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  Editor's Page  
  January 17,  2005
Volume 83, Number 3
p. 5
 

  Custom Chemicals  

  RUDY M. BAUM
Editor-in-chief
 
   
 
 

The cover story of this week’s issue of C&EN is our annual focus on custom chemicals (see pages 41, 52, and 58). The three articles that make up the cover story were reported and written, as they have been for the past three years, by Deputy Assistant Managing Editor A. Maureen Rouhi.

This is also the week of the annual Informex trade show, held this year in Las Vegas. Informex is organized by the Synthetic Organic Chemical Manufacturers Association (SOCMA) and is one of the premier gatherings of fine and custom chemical manufacturers. C&EN and the American Chemical Society have developed a close working relationship with SOCMA on a number of initiatives, and a number of C&EN editors, Rouhi and myself included, will be in attendance at Informex.

As Rouhi writes, “The past four years have been miserable for many custom synthesis providers. The industry had expected that unprecedented productivity of pharmaceutical pipelines would lead to massive outsourcing of manufacturing, which would lead to 15% annual growth in business. Reality, however, has been far different: The pharmaceutical industry did not deliver the mid-1990s promise of 60 to 80 new products per year. In fact, demand for custom manufacturing slumped as the industry consolidated.”

Overall, Rouhi reports, custom manufacturers are “cautiously optimistic” about 2005. In an informal survey that Rouhi conducted of 12 custom manufacturers, the outlook for 2005 ranges from so-so to enthusiastic. For Degussa Exclusive Synthesis & Catalysts, “we see only a stabilizing of the market, no real turnaround,” according to Vice President Rudolf Hanko. By contrast, at SAFC, the fine chemicals division of Sigma-Aldrich, business is “going crazy,” according to Edward Roullard, director of SAFC Europe.

One facet of the custom chemical business that emerges from Rouhi’s reports is the competitiveness of the industry and the importance of continuous innovation to maintain an advantage in the marketplace. Rouhi quotes Simon Sellers, president of the fine chemicals division of Sumitomo Chemicals America: “The industry is hypercompetitive. You need multiple differentiating factors, particularly novel technology, because other companies also have nice facilities and good service. Success is about credibility and track record. Credibility comes with experience you’ve developed, the response you get from regulatory agencies when they visit, and having assets on the ground. Track record is about developing a relationship with a customer, delivering great quality on time at a reasonable price, and building on that to grow additional business.”

Ian Shott, chairman of Excelsyn, a recently launched U.K.-based consulting firm, has long experience in the fine and custom chemical industries. He is blunt in his assessment of the current state of drug discovery, calling it “molecular carnage.” Rouhi reports that, at the European Fine Chemicals Conference held in November 2004 in Newcastle, England, Shott said: “We need to make drug design more rational. We need to think about smaller libraries of compounds with better predictive knowledge of efficacy and built-in manufacturability. We need synthesis pathways consisting of a maximum of five reaction sequences that are designed not by medicinal chemists working in isolation but by teams who understand kinetics, enthalpy, entropy, catalysis, and materials science.”

The good news is that the tough times and fierce competition have led to just these sorts of innovations. Rouhi’s report on custom chemicals details a wealth of new technology that custom manufacturers are harnessing to give themselves a competitive advantage—and bring down the cost of manufacturing the components of new pharmaceuticals.

Another common thread running through any discussion of custom chemicals is the increasing participation of Chinese manufacturers in the marketplace. The chemical enterprise is thriving in China, in terms of both the chemical industry and academic research. That is why C&EN, ACS, and SOCMA are partnering to sponsor a gala reception in April in Shanghai that will bring together business leaders from China and many of the multinational chemical companies now doing business in China. Madeleine Jacobs, ACS executive director and CEO; Joseph G. Acker, president of SOCMA; and I will be speakers at the reception. It promises to be an exciting evening.

Thanks for reading.


Views expressed on this page are those of the author and not necessarily those of ACS.

 
     
  Chemical & Engineering News
ISSN 0009-2347
Copyright © 2005
 


 
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