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Tweet of the week:
— Amy Lane (@biosynthesizer) April 11, 2014
Before we head to the network highlights, just a note that this overlord will be taking a spring break, so Grand CENtral will, too. And no, we are not headed to party central in Cancun with Beaker.
To the network:
The Chemical Notebook: Coke Committed To Plant Bottle Despite JBF’s Bio-based Ethylene Glycol Cancellation
Tweet of the week:
In re that last RT from Neil. We are all more important than our research. The people around you know this to be true, whether you do or not
— Matthew Hartings (@sciencegeist) March 31, 2014
To the network:
Cleantech Chemistry: Fake Meat as Cleantech Investment
This week’s announcement that Albany Molecular Research Inc. will acquire Cedarburg Hauser Pharmaceuticals—a $41 million deal—has us on the verge of declaring a trend. You will recall that last October, AAIPharma purchased another Midwest active pharmaceutical ingredients (API) producer, Cambridge Major Laboratories. All we need is one more to feel that the black ice of overcapacity in pharmaceutical fine chemicals is finally starting to melt.
[Note: The DSM/Patheon deal does not count as it has not, as of yet, led to any consolidation in API manufacturing stewardship.]
Industry watchers have long bemoaned the need—some would call it the obvious-if-not drastic need—for consolidation in the contract pharma chemicals sector. The problem of too few jobs for too many producers is long-standing to the point of seeming sustainable. But action may be triggered now by the nature of those jobs. Customers, transitioning from the block-buster era into the age of targeted therapies, want much smaller volumes of chemicals than they did only a couple of years ago. And the molecules they want have become increasingly more complex. The stronger contractors, such as AMRI, are on the lookout for ready-to-go advanced API synthesis capacity. Companies like Cambridge Major and Cedarburg are perfect targets, especially for diversified service firms such as AAI and AMRI that want to build out their API offerings.
But there are other ways to deal with overcapcity in pharmachem. In Europe, lately, contract fine chemical makers have been investing in non-pharma production, or in other ways shifting emphasis from pharma to markets such as agricultural chemicals, electronic chemicals and catalysts for specialty polymers. Saltigo not long ago combined pharma and non-agricultural fine chemicals into one fine chemicals group, leaving agchem as a separate business. In January, Isochem, the French fine chemical firm, announced plans to build a $2 million plant at its facility in Pont-de-Claix to service an $18 million contract for a high performance polymer catalyst. And last week, Minakem, another French firm, announced plans to expand capacity at its Minafin facility in Tennessee for bio-based 1,2-pentanediol, a key ingredient for cosmetics and an intermediate for agricultural applications and other specialty markets.
Isochem, on the other hand, is among the firms that have cash on hand and are looking to acquire API and general pharmaceutical chemical capacity. Others API makers, such as Siegfried, are looking for to make further acquisitions downstream in final dosage, fill-and-finish, and other formulation services. Then, there is DSM and Patheon (see previous post at Fine Line). One aspect of that story is that the DSM pharma chem business will no longer be held by a publicly-traded firm. The same is true for Ampac Fine Chemicals, now that its parent, American Pacific Corporation, has been acquired by H.I.G. Capital. This will allow for fast, or much faster, action on any possible acquisition.
Pharmachem executives in town for DCAT Week earlier this month all said business is good. Good as in steady, solid. Growth, however, is not really in the cards, which seem very much stacked for that third, trend-establishing deal.
In other thaw news, I happened to turn a page in The Complete Poems of Hart Crane on the ferry from Hoboken this morning, discovering this poem just as we sidled up to Wall Street under the Brooklyn Bridge. I took it as a good sign that April, cruel as it is, will not be coming in like a lion.
Awake to the cold light
of wet wind running
twigs in tremors. Walls
are naked. Twilights raw—
and when the sun taps steeples
their glistenings dwindle
slips along the ground
like a mouse under pussy-
willows, a little hungry.
The vagrant ghost of winter,
is it this that keeps the chimney
busy still? For something still
nudges shingles and windows:
but waveringly, —this ghost,
this slate-eyed saintly wraith
of winter wanes
and knows its waning.
Sorry for the belated round-up folks. Back to usual this Friday. In the meantime, enjoy this ACS national meeting-heavy roundup of CENtral Science goodness.
Tweet of the week, from economist Paula Stephan’s chemistry job placement talk at #ACSDallas:
— Carmen Drahl (@carmendrahl) March 18, 2014
To the network:
ACS Meeting Updates: Roundup of Wednesday #ACSDallas News and Dallas: A Structural Analysis and Safety professionals: On the outer fringe or the leading edge? (cross post) and Roundup of Tuesday #ACSDallas News and Economist Paula Stephan Talks Chemistry Job Placement at #ACSDallas and Liveblogging First-Time Disclosures of Drug Structures from #ACSDallas and Roundup of Monday #ACSDallas News and Going Green On St. Patrick’s Day
Cleantech Chemistry: Help Solve a Water Problem
Newscripts: Amusing News Aliquots
The Chemical Notebook: The U.S. Cracker Leader Board
The Safety Zone: Safety professionals: On the outer fringe or the leading edge? (cross post) and Another acid leak at Tesoro refinery
The Watch Glass: Cephalopod camouflage and New York St. Patrick’s Day parade’s signature green stripe
Here’s a roundup of news stories from the ACS national meeting in Dallas that C&EN published on Wednesday, 3/19:
Teaching Zinc A New Trick
Chemists revisit using zinc reagents as a means of transferring fluoroalkyl groups into synthetic building blocks and polymers
Taking Cues From Nature En Route To Taxol
Synthesis of an intermediate along the way to the cancer drug opens avenues to novel analogs
Happy first day of spring and last day of the national meeting!
Here’s a roundup of news stories from the ACS national meeting in Dallas that C&EN published on Tuesday, 3/18:
Reagent Assembles Ring Motifs Common In Drugs
Method builds medium-sized nitrogen heterocycles with challenging substitution patterns
Color-Changing Gels Track Food Quality
Nano-based materials indicate age, temperature history of perishables
Stay tuned for Carmen Drahl’s liveblogging of the new drug structures session TODAY at 2:00 PM CDT.
Tweet of the week:
— Slate (@Slate) March 14, 2014
To the network:
ACS Meeting Updates (new!): #ACSDallas, Here We Come!
Cleantech Chemistry: The Biology in Green Chemistry
Fine Line: DCAT Week 2014
Grand CENtral: CENtral Science network update
Newscripts: Amusing News Aliquots
Terra Sigillata: Colorado Marijuana Product Potency: Just Another Herbal Medicine
The Chemical Notebook: BASF’s Climate Change Schizophrenia
The Safety Zone: #Chemsafety at #ACSDallas
Things could not have been more “up” at DCAT Week, the annual occupation of the Waldorf Astoria and environs by the Drug Chemicals and Allied Trades association that wrapped up last night. (Each March, DCAT hosts the largest black tie banquet of the year at the grand old hotel). Business in the pharmaceutical chemicals sector is up for the third year in a row, in fact, making for a kind of “up momentum”. While growth is not a major feature of the current gestalt, a “firmness in the upside” is. The center is expected to hold at least through 2014.
Formed in the merger of DSM’s active pharmaceutical ingredients (API) division and Patheon’s two pharma services and manufacturing businesses last November, DPx is really no stranger to DCAT’s membership. And the deal has been a sector focus for a few months now. The strangeness had to do with its entertaining guests in separate suits after the banquet— the traditionally huge DSM suite and a less-active Patheon suite. The new company name, which was announced early in the week (it stands for DSM/Patheon and whatever you attribute to an x subscript—perhaps just an intersection of two lines) was absent in signage, though the crowd at the DSM suite was so large that there may have been low-hanging logos that I didn’t notice.
Patheon also entertained the press on its own earlier in the week. I met on Wednesday with David Hamby, vice president of business services [note: titles of Patheon and DSM personnel in this post are likely in flux, but it can be assumed that people will continue in their current function in DPx]. He explained that DPx will merge API production with formulation services, final dosage manufacturing, and all the R&D along the chain for a full-services, as opposed to one-stop-shop (I suppose there is a difference between the two approaches), menu for pharma clients. The businesses will operate somewhat autonomously, but the focus is on “synergies”, says Hamby. DPx’s plan is to offer pretty much everything, he says, “hopefully at the right time in the right way, helping our clients with a more integrated offering.”
Right time/right way is the crux, of course. But there is also the question of managing two fundamentally different business—services and manufacturing. API producers, such as Siegfried and Hovione, have been trying to find the right balance in expanded offerings, the former very aggressively. And Lonza actually attempted to buy Patheon in 2009. Now that a major deal—$2.65 billion—has been struck to create of a huge soup-to-nuts player, people are wondering if it will work. There is also a bit of speculation regarding what DPx is really up to.
“This is not my favorite deal,” Marianne Späne, director of business development and sales at Siegfried, told me at the Swiss company’s hospitality suite after the banquet. She sees an outsized competitor pursuing a business model that Siegfried had perceived as its competitive advantage against an API producer such as DSM.
In discussions, some DCAT attendees speculated that DSM will sell its share in the company, completing an exit from pharmaceutical chemicals. Others wondered if the company has designs on becoming a full fledged pharmaceutical firm.
Aslim Malik, whom I met in the halls (which, by the way, have lots of tremendous photographs of yester-guests, ranging from comedian Rich Little to French president Charles de Gaulle), emphazied an aspect of the deal that most interests him: The DSM unit is now, like American Pacific, Ampac’s parent, a private company via a recent acquisition. “I told you,” he said, reminding me or our discussion at Informex in Miami earlier this year. “This this is a trend.”
And it’s the first thing Lukas Utiger, the former president of DSM’s pharmaceutical products division and head of API work at DPx, mentioned when I found him in the packed DSM suite. It will be much easier to launch the kind of business that Hamby described to me earlier in the week as a private company, Utiger said. “There will be no quarterly reports.”
A few other interesting developments going about town this week—
I met with Michael Staff, US-based president of M2i life sciences, a company formed by Philippe Guerret, the former chief financial officer of French API maker Minakem, in 2012. The group purchased an R&D facility in Pau, a city on the edge of the Pyrenees in southern France, and a manufacturing site in Salin de Giraud near Marseille. M2i is looking to provide process design and other services and has businesses in crop science and biocontrol, where it specializes in pheromone chemistry, according to Staff. He says M2i (the name derives from Melchoir Investissement et Industrie, a backer of Guerret’s ventures) had hoped to announce a new acquisition at DCAT, but that things were held up. Any day now, as they say.
Zhejiang Hengdian Apeloa, known as Hengdian, a Hanzhou, China-based API producer that specializes in fluorine chemistry, is expanding its sulfur tetrafluoride capacity, according to Nick Kosarych, head of business development for North America. This was of interest to Greg Butler, vice president of Oakwood Chemical, who invited me to the Chinese firm’s suite at the Waldorf on Wednesday afternoon. Oakwood, based in West Columbia, S.C., is looking to contract with Hengdian for commercial scale fluorine chemistry production on projects advancing in its pipeline.
Meanwhile, Aesica, the UK-based API producer, announced that it’s $45 million high capacity manufacturing facility in Queenborough has received commercial validation. Ian Muir, newly-appointed commercial managing director, noted that the company, which has been built largely through acquisition of ex-big pharma manufacturing sites, has grown its services business to half of its 2013 revenue $415 million. Aesica’s emphasis on services, including finished dosage manufacturing, may be reflected in Muir’s resume. He comes to Aesica having previously worked as vice president of oral release technologies at Catalent Pharma Solutions.
[Muir’s take on DPx: “It’s a bold move. It will test the market for that combination of API production and full services.” To those who doubt it will fly, he responds that nobody has really tried it yet.]
Other highlights for me included breakfast with Guy Villax, CEO of Hovione, the Portuguese API producer, who says this will be a big year for RX-360, the supply chain management consortium (watch this space), and lunch with Roger LaForce, who recently resigned as CEO of Zach System, the Italian API producer. After two years, he determined that he and Zach were a bad fit. This note will serve as a follow-up to the profile I wrote last year on his attempt to turn the company around. Many viewed LaForce’s move to Zach in 2012 as an attempt to reprise his seven-year run managing the business at another, very different Italian firm, Fabbirca Italiana Sintetici, better known as FIS. I’m expecting there will be news to report from Roger before long as well.
Another highlight, of course, was the speaker at the banquet, former Secretary of State Hillary Rodham Clinton. As expected, she did not announce her candidacy for the presidency in 2016. She did, however, deliver a campaign-worthy speech followed by an on stage (somewhat staged) interview. Despite the obvious control influences, her intelligence and generally reasonable take on issues ranging from tensions in the Ukraine to healthcare (an item on her resume from the 1990s) won over a huge crowd in the banquet hall and the spill-over rooms. This year marked a record attendance at the DCAT dinner.
So, yes, Hillary Clinton won over a crowd largely made up of marketing executives in the drug industry. Funny how intelligence and reason will do that. “Funny”, also, how the European marketing executives like her so much more than their American counterparts!