What Fine Chemicals Are

COPYRIGHTED MATERIAL

CHAPTER 1 What Fine Chemicals Are

1.1 DEFINITION

The basic principle for defi nition of the term “fi ne chemicals” is a three-tier segmentation of the universe of chemicals into commodities, fi ne chemicals, and specialty chemicals (see Figure 1.1). Fine chemicals account for the small- est part, about 4–5% of the total $1.8 trillion turnover of the chemical industry (see Section 9.1). Commodities are large-volume, low-price, homogeneous, and standardized chemicals produced in dedicated plants and used for a large variety of applications. Prices are cyclic and fully transparent. Petrochemicals, basic chemicals, heavy organic and inorganic chemicals (large-volume) monomers, commodity fi bers, and plastics are all part of commodities. Typical examples of single products are ethylene, propylene, caprolactame, methanol, BTX (benzene, toluene, xylenes), phthalic anhydride, poly (vinyl chloride) soda, and sulfuric acid, Fine chemicals are complex, single, pure chemical substances. They are produced in limited quantities (<1000 metric tons per year) in multipurpose plants by multistep batch chemical or biotech(nological) processes. They are sold for more than $10 per kilogram, based on exacting specifi cations, for further processing within the chemical industry. The category is further sub- divided on the basis of either the added value (building blocks, advanced intermediates, or active ingredients) or the type of business transaction (standard or exclusive products). As the term indicates, exclusive products are made exclusively by one manufacturer for one customer, which typically uses them for the manufacture of a patented specialty chemical, primarily a drug or agrochemical. Typical examples of single products are β-lactames, imidazoles, pyrazoles, triazoles, tetrazoles, pyridine, pyrimidines, and other N-heterocyclic compounds (see Section 3.1). A third way of differentiation is the regulatory status, which governs the manufacture. Active pharmaceutical ingredients and advanced intermediates thereof have to be produced under

3 4 WHAT FINE CHEMICALS ARE

fine chemicals commodities specialities

single pure chem. single pure chem. substances mixtures

substances . . . produced in multipurpose plants produced in dedicated plants formulated low volume (<1000 high volume / mt) low price high price (>$ 10/kg) undifferentiated few applications many applications undifferentiated

sold on specifications “what they are” sold on specifications sold on performance “what they can do” 2004 Figure 1.1 Deﬁ nitions.

current Good Manufacturing Practice (cGMP) regulations. They are estab- lished by the (US) Food and Drug Administration (FDA) in order to guar- antee the highest possible safety of the drugs made thereof. All advanced intermediates and APIs destined for drugs and other specialty chemicals destined for human consumption on the US market have to be produced according to cGMP rules, regardless of the location of the plant. The regulations apply to all manufacturing processes, such as chemical synthesis, bio- technology, extraction, and recovery from natural sources. All in all, the majority of ﬁ ne chemicals have to be manufactured according to the cGMP regime.

A precise distinction between commodities and fi ne chemicals is not feasible. In very broad terms, commodities are made by chemical engineers and fi ne chemicals by chemists. Both commodities and fi ne chemicals are identifi ed according to specifi cations. Both are sold within the chemical industry, and customers know how to use them better than do suppliers. In terms of volume, the dividing line comes at about 1000 tons/year; in terms of unit sales prices, this is set at about $10 /kg. Both numbers are somewhat arbitrary and controversial. Many large chemical companies include larger-volume/lower-unit-price products, so they can claim to have a large fi ne chemicals business (which is more appealing than commodities!). The threshold numbers also cut sometimes right into otherwise consistent product groups. This is, for instance, the case for active pharmaceutical ingredients, amino acids, and vitamins. In all three cases the two largest-volume products, namely, acetyl salicylic acid and paracetamol; POSITIONING ON THE VALUE-ADDED CHAIN 5

L-lysine and D,L-methionine, and ascorbic acid and niacin, respectively, are produced in quantities exceeding 10,000 tons/year, and sold at prices below the $10 /kg level.

Specialty chemicals are formulations of chemicals containing one or more fi ne chemicals as active ingredients. They are identifi ed according to performance properties. Customers are trades outside the chemical industry and the public. Specialty chemicals are usually sold under brand names. Suppliers have to provide product information. Subcategories are adhesives, agrochemi- cals, biocides, catalysts, dyestuffs and pigments, enzymes, electronic chemicals, fl avors and fragrances, food and feed additives, pharmaceuticals, and specialty polymers (see Chapter 11). The distinction between fi ne and specialty chemicals is net. The former are sold on the basis of “what they are”; the latter, on “what they can do.” In the life science industry, the active ingredients of drugs are fi ne chemicals, the formulated drugs specialties (see next chapter).

Electronic chemicals (see Section 11.4) provide another illustrative example of the difference between fi ne and specialty chemicals: Merck KGaA produces a range of individual fi ne chemicals as active substances for liquid crystals in a modern multipurpose plant in Darmstadt, Germany. An example is (trans,trans)-4- [difl uoromethoxy)-3,5-difl uorophenyl]-4′-propyl-1,1′-bicyclohexyl. Merck ships the active ingredients to its secondary plants in Japan, South Korea, and Taiwan, where they are compounded into liquid crystal formulations. These specialties have to comply with stringent use-related specifi cations (electrical and color properties, etc.) of the Asian producers of consumer electronics such as cellular phones, DVD players, and fl at-screen TV sets.

“Commoditized” specialty chemicals contain commodities as active ingredients and are interchangeable. Thus, ethylene glycol “99%” is a commodity. If it is diluted with water, enhanced with a colorant, and sold as “superanti- freeze” in a retail shop, it becomes a commoditized specialty. Note: Sometimes fi ne chemicals are considered as a subcategory of specialty chemicals. On the basis of the defi nitions given above this classifi cation should be avoided.)

1.2 POSITIONING ON THE VALUE-ADDED CHAIN

An example of the value-added chain extending from commodities through ﬁ ne chemicals to a pharmaceutical specialty is shown in Table 1.1. The product chosen is Pﬁ zer’s anticholesterol drug Lipitor (atorvastatin), the world’s top-selling drug with sales of $12 billion in 2004. The value-added chain extends from a C1 molecule, methanol (left side of the table) all the way to a C33 molecule, atorvastatin. The structure of compound III in Table 1.1 is as follows: 6

Table 1.1 Example for the Value-Added Chain in the Chemical Industry: Lipitor (Atorvastatin) Fine Chemicals Parameter Commodities Intermediates API Specialty Example Methanol Acetic acid (I) (II) (III) Lipitor

Molecular formula CH4O C2H4O2 C7H11NO3 C14H30NO4 C33H35FN2O5 N/A Molecular weight 32.04 60.05 157.17 269.34 558.65 N/A Applications >100 >50 10 1 1 N/A Price indication ($/kg) 0.2 1.00 100 200 2,000 80,000 Production (metric tons/year) 32 × 106 8 × 106 200 300 400 400 Producers 100 25 10 5 1a 1a Customers 100 50 1 1 1a Millions Plant typeb D, C D, C M, B M, B M, B F&P Manufacturing steps 1 2 5 15 20 +2

a Active pharmaceutical ingredient (API). b Patentholder; several generic producers preparing for launch. Note: Figures are indicative only. Key: B, batch; C, continuous; D, dedicated; M, multipurpose. Also: (I) Ethyl(R)-4-cyano-3-hydroxy butanoate, “hydroxynitrile” (II) tert-Butyl(4R,6R)-2-[6-(2-aminoethyl)-2.2-dimethyl-1.3-dioxan-4-yl]acetate (III) 2-(4-Fluorophenyl)-β,δ-dihydroxy-5-(1-methylethyl)-3-phenyl-4-[(phenylamino)carbonyl]-1H-pyrrole-heptanoic acid. POSITIONING ON THE VALUE-ADDED CHAIN 7

OH OH O O N O− N Ca2+ H

F 2 (III)

Methanol and acetic acid are typical commodities, namely, low-price/mul- tiusage products manufactured in large quantities by many companies. Under the heading “fi ne chemicals,” three examples of fi ne chemicals used for the manufacture of atorvastatin are listed, namely, the advanced intermediates ethyl 4-chloro-3-hydroxy butanoate and tert-butyl (4R,6R)-2-[6-(2- aminoethyl)-2.2-dimethyl-1.3-dioxan-4-yl] acetate, respectively, and the API, atorvastatin, itself. As long as the latter, 2-(4-fl uorophenyl)-β,δ-dihydroxy-5- (1-methylethyl)-3-phenyl-4-[(phenylamino)-carbonyl]-1H-pyrrole-heptanoic acid, is sold according to specifi cations, it is a fi ne chemical. In the pharmaceutical industry, the chemical synthesis of an API is also referred to as primary manufacturing. The secondary manufacturing comprises the formu- lation of the API into the fi nal delivery form. The API is compounded with excipients that confer bulkiness, stability, color, and taste. Once atarvastatin is tableted, packed, and sold as the anticholesterol prescription drug Lipitor, it becomes a specialty. The price difference between the API and the package sold in the drugstore is very substantial: Lipitor’s retail sales price is more than $80,000 per kilogram.