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Thoughts From CPhI

I spent two-and-a-half long and productive days at the CPhI conference in Frankfurt two weeks ago. Beginning with the annual C&EN reception the evening before the official start of CPhI, through two days of interviews and casual conversations at lunches, receptions, and dinners, I spoke to dozens of the leading figures in the fine and custom chemicals industry.

There’s a lot of ferment out there, as C&EN Senior Editor Lisa Jarvis reported in a news story in last week’s issue (C&EN, Oct. 6, page 9), and as C&EN Senior Editor Rick Mullin will elaborate on in his CPhI review, which will appear in the Oct. 20 issue.

Despite the chaos in the financial markets, which does appear to be hurting some biotech companies, business is pretty good. The halls of the Messe Frankfurt were humming with more than 22,000 CPhI attendees.

Big pharma seems to have settled more comfortably into a clearer relationship with fine and custom chemicals companies, especially Western companies. Large pharmaceutical companies have not yet evolved entirely into exclusively drug discovery and drug sales and marketing entities, with everything in the middle outsourced to a variety of service providers, but they seem to be well on their way.

One person I spent some time talking to was Burghard Freiberg, general manager of Life Science Solutions in Merck KGaA’s Life Science & Analytics Division. Freiberg pointed to one event that has changed the tenor of discussions between Merck and its customers. The contaminated heparin from China has made customers “significantly more cautious about security,” Freiberg told me. Merck is addressing this concern through a newly launched program dubbed “Emprove,” which covers all aspects of risk mitigation. “Our customers are demanding absolute transparency,” Freiberg said. “They require an open book on all our sources. This is a big trust issue.”

At Hovione, President and Chief Executive Officer Guy Villax told Mullin and me that the company’s generics capacity is completely utilized. “That tells me that someone is moving things from somewhere, because there isn’t any new business,” Villax said.

Other conversations suggested similar themes. Trusted suppliers appear to be able to command a premium in today’s market. Transparency in the supply chain is paramount. Pharmaceutical and biotech companies are looking for “partners” not just suppliers.

I know the heparin episode played an important role in advancing some of these changes in attitude. I suspect, however, that the melamine poisoning of milk supplies in China is playing, and will continue to play, an even more important role.

Milk is not a drug, I know. However, I suspect that the melamine poisoning of milk—and I use that term deliberately, because it was not an accidental contamination—may have broken through the background noise into the public’s consciousness in a way that previous problems with products from China did not. Contaminated heparin, melamine-contaminated pet food, diethylene glycol-laced toothpaste, lead-based paint on toys—all of these episodes were troubling to those of us following the various stories, but I do not think they registered fully in the public’s mind.

Milk and its use in baby formula got the public’s attention, however. As of press time, four infants are dead, more than 10,000 have been hospitalized, more than 50,000 have been harmed. It is now clear that numerous individuals in the milk supply chain have been, as standard operating procedure, diluting milk with water and poisoning it with melamine to boost its apparent protein content.

It is also clear that some elements of the Chinese government have known about this scandal for at least several months and chose not to publicize the problem lest it tarnish China’s cherished Olympic moment. That’s not behavior that most of us can understand.

I suspect that legislation requiring all drugs to have the origin of all of their contents documented, which went nowhere in the current Congress, will move rapidly to adoption when the next Congress meets because of this debacle.

Thanks for reading.

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  • Oct 19th 200818:10
    by Klug

    Dear Mr. Baum:

    It is clear from the years that I’ve been reading you that you have a certain skepticism towards China and Chinese manufacture products. I share that skepticism. Nevertheless, as scientists and interested citizens, I call for some level of objectivity on this issue.

    I suggest that you and I have the capacity to search out and learn the nuances of this difficult issue. Clearly, many of these adulteration issues result from the desperate drive to survive in what must be an extraordinarily competitive business environment. Surely, you and I can see America’s early struggles with food purity reflected in China’s current problems.

    I am sure that C&EN will work the melamine story with the same vigor and incisiveness that I found in your work on the contaminated heparin story. I hypothesize that there are differing levels of malicious intent between the melamine and heparin stories; I await the doubtless interesting and revealing story to come.

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