Custom Manufacturers Target Chiral Chemistry, Catalysis, and Biosciences

Facing still-sluggish market conditions and a changing world order in fine chemicals, the large Western custom manufacturers are responding by building their toolboxes in specialized technologies in chiral chemistry, catalysis, and biosciences and by adjusting their manufacturing networks via streamlining or investment in Asia.

Saltigo: a new identity in fine chemicals

"On an industry-wide basis, we see mixed results for 2006 and 2007," says Nick Hyde, business director at Dowpharma (Midland, MI, www.dowpharma.com). "On the small-molecule side, sluggish demand growth is likely to continue. Reduced volume requirements for new APIs that may be more potent, but require lower dosages, further contribute to reduced demand," he says. "On the supply side, the market is dividing into two camps: general-purpose suppliers, who will continue to face fierce competition with suppliers from India and China, and differentiated players that offer specialized technology. For biopharmaceuticals, industry capacity is sufficient, and technology again is key."

That technology focus, combined with a strategy to improve production economics, or (for a select few) expand capacity, is common with the large players.

Degussa AG (Düsseldorf, Germany, www.degussa.com) is staying the course in fine chemicals. It took an impairment charge of 836 million ($1 billion) for its fine chemicals activities (building blocks, exclusive synthesis and catalysts, and peroxygen chemicals) in October 2005 mainly from the 2001 acquisition of the fine and specialty chemical company Laporte PLC.

"Exclusive synthesis and catalysts continue to be a core business for Degussa," says Michael Schwarm, who heads R&D for the exclusive synthesis business line. "The company's interest in growing this business is indicated by the Degussa board's approval to establish an R&D center in India and to enter negotiations for a joint venture in Asia."

Degussa's exclusive synthesis business line is currently in negotiations to get access to production capacity in Asia. It produces pharmaceutical amino acids through its joint venture Nanning Only-Time Rexim Pharmaceutical Co. Ltd. in Wuming, China. Last year it opened an R&D center for exclusive synthesis in Mumbai, India.

As part of a company-wide restructuring, Degussa sold its fine chemicals manufacturing site in Radebeul, Germany to Hexal AG. It is continuing a company-wide cost-cutting program. "This program will bring some reduction in head count at various sites, but we do not expect to shut down any further facilities in fine chemicals," says Schwarm.

On the technology front, Degussa is rolling out advancements in chiral chemistry and olefin metathesis (see sidebar, "Degussa launches catalyst for olefin metathesis for pharma") for pharma applications.

Degussa launches catalyst for olefin metathesis for pharma.

"One of our significant recent developments has been the introduction of chiral alcohols that are prepared using whole-cell biocatalysts," says Schwarm. The chiral alcohols complement Degussa's existing offerings in chiral amino acids, which are used as intermediates for enantiomerically pure APIs. Working with the Leibniz Institute for Organic Catalysis (Rostock, Germany), Degussa Homogeneous Catalysts, an internal start-up, has developed a process route for reductive carbonylation of aryl halides to aromatic aldehydes (benzaldehyde being one example) using a proproprietary palladium–phosphine-based catalyst based on its "cataCXium A" technology that is regularly applied at ton scale.

BASF rolls out chiral intermediates

BASF AG (Ludwigshafen, Germany, www.basf.com) also has been building its chiral toolbox. Last month, it added two chiral amines, (R, R)– and (S, S)–bis (1-phenylethyl) amine, which are used in asymmetric synthesis of nonnatural amino acids and as starting materials for chiral bases (i.e., bases for asymmetric deprotonation according to Simpkins' reactions). It also has developed a new process route, based on dehydrogenase biocatalysts, for producing optically active styrene oxides and aliphatic alcohols.

BASF added to its pharma contract manufacturing capabilities with the acquisition of the Swiss fine chemicals company Orgamol SA (Evionnaz, Switzerland, www.orgamol.com) in October 2005. "The acquisition strengthens our contract manufacturing capabilities and demonstrates our long-term commitment in this field," says Folker Ruchatz, director of pharma solutions and human nutrition for BASF in North America. "We gained important differentiation technologies, all operated under GMP conditions, including azide chemistry, cryogenic reactions, halogenation (with bromine and chlorine), and phosgenation," he says. The Orgamol acquisition gave BASF more than 400 m³ of CGMP production capacity at facilities in Evionnaz, Switzerland, and Saint-Vulbas, France, along with a kilo-lab facility (~0.2 m³ of multipurpose reactor capacity) and a pilot plant (~5 m³ of multipurpose reactor capacity).

SAFC sets ambitious targets

SAFC (St. Louis, MO, www.safcglobal.com), the custom manufacturing arm of Sigma-Aldrich Group (St. Louis, MO, www.sigma-aldrich.com) is embarking on a five-year strategic plan of achieving overall annual organic growth of 10%, with more growth expected through acquisitions.

Roughly 40 percent of its sales are in the newly named SAFC Supply Solutions, which supplies organic raw materials (roughly 80,000 products) customized for the supply chains of pharma, biotech, flavors, and fragrances, and in vitro diagnostics manufacturers. It includes SAFC's former specialties business and Proligo, a producer of raw materials for oligonucleotide manufacture, which SAFC acquired from Degussa in 2005. The remaining 60 percent of SAFCS's sales are divided between custom manufacturing (SAFC Pharma), mammalian cell culture development (SAFC Biosciences), and nonpharma high-tech specialties (SAFC Hitech).

"Our custom manufacturing business is in effect our second horizon for growth," says Ed Roullard, vice-president of marketing and supply chain solutions at SAFC. "Our focus is two-fold: small molecule synthesis and raw material supply to the bioscience industry."

On the API side, SAFC recently completed a $12-million expansion to double capacity for high-potency API manufacturing at its plant in Madison, Wisconsin. The plant is currently undergoing validation, and SAFC plans to have the plant running by the end of March.

SAFC also is evaluating options for either further internal expansion, acquisitions, or partnering with other third-party manufacturers to meet demand for projects entering potential commercial manufacturing. "Our custom manufacturing business is now focused on supplying APIs up to Phase II," explains Roullard. "We made a deliberate decision to develop our asset base to focus on early-stage up to Phase II development and to be selective where we invested significant capital in large-scale production. Now that we have several projects in or nearing Phase III development, we are evaluating how to best meet the impending commercial requirements for those projects."

In addition to the Madison facility, SAFC operates five other CGMP facilities in Sheboygan Falls, Wisconsin; St. Louis, Missouri; Buchs, Switzerland; and Manchester and Gillingham, UK. SAFC is constructing a small-scale manufacturing plant in Bangalore, India, to support its medicinal chemistry operations and to serve the domestic Indian API market. It is scheduled for completion by mid-2006.

SAFC Biosciences was launched last October and includes SAFC's former cell-culture unit and CSL Ltd.'s former JRH Biosciences division, which SAFC acquired for $375 million in 2005. SAFC recently completed a $14-million expansion at its continuous milling plant in Lanexa, Kansas, which produces sera and cell culture media.

Lonza ups production capacity

Meanwhile, Lonza (Basel, Switzerland, www.lonza.com) is investing in biologics. It is planning an expansion of its biologics manufacturing facility in Portsmouth, New Hampshire to provide new mid-scale capacity. The groundbreaking of the 5000-L reactors is planned for April 2006. A fourth 20,000-L reactor in Portsmouth also is slated to be operational in mid-2006. The new biologics capacity follows Lonza's $145-million acquisition of UCB Bioproducts (Braine-l'Alleud, Belgium, www.ucb-bioproducts.com), the bioproducts manufacturing arm of the biopharmaceutical company UCB (Brussels, Belgium, www.ucb.com). The move provides Lonza with a process development and peptide synthesis facility in Braine-l'Alleud and adds liquid-phase peptide synthesis capabilities to Lonza's existing capabilities in large-scale, solid-phase peptide synthesis, and recombinant fermentation production.

Based on a long-term supply agreement with UCB, Lonza is building a commercial-scale facility for microbial biopharmaceutical production (2 X 15,000-L lines) in Visp, Switzerland, with capacity slated to come on line at the beginning of 2007. It is planned to add a third production line at its large-scale microbial plant in Visp. It also has started construction of a large-scale plant based on mammalian cell culture in Singapore, which is scheduled to come on line following completion of successful negotiations. And, Lonza is proceeding with basic design development for a vaccines plant in Portsmouth.

On the small-molecule side, Lonza is expanding API production capacity at Visp by adding a new building with a new drying installation, scheduled for completion by the end of 2006. Overall, Lonza plans to spend 30 million Swiss francs on capital projects in 2006.

Dow repositions in biopharma

On the small molecule side, Dowpharma is proceeding with "modest debottlenecking" at its CGMP facilities in Midland, Michigan, and is repositioning in biopharma. "Our focus is on enhanced technologies rather than simply providing contract biopharmaceutical manufacturing capabilities," says Hyde. Dow, which closed its Smithfield, Rhode Island, biopharmaceutical manufacturing facility, is looking for buyers for the site, but is retaining its biopharma process development capabilities in San Diego, California. It has contracted with Cambrex Corporation (East Rutherford, NJ, www.cambrex.com) to serve as the third-party manufacturer for customer projects using Dowpharma's "Pfenex Expression Technology," an alternative to an E.coli-based expression system and designed to increase throughput. "We also plan to leverage the Pfenex technology in developing human vaccines," says Hyde, who points to the potential use of plant virus-like particles for new and more effective vaccines. DowAgroSciences (Indianapolis, IN, www.dowagrosciences.com) recently received approval for a plant-derived animal-health vaccine, which may serve as the basis for human vaccine development using the Pfenex technology, says Hyde. Dowpharma also is working with DOR Biopharma Inc. to improve protein expression for DOR's mucosal botulinum vaccine.

Clariant targets higher value GMP work

Clariant (Muttenz, Switzerland, www.clariant.com) is on schedule to complete in the second quarter an upgrade of its multipurpose capacity at its CGMP facility in Springfield, Missouri. The Springfield site also has moved into full-scale production of controlled substances authorized by the Drug Enforcement Administration (DEA). Clariant applied for DEA registration as a bulk manufacturer of a controlled substance and an intermediate listed in Schedule II. "These applications are in line with our strategy of siting higher value CGMP work at the Springfield site," says Ralf Pfirmann, Clariant's global business director of life science chemicals. Clariant also is currently debottlenecking capacity at its Molecule Synthesis Centers, which provide small-scale capability (as much as 200 kg) and process development services, in Springfield, Missouri; Frankfurt, Germany; Bon Encontre, France; and Origgio, Italy.

A new 5-million injectable analgesics production line became operation at Tonneins, France in December 2005. The company also recently upgraded its sterile API manufacturing capabilities at Tonneins. "It covered a major expansion and upgrade to our multipurpose facilities as well as facilities for filtration, crystallization, process controls and solvents," notes Pfirmann.

ISP Fine Chemicals, which has CGMP reactor capacity of more than 26,000 gallons (100 m³ ) at its facility in Columbus Ohio, is evaluating the addition of new equipment.

"Due to increased demand, we see a need to add another large-scale inverting filter centrifuge and a double-cone rotary dryer," says Lee Kelly, senior manager, business development, ISP Fine Chemicals.