Fine Chemicals: The Industry and the Business, Second Edition

299 Pages·2011·29.77 MB·English

by  Peter Pollak(auth.)

FINE CHEMICALS
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FINE CHEMICALS
THE INDUSTRY AND
THE BUSINESS
SECOND EDITION
Peter Pollak, PhD
Reinach, Switzerland
A JOHN WILEY & SONS, INC., PUBLICATION
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Copyright © 2011 by John Wiley & Sons, Inc. All rights reserved.
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Library of Congress Cataloging-in-Publication Data:
Fine chemicals : the industry and the business/edited by Peter Pollak.—2nd ed.
p. cm.
ISBN 978-0-470-62767-9 (cloth)
1. Chemicals. 2. Chemical engineering. 3. Chemical industry. I. Pollak, Peter, 1934–
TP200.F525 2010
660—dc22
2010033575
Printed in Singapore
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To Maria, Barbara, and Paolo
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CONTENTS
PREFACE TO THE SECOND EDITION xi
PREFACE TO THE FIRST EDITION xiii
ACKNOWLEDGMENTS xv
PART I THE INDUSTRY 1
1. What Fine Chemicals Are 3
1.1 Defi nition 3
1.2 Positioning on the Value-Added Chain 5
2. The Fine Chemical Industry 8
2.1 Industry Structure 8
2.2 Fine Chemical/Custom Manufacturing Companies 9
2.3 Contract Research Organizations 15
2.4 Laboratory Chemical Suppliers 20
2.5 Mergers and Acquisitions (M&A) 21
3. Products 26
3.1 Small Molecules 26
3.2 Big Molecules 28
4. Technologies 32
4.1 Traditional Chemical Synthesis 32
4.2 Biotechnology 38
5. Facilities and Plants 49
5.1 Plant Design 49
5.2 Plant Operation 61
6. Research and Development 66
6.1 Objectives 67
6.2 Project Initiation 71
6.3 Project Execution and Management 71
vii
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viii CONTENTS
7. Cost Calculation 75
7.1 Investment Cost 75
7.2 Manufacturing Costs 76
8. Management Aspects 81
8.1 Risk/Reward Profi le 83
8.2 Performance Metrics and Benchmarking 86
8.3 Organization 88
Bibliography 91
PART II THE BUSINESS 93
9. Market Size and Structure 95
9.1 Fine Chemical Market Size 95
9.2 Market Breakdown by Major Applications 97
10. The Business Condition 100
10.1 Offer 101
10.2 Demand 103
11. Customer Base 107
11.1 Pharmaceutical Industry 107
11.2 Agrochemical Industry 115
11.3 Animal Health Industry 120
11.4 Other Specialty Chemical Industries 123
11.4.1 Adhesives and Sealants 126
11.4.2 Biocides 126
11.4.3 Catalysts and Enzymes 128
11.4.4 Dyestuffs and Pigments 131
11.4.5 Electronic Chemicals 132
11.4.6 Flavors and Fragrances (F&F) 134
11.4.7 Food and Feed Additives 136
11.4.8 Specialty Polymers 138
12. Marketing 141
12.1 Organization and Tasks 141
12.2 Target Products and Services 145
12.2.1 Exclusives: Custom Manufacturing 147
12.2.2 Nonexclusives: API-for-Generics 150
12.2.3 Standard Products 156
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CONTENTS ix
12.3 Target Markets: Geographic Regions and Customer
Categories 156
12.4 Distribution Channels 162
12.5 Pricing 163
12.6 Intellectual Property Rights 169
12.7 Supply Contracts 170
12.8 Promotion 173
12.9 Network and Contact Development 175
12.10 Key Account Management 176
Bibliography 178
PART III OUTLOOK 179
13. General Trends and Growth Drivers 181
14. Globalization 184
14.1 Western Hemisphere 189
14.2 Eastern Hemisphere 192
14.3 Cooperation Models 195
15. Biotechnology 198
15.1 Small Molecules (White Biotechnology) 198
15.2 Big Molecules (Biopharmaceuticals) 199
16. Ethical Pharmaceutical Industry 203
16.1 Restructuring and Outsourcing 205
16.2 R&D Productivity 207
16.3 Business Impact 215
17. Generics 217
17.1 Small Molecule Generics 217
17.2 Biosimilars 221
18. Other Life Science Industries 224
18.1 Agro Fine Chemicals 224
18.2 Animal Health Industry 226
19. Contract Research Organizations 228
20. Conclusion: Who Is Fittest for the Future? 231
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x CONTENTS
Bibliography 236
Abbreviations 237
APPENDICES 241
A.1 Information Sources/Life Sciences 243
A.2 Checklist for New Product Evaluation 248
A.3 Project Schedule, Custom Manufacturing Project 250
A.4 Company Scorecard 252
A.5 Job Description for Business Development Manager 254
A.6 Checklist for the Selection of Outsourcing Partners 256
A.7 Checklist for the Manufacture of Nonregulated (or Basic GMP)
Fine Chemicals 257
A.8 Checklist for Customer Visit 258
A.9 Outline for a Company Presentation 260
A.10 Overseas Expansion of Indian Pharma and
Fine Chemical Companies 261
A.11 Asian Expansion of Western Fine Chemical Companies 263
INDEX 265
NOTE:
US$ Exchange rates
CHF 1 = US$ 0.966 € 1 = US$ 1.44 INR 100 = US$ 2.15 £ 1 = US$ 1.52
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PREFACE TO THE SECOND EDITION
This revised edition has been prepared in order to provide the reader with an
updated view of the fi ne chemical industry and business. Actually, the most
recent data used in the fi rst edition go up to 2005. Since then, both the fi ne
chemicals industry itself and its customers have undergone substantial changes:
The business as a whole is more competitive now due to the escalating impact
of low - cost players from the Far East on the one hand, and the passing - on of
the price pressure the life science industry is subject to itself on the other hand.
Many Western fi ne chemical companies or divisions created during the “ irra-
tional exuberance ” at the turn of the millennium have exited from the sector.
As described in Section 5.2 , Plant Operation, the most progressive companies
adopt lean production principles originally developed by the automotive
industry. In this context, Section 7.2 , Manufacturing Costs, has also been
refi ned. As described in the new Section 2.5 , Mergers and Acquisitions, the
M & A scenario has inverted from a seller ’ s to a buyer ’ s market. Private equity
fi rms have become owners of a number of fi ne chemical companies. The busi-
ness model of the fi ne chemical industry has broadened and now often includes
also contract research at the beginning and active ingredient formulation
toward the end of the value - added chain. This development is not fi nding
unanimous approval by industry experts. Biotechnology now plays a bigger
role. In the synthesis of small molecules, the use of enzymes has become more
widespread as it enables both a more sustainable and economic production.
Big molecules have fi rmly established themselves as active ingredients in the
life science industry. Thus, biopharmaceuticals now account for fi ve of the ten
top selling pharmaceuticals. To the detriment of originator drugs and agro-
chemicals, the market share of generics has increased. It now also comprises
generic versions of biopharmaceuticals (see the new Section 17.2 , Biosimilars).
Faced with slower growth, patent expirations of many lucrative blockbuster
drugs, and stalling new product launches, leading pharmaceutical companies
are facing challenges as never before. They react by implementing restructur-
ing programs. These comprise, among others, reduction of their in - house
chemical manufacturing and plant eliminations. Outsourcing of chemical man-
ufacturing has moved up from a purely opportunistic to a strategic approach.
Apart from restructuring, globalization is also affecting the fi ne chemicals
industry (see Chapter 14) . In the pharm - emerging countries, double - digit
growth of the consumption of pharmaceuticals and agrochemicals —a nd the
production of their active ingredients — is taking place. With their combination
xi
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xii PREFACE TO THE SECOND EDITION
of 40% of the world ’ s population and the “ low - cost/high - skill/high - future ”
industrial base, they represent a great challenge to the European and U.S. fi ne
chemicals industry. A business condition could develop, whereby even “ best -
in - class ” midsized, family - owned fi ne chemical companies with superior tech-
nology portfolios and footholds in Asia could be relegated to producing small
quantities of fi ne chemicals for new life science products in late stages of
development (see Chapter 20 ).
Peter Pollak
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