The Thaw
Mar27

The Thaw

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 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...

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DCAT Week 2014
Mar14

DCAT Week 2014

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. No need to recap trends and transformations, which C&EN cataloged in our recent coverage of CPhI and Informex. But many of these were embodied in the strange presence of a “new” company called DPx. 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...

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State of the Vibe
Jan26

State of the Vibe

I’ll share the gist of my Informex talk, which was entitled State of the Vibe in Pharma Chem or When New Worlds Collide. I spoke using PowerPoint slides, which I had never done before. Having seen hundreds of PowerPoint presentations, however, I knew that they had to begin with a “Forward-Looking Statement”, something to get the speaker or the speaker’s employer off the hook. So, I led the presentation with my own forward-looking statement, a quote from the German poet, Rainer Maria Rilke:  “The truth is buried under a pile of facts.” I can’t find where Rilke actually says this, but who else would say such a thing? Thus covered, I went into an introduction of the magazine, beginning with a review of our cover stories on pharmaceuticals and fine chemicals from 2013. These showcased important themes. We covered the push toward services in contract manufacturing, the reevaluation of markets in fine chemicals, and the rise in biosimilars. Our annual case history explication of the mechanics of contract manufacturing had its crowd-pleasing focus on the drug molecules in question. There was a uniquely comprehensive feature on the quest for cures for rare diseases (a highlight of C&EN’s coverage last year, written by Lisa Jarvis). Then, there was the Pharmaceutical Year in Review, a look at what we called “The New Machine”. As for inside action, we ran features on China, where the long-running story of low-cost competition and its down side is nuanced by the anti-corruption push of the new five-year-plan. There was an article on the push to bring excipients into the fold of regulated manufacture, largely as a means of securing the supply chain and the businesses of Western suppliers of bulk drug material. And there was one on the reemergence of Design of Experiment, the statistics-intensive industrial quality regime from the 1960s that is currently riding the wave of data analysis in science-based (certainly in pharmaceutical-based) industries. I pointed to only one news story from 2013—DSM’s announcement last month of a deal with Patheon to create a separate company combining DSM’s pharmaceutical fine chemicals and Patheon’s formulation services businesses. A quick look at the number of diversified chemical companies who have somehow entered and exited the field of fine chemicals between the mid 1990s and 2000s has us wondering whether DSM will somehow join the club, leaving BASF as the sole diversified chemical giant still in the pharma chemical game. Next: A swing through ten years of fine, custom, and contract manufacturing in the pharma sector with a look at the CPhI headlines from 2003 to 2013. Long story short, we watched the sector rise steadily...

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C&EN Talks at Informex
Jan24

C&EN Talks at Informex

Informex, if somewhat downsized, was upbeat in Miami. I haven’t got official word from UBM on attendance, but the consensus on the exhibit floor was that floor walking was down. Business, however, was up! David Ager, principle scientist with DSM, said it was well worth the travel to South Beach for the leads his company picked up. Others said the same. Generally, spirits were higher in Miami than they were in Anaheim last year. Go figure. If there was any upside to last year’s venue, it was the proximity of hotels to the convention center. Informex 2013 was like an alternative Disney World behind the real Magic Kingdom with all the hotels on a short road that ended in a cul-de-sac fronted by the convention center. Most attendees spend all week at those hotels and at the exhibition. Still, show management had a hard time getting people from the exhibit hall to rooms in the hotels for the conference sessions. The solution this year was to combine the two with presentations given at two “Silent Theaters” in the exhibit hall. C&EN presented two of the session. Publisher Kevin Davies gave a presentation entitled “The Chemistry of Next Gen Sequencing”. And I gave one entitled “State of the Vibe in Pharmachem”. From the speaker’s perspective and the attendee’s, I thought the speaking theaters, in which the audience wore sound canceling headphones, worked very well. Most speakers drew good crowds. Kevin’s talk was intriguing. A history of the genome and its sequencing from Sanger, the genomics pioneer, to Illumina, the firm that debuted the much anticipated $1,000 genome just this month. There were walk-ons by Watson and a Dutch woman whose name approximates Crick. Much scientific intrigue, if not your standard chemistry. Kevin is an authoritative source on the $1,000 genome, having, in fact, written the book. His slide headings were fantastic—The Language of God, The Book of Life, and Mission Accomplished [with a photo of George W. Bush on deck under the banner for context]. He walked us, engagingly, through the rise of single molecule exonuclease sequencing, the emergence of companies like Solexa and Illumina, and the efforts and machinations of marvelously driven characters such as Jonathan Rothberg and Craig Venter. He showed us scientist pub life in Cambridge, UK, and the rise of Oxford Nanopore, which recently debuted a sequencing device about the size of a matchbox car, heralding the easy-access sequencing of our X-topian future. Kevin demonstrated this thingamabob at the bar last night, and it is quite amazing.  It is all very amazing. Especially the competition between scientists and the companies they form, reminding us that advances...

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Buh-buh-buh-buh-buh-Bad!
Jan22

Buh-buh-buh-buh-buh-Bad!

Today I was offered a great opportunity to air my grievances about Breaking Bad, the award-winning AMC dramatic series that I have avoided watching. As it turns out, I’m glad I waited until now! Donna Nelson, a chemistry professor at the University of Oklahoma who has garnered a bit of fame in the chemistry world as a consultant for the series, was the opening speaker at Informex this morning. I hit her with my reservations regarding the show, more-or-less like a ton of bricks, moments before she got started. My reservations, I told her, arise from the following perceptions: 1)   Science nerds (we will visit the word nerd below… relax) took to the show with immense enthusiasm for living vicariously through an outlaw chemist—an outlaw chemist who is making crystal meth for money! 2)    The science enterprise latched on to this show’s popularity as a chance to finally get science right on TV with a show… about making crystal meth! 3)   A fundamental question: What do the details of chemistry have to do with drama? I never cared about the authenticity of Carmella’s recipe for tomato gravy when I watched the Sopranos (twice) because it had nothing to do with the drama. I doubt David Chase brought in a chef to consult. Why should I be interested in the details of the chemistry in Breaking Bad when it is the dramatic element of how the chemistry is used that should hook me? In my view the Chemical Enterprise has shown too much enthusiasm for a story of science’s amorality tipping heavily into the immoral. What kind of anti-hero role model is Walter White? Nelson effectively disarmed me in our brief chat before she went on. I could tell intuitively that she saw something behind the kind of objections I raised, objections comparable to those of colleagues who pulled her aside when she got started and said… “Do you know what that show is about? Don’t do it!” She did it, and I’m impressed with what she’s done. And C&EN had a bit roll in her contribution to the Enterprise as a volunteer adviser on chemistry: Nelson saw a story in C&EN written by Jyllian Kemsley in which Vince Gilligan, the show’s writer and producer, told her he would very much welcome input from chemists. The story ran after the first few episodes. Nelson decided to take him up on it, and got an introduction through Rudy Baum, then editor-in-chief of C&EN. Nelson says she was satisfied that the series did not glorify illicit drug production—she tells me that the protagonist is dragged through the desert in his underwear, among...

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Ohhhhhhhhh~ Miami!
Jan21

Ohhhhhhhhh~ Miami!

Informex got off to a glorious start last night with a cocktail reception at the Skydeck here in Miami. So far, the big story is that the annual conference and exhibition survived being in Anaheim last year, a choice of venue that I like to think of as a kind of ironic joke at my expense. We are only getting started, with the day of business and technical presentations that precedes the exhibition hall days at Informex. The event, now organized by UBM Live, is celebrating its 30th anniversary this year, by the way–a testimony to the strength of the fine chemicals community within the “Chemical Enterprise”. This is in no small part thanks to the efforts of the Society of Chemical Manufacturers and Affiliates, which, when it was the Synthetic Organic Chemical Manufacturers Association, introduced Informex in, I believe, Atlanta (a few card tables and I think you were allowed to smoke). SOCMA grew Informex to fill a sizable exhibit hall every year, regularly holding it in New Orleans for a good stretch before handing the reins over to UBM. Which reminds me of a cab ride in Las Vegas when Informex hit that city some years back. My cab driver asked what show I was in to see. Me: Informex. It’s the Synthetic Organic Chemical Manufacturers Association meeting. Driver: Oh. Driver [following ten minutes of silence]: Can a chemical be synthetic and organic? Me: Good question. I was particularly impressed today with Maximillian Yeh’s presentation on highly-potent active ingredients. Yeh is a North American account director with Evonik based in San Francisco. I also liked the talk Stephen DeSalvo, the U.S. marketing director of Fabbrica Italiana Sintetici  (FIS), gave on that company’s recent investments in everything from an anti-cancer active pharmaceutical ingredients pilot plant to Delmar Chemicals, an API producer near Montreal. FIS, with headquarters and primary manufacturing in Vicenza, Italy, is investing heavily in building Delmar into a North American sister site with capabilities similar to those it has in Italy. The two talks touched on themes that are dominant now in the fine chemicals sector—specialization and expansion. I will be giving a talk tomorrow at 3:00 pm in “Theater 1” at Informex titled, “State of the Vibe in Pharma Chem”. In it, I will expand on these two themes and others as I gloss the changes in the pharmaceutical sector and those in the field of fine chemicals. One delightful surprise so far was a visit from Walter “Skip” Mongen, a sales executive with C&EN for many years who retired about five years ago. Skip hit the Skydeck on Monday. We reminisced about the night...

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