[an error occurred while processing this directive]
Skip to Main Content

Cover Story

January 11, 2010
Volume 88, Number 2
p. 16

World Chemical Outlook

Fine Chemicals: The Outlook Is Good, But The Caveats Are Several

Rick Mullin

  • Print this article
  • Email the editor

Text Size A A

CONSTRAINED: Lonza sees only modest growth this year for chemical active ingredients. Lonza
CONSTRAINED Lonza sees only modest growth this year for chemical active ingredients.

The year ahead promises both push and pull for manufacturers of pharmaceutical fine chemicals. Major drug companies are expected to accelerate the outsourcing of intermediates and active ingredients to the fine chemicals industry, but continued financing woes will mean less business from small and emerging firms.

These macroeconomic trends will dominate in a business environment that began to improve late last year. “Over the last quarter, a lot of companies said they were seeing things moving up,” says James Bruno, president of the consulting firm Chemical & Pharmaceutical Solutions. “People are talking about additional rounds of financing.” In contrast, business ground to a halt earlier in the year, partly because major mergers put long-range planning on hold.

Aslam Malik, president of Ampac Fine Chemicals, agrees that the pharmaceutical chemicals market got off to a bad start in 2009. “But I think we hit the bottom early in the year and have pulled out. We are getting lots of inquiries—lots of things going back into development and clinical trials,” he says.

Malik notes that increased outsourcing by large drug companies will help counteract general economic pressure for fine chemicals suppliers. “The sector will do well overall,” he predicts, “but that doesn’t necessarily mean more business for Western producers.” Competition from India continues to grow. “And China is catching up quick,” he says.

Steve Klosk, chief executive officer of Cambrex, says fine chemicals manufacturing for drugs in the early stages of development was hardest hit in 2009. Cambrex’ preclinical work dropped by roughly 15% last year. But overall business was down by less than that in the first three quarters, Klosk says, and in recent months it has been back up to 2008 levels.

He is less certain than Malik that the sector is rebounding, however. Funding for emerging pharma and biotech R&D is still shaky, he says. And although the trend toward more outsourcing is encouraging, drug companies are still under pressure to utilize idle capacity.

Stephan Kutzer, head of custom manufacturing at Lonza, predicts slow growth—1 to 3%—sectorwide for traditional chemical active ingredients in 2010, although he recognizes the opportunity to surpass this rate, given increased levels of outsourcing on the part of big pharma. In contrast, growth in biopharmaceutical outsourcing could be as high as 10%, he says.

Technology specialization will be key to growth in 2010, fine chemicals executives say. Current interest in preclinical services, including process and media development, indicates activity in the earlier stages of R&D and a better year ahead, Kutzer says.

Chemical & Engineering News
ISSN 0009-2347
Copyright © 2011 American Chemical Society
  • Print this article
  • Email the editor

Services & Tools

ACS Resources

ACS is the leading employment source for recruiting scientific professionals. ACS Careers and C&EN Classifieds provide employers direct access to scientific talent both in print and online. Jobseekers | Employers

» Join ACS

Join more than 161,000 professionals in the chemical sciences world-wide, as a member of the American Chemical Society.
» Join Now!