled trans- its service providers manage to times”, companies must ensure product qual- portation. On the other hand, it keep this process well under that cool products are only out- ity at all times, offers the opportunity to control control. side of their designated temper- AS healthcare the transportation time of each Looking at the processes ature range for a limited period has developed individual parcel, resulting in within a DC, however, incoming of time, as per specification. unique IT solu- an increased robustness and tions for these “in- quality of the micro-distribu- DC” processes. Either all tion. Figure 1 processes are performed in a temperature control- Conclusion led environment, or – as Storage Picking/Packing Goods dispatch per specification – the All in all, the micro-distribu- Full pallets Original cartons Shipping pallets limited time for a product al- tion of temperature sensitive (1 SKU per pallet) (1 SKU) (Multiple cartons with lowed outside of a cool envi- final recipient, is performed healthcare products is not easy Mixed cartons multiple SKU’s) ronment is constantly tracked according to these guidelines? to manage, but it is not impos- (multiple SKU’s) and monitored. Every internal Two main options are available: sible. movement is captured using a actively cooled distribution or Being a leading provider Increasing compexity barcode scanner system, each passively cooled distribution of outsourced SCM in Europe, scan generates a time stamp in (in insulated boxes). AS healthcare offers tailor- the WMS system. Thus every When looking at the basic made solutions for the health- movement of a temperature systematic of carriers’ networks care industry. The portfolio of sensitive product outside of for a next-day delivery of such services comprises customer its designated environment is shipments, regardless of what call centres, warehousing and Long life, very economical Compatible with all pallet logged. Whenever this product option is preferred, the scenario transport management, IT solu- jacks and handling gear is brought back to its original shown in fig. 2 may apply (for tions as well as financial serv- Optimizing logistics Source: AS Healthcare © GIT VERLAG temperature environment, this example). ices. Validated processes for the processes with RFID 100% customer satisfaction Technology Fig. 1: Micro-distribution: typical process flow within a DC scan will determine the total In addition to the increased warehousing and distribution of Conveyable with closed time spent outside of e.g. 2 complexity during the “in-DC” sensitive products, value-added Top load capacity, runner bottoms – 8°C. If during these processes processes, another challenge services (e.g. licensed manu- highest durability Figure 2 Contact: a pre-set time limit is reached, arises: how to ensure the qual- facture in view of repackaging Easy to clean Alexander Korell, then an automatic warning is ity and integrity of temperature and labelling), the logistics of Universal use [email protected] 17:30h: handover of picked orders generated in order to either sensitive products when several clinical trials and promotional or +49 (0) 5245/43-116 to carrier – loading on truck an departure perform the transaction within hundred or thousand different material are also available, in at DC the remaining time, or if not parcels are shipped to custom- order to support our customers’ 18:30h: Arrival at carriers receiving HUB possible to cancel this trans- ers like this every day. business. and unloading of all parcels. Sorting and allocation of parcels to regional HUB’s/depots. action and bring the product Of course, this can no longer back to its original location. If be compared to the “one-dimen- 21:00h: Departure of trucks to regional HUB’s/depots the time limit is exceeded, this sional” transportation of “bulk individual item will automati- shipments” and solved with the 3:00h: Arrival of trucks at regional HUB’s/depots, unloading of all parcels, cally be placed into quarantine same solution. The use of tem- sorting and allocation of parcels to – deviations are generated ac- perature loggers for example, E Contact: delivery vans cordingly. whether electronic or chemi- Andreas Olpeter 7:30h: Departure of delivery vans at By following this process cal, is not feasible, both for cost Arvato Services Healthcare (AS Healthcare) regional HUB’s and final transport of design and combining this data and performance reasons. Such Eschborn, Germany parcels to customers Company’s DC Carrier’s HUB/depot with a central temperature data loggers only provide post- Tel.: +49 6196 7755 836 Paul Craemer GmbH • Germany • www.craemer.com monitoring system, one is able event information, when the Fax: +49 6196 7755 811 Source: AS Healthcare © GIT VERLAG to identify where this product product has been handed over [email protected] Fig. 2: Basic systematic of carriers’ networks for a next-day delivery (example) has been, at what time, for how to the customer. www.arvato-services-healthcare.com

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CHEManager Europe 9/2007 ProductionFacilities · Processes · t echnologies Page 21 Dueling Technologies The False Debate

he enthusiasm for radar and include radar, capacitance, and electro-mechanical. Siemens new technologies has led some also offers pressure transmit- to predict ultrasonic level ters and other technologies. T All of these have their uses. measurement may be in decline. Not It is important to look at the so, says Dave Bignell, President and application first, then recommend the best solution for the CEO of Siemens Milltronics Process customer. Instruments Inc., who points out that Why does ultrasonic technology ultrasonic technology is still showing remain so popular? on-going market growth because of Ultrasonic technology re- its inherent advantages. CHEManager mains popular because it has a Europe went into more detail with number of practical advantages. In a great number of applica- Dave Bignell. tions, it equals any technology in accuracy and reliability and is generally less expensive. That is why it continues to represent about two-thirds of the non- contacting level market.

What are the advantages of ultrasonic technology?

Ultrasonic is a well proven technology with an excellent track record. It is non-contacting and requires very little maintenance. It is virtually self-cleaning because of the vibration of the transducer face. Ultrasonic is a very cost- Will popularity of ultrasonic people became convinced radar not seriously affect the speed with many different transduc- Ultrasonic technology contin- Dave Bignell effective technology, generally decrease as the cost of radar is a do-all product. Unfortunate- of sound. Our customers in the ers makes ultrasonic technology ues to evolve. Today’s ultra- President and CEO of Siemens lower in price than radar. Fur- decreases? ly, the result is that service tech- mining, aggregate and cement very versatile. sonic devices have enhanced Milltronic Process Instruments Inc. thermore, you can multiplex; nicians are now troubleshooting industries also use ultrasonic hardware and advanced echo- for example, you can con- The cost of radar technology applications where radar was technology widely for many When should I use ultrasonic processing software with great- nect up to 10 transducers to is gradually going down, and installed when, in fact, ultra- level applications such as flota- and when should I use radar? er accuracy and more capabili- Some people say ultrasonic is one ultrasonic controller, and this will encourage plants to sonic or a different technology tion tanks, crushers, stockpiles, ties than ever before. Compar- aging technology, and will be this really drops the price per consider radar when there are would have been the better fit. and storage silos. It all depends on the details ing early ultrasonic technology surpassed by radar. What do measurement point. applications involving vapors, Like every technology, radar of the application – the vessel with what we have today is a you say? A big advantage of ultra- vacuum, or heavy dust. These has its strengths and its limi- What makes ultrasonic technol- characteristics, the material lot like comparing 1960s AM sonic technology is the ability are applications radar does tations. As people discover ogy so versatile? being measured, the process radio to today’s satellite radio. The overall ultrasonic market to mount the controller/display very well and where ultrasonic the limitations and as some of connections, chemical compat- Ultrasonic is an established is still growing at about 3 % panel remotely from the sensor, is not the best choice. Even so, I the hype subsides, they focus The heart of an ultrasonic ibility, power requirements, and technology, but we continue to a year according to industry which is very useful in certain believe ultrasonic will continue on the real question which is system is the sensor or trans- measurement environment. As invest in refinements that bring research groups. Siemens Mill- applications such as on a pri- to be the technology of choice choosing the best technology ducer. Good suppliers offer general rule of thumb, ultrason- real benefits to customers. With tronics is already the market mary crusher, in a wet well, for its proven applications. for the job. a wide range of transducer ic is a great solution for water the launch of our new Sitrans leader in ultrasonic level, and or in harsh chemical environ- models so you can select the applications, most liquids, and Probe LU transmitter in 2004, our ultrasonic product sales ments. Radar’s high operating Is radar a technology fad? How has the emergence of new one with the right range, beam medium-range solids storage for example, we further en- grew 4 % last year, even though frequency cannot be well con- technologies affected ultrasonic angle, sensor facing material, silos. hanced what was already the there are more suppliers and tained in long cable runs, and I know technical people can sales? and other characteristics for We generally recommend best echo-processing software this market is more competitive the electronics must usually sometimes fall in love with the particular application. If radar for long-range meas- in the market. It is a low cost than ever before. Of course, ra- be located within 10 feet of the the latest technology. When At one time, ultrasonic was the required, you can select a sen- urement on high storage silos, 2-wire, easy-to-use transmitter dar sales are also growing and, antenna. On the other hand, radar level measurement first only non-contacting technology sor that will withstand low or extremely dusty applications, that offers high accuracy and because it is a new technology, an ultrasonic controller can be appeared, many people jumped available, so it was sometimes high temperatures, or one that and applications involving con- virtual plug-and-play installa- our radar sales are growing at located 1,000 feet or more from on the bandwagon. They want- misapplied. In instances where has housing or facing compat- tinuous feeding and extraction tion, as well as Profibus and an even faster rate than the the transducer. These practical ed to install radar everywhere, it hasn’t worked well such as ible with harsh chemicals. This such as lime or activated car- Hart for easy integration. The more established technolo- considerations are important; including applications that were the extreme dust of a cement ability to combine a controller bon. Volatile chemicals with Sitrans Probe LU and also our gies. Frankly, I think this duel for example, mounting a radar not appropriate or even where silo or on tanks storing volatile vapors above the liquid surface, MultiRanger and HydroRanger between technologies is a false transmitter in a sump or wet radar was more expensive. chemicals, customers now have or applications with extreme controllers are examples of debate that does not serve well would be unnecessarily dif- Ironically, when ultrasonic was other options like radar and temperatures or pressure are advanced ultrasonic solutions customers well. Unfortunately, ficult when an ultrasonic system first introduced, some people TDR. I think it is a good thing also best suited to radar, or may for a wide range of applica- suppliers with only one tech- will perform the task and is eas- were so keen to use it every- for customers to have choices. require capacitance technology tions. nology may promote a message ily installed. where that it was sometimes Different technologies serve dif- for interface measurement. that their solution can do eve- Remote mounted electron- misapplied as well. ferent needs in a process plant, What is the future of ultrasonic rything, but this eventually cre- ics also make sense for pump Sometimes vendors with only and we should always choose What are the key customer level technology? ates problems when technolo- control and alarm relays. While a single technology to offer may the one that serves the applica- demands for ultrasonic level gies are misapplied. The truth some end users connect to a sell their solution into marginal tion best. For this reason, the technology today? Ultrasonics will continue to be a is that no single technology PLC, many more rely on the ul- applications. This ultimately Siemens portfolio offers mul- valuable, growing technology in is right for every application. trasonic device. For this reason, hurts acceptance of that tech- tiple technologies for our cus- Customers are looking for new the marketplace. It meets cus- They all have their strengths we have sophisticated pump nology in any application. tomers. features, primarily advanced tomer needs for proven, easy- and applications. That is why, control and rotation routines Instrument suppliers have done echo processing, diagnostics, to-use, low maintenance level some years ago, we broadened built into many of our ultrasonic an excellent job promoting the Is ultrasonic technology only and networking capabilities measurement at a reasonable our level measurement line to controllers. newest technologies, and some for the water and wastewater such as Profibus. cost. Its continued success will industries? Cost is important, but it is depend on our ability to meet more than just the initial cost of change customer needs for Ultrasonic has somehow become the product. Because staff and increased energy savings, sim- Fig. 1: The Sitrans Probe LU is a 2-wire labeled a water product, and loop powered ultrasonic transmitter for maintenance time is precious in ple operations, and networking this may be partly our own level, volume and flow monitoring of process plants, customers want capabilities. fault for first promoting it with liquids in open channels, storage ves- instruments that are simple to such great success in the water sels and simple process vessels install, set up, and swap. They industry. The water industry want accurate, reliable prod- values ultrasonic because it is ucts that are low maintenance. E Author: adaptable to most applications They want products they can “fit Dave Bignell found in water plants. Water and forget.” Many plants have Siemens AG plants also tend to be cost-con- reduced their staff, and rely Automation and Drives scious and ultrasonic performs more and more on vendors or Siemens Milltronics Process Instruments Inc. well and costs less than radar contract installers for pre-and Peterborough, Ontario, Canada or other technologies. post-sales advice and support. www.siemens.com/processautomation The chemical industry gen- All these elements are part of erally tends to think of radar the overall cost of ownership. E Contact: first because radar is usually Most customers today prefer to Ms. Karin Kaljumäe the best choice for hydrocar- deal with a large, established Siemens AG bons with vapors and pressure supplier like Siemens that SBS ORS GD AHS OD12 extremes. The knowledgeable offers a big product portfolio Fürth, Germany technician, however, knows that and can meet the full range of Fax: +49 911 978 3321 ultrasonic technology is effec- Fig. 2: The MultiRanger is a versatile instrumentation needs. [email protected] tive on chemicals such as sul- short to medium-range ultrasonic sin- phuric acid, caustic soda, phos- gle and multi-vessel level monitor/con- How is ultrasonic technology Exclusive technical publication Dave Bignell, President and CEO of Siemens Milltronics Process Instruments Inc., presenting the product portfolio of phoric acid and oils because the troller for virtually any application in a changing to meet today’s cus- from the Automation and Drives ultrasonic level technology vapors from these materials do wide range of industries tomer needs? Group.

[email protected] Page 22 Production CHEManager Europe 9/2007 Maintenance Strategies for pH Systems Merck to Use New pH Technology

he memosens sensor technology introduced by TEndress+Hauser in 2004 has proven its worth in the tough day- to-day industry environment. These digital systems not only increase process safety but also reduce costs since they are cheaper to maintain than equivalent analog measuring points. An integral part of this strategy is central calibration in the labs of the measurement and control workshops where the sensors are regenerated and calibrated under ideal conditions. This approach is particularly worthwhile for process analysis parameters such as pH measurement as they have to be calibrated and adjusted frequently.

At its center in Gernsheim, Ger- Fig. 2: Life cycle of Memosens sensors many, Merck KGaA switched its pH measuring points in the chemical production section Fig. 1: Central calibration at Merck over to memosens sensor tech- results of factory calibration,  Sensor history with serial the client can assign the sensor nology more than a year ago. to storage and operation, and number a specific measuring point TAG Here, chemicals are produced difficulties of analog pH meas- also a measurement and control on to final sensor scrapping. Graphic display of the cali- X or a measuring point group in batch processes at tempera- urement, such as moisture, salt expert at Merck in Gernsheim, In addition to the unique serial bration results over time and TAG group 1. This assignment tures between 75 and 85°C. The bridges, potential overlay or and responsible for pH meas- number of the sensor, the meas- information on the various is stored in the database and in pH value is usually in the very EMC interference. Mr. Werske, urement, finds that „the operat- uring system where the sensor operating locations and con- the sensor itself. With the Mem- Fig. 3: Memosens plug-in-head with acidic range but can go as far measurement and control spe- ing life of the sensors has been has been operated in the plant ditions. oclip accessory, this assignment Memoclip as the alkaline range at times. cialist at the Gernsheim plant, extended by about 30 %. Some also acts as the data manage-  Measuring point history with can also be made visible from Since the pH value is very cites another advantage that sensors were even in operation ment allocation key. Using the TAG the outside so that the sensor relevant to the quality of the was a decisive factor in mak- for 6 months – the analog sen- TAG information, the database Information as to which sen- is clearly labeled throughout able which ensure safe plant process, it is measured redun- ing Merck switch to the new sors deployed previously never always links the sensor-spe- sors have been in operation its entire life cycle, even when operation. Users can choose dantly with an Orbipore elec- sensor technology: „Being able achieved such a long service cific data – such as the serial at a certain measuring point, being transported and cali- between sensors with a liquid, trode CPS91D with memosens to simply replace the sensors life.“ To quantify this subjective number, sensor type and factory how long they were in opera- brated. gel or polymer electrolyte and technology in conjunction with on site and then service them observation, the measurement calibration data – to the data of tion and when. When the sensor is replaced different types of membrane, a 2-channel Mycom S CPM153 centrally in the lab under ideal and control specialists kept sta- the measuring points such that on the online measuring point, such as ceramic and Teflon with a digital sensor input. The conditions gives us such qual- tistics on all the data saved in these data cannot be modified As a result, predictive main- the Liquiline transmitter uses membranes, or the „open“ measuring system is integrated ity and cost advantages that the sensor. The data were read or confused with other data. tenance with improved asset the TAG or TAG group to check membrane, to find the optimum into the process control system more than justify the costs for out at the transmitter and add- By automatically transmit- management becomes an in- whether the correct sensor has sensor for their process. The by means of the Profibus output upgrading.“ ed to the statistics by hand. This ting all the data saved in the tegral part of the new mainte- been connected. If a sensor with various electrolyte and mem- in Mycom. Within the context of the in- process was time-consuming, sensor following calibration nance strategy. the incorrect assignment is con- brane combinations are avail- The harsh process condi- novative calibration and main- susceptible to error and thus in the lab, an additional data nected by mistake, an alarm is able both for glass sensors and tions take a considerable toll tenance strategy, Merck is resulted in high costs. record is recorded for the sen- Clear Assignment of the Sensors to automatically output. For rea- the non-glass ISFET sensors on the sensors used. Both the focussing on predictive main- sor history, including the oper- the Measuring Point sons of safety, the measuring from the Tophit product family. pH and temperature ranges of tenance as the operating staff End-to-End Documentation ating location, by means of the point cannot be put back into Pfaudler enamel sensors with the process, and the medium simply replaces the sensors on TAG. Mr. Walter regards the This maintenance strategy also service until a correct sensor memosens technology will soon itself, make tough demands in site with calibrated sensors at For this reason, Merck is now graphic display showing the has an effect on processes dur- has been connected. This sim- be added to the portfolio. In this terms of sensor performance regular intervals. The meas- using the new intelligent data slope and zero point over time ing operation and on the day- ple operation ensures that the way, our clients can choose the and robustness. The medium urement and control special- management system. The data as particularly useful – „here to-day working scenario. The right sensors are used. Con- ideal sensor for every applica- attacks the leached layer of ists then maintain the replaced management software is based you can see the condition of sensors no longer only remain sequently, the sensor can be tion. the pH-sensitive glass, with the sensors in the company‘s meas- on a server-enabled database the sensor at a glance,“ he says. at the measuring point. Instead, replaced correctly 24x7 by the glass becoming „unclear and urement and control workshop and, in conjunction with the Based on the information on the they are taken to the central cal- operating staff on site – either dull“ as a result. This reduces by: laboratory measuring system, operating hours - particularly ibration system in the measure- in rotation or in the event of an Author: the sensitivity of the sensor and  Qualifying the condition of is an essential part of the cost- in extreme pH and temperature ment and control workshop to error. Dr. Monika Heisterkamp thus the quality of the pH meas- the sensor saving maintenance strategy. ranges – and using a number be maintained and then brought urement. The leached layer can  Cleaning and regenerating if The software records all the of other criteria, the company back to the operating facility and Summary be brought back to an optimum necessary data stored in the sensor, the decides when a sensor is to be deployed again in the process. state by regenerating the sen-  Calibrating/adjusting calibration/adjustment data regenerated or scrapped. This movement of the sensor The sensor technology has revo- sors regularly which, in turn, and the process- and measur- Thus, measuring systems from place to place requires vi- lutionized analytical measuring E Contact: extends the operating life of the The sensor is then ready for ing point-specific data during and maintenance concepts are able measures to ensure that the technology. Sensors are already Miriam Sosulski electrodes. operation again afterwards, is central sensor calibration. The analyzed on the basis of the sensors are reconnected to the available for the pH, dissolved Endress+Hauser Conducta GmbH+Co. KG The advantages of sensor brought back to the plant and data is thus also managed cen- sensor and measuring point correct measuring system. oxygen and conductivity pa- Gerlingen, Germany technology come to the fore used in the process. trally and automatically. In this data recorded centrally, and With memobase, the sen- rameters and the platform is Tel.: +49 7156 209 190 particularly in such harsh proc- How does predictive mainte- way, the client can track and optimized where necessary. sors are recorded in the cen- being continuously expanded. Fax: +49 7156 209 266 ess conditions. Inductive data nance affect the operating life document the entire life cycle of The following analysis options tral calibration system during For the pH sensors in particu- [email protected] transmission eliminates the of the sensors? Manfred Walter, his sensors end to end from the are available here: initial commissioning. Here, lar, all sensor types are avail- www.conducta.endress.com

Meet at WTT-EXPO Solution Provider for the Polymer Industry Fachmesse für • Application engineers • Accessory suppliers Product Swiss company List • (Maintenance) Service providers • Software providers industrielle Wärmetauscher- develops and industrializes ad- • University and institutional research facilities und Wärmeträgertechnik vanced and customized solutions • more than 160 exhibitors from 13 countries for processing of viscous, sticky and crust-forming products for Free lectures on the stage in the fair hall the polymer, chemical, fiber, food Detailled listing at: www.wtt-expo.com > Fringe events Trade Fair for Industrial Heat Exchanger and Heat and environmental industries. Premium-Mediapartner: Organizers: The company is suited for Transfer Technology PUBLICO the demands of many polymer PP Publications applications: providing long pp-publico.de residence times, highest mixing efficiency, intensive surface re- www.wtt-expo.com • 09.- 11.10. 2007 • Karlsruhe Fair newal, self-cleaning of the large heat transfer surface area and precise control of the process temperature. At the K 2007 show, List International Congress on Biodiesel: will illustrate technology for polymerization/polycondensa- The Science and The Technologies tion reactions, direct desol- to the commercial industrial pi/2007/07/Presseinforma- ventizing of polymer solutions level. tion18072007.jsp). 5–7 November 2007 and process solutions for spe- In addition to the pilot instal- Hilton Vienna • Vienna,Austria cific compounding and crafting lation at the Technical Center Join the global discussion on processes providing possibilities in Arisdorf customers have the science of biodiesel. for new polymers. access to a two – stage semi E List AG 8th8th AOCSAOCS PracticalPractical ShortShort CourseCourse The company is particularly – commercial installation at Tel.: +41 61 815 3000 onon Biodiesel:Biodiesel: Processing, Processing, focusing on the direct devolatili- the Institute for Applied Poly- www.list.ch Chemistry,Chemistry, and and ProductionProduction zation of elastomeric polymer mer Research (IAP, Golm) at the [email protected] solutions. Merseburger Innovations – and 4–5 November 2007 • Hilton Vienna Over the past few years, List Technology-Center in Schkopau K 2007, Duesseldorf, (preceding the International Congress on Biodiesel) www.aocs.org/meetings/biodieselwww.aocs.org/meetings/biodiesel has progressed this technology (www.fraunhofer.de/fhg/press/ Hall 9, booth C24

[email protected] CHEManager Europe 9/2007 Production Page23 The Perfect Plant Savings Through Higher Productivity and Improved Capacity

lobal competitiveness is placing tre- Canada, the production manager and pany needed a company-wide, single workers did not have any insight into version of the truth to support deci- mendous pressure on cost, quality fluctuations in performance and the sion making. and responsiveness in manufactur- financial repercussions resulting The advantages were clear even G from them. In addition, the insuffi- after the first implementation steps ing as nodes are being pushed out to distant cient integration of the ERP and op- of the perfect plant with SAP xApp locations leading to a loss of visibility and erating systems resulted in accuracy Manufacturing Integration and Intel- deficiencies. ligence (SAP xMII) due to its high us- control. Asset efficiency is a premium, but Nova chemicals was able to imple- ability and complete integration into effective comparative measures are difficult ment the first part of their vision for the SAP ERP system: the perfect plant by using xMII and Through the better use of data for to achieve. Plants use copies of master data Pavilion’s application Manufacturing decision making purposes the com- creating compliance and quality issues. Pro- Process Optimization (MPO) pany has the possibility to save more The benefits achieved by this were than US-$10 million on costs such as duction personnel lack the decision support enormous: procurement, inventory, etc. information to meet their targets. Business  Million dollar savings through In the first month consignment higher productivity and improved stock was reduced by 8 % and by May and financial impact of production asset ex- capacity 2006 by 23 %. ceptions cannot be monitored or controlled  Managers can quickly identify fur- Thanks to an optimized visibility John Harrison ther areas to improve profitability of inventory, Eastman was able to Fig. 1: Due to suboptimal performance of a pump in the plant the fulfillment of a customer order at the enterprise level.  Users can make better decisions reduce expensive rush deliveries for is at risk  Increase production yields by 10 % based on real-time data consignment stock by 50 %. As chemical companies struggle to through proactive monitoring of deal with this environment, one of manufacturing events The line workers are motivated and The Road to the Perfect Plant the tools being used is the concept  Reduce maintenance costs by 10 % empowered to maximize the efficien- gin the journey towards the perfect As overwhelming as the vision of the perfect plant. The well known – through streamlined maintenance cy of their equipment and to close the How can you go about making the plant. might seem, the journey to a perfect term “Perfect Order” refers to an processes and alignment with man- gap between theoretical possibilities concept of perfect plant a reality? Every element and its realization plant starts with a first step. With order where everything is correct and ufacturing metrics and actual capacity utilization. First, the areas requiring optimiza- is a stepping stone on the way to a each problem that reality brings is an reaction is quick. The term “Perfect  Reduce asset capital investments tion need to be identified and defined company’s ideal of the perfect plant. opportunity to refine the vision until Plant” is the operations version of the by 10 % through improved asset Eastman Chemical within an overall plan, taking into ac- It is an ongoing journey – due to the what you have in the end is success. “Perfect Order” within the plant, suc- performance from greater asset count the individual characteristics ever changing environment between cess is defined by aligning corporate reliability At Eastman Chemical, a manufactur- of the company, its processes and the creation of the vision and the strategies and objectives with the  Reduce inventory by 10 % – manu- er of fibers and plastics in Kingsport, production. As soon as a plan is in realization of it. This leads to new E Contact: plant‘s performance. However, to facturing lean process enablement Tennessee, USA, the employees spent place the expected advantages of challenges making perfect plant a John Harrison take ownership of these factors, plant through streamlining and reducing too much time manually collecting perfect plant need to be quantified continuous renewal and optimization SAP, Canada personnel must have the visibility and variability of execution data from various systems. The com- and prioritized. Now it is time to be- process. [email protected] control of key metrics.  Increase value chain agility and The perfect plant concept from customer responsiveness through SAP gives a 360-degree view into all Complete value chain integration plant operations. It allows individuals and visibility to increase visibility, improve integration with business processes, and ex- Example of a “Perfect Plant“ Scenario tend the investment in the SAP ERP application by integrating with plant In a polyolefin plant, a customer order operations. needs to be fulfilled in spite of a defec-

It provides an environment in tive pump. With the integrated com- E20001-F150-P710-X-7600 which manufacturing assets are op- bination of SAP xAPP Manufacturing timized and production performance Integration and Intelligence (xMII), is increased - delivering critical vis- Pavilion’s Manufacturing Process ibility into all aspects of the manu- Optimization (MPO) and Meridium’s facturing operations. Perfect plant Reliability Centered Maintenance and processes offer capabilities that help Optimization (RCMO) it is possible to to respond faster to changes in mar- avoid temporarily shutting down the ketplace conditions and minimize the production as well as being able to impact on the bottom line. The re- fulfill the customer order although sult is greater momentum, driving the the throughput was reduced (Pavilion company to increased yields, superior and Meridium are both members of asset utilization, and streamlined or- the SAP Industry Value Network for der fulfillment. Chemicals). The production worker identifies that a pump has overheat- This perfect plant concept has three ed and is running below optimal per- major thrusts: formance. He creates a maintenance  Asset Performance and Utilization: order in SAP xMII and informs the Assets are monitored so that events of production manager. concern are triggered automatically. With Pavilion’s MPO and the same Enterprise Asset Management (EAM) process model which is used for the processes are optimized and all asset continuous regulation of the process, content is available in a single source. the production manager simulates the EAM processes are tightly linked to situation with the new parameters manufacturing processes. and optimizes the process anew. This  Manufacturing Execution: guarantees that the customer order Manufacturing execution is so effec- can be fulfilled in both quantity and tive that it is nearly event free due to quality and that the defective pump Assumed. Proven. proactive monitoring and automated can safely continue even at a lower event handling that is tightly coupled performance. with EAM and the enterprise. Person- In SAP xMII the production manag- nel have visibility across all critical er can immediately and at all times see processes that contribute to success that the customer order is being proof manufacturing execution. duced without delays, interruptions or  Operational Scheduling / Planning: quality deviations. He can also see that The Operations Schedule is such that although there are technical problems changes are not driven primarily by with the pump, the production is run- unplanned events in manufactur- ning at the theoretical maximum. ing but rather by demand shifts and The maintainance engineer finds other factors. Manufacturing is able the source of the defective pump in to manage & react to these changes the closure of the wheel blower. With more rapidly and reliably. Meridiums’s fully integrated application RCMO, he analyses the risk of a The perfect plant typically aligns and complete breakage of the pump. He improves key performance indicators then creates a RCMO message auto- (KPI) across manufacturing. Here are matically in SAP ERP detailing the some examples of typical KPI’s for the required steps to minimize the risk. Perfect Plant: These steps are to monitor the rota-  Reduce manufacturing costs by tion speed and temperature of the 5 % through manufacturing proc- pump. SAP xMII obtains this data ess monitoring and increased vis- through the attached online systems. ibility  Increase plant efficiencies by 25 % Nova Chemicals through optimization of manufacturing processes and integration At Nova Chemicals, a manufacturer with the enterprise of plastics and chemicals in Calgary, With our complete sensor technology we leave no room for false assumptions. Whether sensors, or communication – we have a comprehensive product range for SAP-Solutions for the Chemical and Pharmaceutical Industry each application and all industries. As part of Totally Integrated Automation, our sensor systems set a new benchmark in profitability and performance. We provide From Nov 26 to Nov 27 the German Chemical Industry Association (VCI) and SAP reliable solutions that measure with precision, for the process industry as well as the conduct their traditional conference on SAP- and partner solutions for the chemical manufacturing industry. and pharmaceutical industry. During this conference, a series of lectures presents the Setting standards with Totally Integrated Automation. latest developments and manifold applications related to SAP-technologies. CHEMa- www.siemens.com/sensorsystems nager Europe and its German counterpart CHEManager will report intensively about this event in the upcoming issues. For more information and registration, visit www.sap.com/germany/campaigns/vci- kongress/index.htm.

[email protected] Page 24 Production CHEManager Europe 9/2007 Glasslined Steel in Pharmaceutical Production Universal Chemical Resistance Combined with Ideal Cleaning Properties

t is hard to imagine a pharmaceutical proc- Components for cleaning apparatus in compliance with pharmaceutical needs, ess plant without glasslined apparatus or such as quick-action lids, covers components today. The universal chemi- optimized for the installation of clean- I ing systems and spray lances, up to cal resistance of the glasslined compound the validation of cleaning processes material, combined with its optimum clean- in the works of the apparatus manufacturer. ing properties, are the main reasons why External cleanliness: Apparatus and glasslined components have gained a firm component designs incorporating glasslined stainless steel, quick-action position in this respect. covers made of glasslined stainless steel, fully welded, tight apparatus In the past, plant operators used to insulation, housing of drives with produce their active ingredients in external ventilation. commercially available standard Some of the examples mentioned apparatus and components which will be described in more detail had been manufactured according below. to the comprehensive DIN standards Various components, lined with pharma glass qualities applicable to glasslined apparatus Glasslining Optimized for and technology. In the past few years, Pharmaceutical Needs in many respects. Since the sealing connection with a sterile mechanical however, manufacturers of glasslined areas, as already described above in seal resulted in a much more con- equipment sparked off real fireworks Some manufacturers of glasslined connection with the pipes, are most venient design in terms of cleaning of innovation in connection with apparatus also offer glass qualities critical in regard to cleaning, dead ease. Due to the structural principle glasslined components in pharma- today that have been specifically zones, deposits of product residues of the mechanical seal, undercuts can ceutical production. optimized for the needs of pharma- and product remainders, they were be safely avoided. Besides, by using ceutical processes. In pharmaceu- naturally subject to the greatest gas-film lubricated mechanical seals, Innovation tical applications, brightly colored optimization efforts. According to the the risk of contaminating the product glass is normally preferred, i.e. white principle that “the best gasket is the with abraded gasket material can be Innovation mainly focused on the fol- and recently also light blue. Stud- one you don’t need”, apparatus small minimized. lowing aspects: ies conducted prior to developing a low internal volumes were developed Optimized glasslining: Special glass quali- special light-blue pharmaceutical for which no main flange gasket was Pharma-compliant Cleaning Ease ties whose chemical resistance, com- glass arrived at the conclusion that necessary. A typical example is the position and color even differed con- light-blue products and media al- BE 630 reactor that complements the Cleaning of glasslined apparatus used siderably in some cases from those of most never occur in pharmaceutical lower end of the BE series of reactors for pharmaceutical production must be standard chemical glass. processes, therefore, there is a good to DIN 28136. The largest opening of easy to accomplish and to reproduce. Reduction of dead zones on glasslined nozzles color contrast between the glass and the BE reactor is the manhole, whose Based on its excellent surface prop- and ports: For this purpose, structural the product. Besides, a bright color gasket is obviously shorter than the erties, technical glass is probably the solutions were developed such as ensures that the reactor contents main flange connection of an AE material of choice in order to obtain Glasslined apparatus in active ingredient production special sterile mechanical seals in are well lighted, another factor that reactor to DIN 28136 of the same optimum cleaning results. Besides, a the area of the agitator nozzle, the facilitates visual process control. In size. Another possibility of shorten- number of components are available reduction of nozzle radii of pipes, addition to the color, the most obvious ing gasket lengths by doing without to make cleaning the apparatus inside elimination of flange gaskets and feature, some modern pharmaceuti- gaskets are the glasslined sight glass as simple and safe as possible. These their replacement with novel designs, cal glass qualities are also character- units of the type offered in several de- include, for example, plug-in cleaning optimization of bottom outlet fittings, ized by improved surface properties signs. With this option, a sight glass is lances to be fitted to the quick-action etc. and free from heavy metals. In order fused into the glasslining of the man- covers, or cleaning lances in dedicated to avoid undesired glass corrosion hole cover pressure-tight and without nozzles, which are preferably provid- when cleaning components with gaskets, and the result is a sight glass ed on the manhole cover. alkali media at elevated tempera- system without dead zones. In order tures, the chemical resistance of to avoid cleaning difficulties in the External Cleanliness the pharmaceutical glass was also area between the baffles installed in optimized with respect to alkali the reactor nozzle, glasslined reac- And finally, “externally clean” com- media. tors are offered today where the baf- ponents are also characteristic of Manhole cover with plug-in cleaning lance fles have been welded to the reactor ultramodern pharmaceutical plants. Reducing The Dead Zones wall and fully coated with glass. External cleanliness is not a value in in the factory. For universal applica- ings when operating the apparatus Another example to be described is itself, however, but should be com- tions in a broad temperature range, and also prevents external corrosion. Being the main component of the optimization of the agitator nozzle. bined with obvious benefits for the the insulation will be made of cellu- Moreover it “looks nice”. The same most chemical processes in While mechanical seals to DIN 28138- operator. For example, full insula- lar glass, whereas apparatus that is applies to a full drive casing. In addi- active ingredient production, the 2 have many dead zones and under- tion of glasslined apparatus char- mainly operated at high temperatures tion to ensuring a homogeneous opti- glasslined reactor can be opti- cuts which are difficult to access, the acterizes state-of-the-art equipment will be insulated with glass wool. The cal appearance, it prevents contami- mized for pharmaceutical needs development of a pad type nozzle in today, which has been welded tight insulation yields significant cost sav- nation of the workspace by abraded materials and worn components of the drive, or simply provides for the targeted dissipation of the electric New German Welding Technology motor’s heat loss. Another alternative is to use com- Up to 70 % Reduction of Downtime in time it takes to provide replacement ponents made of glasslined stainless Petrochemical Plants parts can be saved; there are no time steel. For example, manhole covers consuming inspections or crack tests or the flat covers of smaller appara- Operators of petrochemical and with “new on old” welds; reduction of tus are made of glasslined stainless chemical plants, smelters and the cost of equipment and, of course, steel. The glasslined stainless steel glass works have a new alterna- the reduction of downtime of up to material not only has an attractive tive. A patented welding method 70 %. appearance, it also efficiently pre- from Germany can reduce the In June 2007, SWS signed a co- vents color particles from coming off forced downtime of the equip- operation contract with H. Weber and falling into the apparatus when ment by up to 70 %. This could GmbH & Co. from Pulheim, Germa- opening and closing the manhole as even affect fuel prices. The pat- ny. The Weber Group is one of the a potential source of contamination of ented welding method, which is largest players in industrial pipe and the product processed inside. In ex- referred to as gierull welding, is plant construction in Germany and treme cases, the entire apparatus may available from SWS GmbH & Co. throughout Europe. The cooperation be made of glasslined stainless steel, a KG, Bottrop, Germany. focuses on services, remedy of faults, measure that is frequently not neces- Now and then, crackers or repairs and maintenance of furnaces sary, however, if full insulation for the steam reforming furnaces suffer and reactors. apparatus is properly designed. damage due to power outage or The scarcity of raw material and the A solution: gierull welding, a pat- unexpected events. Normally, re- corresponding long delivery times for ented welding technology. Gierull Conclusions pairs cost a lot of time and mon- replacement parts extend the down- welding makes pipes and moldings of ey. Damaged equipment made of time additionally. The damage due carburized, heat resistant steel weld- More information on the company and It must be mentioned at this point that temperature resistant high-alloy to loss of production, the cost of re- able. Used pipes and moldings are re- the giuerull welding technology under: most of the solutions described above stainless steel is very difficult to placement equipment and the cost of paired by gierull welding and welded www.sws-online.eu have not been standardized by norms repair. Often, the material is car- repair affect the yield of the plant. in the furnace again. The benefits of and guidelines, but by manufacturer- burized and cannot be welded. the patented method are obvious: The E www.sws-online.eu specific concepts at maximum. There- fore, some of the solutions shown may Quick Disconnect Couplings be manufacturer-specific and differ strongly, depending on the custom- Product A new line of com- locking mechanism and double-sid- er’s express requirements. However, pact, non-spill quick disconnect ed non-spill shutoff valves for added these examples demonstrate the flex- couplings from Colder Products safety and convenience.” ibility of manufacturers of glasslined Company provides users with The NS2 meets the need for small- apparatus and components today fast, safe and virtually leak-free er, more cost-effective industrial cou- when the optimum technical solu- fluid line connections. An excel- plings. The smaller couplings can tions to the specific requirements lent choice for printing and ink replace larger ones, offering users of producing pharmaceutical active management, analytical instru- a low-cost, space-saving option for a ingredients have to be found and mentation, electronic cooling, wide variety of coupling applications. implemented. Today, customers have and many other applications, the The new couplings also offer very low the choice among a wide variety of patent-pending NS2 couplings air inclusion – air induced into the concepts and detailed solutions and provide high-flow fluid transfer coupling upon connection – minimiz- may select the ones that optimally fit in a small footprint. ing contaminants and reducing the their GMP concept. “This NS2 Series of quick dis- need to purge fluid lines. connect couplings builds on our E Contact: platform of non-spill valves and Dr.-Ing. Jürgen Reinemuth reflects our commitment and on- E Colder Products Company GmbH Pfaudler Werke GmbH, Schwetzingen, Germany going investment in easy-to-use, Tel.: +49 6134 28780 Tel.: +49 06202 850 high quality couplings,” said Andy dustrial markets, Colder Products quire the safe transfer of fluids, the [email protected] Fax: +49 06202 26151 Hass, business unit manager, in- Company. “For applications that re- NS2 offers an easy, twist-to-connect www.colder.com www.pfaudler.de

[email protected] CHEManager Europe 9/2007 PharmaFacilities · Processes · t echnologies Page 25 Capitalise On Opportunities Global Pharma Market to Double by 2020

he global pharmaceutical mar- research and less on sales and rather than ‘made to forecast’ marketing. Pharma’s traditional using justintime manufactur ket will more than double in strategy of placing big bets on a ing and delivery techniques value to US-$ 1.3 trillion by few small molecules, marketing learned from other industries T them heavily into primary care such as the automotive sector. 2020, according to a new report on the with the aspiration of achieving future of the pharmaceutical industry blockbuster sales, will no long More sophisticated direct-to-consumer er suffice. It must focus on the distribution channels will diminish the released by Pricewaterhousecoop- development of medicines that role of wholesalers: The industry’s ers. The increase is driven by soaring prevent, treat or cure. These heavy reliance on wholesalers must demonstrate tangible ben for distribution will be sup worldwide demand for medicines and efits and tackle unmet medical planted as the overthecoun preventative treatments as the popula- needs. Governments and payers ter (OTC) selfmedication sec must play their part and ensure tor grows and new technologies tion grows, ages, becomes more obese the industry is rewarded for enable automated dispensing of and more prosperous. these efforts.” medicines direct to consumers. Some of the major changes Fulfilment of prescriptions for By 2020 the E7 countries for the industry are: most primarycare medications – Brazil, China, India, Indone will be fully automated, whereby sia, Mexico, Russia and Turkey Emphasis on outcomes to increase: The doctors will write prescriptions, – could account for as much focus on outcomes and meas check reimbursement criteria, as one fifth of global pharma urement of outcomes data will and download the script to the ceutical sales. Further, the drive product development, patients’ smart health card or chronic conditions in the devel pricing and reimbursement email account. Patients will be oping world will increasingly decisions and risksharing able to forward the script to an resemble those of the developed agreements between industry, online pharmacy, which checks world. But the report indicates health care payers and provid their identity using a webbased that the current pharmaceuti ers and regulators. Success biometric device and mails the cal industry business model is ful companies will prove that medication to their specified both economically unsustain their products really work and address. able and operationally incap add value. Companies will also Simon Friend, global phar able of acting quickly enough to be rewarded with a fair price maceutical leader, Pricewater produce the types of innovative for new therapies according to houseCoopers, concluded: treatments demanded by glo the level of improvement over “Increasingly pharmaceuti bal markets. In order to make existing medicines. Riskshar cal companies are no longer the most of these future growth ing agreements will become shaping their own destiny. The opportunities, the industry must more mainstream with drug be prevented. Recognising the efficacy and reducing the risk The blockbuster sales model will dis- toring and disease management, future will require the industry fundamentally change the way manufacturers adjusting prices cost effectiveness of prevent profile of many existing thera appear: It will be replaced by may be more valuable than the to take note of growing health it operates. according to the results of out ing diseases among healthy peutic agents. a smaller, smarter and more medicines themselves. care market dynamics involving Further, the report contends comes analysis data that dem populations rather than treat effective sales force, led by key the demands of payers, patients, that despite unprecedented onstrates drug efficacy. ing sick populations, pharma The current linear phase R&D process account managers who will The supply chain functions will become physicians, regulators and poli global demand for its product, will enter the realm of health will give way to in-life testing and live negotiate tender based con revenue generating: The future sup ticians. For the industry to rise the pharmaceutical industry is Compliance monitoring becomes win- management, with wellness licensing: The current R&D mod tracts on therapeutic benefit ply chain will be responsible not to these global challenges, the at a pivotal point in harnessing win for patients, payers and providers: programmes, compliance moni el, involving phase I, II III and and outcomes. The imperative only for distribution of all prod current business model needs to its ability to capitalise on these Solutions to monitor and ensure toring, vaccinations and other IV clinical trials that typically will be who can add the most ucts and services, it will also adapt, but cannot do so alone. It opportunities. Pharmaceutical that patients are fully compli valueadded services. There end in submission for a drug value, not who can sell the most create new channels through requires collaboration between companies are facing a dearth ant with their medications are currently 245 pure vac licence and market approval, pills. Under this model, most which to market products, so all groups driving the delivery of new compounds in the pipe could generate more than US$ cines and 11 combination vac will be replaced by collabo pharmaceutical companies will becoming revenue generating of future health care.” line, poor financial perform 30 billion of revenue a year in cines in clinical development, rative inlife testing and ‘live sell integrated packages of med rather than a cost centre. Fur ance, rising sales and marketing new sales, and would improve and the market is estimated to licences’ being issued contin icines and services, and some thermore, 2020 will likely give expenditures, increased legal outcome and patient safety. be worth as much as US$ 42 gent on the performance of services, such as patient moni rise to ‘made to order’ therapies E www.pwc.com/pharma and regulatory constraints and One U.S. study found that 20 % billion by 2015. the drug over its lifecycle. The challenges, and tarnished repu of Americans never fill their industry will conduct smaller, tations. At the same time health original prescriptions, or use New technologies will drive R&D: more focused clinical trials, care payers and providers eve other people’s medicines, and Transformational technologi continuously sharing results rywhere have recognised that 60 % of patients cannot iden cal changes in the pharmaceu with regulators. If testing con current health care expendi tify the drugs they are taking. tical industry will reshape the firms that a medicine is safe ture levels are also unsustain This not only affects safety and business strategies of pharma and effective, a live licence will able unless they deliver more outcomes, it creates risk and ceutical companies. The role of be issued permitting the com demonstrable care and cost revenue loss for pharmaceuti geneticbased diagnostics in the pany to market the drug on a benefit over the long term. cal companies. Pharmaceuti development of personalised restricted basis. Further inlife Dr. Steve Arlington, global cal companies will revise their medicines has already short testing will extend the licence pharmaceutical research and proposition, employ new tech ened the R&D cycle for those to cover a larger number of development advisory leader, nologies and develop person products. Further research into patients or a different patient reserved. Pricewaterhousecoopers, and alised compliance monitoring the human genome will open population. principal author of the report, techniques as a valueadded up a new world of opportuni commented: service to patients, payers and ties in molecular science and Greater international regulatory coop- “The pharma industry will providers. Improved patient new ways of looking at targets. eration: Already, several national not be in a strong position to compliance would also help These new technologies will be and regional regulators have capitalise on opportunities un clinical studies and outcomes. used to improve understanding begun to collaborate by sharing less R&D productivity improves. of diseases and link genomic and safety and efficacy data. There The core challenge for the in Focus will shift from treatment to clinical data. The development may well be one global regula dustry is a lack of innovation. prevention: Preventative health of molecular delivery platforms tory system by 2020, admin The industry is investing twice care represents a huge could speed the development istered by national or federal as much in R&D as it was a dec opportunity for both health of new products that leverage agencies responsible for ensur rights All Inc. Scientific Fisher Thermo ©2007 PB AD 2007 38 ade ago to produce twofifths of care providers and the pharma existing/approved platforms. ing that new treatments meet More than you’ve ever expected in cell culture. the new medicines it then pro industry. Currently only 3 % of The convergence of therapeu the needs of the patient popu More than you’ve ever expected in cell culture. duced. It is simply an unsustain health care spending on OECD tics and medical devices, which lations within their respective able business model. countries is used for prevention, started in earnest with the drug domains. Such a system would “Over the next decade, yet the WHO says up to 80 % of releasing stent, will continue help to reduce the spiralling the industry must shift its in heart disease, stroke and dia and they will become increas costs of regulatory compliance Get proven solutions for your process development and production by combining Thermo Scientific HyClone Visit the Thermo Scientific vestment focus more toward betes and 40 % of cancer could ingly sophisticated, improving and reduce time to market. booth at: single-use bioreactor and media products, featuring: Biotechnica Hall 9, Booth F34 • Single-Use Expertise — the leader in single-use technology Hannover, Germany with stirred tank bioreactor capability to 1000 liters October 9-11, 2007

R&D spending has soared out but the number of Figure 1 How much cash would a private equity consortium Figure 2 • Sterility — HyClone BPC®s assure efﬁcient and successful NMEs and biologics approved by the FDA is down have to pay to buy one of the leading pharmaceutical companies? process runs. We’ve shipped millions of liters 160,000 • Higher Yields — our “Metabolic Pathway Media Design” 50,000 60 140,000 and Process Supplement Kits maximize bioreactor cell 45,000 120,000 50 growth and productivity 40,000 100,000 35,000 40 80,000 Call us for a full capabilities overview or consultation on your 30,000 60,000 process at: +32 53 85 71 84 or visit www.thermo.com/perbio 25,000 30 40,000 $38.9bn 20,000 15,000 20 20,000 10,000 0 R&D Spending (US$ Millions) 10 J&J 5,000 GSK Lilly BMS UCB Pfizer Wyeth Bayer Baxter Solvay Cash Required for Buyouts (US$ Millions) 0 0 No. of NMEs and Biologics Approved Novartis Merck &AstraZeneca Co 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004*2005*2006* sanofi-aventis Novo Nordisk Schering-Plough Part of Thermo Fisher Scientiﬁc R&D Spending NMEs and New Biologics Approved Cash required assuming debt = 5x EBIT Cash required assuming debt = 6x EBIT * includes Biologics Cash required assuming debt = 7x EBIT Source: PWC © GIT VERLAG Source: PWC © GIT VERLAG

[email protected] Page 26 Pharma CHEManager Europe 9/2007 A New Game Plan Strategic Thinking for the Life Sciences Industry

mproved quality and reduced costs shows that such understanding So companies do save money. is being applied to quality sys- Also, it is worth bearing in mind are two of the main driving forces tems by using standard proce- that with a new drug costing behind the life sciences industry dures in risk management in anything from £200 million to I order to achieve the very best £1 billion to develop, the cost today. This is especially true for the product quality. of this equipment and there- biotechnology and pharmaceutical Many companies are now fore the cost of understanding coming to realise that their lev- the process is a fraction of that. sectors. To a large extent, these forces el of regulation has increased Of course the instruments and are being driven by regulation, which over the years simply because, analysis tools can be reused for in the past, they have not been the development of many other is now one of the industry’s major able to demonstrate this deep new drugs, too. costs. However, regulators such as understanding of their proc- The other important aspect esses to the regulator. On the to consider is the message that the U.S. Food and Drug Administra- other hand, companies that this approach sends out to the tion (FDA) and the Medicines Health by sheer determination have regulator. Effectively users are achieved such understand- saying, “Look, I understand Regulatory Agency (MHRA) are keen ing are finding that they can how to make my product, and I to reduce their cost burden by making reduce the number or intensity can reproduce it very accurate- of regulatory inspections and ly. There is also a risk-based manufacturers themselves focus more the number of quality systems approach to what I do in manu- closely on improved product quality. they need – therefore reducing facturing, so you don’t need to costs. police me too much.” The idea behind such a self- Nevertheless, such an ap- regulating regime is that it The New Approach proach does not signal the end would both improve product of 21CFR Part 11: Companies quality and reduce the need Most life science companies fol- will still adhere to good au- for – and therefore the cost of low a classic product life cycle tomation and manufacturing – intervention by a regulator. that starts with drug discovery practices. It will be inherent in Although self-regulation has and ends with plant decom- their quality systems. But what proved less than successful in missioning. They have been it does do is give them latitude some industries, in others it has making products this way for to change the process without led to substantial cost savings many years. However, there is a reference to the regulator. as a result of improved product growing emphasis on the need duction. The process dynamics to understand correlations tion. This is exactly the same tion and promotes inefficiency In conclusion, therefore, quality and faster delivery. This to better understand all aspects change at each stage and in the between process elements and procedure as carried out by the whilst not necessarily guaran- Eurotherm helps with data ac- should certainly be the case for of new product development. past a procedural-based system interactions at the molecular oil and food sectors for many teeing quality. quisition at the drug develop- the life sciences industry too. Firstly, manufacturers now was followed until the product or biological level. By under- years. However, it has not been ment stage and with data analy- However, it is important to learn as much as possible about was manufactured the same standing this and by looking for adopted by the life sciences Spend To Save sis and therefore process under- remember that a regulator’s the science of making a new way three times. This was then mathematical correlations, pre- industry because traditionally standing at the next stage. Once first priority is patient health. So drug. Although this stage still adopted as the procedure for dictions can be made as to what the regulator has insisted on a In one sense, cost savings the process is understood, the manufacturers have to demon- uses traditional analytical tech- manufacturing that product. happens during the process. procedural-based approach to are only marginal with this loop can be closed by taking the strate in the first instance that niques, it is making far greater A science-based approach The software used here is manufacturing. This has now approach. Obviously, there is an same measurement and analy- they thoroughly understand use of new technologies and ensures that when these criti- based on statistical process changed. Some would say the increased cost at the front end, sis technology from the labo- their manufacturing process- instrumentation. This means cal control points are achieved, control, and spectral analysis. change is consumers lead and but you are achieving quality by ratory and deploying it on the es and that they know how to that product manufacture can the manufacturer knows that it It takes all the uni-variant data that they have pressured the design. By making sure of qual- production line in order to do minimise the risk involved with be understood right down to is in full control of its process. such as temperature, pressure regulator for lower costs and ity at the front end, however, in-line control on new measure- them. The regulator is looking the atomic level. Importantly, it Success here depends to a large and flow, along with the multi- higher quality and they have it also ensures quality at the ment techniques. This is a new for terminology such as “risk- also helps scientists to under- extent on data acquisition. The variant data such as frequency accepted that its “stick to proce- back end in terms of less wast- and better method of control for based approach” to demon- stand the critical control points. scientist knows what measure- and mass spectrometry and dures” approach stifles innova- age and less product variability. the life sciences industry. strate that company’s quality These are routinely being used ments to take and what vari- puts them into a big math- systems embody forward think- by both the oil and food indus- ables to measure, so basically ematical engine that looks for ing techniques for continuous tries to ensure that processes the laboratory is brought down correlations against set process Eurotherm is a global supplier of control, measurement and data record‑ E Contact: improvement. A science-based can be accurately repeated time to the production department to points. ing solutions and services to industrial and process customers. Euro‑ Mike McKenna approach founded on a total after time. measure them in-line and also It is at this point that therm’s product range includes distributed process automation systems Eurotherm Lifesciences understanding of the science Such critical control points to do control in-line. Eurotherm’s technical exper- and machine control incorporating single and multi‑loop control, opera‑ Worthing, UK that underpins the manufactur- are particularly relevant to the Once the in-line meas- tise really comes into play. Its tor displays, data management and graphic recorders, power control and Tel.: +44 1903 268500 ing process supports manufac- life sciences industry as you urements have been taken, technology does two things signal conditioning. It is an ISO 9000 approved company, and operates Fax: +44 1903 265982 turer’s claim to be in control of advanced process control tools – extremely accurate measure- [email protected] move from laboratory-scale TickIT protocols for software management. their risks and processes. It also production to full-scale pro- and analysis tools can be used ment and database manipula- www.eurotherm-lifesciences.com

GMP in the Centre of the European API Conference

he rapidly changing pharma- the requirements of ICH Q7A pose the These requirements and issues and EDQM will present updates be an update on EMEA’s ac- executed batch records, raw objective of the new revision in mind, the Active Pharma- on their recent and upcoming tivities related to API Compli- stability data, methods valida- which covers changes to the ceuticals legislation entails key issues. In addition, products of Eu- ceutical Ingredients Commit- activities. ance by Francois-Xavier Lery tion package). An emphasis will medicinal product. The pro- worldwide challenges for Active ropean manufacturers have to compete tee (APIC) invites to the 10th The conference comprises from EMEA in London. He will be on quality by design in the posal modifies the legal basis T European API Conference in two parts: the GMP Conference inform about the recent Guid- evaluation of critical aspects of of the Variations Regulations, Pharmaceutical Ingredients (API) manu- with APIs produced outside of Europe Warsaw, Poland, from 24 to 26 will concentrate on European ances that have been published pharmaceutical quality. so that all medicinal products facturers and manufacturing authorisa- that do not necessarily comply with Eu- October 2007 to discuss current and US authorities’ initiatives, on API-related Inspections. Gerald Migliaccio, Pfizer’s placed on the Community mar- developments and changes. activities, expectations and Xavier Lery will also present Vice President Quality Opera- ket – including those authorised tion holders. Auditing, inspections by ropean GMP and regulatory filings and Speakers from international interpretations of regulations. the results of the evaluation of tion will report on the next steps at purely national level – are authorities, certification procedures and are therefore less expensive. authorities like FDA, EU, EMEA Part of the conference will the API compliance situation as regarding ICH Q10 “Pharma- subject to the same criteria for observed during recent dosage ceutical Quality Systems”. This the approval and administrative form manufacturer inspections. document was realised in May handling of changes, regardless The inspection results will be this year (Step 2). It will harmo- of the procedure under which entered in the newly launched nise the requirements in the 3 those medicines have been EUDRA GMP Database. regions (Europe, USA, Japan). authorised. Hendrik de Jong, The update on FDA’s 21st ICH Q10 is a model for a Chair of the European Pharma- Century Initiative on Pharma- pharmaceutical quality sys- copoeia Commission, will give ceutical Quality Assessment will tem that can be implemented a presentation on the impact of CPhI Worldwide 2008 be presented by Moheb Nasr throughout the different stages changes on API manufacturers from FDA. The FDA is current- of a product lifecycle. Much of and the manufacture of medici- ly implementing this new ap- the content of ICH Q10 appli- nal products. APIC´s view on the The source of new growth proach across all product types. cable to manufacturing sites is revision of the Variations Regu- The new system encompasses currently specified by regional lation will be presented by Hilde several initiatives with the ob- GMP requirements. ICH Q10 Vanneste from Janssen Phar- in networking opportunities jective to allow rapid introduc- describes one comprehensive maceutica in Belgium. tion of new technologies into approach to an effective phar- The partly parallel Regula- At the forefront of the rapidly expanding pharmaceutical market, CPhI Worldwide is renowned for showcasing the latest technology and innovations pharmaceutical manufacturing maceutical quality system that is tory Affairs Conference will in this industry. In 2008, professionals from all over the world will gather in Frankfurt to discuss the most recent trends and developments. and expedite review of appli- based on ISO concepts, includes address major problems, e.g. Meet new customers, forge partnerships and benefit from the multitude of networking opportunities to support your business needs. Don’t miss your cations without compromising applicable Good Manufacturing regarding submission and chance to exhibit at CPhI Worldwide 2008 – the perfect environment for growth. the high quality of drugs. With Practice (GMP) regulations and implementation of changes. It this approach the FDA will fo- complements ICH Q8 “Pharma- will also highlight EDQM’s lat- 30 September – 2 October 2008. Messe Frankfurt, Germany cus on critical pharmaceutical ceutical Development” and ICH est activities on inspections and quality attributes (chemistry, Q9 “Quality Risk Management”. on the CEP procedure. www.cphi.com pharmaceutical formulation, The implementation of ICH Q10 With this year’s conference manufacturing process, prod- and ICH Q 9 into daily operation the committee will tie up to last uct performance) and their rel- will also be covered during one year’s meeting where attend- evance to safety and efficacy. of the parallel sessions. ees already discussed vibrantly The system will rely more on The European Commission latest requirements and hence the information provided by the launches a Public Consulta- demonstrated the importance applicant (e.g., the comprehen- tion on the co-decision part of of an ongoing exchange. sive quality overall summary the revision of the Variations (QOS) and the pharmaceutical Regulations. Nicolas Rossignol development report) and less on from the European Commission the voluminous raw data cur- in Belgium will inform about rently being submitted (e.g., the the background, reason and E www.api-conference.org

[email protected] CHEManager Europe 9/2007 Pharma Page27 Chips and “Snips” for Personalized Medicine Trend Report: Life Sciences and Diagnostics

rom genetic testing for diagnostic purposes to protein analyses on chips – as F in the past, the latest tools in molecular biology and bioanalysis will be the focus Photo: AlexSchelbert.de of Analytica 2008, in Munich from April 1 – 4, 2008. The international trade fair is a driving force behind developments in personalized medicine – medicine that takes the patient’s genetic profile into account, which can reduce side effects and optimize treatment.

The effect of medication varies from case to case. What works for one person does not necessarily work – or could even lead to serious side effects – for another. The reason: hardly any art bioanalysis, molecular-biology blockbuster medications would still medication takes genetic differences and information-technology tools. be on the market today if the patients between patients into account. Even The latest systems – from online PCR who tend to have bad reactions for the slightest deviations in a patient’s devices and microarray scanners genetic reasons had been filtered out genetic makeup can accelerate or de- with integrated barcode readers to and treated using other alternatives. lay the effect of medication and how expanded bioinformatics software Hans-Joachim Heusler, Manag- they are broken down by the body. for analyzing and storing enormous ing Director at Munich International Molecular-biological diagnostics quantities of data – will be on display Trade Fairs, summed up the diverse makes it possible to tailor therapies at analytica. At the Innovations Area program of events at the upcom- to patients’ genetic profiles and mod- in Hall A3, start-ups in biotechnol- ing 21st European Trade Fair for ify medication dosages to suit their ogy, the life sciences and related dis- Instrumental Analysis, Laboratory metabolisms. It is known as “person- ciplines will present their ideas and Technology and Biotechnology as alized medicine”. Analytica 2008 will products that will give new impetus follows: “Innovations in biotechnol- focus on innovations in analysis, labo- that would be ineffective are not even user friendly. Detection kits with ter, i.e. a base, is interchanged. Ex- to the entire industry. ogy, the life sciences and diagnostics ratory technology and biotechnology considered. ready-to-use reagents, all-in-one perts assume that there are ten mil- are accelerating the development of including the latest bioanalysis and Roche also has a gene chip that concepts consisting of microarrays, lion SNPs in the human genome. In Cutting Costs In Healthcare custom therapies and offer a great diagnostics procedures that make makes it easier to choose the opti- hybridization stations, scanners and many cases, SNPs are the cause of deal of potential for cutting costs in customized therapies possible in the mum medication in the right dose. analysis software as well as ongo- diseases. Because even a perfectly functioning the healthcare sector. Together, Ana- first place. The Amplichip CYP 450, which is ing advancements in automation are The NGFN (Germany’s National gene is no guarantee for a correctly lytica 2008 and the Analytica Confer- already licensed for diagnostic pur- making it easier for chip technol- Genome Research Network), a group functioning protein, the big question ence not only give visitors a look at Biochips Increase Therapy Success poses in the USA and Europe, recog- ogy to be incorporated into routine of researchers of various disciplines is: which genetic products, i.e. which the latest equipment and techniques, nizes deviations in two genes that are clinical applications. In an age of from throughout Germany, want to proteins, actually have an effect on they also give industry representa- Personalized medicine revolves coded for liver enzymes in the Cyto- tight budgets in the health-care sec- use DNA chips to examine 25,000 the cell? Beside classical analysis tives a forum that promotes the ac- around DNA chips. Take breast can- chrome P450 family. Patients with a tor, costs also play a key role. There patients and control persons. Sci- techniques such as electrophoresis, tive exchange of information between cer, for example: A microarray from deviation in these genes, for exam- are already systems on the market entists want to identify the genetic chromatography and mass spec- equipment developers and users and Eppendorf will allow physicians to ple, break down beta-blockers used that are an attractive alternative to causes of obesity, Alzheimer’s, neuro- trometry, protein chips are increas- between international “cutting edge” determine whether a patient should to lower blood pressure too quickly common fluorescence scanners with dermatitis, schizophrenia, tuberculo- ingly being used to find the answer. researchers and decision-makers in undergo radiation or chemotherapy or too slowly. Thanks to genetic regard to price: they detect hybridiza- sis and many other diseases. Accord- Scientists use them to identify specific the scientific and industrial sectors.” following a lumpectomy – and which testing, physicians can adapt medi- tion electrochemically or by precipi- ing to Peter Nürnberg, Professor of antibodies or proteins that can be patients are considered cured and cation treatment to their patients’ tating silver onto gold nanoparticles. Genomics at Cologne University and used as biomarkers for more precise can skip this severe treatment alto- metabolisms. Other Amplichips are coordinator of the genotyping plat- diagnostics. gether. The breast-cancer chip has also being developed: For example, Identifying Minor Defects in Our form at the NGFN, “We are delving Decoding proteins gives pharma- more than 200 genes that identify the the Amplichips p53, which detects Genetic Makeup into a new world of genetics that will researchers a point of departure E Contact: type and stage of a tumor. defects in the tumor-suppressing help us to develop better treatment for new active ingredients. Biomar- Messe München GmbH Biochips can also be used to im- gene p53, identifies how aggressive The fact that patients react differently alternatives.” He and his colleagues ker tests, which filter out unsuitable Pressereferat Analytica prove aids therapy. In this case, the a tumor is, making it possible to cus- to a given therapy despite a 99.9-per- will collect more than 20,000 indi- active-ingredient candidates before Messegelände virus’ ability to change is problematic tomize the cancer therapy. cent genetic match is frequently due vidual samples; the chips they use they are tested on patients, also help München, Germany because it can make active ingredi- Genetic diagnostics is still reserved to single-nucleotide polymorphisms have more than a half-million SNPs companies to cut costs considerably. Telefon +49 89 9 49 2 06 51 ents less effective. Biochips identify for specialized laboratories. Howev- (SNPs, pronounced “snips”). A SNP and other gene variations. Pharmaceutical companies also Telefax +49 89 9 49 2 06 59 these types of resistances by analyz- er, as Analytica 2008 will show, chip is a minor defect in the script of the Large-scale projects of this type profit from the trend toward person- [email protected] ing the virus’ genome. Medications technology is getting more and more genetic mapping. Only a single let- are only possible using state-of-the- alized medicine in another way: some www.analytica.de

Ultimate Time and Cost Savings Outsourcing Drug Production

harmaceutical companies increas- and long-term financial backing and stability to do so. Contract pharma- ingly turn to Contract Manufacturing ceutical companies such as Cenexi Organizations (CMOs) to improve that are backed by a financially P strong company provide pharma- cost-effectiveness, capacity and time-to- ceutical organizations with impor- market. Outsourcing also allows pharma- tant benefits over other contractors. The parent company provides the ceutical companies to take advantage of contractor with superior financial state-of-the-art process technology available stability and security, which helps the contractor to keep pace with the from the OEMs that is perhaps not available latest market developments ensuring in-house. In addition, outsourcing manufac- that the investment capital is always available for new equipment and turing allows pharmaceutical companies to services. concentrate more on their core competencies As well as satisfying the criteria mentioned above, pharmaceutical and on marketing their products. This article contractors need to fulfil four key discusses specific guidelines for the successful criteria. outsourcing of drug manufacture. The Four Criteria

Worldwide revenue for pharmaceu- The first is to update and improve tical contract manufacturing and the pharmaceutical dossier making research was estimated at $100 bil- sure that the validation process is an lion in 2004 and is expected to rise integral part of the documentation. at an average annual growth rate of Details of formulations, raw material 10.8 % to reach $168 billion in 2009. curred from building and maintaining Consequently, pharmaceutical time-consuming and challenging need to ensure that the contractor specifications, packaging details and More specifically, contract manu- plants is very high and constantly in- companies turn to CMOs who are ca- procedure. Nevertheless, there are is capable of producing high quality information on the finished products facturing of prescription drugs was creasing. Pharmaceutical companies pable of taking on the responsibilities certain requirements that the con- products, including the quality of the should all be included in the new reported as being worth $26.2 bil- also face high costs to upgrade to new, for the whole drug production process tractor must fulfil and which can act packaging, while also being reliable document. The availability of such lion in 2004 and is estimated to grow advanced equipment and employing a including packaging, manufacturing as a useful guideline to making the with regards to the timing of deliver- a comprehensive pharmaceutical to $43.9 billion by the end of 2009. workforce of highly competent profes- and regulatory compliance and vali- most appropriate choice. Contract ies. Contractors need to set up a set dossier will enable easier and more Contract manufacturing of Over-The- sionals. In addition, drug production dation. Pharmaceutical companies manufacturers must have an effec- of key performance indicators en- effective regulatory compliance, thus Counter (OTC) and nutritional prod- is very time consuming and a very ex- can then focus on activities and other tive validation process in place which suring the measurement of delivery speeding up the validation process for ucts is the largest and fastest growing pensive process requiring increased issues that are key to their sustained will help them achieve and maintain times against clear and demanding new products. segment, expected to rise at an aver- capital employment, Furthermore, prosperity for example, marketing. regulatory compliance. Other impor- targets. The second criterion relates to age annual growth rate of 11.3 % to price pressures in the pharmaceu- tant issues to consider when choos- There are many small to medium stability studies associated with the $102 billion by 2009. tical market are more intense than Identifying the Most Proficient Contractor ing a contractor include the cost of size pharmaceutical contractors that improvements and expansion of Pharmaceutical contract manufac- ever while pharmaceutical companies the product, transfer costs and the are well positioned to meet all these analytical development. Processes turing is growing at a considerable also need to comply with many strict Identifying the most competent time taken to complete the trans- requirements, but it is certainly far rate. Firstly, drug production costs in- regulatory requirements. contract manufacturer can be a fer. Pharmaceutical companies also easier for large suppliers with sound E Continues Page28

[email protected] Page 28 Pharma CHEManager Europe 9/2007 Ultimate Time and Cost Savings Outsourcing Drug Production

E Continued Page 27 Improving Processes Transferring Production contractor’s facilities are be- Outsourcing manufacturing ing established and validated. to contractors is gaining mo- never remain stable over the Some processes are easily and The transfer of production from As well as minimising the risk mentum as a viable solution life cycle of pharmaceutical quickly improved. For example, a pharmaceutical company’s of disturbances in products to address these challenges. products. Changes are not only production batch sizes can be facility to that of the contractor supply, the transfer of produc- A competent contract manu- inevitable but they are often increased without significant can be a lengthy and difficult tion saves time, only six months facturer needs to be innova- desirable, especially when they effort leading to substantial process taking from around to produce the first batches of tive and forward-thinking, trigger stability enhancements economies of scale. Further 18 months up to two years to product. Traditionally, such a fully understanding the specific or production efficiency gains. process improvements may be completed. The process short production period would requirements of each pharma- Nonetheless, whenever a proc- include the installation of new involves considerations such as have been completely impos- ceutical vendor and uniting the ess changes, stability trials need equipment to improve produc- the sourcing of raw materials, sible. entire manufacturing operation to be performed and thoroughly tivity. However, such implemen- stability trialling, validation and A further advantage of to deliver high quality, competi- documented as part of the vali- tation may involve considerable traceability. transferring production relates tive and profitable products. dation procedure. investment, meaning that the One of the most crucial to regulatory compliance. It is The long-term financial stabil- The validation of new proc- potential benefits must be care- requirements is for the con- certainly far more cost-effective ity of the contractor is also a esses forms the third criterion. fully evaluated in relation to the tractor to have a high level of to outsource production than prerequisite to ensure uninter- A team of six expert pharma- installation costs. production processing expertise to upgrade or replace an aged rupted supply throughout the cists and engineers are need- Achieving reductions in pro- in order to be able to provide plant that has become incapa- product life cycle. ed to facilitate and improve duction plant downtime is an uninterrupted supply, since ble of meeting current regula- the validation process of new additional benefit associated there are many people that are tory requirements. products and ensure compli- with process improvements. dependent on drug treatments ance with the stringent GMP Furthermore, having efficient on a continuous basis. Main- Conclusion standards. maintenance procedures in taining large stocks of those The fourth criterion is the place can eliminate costly and particular drugs is expensive, The pharmaceutical manufac- E Contact: continuous update of pro- time-consuming production inconvenient and often impos- turing arena is a highly compet- Philippe Mougin duction processes in order to failures, therefore increasing sible when it comes to short- itive and challenging one. Com- Managing Director improve them, address and productivity and reducing pro- lived products. panies face increasingly higher Cenexi, Roche Group eliminate any problems while duction costs. On the other hand, the production costs and falling Fontenay sous Bois/France increasing efficiency with the In summary, contractors need transfer of production to a prices, making it a necessity Tel.: +33 1 43 94 88 66 aim to deliver products of the to thoroughly apply their produc- contractor ensures that the to invest in and upgrade core Fax: +33 1 43 94 88 68 highest possible quality at the tion expertise in order to offer an existing production line can capabilities to ensure future [email protected] lowest possible cost. overall high quality service. continue operating while the prosperity. www.cenexi.com

Fine and Custom Chemistry without Boundaries Ultimate Flexibility And Service

eing a researcher at a major with conducting the time-consuming tom Chemicals for Thermo molecules in semi-bulk to bulk Fisher Scientific, explains how quantities. However, many pharmaceutical company, analysis yourself. But as an alternative this concept of Service without people may not be aware of working on a potential new you can fall back on Thermo Fisher Boundaries is helping custom- the unique capabilities of FCC. B ers concentrate on their core The company’s standard chemi- cancer drug, you need a specific Scientific Fine and Custom Chemis- activities. cal products can be tailored to intermediate molecule to be combined try (FCC) services. They conduct the The Fine and Custom Chem- meet special needs or provide istry business became part of custom synthesis as well as with other compounds to create the specific tests and provide you with Thermo Fisher Scientific fol- other services to help custom- active ingredient in the test drug. the compound and quality control lowing the merger of Fisher ers increase their efficiency and and Thermo Electron last year. reduce costs. Several suppliers can provide the to your specifications. You can get For decades, customers all over ‘Service without Bounda- compound but not the custom quality- back to work. That’s “Service without the world have turned to Fisher ries’ is a message Thermo – and now Thermo Fisher – for Fisher Scientific is communi- control testing needed to understand Boundaries.” our well-known chemical prod- cating – through marketing how specific circumstances or foreign ucts. These include laboratory activities – to customers who Stefan Verheyden, global busi- reagents, discovery chemicals may not be aware of how they substances will affect it. You are faced ness director of Fine and Cus- and high-potential organic can be helped. Service without boundaries emphasizes broad capabilities, and it responds to a growing need in the market. The pharmaceutical customer, in particular, faces increasing pressure to cut costs and improve efficiency. They can be PRESENT helped by providing the custom All of these products are sold Thermo Fisher Scientific of custom-synthesis and con- chemicals and services that will in pre-packaged quantities. is most active with customers tract-manufacturing partners eliminate work and save them However, the Fine and Custom involved in early-stage devel- provide complete raw-mate- YOUR time in the lab. Chemistry business can pro- opment – meaning from the rial backward integration, and The Fine and Custom Chem- vide individualized quantities of research and development each partner specializes in a LOCATION istry business brings together these products when customers stage into pilot-phase produc- different area of chemistry so all of Thermo Fisher Scientif- scale up from research to devel- tion. For these customers, the that they can meet almost any ics internal and external ca- opment and production. They same quality chemicals are need of the customer – wheth- pabilities to create a dedicated can also synthesize or source delivered in both pre-pack (our er the compound developed by service provider for the custom- other compounds not found catalogue business) and semi- themselves or outsourced. And, ers. Their aim is to add value in the catalogues, and provide bulk to bulk quantities. Also they are continually expanding through expertise in sourcing dedicated services such as spe- several dedicated products can their offering. From a custom- and manufacturing custom cial packaging, additional test- be delivered in multiple (up to ers’ perspective, working with products across a wide range of ing, re-packing of raw materials 100) ton quantities to meet the the FCC business offers a good applications and technologies, and more. needs of later-stage develop- solution. from laboratory research and FCC’s complete offering in- ment and production. FCC’s most important de- Regions & Locations Guide 2007 development to production. The cludes: Another reason Thermo Fish- velopment and manufactur-

Regions & Locations Guide 2007 is the leading magazine for managers and executives in the chemical dedicated service and intimate  Semi-bulk and bulk quanti- er Scientific is different from ing facilities are located in the and pharmaceutical industry and related sectors deciding about investments in new facilities worldwide! Regions & Locations Guide is a most effective medium to attract potential investors to your region or approach ensures the best and ties of standard chemical their competitors is because United Kingdom, Belgium and location. most cost-effective solution. products, including 20,000 of the people. Strong technical the United States. But of course, different research chemicals expertise gives a thorough un- customers can be served all A special publication from: Products And Services sold under the Fisher Chemi- derstanding of their customers over the world: FCC commer- CHEManager, CHEManager Europe and BIOforum Europe cal, Acros Organics and May- and their needs as well as the cial offices are based in Geel, Request your sample copy: [email protected] Thermo Fisher Scientific sells bridge brands; ability to envision the solutions. Belgium; Loughborough, U.K.; Publishing date: September 25 Increased Print Run in 2007 Advertising Deadline: September 10 its chemical products through  Custom chemical synthesis They have 100 experienced and Morris Plains, New Jer- Digital version online at www.rlg-git.com Editorial Deadline: August 10 major catalogues represent- and contract manufacturing chemists on staff and superb sey. Team members support Format: A4 Additional distribution at events and trade fairs Print Run: 15.000 ing the Acros Organics, Fisher to meet laboratory, kilo and sales, sourcing and technical customers across many conti- Chemical and Maybridge prod- pilot-scale needs; support teams. Many of the peo- nents, including Europe, North uct lines. Customers in many  Production of pharmaceuti- ple have strong chemistry and America, South America, Asia Contact: industries do their basic re- cal intermediates and organic science backgrounds. They are and Africa. Editorial Biotech & Life Sciences search with these reagents and building blocks; also experts in service-related They have a dedicated back Sergio de Oliveira Osman Bal Tel. +49 6151/8090-206 Tel. +49 6151/8090-197 chemicals. The Acros line in-  Private labeling for original- areas such as dedicated pack- office, providing excellent serv- [email protected] [email protected] cludes fine chemicals, interme- equipment manufacturers; aging, special mixtures, OEM ice when it comes to quoting,

Key Account Manager Biotech & Life Sciences diate compounds and specialty  Customized packaging; business and complex quality- order-entry and follow up, tech- Mike Reubold Andreas Zimmer chemical products. The Fisher  Specific quality-control fulfill- control requirements. nical and scientific support and Tel. +1 201/748-8810 Tel. +49 6151/8090-178 [email protected] [email protected] Chemical range includes high- ments; Secondly, the Fine and more. For FCC serving custom- purity liquid-chromatography  Raw-materials handling and Custom Chemistry business ers means exceeding expecta- Industrial & Chemical Industrial & Chemical Corinna Matz-Grund Thorsten Kritzer solvents, DNA synthesis sol- traceability. combines strong global sourc- tions, not just meeting them. Tel. +49 6151/8090-217 Tel. +49 6151/8090-246 [email protected] [email protected] vents and electrophoresis-grade ing – from 3,000 suppliers all reagents; commercial grade BP, These services also help cus- over the world – with their USP and EP chemicals, custom tomers eliminate legal red tape own manufacturing capabili- E Contact: chemical blends and reagents. because in many cases they ties. Because of that, they offer Stefan Verheyden www.gitverlag.com And, Maybridge represents a provide the regulatory and a great buy available on the Fine & Custom Chemistry line of heterocyclic chemical environmental clearance and market without losing sight of Geel, Belgium building blocks for medicinal documentation. A solution is local market demands, needs Tel.: +32 496 16 52 95 chemistry. delivered, not just a product. and expectations. The network [email protected]

RLG_0607_A4_engl.indd 1 29.06.2007 10:48:55 Uhr

[email protected] CHEManager Europe 9/2007 Pharma / BusinessP artners Page 29

Low-cost Production of Ultra-pure Media

With the product lines Vapotron VT large amounts of gas, a of the condensate. Furthermore, a and Multitron MT, the pure-water membrane degassing triple drop separator guarantees the specialist Christ Water Technology stage can be fitted before separation of small and large drops Group now presents the first ultra- the generator in order to of water in ultra-pure quality. pure steam generators and distillation comply with EN 285 for Depending on the customer’s units from their own production. The non-condensable gases. requirements, the distillation units company can thus now offer technol- The system is controlled consist of up to nine columns and ogy and service for all sectors of wa- fully automatically by a have an output of 100 to 15,000 kg of ter treatment – from Purified Water stored-program control- distillate per hour. The size of the first (PW) to Water for Injection (WFI). ler which complies with column can be adapted to the actual This simplifies the execution of over- GAMP. Together with its requirement for ultra-pure steam or all projects and ensures a uniform easy to use touch-screen WFI and this means, in many cases, documentation structure for complete panel, it also complies that there is no need for a separate water-treatment systems delivered in with the requirements of ultra-pure steam generator. Online the form of turn-key plants. Further- 21 CFR Part 11. TOC measurement is available as an more, the new technology permits a option. The fully automatic control reduction of up to 25 % in the operat- New Distillation Technology system ensures compliance with all ing costs. Permits Savings relevant regulations and also keeps a record of all measured values. Economical Production of Pure Steam The Multitron MT distilla- Integration into a comprehensive tion units also use a new visualisation concept simultaneously The pure steam generator Vapotron technology which permits permits a full, wet FAT test of the VT generates sterile steam which is the cooling-water con- complete system, including the pre- free of pyrogenic substances. It is par- sumption to be reduced treatment stages. ticularly suitable for SIP sterilisation, by up to 25 % and the the humidification of clean rooms and steam consumption to the operation of steam sterilisers. The be reduced by 20 %. This system, which normally uses PW, Fig. 1: The ultra-pure steam generator vapotron vT produces Fig. 2: The multitron mT series of distillation units guarantees the safe and economical is made possible by the E Contact: delivers 50 to 5,000 kg of ultra-pure 50 to 5,000 kg of sterile, pyrogen-free steam per hour. production of WFi. combical concept, a com- Christ Water Technology Group steam per hour. It differs from the bined cooler and heater Tel.: +41 61 7558111 previous versions in that it has short integration of the exchanger ele- mechanical stresses and considerably units. In the case of problematical which pre-heats the incoming wa- [email protected] heat-exchanger tubes with floating ments. This reduces the thermal and increases the operating lifetime of the feed water, such as that containing ter and ensures optimal utilisation www.christwater.com

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[email protected] Page 30 IndustrI al l ocatI ons CHEManager Europe 9/2007 Fit For The Future Chemical Industrial Parks in China

uge investments have flowed into square km). It is also responsible for infrastructure development and the Tianjin Export Processing Zone operation of public utilities (water, China’s chemical parks during the (2.5 square km) and Tianjin Universi- waste water, electricity, steam and last few years. These investments ty Scientific and Technological Park. gas). The administration committee H TEDA’s GDP grew by 25 % between has achieved ISO 14001 certification, have sparked off a high-performance chemi- 2004 and 2006 to 64.2 billion RMB. and an eco plan for special water and cal industry producing not only basic chemi- Value-added increased in the second- solid waste recycling was approved ary manufacturing industry by 29 % by the State Environmental Protec- cals, but increasingly fine and special chemi- to 54.1 billion RMB and by 4.1 % tion Administration (SEPA) in 2003. cals. In many cases the concepts have been in the service sector to 10.1 billion The Chemical Industry Park was RMB. The population in this area established as a TEDA satellite zone inspired by European or American sites. was 105,000 at the end of 2005. Total in 1996. Of the 27 square km which investment by 4,190 foreign compa- have been earmarked for develop- The Tianjin Economic and Technological nies was around US-$30 billion as of ment, 2.5 square km have been Development Area (TEDA) the end of May 2006. developed as of April 2006. TEDA CIP, By the end of 2005, 9,185 domestic a public company, has responsibility TEDA was founded in 1984 as one of companies had invested about 42 bil- of park development. It takes care of the first national development zones. lion RMB. The high-tech sector and investment incentives, provision of It is located 40 km from Tianjin and the service industry are the priorities the environmental infrastructure and 120 km from Peking. 33 square km in the site development strategy. The organization of the safety manage- were originally reserved for the site, Tianjin Economic and Technologi- ment program and it also carries out and most of this space is now being cal Development Area has excellent environmental and safety audits. utilized. Permission was granted to regional, national and international A favourable political framework TEDA in 2005 to develop an addi- transportation links. Tianjin is one of provides support for investment tional zone, TEDA West (48 square the major rail centers in China, and incentives at three levels. TEDA CIP km). The principal industries in the it also has an international airport. participates in the national “circular zone are telecommunications (61 %), It has a direct link to the national economy” initiative and has a pro- machinery manufacturing and car superhighway network and is only gram to attract recycling companies. production (25 %), biopharmaceuti- 5 km from the international seaport General tax benefits also apply to the cals (5 %) and food (6 %). The TEDA in Tianjin. chemical industry park, and favour- administration committee has set up TEDA uses the “autonomous ad- able land use rights are offered to at- three specialized industrial parks: ministration committee and develop- tractive investment projects. TEDA CIP the Microelectronics Industrial Park ment company model”. TEDA Invest- does not currently have its own infra- (4.6 square km), the Yat-sen Scientific ment Holding Co. Ltd has responsibil- structure network. Instead, the park and Industrial Park (10 square km) ity for development. The company’s is connected to the public utilities net- A water treatment plan for industrial and planning is underway for a dedi- makes Piocelan (a resin composite and the Chemical Industrial Park (27 activities include real estate and works (electricity, water and steam). users is currently under construction, cated district heating station. Waste made of polyethylene and polysty- disposal companies collect waste from rene) is a Japanese FDI. Taiding industrial companies on the site. Each (Tianjin) Environment Technology is company currently operates its own one of the recycling companies at the emergency services, but that is likely site. It can recycle 30,000 t/a of elec- to change in the future. trical and electronic waste. Development of the fine chemical Industrial production at TEDA industry is the priority at TEDA CIP. CIP increased to 263 million RMB There were 20 investors at the site in in 2005. As of April 2006, there was April 2006. Five have already started little inter-company value-added at IN production, and the other plants are the site. TEDA CIP will target down- EUROPE still under construction. The list of stream producers in the future to domestic investors includes Tianjin increase the level of on-site vertical Zhongwei Pharmaceutical (Vitamin integration. THE B1), Tianjin DEK Chemical (dyes and VIEW pigments), Suanhuan Lucky New Shanghai Chemical Industry Park (SCIP) Materials (sintered magnets) and Cenway Technologies (herbal extracts Construction of the Shanghai Chemi- and special chemicals). cal Industry Park (SCIP), which focus- The Japanese and Americans are es on petrochemicals, got underway the major foreign investors. They in 2001. It is situated on Hangzhou are engaged in joint ventures (JV) as Bay about 50 km from Shanghai. A well as direct investment (FDI). The total of 29.4 square km are available list of American investors includes JV at the site. Development will take Cabot Chemical (Tianjin) which pro- place in three phases. Because the duces carbon black and has invested Shanghai area is very crowded, land a total of US-$60 million, and the FDI for the areas in phases 1 and 3 has PQ (Tianjin) Silicates Technology, to be reclaimed from the sea. Devel- which makes silicates. The Japanese opment has proceeded most quickly are involved in the JVs Tokai Car- at the phase 1 site. Most of the plots bon Tianjin (US-$50 million), Tianjin are being leased by foreign investors, Toho Lead Recycling (US-$4.75 mil- above all from Germany. lion) and Tianjin Cosmo Polyurethane Phase 1 direct investments include (258 million RMB). Tokai Carbon has BASF production facilities for 80,000 a production capacity of 40,000 t/a t/a of THF, 60,000 t/a of poly-THF and of carbon black. Tianjin Toho can 8,000 t/a of polyisocyanate (total in- produce 12,000 tons of secondary vestment US-$335 million), Degussa lead mixtures a year and und Tianjin production facilities for 9,000 t/a Cosmo specializes in polyether and of polyester and 8,500 t/a of color- polyurethane resins. Tianjin Sekisui Plastics Co. (US-$5.6 million) which E Continues Page 31

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CMeurope_Plattform_A4_e.indd 1 18.07.2007 11:41:12 Uhr [email protected] CHEManager Europe 9/2007 IndustrI al l ocatI ons Page 31 Fit For The Future Chemical Industrial Parks in China

E Continued Page 30 Eco Industrial Parks (EIPs) Act as (EIPs) and at the macro level as Pilot Projects for a Sustainable eco cities and provinces. ants (total investment US-$36 Economy At the industrial park level, million), a future complex for an environmental research 100,000 t/a of methylmeth- Sustainable development, “cir- institute with support from the acrylate and special Plexiglas cular economy” and integrated site management team develops products and the British Lucite production facilities play a stra- an eco plan for the park, which facility for 90,000 t/a of MMA at tegic role in the Chinese econ- takes regional constraints and a total cost of US-$110 million. omy. Numerous new laws have opportunities into account. Bayer is planning to invest been introduced in order to These plans are not limited a total of US-$1.8 billion at the implement what has long since to issues related to industrial integrated site. Bayer now has been standard in western coun- production. They focus mainly or is currently building produc- tries: conservation of resources, on inner- and intra-company tion capacity for 10,000 t/a of environmental protection and engineering issues, for exam- polyisocyanate, 200,000 t/a safety. The 7th AchemAsia from ple energy cascading, shared of polycarbonate, 200,000 t/a 14 – 18 May 2007 will bring use of infrastructure, exchange of bisphenol A, 172,000 t/a of together around 500 exhibitors of by-products and waste recy- diphenyl carbonate, 230,000 t/ from 25 countries and 20,000 cling, as well as on economic a of methylendiisocyanate and visitors to discuss this topic. incentives such as subsidies 150,000 t/a of TDI. Construc- Explosive economic growth, for environmental protection tion of most of these produc- a higher standard of living, investment and resource pric- tion facilities got underway in population growth and an ing strategies. 2003/04, and completion took unbalanced regional distri- Once the eco plan has been place in 2005/06. Production is bution of resources coupled approved by SEPA, the park is planned to start at the Degussa with the lack of a strategy for given “EIP” status. There were methylmethacrylate facility in sustained development have 16 Eco Industrial Parks in 2009. Production at Bayer’s resulted in regional shortages China in May 2006 (see table MDI and TDI facilities will com- of energy and water, signifi- 1). SEPA published the Stand- mence in 2008. cant pollution and damage to ards for EIPs in China, and it The list of Phase 1 joint ven- the environment. The govern- is expected to start assessing tures includes Shanghai SECCO US-$1.12 billion), the Shanghai GPC and SHYG have built their empty, and SCIP Development a waterworks (340 million RMB) ment has recognized the prob- implementation of the eco plans Petrochemical cracker (joint SINOPEC Mitsui Chemicals (JV own plants for the production of Co. is searching for potential in- and a waste water treatment lem, and in 2002 it adopted the in the near future. venture between SINOPEC, SPCc between SINOPEC and MGCg) PVC, acetone, ABS, SBR, PVDF vestors to increase the level of plant (398 million RMB) with “Circular Economy (CE)” as its Despite the success of some and BP, capacity 900,000 t/a of bisphenol A facility (120,000 and HFA. The 13.4 square km vertical integration at the site. Sino-French Water Develop- new, far-reaching development pilot projects (e.g. TEDA and ethylene) at a cost of US-$2.73 t/a) and the Shanghai Shenx- Phase 2 sector will be mainly The reagents plant built by TCI ment, a subsidiary of the Suez strategy. It is hoped that this Dalian development zone), billion, the Shanghai Lianheng ing Chemical Industrial for- used by downstream customers (Shanghai) Development of Ja- group which is based in Hong approach will provide a basis progress has been slow because Isocyanates isocyanate facility maldehyde facility (80,000 t/a). of the Phase 1 companies (fine pan at a cost of US-$70 million Kong, and a waste incinerator for continual economic growth insufficient attention has been (GPCd, SHYGe, SCACCf, BASF Alongside the foreign investors, chemicals and derivatives). has now gone into operation. (510 million HKD) with Swire by making more efficient use given to the economic aspects. and Huntsman joint venture, the domestic producers SCACC, Currently the sector is virtually The land reclamation work SITA Waste Services working of natural resources and by In order to achieve more effi- for the Suez Group and the New increasing the ecological efficient implementation, a slow World Group of Hong Kong. A ciency of production and con- paradigm change is currently heating and power station with sumer consumption. under way. Instead of being cogeneration was constructed The State Council gave an viewed as an incentive to as a 70:30 JV with Singapore additional indication that the recycle, “circular economy” will SembCorp Utilities for 2.81 “Circular Economy” will play an become a strategy for sustain- billion RMB, and the dock and important role in the country’s able development evolving the tank storage facilities (US-$210 future economic development industrial structure, developing million) were built in collabora- when it transferred responsi- new technology and reforming tion with Vopak of Holland. Sin- bility for driving the Circular industrial policy. The draft Cir- opal, a JV between Air Liquide Economy forward from the cular Economy Promotion Law and Praxair, supplies indus- State Environmental Protec- is expected to go into effect in trial gases to producers at SCIP tion Administration (SEPA) to 2007 or 2008. (US-$120 million investment). the National Development und All of these facilities went into Reform Commission (NDRC). E Contact: operation between 2004 and Since 2002, China has been Dr. Christina Hirche 2006. An impressive infra- phasing in the circular economy Dechema, Frankfurt, Germany structure is being put in place at three levels: at the micro and Tel.: +49 69 75 64 2 77 at SCIP. Future goals include company level as cleaner pro- Fax: +49 69 75 64 2 72 integration of environmental duction (Cleaner Production [email protected] protection programs and further Promotion Law 2003), at the www.dechema.de implementation of the “circular meso or industrial park level in www.achemasia.de economy” strategies. the form of Eco Industrial Parks www.achemasia.net

Fig. 1: Number and distribution of the different categories of industrial parks in China. Bayer Chemical Start-up Initiative Table 1: Eco industrial parks including corporate groups and development zones in China for Phase 3 was completed in 2004, and the plots are already No. Location Industrial Focus Approved reserved for specific large inves- 1 Guigang, Guangxi sugar, alcohol, fertilizer and paper factory 2001 tors. The list of facilities which (Guitang Group) will be constructed includes a 2 Nanhai Eco-Industrial Park, environmental S&T consulting, production of 2001 Guangdong environmental protection technology, production of cracker, a refinery, a gas-based Bayer Industry Services (BIS) is the biggest chemical park operator ecological products, recycling industry power station and a port. START Essen in Germany with three sites in the largest chemicals region in Europe. 3 Baotou Aluminium (Group) aluminum industry 2003 As is the case at TEDA, the 14 –16.9.2007 Through the Bayer Chemical Start-Up Initiative BIS now wants to Co. Ltd., Inner Mongolia management structure of the bring up-and-coming young scientists on board: 4 Changsha Huangxing 2003 Shanghai Chemical Industry Hall 12, Stand B 42 Industrial Park, Hunan Park (SCIP) is based on the “au- • Advice in the development and implementation of your business idea 5 Lubei, Shandong (Lubei Group) chemicals, construction materials and light industry 2003 tonomous administration com- • Essential contacts to network partners and investors 6 TEDA, Tianjin electronics, machinery, pharmaceuticals and foodstuffs, 2004 mittee and development compa- • Attractive leasing models for a top infrastructure ISO 14001 ny model”. The Administration 7 Fushun Mining Group, Liaoning coal mining and methane recovery 2004 • Possibilities of cooperation with all companies at the Committee (SCIPAC) has re- 8 Dalian ETDZ, Liaoning petrochemicals, electronics, telecommunications, etc. 2004 Bayer Chemical Parks ISO 14001 sponsibility for the project ap- 9 Suzhou High-Tech Development telecommunications, fine chemicals, precision mechanics 2004 proval process and business Contact: Zone, Jiangsu and new materials, ISO 14001 coordination between the city Dr. Volker Wege 10 Suzhou Industrial Park, Jiangsu IT, automotive industry, logistics, ISO 14001 2004 government, SCIP and SCIP De- Tel.: +49-214-30-6 15 48 11 Yantai ETDZ, Shandong electronics, textile fiber, plastics food and 2004 velopment (SCIPDC) in matters Fax: +49-214-30-3 19 18 biomedical, ISO 14001 relating to development and [email protected] 12 Guiyang Kaiyang Phosphorus mining coal with high phosphor content 2004 construction of infrastructure, Chemical Engineering Group, utility services, waste disposal, Guangxi investor acquisition and land 13 Weifang Ocean Chemical chemical and high-tech industry 2005 leases. SCIPDC is a public com- High-tech Development Zone, Shandong pany, and the companies at the Bayer Industry Services 14 Zhengzhou Shangjie 2005 site are the major shareholders. focus on your success SCIPDC has established joint GmbH & Co. OHG Industrial Park, Henan 51368 Leverkusen 15 Baotou Iron and Steel (Group) iron, steel and rare earth metal industry 2005 ventures with large foreign com- Germany Co. Ltd., Inner Mongolia panies to construct and operate www.bayerindustry.de 16 Shanxi Antai (Group) Co. Ltd., coal washing, coking plant, pig iron, construction 2006 utility and waste disposal serv- Shanxi materials and the electric power industry, ISO 14001 ices. The list of projects includes

[email protected] Page 32 AT A GlA n CE CHEManager Europe 9/2007

The EU Chemical Industry Latest Research in Organic Electronics Geographic breakdown of EU chemical industry sales Public image of the EU chemical industry OEC-2007 in Frankfurt Sales 2005: % 613 billion 74 Electronics ow in its fifth year, the 78 74 Organic Electronics Confer- Percentage shares Food SE 2.4% 77 PL 1.7% 67 ence and Exhibition 2007 Automobile DK 1.3% 72 N Other (OEC-07) is the premier international AT 1.3% DE 66 IE 12% Pharmaceutical FI 1.1% 24.9% 70 gathering of scientists, engineers, HU 1.0% 5.6% 61 CZ 0.9% BE 6.4% Electricity 70 manufacturers and investors for the PT 0.7% 6.5% 15.6% 49 SI 0.6% 7.1% % of positive replies Chemical discussion, demonstration and evalu- Others 1.0% NL 48 9.4% 12.5% 39 Petrol/oil ation of organic semiconductor tech- 45 FR ES 37 Nuclear energy nologies and organic electronics. OEC- GB IT 35 8 industries average: 58 07 is held at the Sheraton Frankfurt Note: Big 8: Germany, France, Italy, UK, Spain, Netherlands, Belgium and Ireland 2006 2004

Source: Cefic Source: Cefic Pan European Survey 2006 © GIT VERLAG Hotel & Towers in Frankfurt, Germany the conference is divided ing issues. Workshop partici- on 24 – 26 September 2007. Germany is still the largest chemicals producer in europe, fol- in a pan european poll on the image of the eU chemical industry, into three themed tracks with pants will also be able to take lowed by France, italy and the UK. chemicals in 2006 were in sixth position out of eight bench- invited speakers, and one peer- part in visits to local companies together, those four countries generate almost two thirds of the mark industries and rank below the average. However, recent With all exhibition space sold reviewed track. Conference MaN roland Druckmaschinen eU’s chemicals sales (€613 billion). adding Spain, Netherlands, efforts to improve the reputation of the industry seem to work- out, nearly 100 speakers and a delegates will benefit from and Merck KGaa. Belgium and ireland raises the share to 88 %. Poland is the big- ing. the image of the chemical industry in the last two years has 100 % increase in submissions focused presentations delivered the conference Gala Dinner gest new eU country, representing 1.7 % of total eU chemicals developed far better than the average of all eight benchmark of peer-review papers com- by established multinational on the evening of 25 September sales. industries. pared to 2006, all the indica- organisations such as BaSF, De- will host the presentation of the tions are that OeC-07 is set to gussa, Dai Nippon Printing, Du- 2007 Organic Semiconductor be the biggest and most exciting Pont, lG.Philips, Merck, Nokia, industry awards (OSia). three in the conference’s history. Siemens, Sony, and Samsung, awards will be presented: Start- The EU Chemical Industry Hosted by cintelliq, the as well as from organisations up of the Year, research and organic semiconductor indus- exclusively focused on organic Development, and Best Peer- Sectoral breakdown of EU chemical industry sales EU chemical industry consumption structure try specialist, and by its con- electronics such as Cambridge review Paper. % of chemical domestic consumption ference partner the Organic Display technology, Cenamps, Craig Cruickshank, cintelliq electronics association (Oea), e ink, Konarka, Nanoident, founder and CeO, said, “the Base chemicals: Textile & Clothing Construction Petrochemicals, Plastics & synthetic rubber, the key industry association Novaled, OleD-t, Plextronics, continued and growing inter- Consumer chemicals: man-made fibres, other basic inorganics, Electrical goods Agriculture Perfumes & cosmetics, soaps & detergents industrial gases, fertilizers Automotive for organic electronics, OeC- PolyiC, Polymer Vision, printed est being shown in OeC-07 Office machines Paper & printing 07 aims to cover all aspects systems, Sumation and thin reflects the dynamism within 10.1% 0.7 % 6.3 % 5.4 % Pharmaceuticals 6.4 % 5.3 % products of organic electronics (encom- Film electronics. the organic semiconductor and 4.5 % Industrial 3.9 % passing plastic and printed Keynote speakers include: organic electronics industry as machinery 23.2% 38.5% 1.9% electronics) and organic semi-  eC funding for organic elec- a whole, and we confidently conductor technologies. OeC- tronics – rosalie Zobel, Direc- expect to hear some exciting Metal 16.4 % 30.3 % products 07 will host the field testing tor european Commission company announcements made 28.2% 2.5 % 6.1% of the first printed low cost  Organic electronics roadmaps during this year’s event.” 10.3 % Services organic tickets developed by – Wolfgang Mildner, Chair- Wolfgang Mildner, chairman the Prisma Project (Printed man Oe-a of the Oe-a, said, “OeC-07 is Consumer products Specialty & fine chemicals: Rest of manufacturing Smart labels). the tickets will  ePaper and eBooks in the the central forum and market- Fine chemicals, other specialty chemicals, Rest of Industry use first generation printed newspaper industry – allan place for this industry and con- * EU 15 paints & inks, crop protection organic-tickets based on radio Marshall, principal iMedia sequently the place to inform Source: Cefic Source: Cefic and eurostat © GIT VERLAG frequency technology produced advisory, the community about recent by Bartsch and PolyiC in close reducing carbon emissions progress at Oe-a: the expan- the output covers four wide ranges of products: base chemicals, the chemical industry underpins virtually all sectors of the  collaboration with members of through new technologies – sion of our worldwide activities speciality and fine chemicals, pharmaceuticals, and consumer economy and its strategies impact directly on the downstream the Prisma -Project. During this richard Guy, research Man- and the update of our roadmap chemicals. Base chemicals are produced in large volumes and users of chemicals. the consumption structure of chemicals by first field trial, organic tickets ager Carbon trust for organic electronics.” are sold to the chemical industry itself or to other industries. downstream users gives the following picture: will be used to collect statisti- Specialties cover the auxiliaries for industry, dyes & pigments,  30.3 % of chemicals consumption is absorbed by consumer cal data. Four reader stations Four pre-conference workshops More information can be found oleochemicals, crop protection, and paints & inks. Fine chemicals products, 16.4 % goes to services, 6.4 % to agriculture, 5.4 % developed by PolyiC and about on 24 September will help new at www.oec-europe.com represent pharma-, agro-, and chemical intermediates. Phar- to construction, 6.1 % to the rest of manufacturing and 10.3 % 1,000 organic tickets convert- entrants to the industry get up maceuticals represent both basic pharmaceutical products and to the rest of industry. ed by Bartsch will be used to to speed with developments in E Contact: pharmaceutical preparations but not pharmaceuticals interme-  the big industrial customers of chemicals are the metals, monitor the flow of attendees technology, intellectual prop- Craig Cruickshank diates. Finally, consumer chemicals are sold to final consumers: mechanical & electrical industries, textiles & clothing, the throughout the two day confer- erty, and commercial activities, cintelliq ltd soaps and detergents, perfumes and cosmetics. automotive industry and paper & printing products. ence and exhibition. the field while industry professionals will St John’s Innovation Centre trial is expected to deliver val- benefit from workshops provid- Cambridge/Great Britain uable results and support the ing more in-depth coverage of Tel.: +44 1223 421526 Knowledge Management Quo Vadis, Venture Capital development of a wider range applications, standards, print- [email protected] of prFiD applications. ing processes and manufactur- www.oec-europe.com Time invested in knowledge work (%) Where are investments being made? According to capital invested in venture capital panel participants in Q3 2006 in million %

Biotechnology 18,6 Software 13,2 Medical technology 12,1 Enclosed Please Find our Reach Supplement. 38% 46% Internet services 4,2 Industrial automation/logistics 4,0 Hardware 4,0 10% 6% New materials 2,9 Index Media/entertainment 2,5 Telecommunications 2,1 aBX logistics 17 GDCh 16 Meridium 23 Energy 2,0 allessaChemie 1 Gempex 32 Messe München 27 Girindus 10 Implementing knowledge Looking for information IT services 0,4 allessaSyntec 1 Morgan Grenfell Private equity 1 Discussion with experts Looking for experts almig 29 Glaxosmithkline 18 Internet infrastructure 0,1 NCeC r9 aOCS american Oil Chemists’ Society 22 Hamilton 29 Nova Chemicals 23 archimica 10, 12 Helsinn 12 Novartis 1 Source: Deutsche Bank Research Source: VDI © GIT VERLAG arvato logistics Services 20 Hillesheim 29 Novasep 11 thanks to improvements in technology, knowledge workers in the third quarter of 2006, venture capitalists invested signifi- BaSF 2, 8, 9, 12, r2, r11 Hoyer 17 € Ökopol r 6, r9 only have to use a small amount of their time in researching. cantly less than in the past. Only 58 million was pumped into ineos 1 Bayer 1 Organica Feinchemie 29 More than 4/5 of their work time is used for discussions with start ups by the 40 venture capital panel member German ven- KPMG 7, r2 Bayer industry Services 31 Oxea 2 local experts about finding feasible solutions and to put newly ture-capital investors. the most attractive sector for investment lanxess 1, 2, 12 Bertschi 17 Pavilion 23 acquired know-how to use. remains biotechnology: about €19 million was invested in the leistritz 12 Brenntag 1, 4 Peptisyntha 10 industry, mainly as follow-up financing of existing investments. Bruhn Spedition 17 list 22 Perbio 25, 28 CaBB 29 logica 29 Pfaudler 24 Cargolux 18 lonza 1 Pfizer 10, 12 ImprI nt Cefic 26, 32 luxair Cargo 18 PP Consulting 8 Ceva logistics 17 Maxager 4 Publisher: Dr. Dieter Wirth Christiane rothermel Print run: 15,000 arbitrarily use the unmodified PP Publico Publications 22 Git VerlaG GmbH & Co. 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