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I’ll share the gist of my Informex talk, which was entitled State of the Vibe in Pharma Chem or When New Worlds Collide. I spoke using PowerPoint slides, which I had never done before. Having seen hundreds of PowerPoint presentations, however, I knew that they had to begin with a “Forward-Looking Statement”, something to get the speaker or the speaker’s employer off the hook. So, I led the presentation with my own forward-looking statement, a quote from the German poet, Rainer Maria Rilke:
“The truth is buried under a pile of facts.”
I can’t find where Rilke actually says this, but who else would say such a thing?
Thus covered, I went into an introduction of the magazine, beginning with a review of our cover stories on pharmaceuticals and fine chemicals from 2013. These showcased important themes. We covered the push toward services in contract manufacturing, the reevaluation of markets in fine chemicals, and the rise in biosimilars. Our annual case history explication of the mechanics of contract manufacturing had its crowd-pleasing focus on the drug molecules in question. There was a uniquely comprehensive feature on the quest for cures for rare diseases (a highlight of C&EN’s coverage last year, written by Lisa Jarvis). Then, there was the Pharmaceutical Year in Review, a look at what we called “The New Machine”.
As for inside action, we ran features on China, where the long-running story of low-cost competition and its down side is nuanced by the anti-corruption push of the new five-year-plan. There was an article on the push to bring excipients into the fold of regulated manufacture, largely as a means of securing the supply chain and the businesses of Western suppliers of bulk drug material. And there was one on the reemergence of Design of Experiment, the statistics-intensive industrial quality regime from the 1960s that is currently riding the wave of data analysis in science-based (certainly in pharmaceutical-based) industries.
I pointed to only one news story from 2013—DSM’s announcement last month of a deal with Patheon to create a separate company combining DSM’s pharmaceutical fine chemicals and Patheon’s formulation services businesses. A quick look at the number of diversified chemical companies who have somehow entered and exited the field of fine chemicals between the mid 1990s and 2000s has us wondering whether DSM will somehow join the club, leaving BASF as the sole diversified chemical giant still in the pharma chemical game.
Next: A swing through ten years of fine, custom, and contract manufacturing in the pharma sector with a look at the CPhI headlines from 2003 to 2013. Long story short, we watched the sector rise steadily from a prolonged slump in the early 2000s, only to gain real traction at the beginning of a worldwide recession in 2008. Despite claims that pharma operates on its own economic cycle, we found the pharma chemicals sector in another ditch, a tough one, from which it has risen over a relatively short space amidst real optimism for the future. That optimism was in evidence not only at CPhI in Frankfurt last November, but also on the exhibit floor of Informex in Miami.
Turning to the recent (five-years) evolution of the pharma sector, my first slide questioned any optimism having to do with pharmaceuticals. It showed a precipitous drop in R&D investments 2013, caused primarily by a big drop in Phase I trials. Quoting from IMS Institute for Healthcare Informatics, I noted that global drug sales grew a mere 1.3%, to $854 billion, in 2013 compared with 3.5% growth the previous year. With the five-year consolidated annual growth rate up to the present totaling about 4.5%, it’s fair to say that the pharma industry, after all it has done to reinvent itself following the blockbuster bust and in preparation for the 2012 patent cliff, had a terrible 2013. The new machine, as we called it in the C&EN Pharmaceutical Year-in-Review article, may need a little more runway before takeoff.
I ran down the checklist of features characterizing the new world in pharmaceuticals, which includes the development of complex molecules, the push for personalized or targeted therapies, and the outcomes focus of regulatory reform. Drug companies, regulators, and payers are currently scrambling to develop means of determining and communicating the value of a new chemical entity—the only point of agreement is that scientific innovation will not be the determining factor. The future seems headed toward more complex molecules required in small volumes, one in which the major pharma companies will play a drastically different role vis-a-vis emerging companies and biotechs. It is the latter who dominated the M&A action last year, with big pharma dropping from a 70% share in the deals in 2011 to less than 10% in 2013, according to Ernst & Young. Notably, one of the biggest deals in 2013 was Shire’s acquisition of ViroPharma—a $4.2 billion investment in a portfolio of drug candidates for rare diseases. The biggest deal was Amgen’s $10.2 billion acquisition of Onyx. All right, Amgen is more like big pharma than biotech these days. One of my bullet points, “Big Pharma as Bit Player?”, may have been an enormous exaggeration. For effect.
The push for patient data finds many of these large drug companies, who are notably in sparse attendance at Informex, forming unique partnerships. Merck, for example, is working with the Regenstreif Institute, a nonprofit medical informatics and health care research organization affiliated with Indiana University School of Medicine. The partners are studying patient health outcomes in the area of osteoporosis with data culled from Regenstrief’s information on 13 million patients. AstraZeneca is signed with HealthCore, the health outcomes research subsidiary of WellPoint, a big managed-health-care firm that keeps a huge database culled from the 44 million patients it covers. C&EN noted this year that Humedica, founded in 2008 by former pharmaceutical executives to conduct drug effectiveness studies, has seen a big rise in outcomes research, which now accounts for 40% of its business.
Moving on to the new world of fine chemicals, I noted the push for high tech chemistry and processes, which was mentioned as early as the 2003 CPhI feature as a strategy for rising from the trough. Services extending to R&D have been an obvious trend of late, also dating back several years. The development of generics is an ongoing trend, as is the reevaluation of markets: The economics elsewhere seem a lot better and always have, as this chart from Ann Thayer’s feature on fine chemicals for 2013 makes clear.
Then, there is the new twist on China. I noted that while there are many accounts (100% of them anecdotal) of projects gravitating back to the west because of quality concerns in Asia, several companies, including Asymchem, Porton, and Wuxi Apptech, have established themselves as alternatives to the West operating at Western standards in China. Of interest this year is a new anxiety—President Xi has made clear that the country intends to crack down on corruption, which in the huge country’s Byzantine regulatory environment will be no mean feat. Companies operating there have expressed some concern that Western firms will be targeted with arbitrary suits. The travails of GlaxoSmithKline, accused of paying doctors to prescribe drugs, is held forth as an example. But we know of several Chinese firms that have similarly been visited by investigators. A bit more volatility in China these days, to say the least.
Looking at recent action in the fine chemicals area, I made a point of what one company, Axyntis, has done over the last year. Axyntis formed a partnership with a Japanese silica specialist, Fuji Silysia Chemical, to acquire Kyralia, a chromatography services firm that Axyntis has contracted with previously. Kyralia’s assets will be moved to Axyntis’s plant in Pithiviers, France, and it will operate as a company called Kyrapharm. Axyntis also formed a Partnership with Provence Technologies Group, an R&D services firm focused on scouting chemical synthesis pathways, process design, and analytics. The partnership is intended to link early-stage drug development services to industrial-scale manufacturing at the company’s plants in France. Axyntis also acquired a plant in Calais, France, from International Chemical Investors Group, a German holding company that acquired it only a year ago from the Belgian firm Tessenderlo. Partnership, acquisition, analytical and R&D services, capacity expansion…Axyntis touched a lot of bases last year.
The poster boy for high tech chemistry and process design in my speech, somewhat randomly chosen from a large cast, was Dottikon Exclusive Synthesis, which has spent 12% of annual revenues on R&D over the past three years in preparation for the emerging upturn in business, according to CEO Markus Blocher. “The actual work is coming,” he said at CPhI in regard to process engineering services. “A new phase is just starting in pharmaceuticals, and anything that was put off into the future has to be done now.”
Some statistics supporting the rise of formulation services: More than half of the new pharmaceutical compounds moving into development have tricky physical properties. An industry-sponsorted report by Nice Insights, detailed in C&EN’s coverage in 2013, revealed that 82% of drug industry respondents believe that innovative dosage formulation is required to meet the needs of pharma R&D.
58% outsource dosage form development and 56% report that they spend $10- to $50 million on it annually. With 30- to 40% of drugs new drugs having problems with water solubility, moisture sensitivity, or acid sensitivity, there is a booming market for services.
Hovione, Solvias, Catalent, Siegfried, and others have been building this kind of business. DSM is obviously now in the formulation service sector on a large scale.
Bringing the new world of pharmaceuticals and the new world of fine chemicals together, we will find no overall match or miss-match, obviously. The individual supplier will have to show certain specific assets, physical and scientific, to meet very specific needs of the customer. The Evonik ad above illustrates the situation nicely. But in nearly all cases, those needs will trend toward smaller-volume production of higher-value, more complex molecules. A flexible response, based on large- and small-scale manufacturing and a menu of in-demand chemistry, will be required as molecules move through development and to the market. And the drug industry’s focus on the patient will impact the volume and scientific nuance of the business available to contract suppliers of chemicals and services. The new worlds will collide at many different junctions amidst various failures to connect.
But wait. What about those down numbers for the pharma industry last year? Could all of this high-tech momentum and enthusiasm be for naught in the face of an inevitable cyclical downturn in the fine chemical sector, one that may already be underway? Will we hear the specious argument of “this cycle is different” from those attempting to maintain the high at next year’s CPhI? Who knows? Well, it’s always worth asking James Bruno, president of Chemical and Pharmaceutical Solutions, a prominent industry watcher. “I think 2014 is probably going to be a good year for most people, but those are the guys that started preparing for it in 2010, 2011,” he told me in an interview for our recent World Forecast feature a few weeks ago.
In summation, I would describe the State of the Vibe in Pharma Chem as solidly optimistic in the face of some worrying numbers in the far-from-booming pharmaceutical sector
Everyone reconvenes for DCAT Week in New York in March. Not much could change between now and then, one would think. And that’s a good thing for fine chemicals in the New World.
I have broken blog protocol on length here. I will try to keep it down next time. Thanks to the folks who showed up for my talk last Wednesday!
Informex, if somewhat downsized, was upbeat in Miami. I haven’t got official word from UBM on attendance, but the consensus on the exhibit floor was that floor walking was down. Business, however, was up! David Ager, principle scientist with DSM, said it was well worth the travel to South Beach for the leads his company picked up. Others said the same. Generally, spirits were higher in Miami than they were in Anaheim last year. Go figure.
If there was any upside to last year’s venue, it was the proximity of hotels to the convention center. Informex 2013 was like an alternative Disney World behind the real Magic Kingdom with all the hotels on a short road that ended in a cul-de-sac fronted by the convention center. Most attendees spend all week at those hotels and at the exhibition. Still, show management had a hard time getting people from the exhibit hall to rooms in the hotels for the conference sessions. The solution this year was to combine the two with presentations given at two “Silent Theaters” in the exhibit hall.
C&EN presented two of the session. Publisher Kevin Davies gave a presentation entitled “The Chemistry of Next Gen Sequencing”. And I gave one entitled “State of the Vibe in Pharmachem”. From the speaker’s perspective and the attendee’s, I thought the speaking theaters, in which the audience wore sound canceling headphones, worked very well. Most speakers drew good crowds.
Kevin’s talk was intriguing. A history of the genome and its sequencing from Sanger, the genomics pioneer, to Illumina, the firm that debuted the much anticipated $1,000 genome just this month. There were walk-ons by Watson and a Dutch woman whose name approximates Crick. Much scientific intrigue, if not your standard chemistry.
Kevin is an authoritative source on the $1,000 genome, having, in fact, written the book. His slide headings were fantastic—The Language of God, The Book of Life, and Mission Accomplished [with a photo of George W. Bush on deck under the banner for context]. He walked us, engagingly, through the rise of single molecule exonuclease sequencing, the emergence of companies like Solexa and Illumina, and the efforts and machinations of marvelously driven characters such as Jonathan Rothberg and Craig Venter. He showed us scientist pub life in Cambridge, UK, and the rise of Oxford Nanopore, which recently debuted a sequencing device about the size of a matchbox car, heralding the easy-access sequencing of our X-topian future. Kevin demonstrated this thingamabob at the bar last night, and it is quite amazing.
It is all very amazing. Especially the competition between scientists and the companies they form, reminding us that advances in pharmaceutical science have historically been heavily fueled and impeded by matters pertaining to fame and money. OK, certainly there is a legitimate drive for cures in the engine. But there are also some tough considerations as genome sequencing comes within the broadest public reach. Kevin’s presentation raised the equation of the $1,000 genome and the $1 million interpretation. He noted that there is much wailing over the FDA holding things up at 23andMe, a company that made waves five years ago when it began marketing rapid genetic testing to the rich and interested. But it may not be such a bad thing for 23andMe’s service to be regulated. Moreover, it’s important to note that their service produces genetic data that is pretty tough to vet and, therefore, may not tell the customer all that much.
Kevin is a real expert on all of this and he’s given me a few leads for the Life Science Business feature due on February 24. In that article, I will be looking at the RE-SET button being pushed on personalized medicine. Over the next couple of weeks, I will be learning a lot more about where genomics data ends and where patient data starts in the near-future world of drug research. Have any ideas? Call me.
My presentation covered the transformation that has occurred in the pharmaceutical and fine chemical sectors and how well the latter has accommodated the former. I drew heavily from the Pharmaceutical Year in Review issue of C&EN (December 9, 2013) and the headlines C&EN ran for its CPhI coverage over the last ten years. I will flesh that talk out in my next post… this one is getting long.
Today I was offered a great opportunity to air my grievances about Breaking Bad
My reservations, I told her, arise from the following perceptions:
1) Science nerds (we will visit the word nerd below… relax) took to the show with immense enthusiasm for living vicariously through an outlaw chemist—an outlaw chemist who is making crystal meth for money!
2) The science enterprise latched on to this show’s popularity as a chance to finally get science right on TV with a show… about making crystal meth!
3) A fundamental question: What do the details of chemistry have to do with drama? I never cared about the authenticity of Carmella’s recipe for tomato gravy when I watched the Sopranos (twice) because it had nothing to do with the drama. I doubt David Chase brought in a chef to consult. Why should I be interested in the details of the chemistry in Breaking Bad when it is the dramatic element of how the chemistry is used that should hook me?
In my view the Chemical Enterprise has shown too much enthusiasm for a story of science’s amorality tipping heavily into the immoral. What kind of anti-hero role model is Walter White?
Nelson effectively disarmed me in our brief chat before she went on. I could tell intuitively that she saw something behind the kind of objections I raised, objections comparable to those of colleagues who pulled her aside when she got started and said… “Do you know what that show is about? Don’t do it!”
She did it, and I’m impressed with what she’s done. And C&EN had a bit roll in her contribution to the Enterprise as a volunteer adviser on chemistry:
Nelson saw a story in C&EN written by Jyllian Kemsley in which Vince Gilligan, the show’s writer and producer, told her he would very much welcome input from chemists. The story ran after the first few episodes. Nelson decided to take him up on it, and got an introduction through Rudy Baum, then editor-in-chief of C&EN. Nelson says she was satisfied that the series did not glorify illicit drug production—she tells me that the protagonist is dragged through the desert in his underwear, among other degradations, and is finally (spoiler alert) killed. She added that the U. S. Drug Enforcement Agency also consulted on the show, advising on the look and feel of a real bathroom meth lab and making sure that the series did not broadcast a recipe for making the drug.
Well, OK. Walter is portrayed as a bad guy who gets his comeuppance. Just like Jesse James, who is still considered a mythic hero. Nelson, in fact, showed in her presentation that students in the Oklahoma University Affiliates of the ACS ran around with T shirts that said, “We do stuff in labs that would be a felony in your garage!”
(Science nerds living vicariously through an outlaw chemist, etc.: Check).
But Nelson alerted me to a practical consideration having to do with the science community communicating with the public. Think about it—C&EN broadcasts a request for a scientist to consult with Hollywood on a hot new TV series. How many chemists respond? One. Just one! Donna Nelson. Think also about how many TV shows and movies involve science. Now, how many producers put out the feelers for real scientists to consult? Well who knows? But only one has done so through C&EN. Gilligan, a professed amateur science nerd, deserves a lot of credit for reaching out. And he had a hard time finding a response. Nelson, who flew to Burbank, Calif., for an initial meeting, expressed some shock that the show got no input from any of the nearby universities. Gilligan said they all snubbed him. Nobody wanted to risk getting involved.
Nelson took a pragmatic view of her options. “They had a hit,” she told me. “It was either going to be a hit with good science or a hit with faulty science.”
I appreciated Nelson’s willingness to listen by my spiel about how the science community is its own worst enemy when communicating with the public. She agrees with me! Such communication is all about taking the kind of risk she took in getting the blackboard in the classroom right on a TV show. Getting the dialogue right. Getting the reactions straight. Apparently they loved her at Breaking Bad. They relied on her heavily, and the show benefited greatly. So did chemistry. It worked because chemistry became an integral aspect of the drama.
Since working on Breaking Bad, Nelson has appeared on panels with writers and actors from shows like CSI, House MD, and others that deal with science and medicine.
There is no lack of science in popular entertainment. And entertainment is pervasive in our culture. Think of TED Talks. TED stands for Technology, Entertainment, and Design. These are presented as the pillars of highbrow contemporary discourse! I much prefer an edgier venue called Nerd Nite, which is probably an even more entertaining venue for science. Nelson says she hopes to dispel the notion that scientists are nerds, and here may be the one area on which we disagree. The term nerd is now synonymous with hip in the good sense of hip. Nerds are smart and cool. Nerds are nothing like the elitist science hermits I’ve seen giving TED talks or the ostensibly non-nerd folks in the audience at these things.
Maybe the real outlaw, the one with the white hat in Breaking Bad, is Donna Nelson. What a step she has taken outside the collective comfort zone! Even if my dystopian vision of a future in which chemists on the cover of C&EN have to wear ski masks along with their protective eyewear and lab coats is realized, we know from Nelson’s example that science can be communicated accurately and entertainingly to a broad, really quite smart audience.
Informex got off to a glorious start last night with a cocktail reception at the Skydeck here in Miami. So far, the big story is that the annual conference and exhibition survived being in Anaheim last year, a choice of venue that I like to think of as a kind of ironic joke at my expense.
We are only getting started, with the day of business and technical presentations that precedes the exhibition hall days at Informex. The event, now organized by UBM Live, is celebrating its 30th anniversary this year, by the way–a testimony to the strength of the fine chemicals community within the “Chemical Enterprise”. This is in no small part thanks to the efforts of the Society of Chemical Manufacturers and Affiliates, which, when it was the Synthetic Organic Chemical Manufacturers Association, introduced Informex in, I believe, Atlanta (a few card tables and I think you were allowed to smoke). SOCMA grew Informex to fill a sizable exhibit hall every year, regularly holding it in New Orleans for a good stretch before handing the reins over to UBM.
Which reminds me of a cab ride in Las Vegas when Informex hit that city some years back. My cab driver asked what show I was in to see.
Me: Informex. It’s the Synthetic Organic Chemical Manufacturers Association meeting.
Driver [following ten minutes of silence]: Can a chemical be synthetic and organic?
Me: Good question.
I was particularly impressed today with Maximillian Yeh’s presentation on highly-potent active ingredients. Yeh is a North American account director with Evonik based in San Francisco. I also liked the talk Stephen DeSalvo, the U.S. marketing director of Fabbrica Italiana Sintetici (FIS), gave on that company’s recent investments in everything from an anti-cancer active pharmaceutical ingredients pilot plant to Delmar Chemicals, an API producer near Montreal. FIS, with headquarters and primary manufacturing in Vicenza, Italy, is investing heavily in building Delmar into a North American sister site with capabilities similar to those it has in Italy.
The two talks touched on themes that are dominant now in the fine chemicals sector—specialization and expansion. I will be giving a talk tomorrow at 3:00 pm in “Theater 1” at Informex titled, “State of the Vibe in Pharma Chem”. In it, I will expand on these two themes and others as I gloss the changes in the pharmaceutical sector and those in the field of fine chemicals.
One delightful surprise so far was a visit from Walter “Skip” Mongen, a sales executive with C&EN for many years who retired about five years ago. Skip hit the Skydeck on Monday. We reminisced about the night we got lost walking back from a restaurant in Madrid doing a shabby Abbott and Costello imitation as we got even more lost. And then there was that dinner in Milan…. Ah, the memories.
Cultural note: I may have jinxed the weather here slightly by cuing this on my iPod as I hit the causeway. But who wouldn’t put on Donald Fagen’s swing-bop tribute upon entering these environs?
More tomorrow! And come to my talk at 3:00 pm, Theater 1, if you’re on site.
My colleague Ann Thayer is “tweeting” here. To follow Ann’s tweets from Informex, reference: @annmthayer
Day Four of CPhI, the third day of the exhibition, is always clean-up day. If you find someone who is still around, he or she will likely have time to chat. I finally caught up with Xavier Jeanjean, vice president of sales and business development at Isochem, the French pharmaceutical chemicals firm.
Like others, Jeanjean is guardedly optimistic about the drawn-out recovery in contract services for active pharmaceutical ingredients (APIs). He likes the complex molecule/service package angle that is shaping up for the CPhI Review article on Nov. 11. Like many others, including Markus Blocher, CEO of Dottikon, he sees the call for high tech manufacturing and services as a vindication of a long-standing strategy of marketing chemicals as part of a comprehensive technology/regulatory/quality package. It was interesting to hear that Isochem is making an effort to concentrate primarily on the pharma market next year, given that other players, notably Saltigo, have shifted their emphasis to specialties and agricultural chemicals of late.
But Jeanjean gives one very good reason to lean into APIs just now: “Innovation is back.” The complex molecules I have alluded to all week are real. They are currently coming forward with momentum and their owners are in need of a lot of specialized support.
Review to come.
Cultural Note I: C&EN got beat on tweets! Congratulations to our good friend in the Press Room, Brandi Schuster, editor-in-chief of ChemManager. No “I-prizes” are given for blogging, unfortunately.
Cultural Note II: I noticed that Josh Fischman tweeted about my Day 3 post—The tweets were rolling on big video screens around the Messe all week. A regular birdhouse, it was! Thanks Josh and Ann Thayer for twittering about Fine Line at CPhI.
Wow! What a morning. The usual stops really paid off. Take, for example, my visit to the Weylchem/Corden Pharma booth, housing two groups of companies owned by the voraciously acquisitive International Chemical Investors Group (ICIG) based here in Frankfort. I came by at the invitation of Andrea Missio, business development director for WeylChem International. We had a great talk, but while I was there I also caught Laura Coppi, managing director of Farchemia, a Milan area company in the Corden group. Then, I ran into the Achim Riemann, the managing director of ICIG!
Laura, you will recall, is late of Fabbrica Italiana Sintetici (FIS), where she came in as commercial director with the departure of Roger LaForce two years ago. She explained that she is now leading a profit center that operates rather autonomously within a conglomerate. One of her first tasks is to prepare a “strategic growth plan.” I asked for more details on the plan: “Hey! I’ve only been here two weeks!” she said. “Come on!”
Missio and Coppi discussed how companies within ICIG and its two chemical subdivisions synergize and autonomize. Missio begged off questions about a recent ICIG acquisition, that of Allessa, the German fine and specialties chemicals group. Both WeylChem and Allessa are composed of former Hoechst chemical businesses and have assets in the Frankfurt area. The operational synergies for these sites are obvious. Not so the synergies between WeylChem’s and Allessa’s operations elsewhere in Europe and the U.S.
ICIG’s press release highlighted the reuniting of the Hoescht businesses.
I asked Reimann if ICIG, which most recently purchased DNF, a former Clariant detergents business, is attempting to build a large German chemicals conglomerate. No, he said, the firm is looking to create two integrated global businesses—one, Corden Pharma, focused on APIs, and the other, WeylChem, focused on non-cGMP fine chemicals. He concedes that operations are still centered in Europe with some U.S. sites and none in Asia. The company continues to look at China, but finds the cost of setting up operations prohibitive, says Reimann.
Sources with other companies are skeptical of ICIG’s approach, viewing the deals as largely financial in nature. David Simmonet, president of Axyntis, says his firm recently purchased a French API plant in Calais, France, which had gone into bankruptcy—it was originally part of Tessenderlo, another company acquired by ICIG. Simmonet says Axyntis, which already has a plant with R&D assets in Calais, hopes to integrate and revive the Calais facility.
Day three ended with the European Fine Chemicals Group’s annual dinner, at which keynote speaker, Utz-Hellmuth Felcht, showed a slide (yes, another PowerPoint presentation at the EFCG dinner!) illustrating all the pieces spun off in the break-up of Hoechst. Felcht, whose long resume includes a run on the management board at Hoechst, noted that this slide looks like an explosion in a pharmacy. It does. I don’t think anyone could put that back together.
Reimann shrugs off any contention that ICIG is implementing a sink-or-swim culture among it’s holdings. The firm has been at it for some time, and certainly WeylChem and Corden Pharma are going ventures. Is the autonomous business portfolio approach working for ICIG and its holdings? Or is Calaire a casualty (one that may be revived) of rampant acquisition? Everyone is still watching to see.
At Allessa, folks are also waiting. One executive I asked about the future there said he could not comment. “It gets political,” he said.
Cultural Note: I resume illustrating Fine Line this week with some of my favorite paintings from The Städel, Frankfurt’s great art museum. No editorial tie-in intended.
Cultural Note II:
I combed the disperse and multi-tiered halls of the Frankfurt Messe today, immediately picking up on one of the themes put forth at Monday’s conference. Ashland and Dow announced new drug dispersion polymer product line extensions. Both companies are addressing the need to improve the dispersion and delivery of complex molecules that are beginning move forward in the pipeline.
Christophe Massip, global marketing director for Dow Pharma & Food Solutions notes that 70 percent of the drugs across current industry pipelines are now rated Class 2 (poorly soluble), or Class 4 (poorly bioavailable). In essence, all the low hanging fruit of easy soluble molecules has been picked in drug R&D, he says.
Massip’s division, by the way, is one of five at Dow, including Dow Polyglycols, Surfactants and Fluids and Dow Water & Process Solutions, contributing to a new Dow Healthcare division that will focus on drug delivery, process purification and separation, and active pharmaceutical ingredients.
Several companies, including the French firm Novasep, report new FDA inspections for high potency APIs, antibody drug conjugates, and other advanced technologies, responding to an increase need for high tech products and services. Some, like Fabbrica Italiana Sintetici (FIS) in Vicenza, Italy, are making big investments in R&D, upping high potency capacity and experimenting with flow chemistry.
The “new complexity” in API supply “does not come only from the molecule and the chemistry, but also from an increased uncertainty about what our customers will request,” says Franco Moro, general manager of FIS. “Outsourcing is not just outsourcing the product. It is outsourcing of services, including R&D, analytical and regulatory services, and quality”
In broadening its offering, FIS, in fact, has done some sub-outsourcing, forming several manufacturing and service partnerships. The company has been working with Enantia, a Spanish firm specializing in chemical R&D, and with a partner in the U.K. on crystallization research. FIS also has a Chinese partner manufacturing APIs.
Andreas Weiler, head of strategic marketing at SAFC, closed the day with a talk in the Messe Forum entitled, “Is There a Future for Western CMOs,” referring to contract manufacturing organizations serving the drug industry. His answer boiled down to “yes,” as long as they are ready to deal with the kind of drugs that have been introduced in the last two years—drugs that will require low volume, high potency APIs.
More on all this and a gloss of announcements at the press conferences tomorrow.
Cultural Note: I plan to revert to images from the Städel collection tomorrow, unless another excellent choice of images from the show presents itself.
The fine chemicals world has funneled en masse to Frankfurt this week, as it needs to be somewhere in Europe at this time of year for CPhI, one of the major events on the “pharmachem” calendar. Frankfurt is a favored venue for the event—this is the third time since 2008 that CPhI has convened here.
Day One consisted of a series of conference sessions that nicely cued up the major themes in the industry in 2013: The impact on contract chemical suppliers of the high tech/complex molecules characterizing new drugs, and the changing regulatory and business landscapes in India and China. Perennial themes, yes, but they are not alone! Emerging markets were also on the docket, with one event titled “Generics and Super Generics in Emerging Markets.” I shared the moderator’s view, given during his introduction, that there is no such thing as a super generic, and left immediately to attend a session called “Drug Delivery Systems.” That seemed a bit more cut and dried.
Speakers from BASF, Hovione, and Boehringer Ingelheim Pharma outlined the challenges of achieving the necessary standards of safety and bioavailability at a cost that insures profits when tackling problems of getting new drugs into the patient. Each firm, as a supplier of active pharmaceutical ingredients (APIs), has launched a drug delivery technology service associated with finished-form APIs. While each can claim to have pioneered advances in areas such as spray drying or polymer micronization, I found it interesting that some of the real pioneers have come from other, perhaps not-so-unexpected, industries.
Take the plastics industry, where we find the architects of melt extrusion, a variant of which has been deployed by BASF for API production, according to Nigel Langley, head of marketing for pharma ingredients and services. Meanwhile, at Hovione, where spray drying is a specialty, efforts to mask the bitter taste of drugs has led the company to take a page from the book of the chocolatier, according to Conrad Winters, director of drug product development.
In an after-lunch event titled “API Sourcing in Emerging Markets,” panelists discussed the new regulatory pressures in China under president Xi Jinping. There has been a bit on that in Fine Line recently as well as in the magazine. On India, discussion centered around recent depreciation of the rupee and growth that is slowing at such a rate that it will soon break back into the single digits. Both countries still claim cost advantages over the West, and panelist point to the growth of cGMP and high tech manufacturing and research services.
There were ome interesting bits on how companies in the two countries are working to keep talent from moving to the U.S. and Europe. Panelist Ian Lennon, senior vice president of global business development at Chrial Quest, a Chinese API supplier, says the firm guarantees workers in some positions that if they leave the company, they can have their jobs back if new positions don’t work out. Reva Pharma, an Indian generics firm, pays for workers’ marriages in a bid to keep them local, according to CEO Gurpreet Sandhu, another panelist.
There was another panel on biosimilars that my colleague Ann Thayer attended. Here is her recent cover story on that topic.
This should serve as a quick overview of the discussions ahead in Frankfurt. Ann and I will be in touch—Ann on Twitter, I at Fine Line.
Cultural note 1: When in Frankfurt, visit the Städelsches Kunstinstitut und Städtische Galerie, better known as the Städel. It is Frankfurt’s Prado (OK, I wish we were back in Madrid) and has some fantastic Modern and Old Masters paintings. No photograph I take at CPhI could compete with what I will use to illustrate my posts this week, paintings from the Städel, starting with the amazing Blinding of Samson (or Simson, as he is called in Frankfurt) by Rembrandt. I swung by the museum yesterday and will return after the expo on Thursday evening for a special exhibit of the work of Albrecht Dürer, which opens later this week.
Cultural note 2: To follow Ann’s tweets from CPhI, reference: @annmthayer
Dateline: Long Branch, New Jersey
The day kicked off with a panel discussion on Quality by Design (QBD), a somewhat self-explanatory method of efficient process design associated with the quality management movement of the previous century. It has been revived with the FDA’s recent establishment of an enhanced submissions regimen based on QBD for drug companies filing new drug applications.
QBD comes with other quality sub-practices, including Design of Experiment (DOE), which was featured in an article in C&EN earlier this year. It also comes with additional costs in process design and R&D. As so often happens when something like a quality standard is established as a way to achieve regulatory approval, the industry has tended to focus efforts more on gaining that approval at the lowest cost rather than on designing the most efficient process.
Panelists agreed that cost concerns can lead to a lot of confusion on QBD, especially when dealing with a contract manufacturing organization. Emerging pharma companies that have little experience in advanced stages of process engineering are unlikely to employ QBD effectively.
According to panelist Kevin Siebert, senior research adviser at Eli Lilly & Company, Lilly has put together four enhanced submissions using QBD. “One was withdrawn, but FDA gave us feedback on it,” he says. “We’ve embraced the initiative. It’s an effort that we use in the early stages when we are looking at process robustness. But it is intended to deliver not only material but also information to support the advanced submissions.”
Panelists agreed that the opportunity to deliver on the information is often lost when dealing with a CMO.
From the perspective of an emerging pharmaceutical company, said panelist James Bruno, president of Pharmaceutical and Chemical Solutions, the focus is on minimizing the amount of work needed to reach clinical milestones. “There is a heavy reliance on CMOs, because few of these companies have strong tech groups. Many don’t understand scale up and process development. Their whole point is, ‘how much will it cost and when can you deliver.’”
The CMO, he said, is therefor under significant cost and time pressure, and will move a reasonable process along without the full QBD vetting. “There is a disconnect on expectations,” he said. “It’s a highly competitive market, and you want to make sure what you turn over to Merck and Lilly is a good package.” The CMO looks to the drug company, and vice versa, to get that together. “It is about money at end of day,” he says. “It’s about how can you minimize cost going forward.”
After the panel, Bruno told me that QBD will eventually be applied effectively, and that it will accelerate the use of efficient technology and process design that are beginning to transform drug chemical production—see his comment yesterday on the need for simple assets.
The panel was followed by a plenary presentation featuring Stefan Loren, managing director of Westwicke Partners. Loren reprised his plenary talk of 2010 on Wall Street’s view of emerging pharma, biotech, and pharma outsourcing.
That view has changed markedly since Loren’s last appearance, largely because money can be had at the moment.
Loren noted, however, that uncertainty is a dirty word on The Street. And there is a solid trace of it in the air right now. For example, there is concern that the upswing in productivity at Big Pharma results from in-licensed products, and that gains in drug approvals may not be sustainable.
Outsourcing, said Loren, has “matured” in Wall Street’s assessment in recent years. It is applauded now as a means of diversifying risk. This marks a welcome evolution from an earlier insistence on the one-stop-shop approach. He advised pristine due diligence in picking a contract manufacture, however, noting that a problem caused by a contractor can hit a drug firm’s stock hard and long.
One surprising bit of intelligence at ChemOutsourcing comes from Fabbrica Italiana Sintetici (FIS): Managing director Laura Coppi will be leaving for a position at CordenPharma in Milan after two years in the key business management role at the Vicenza-based pharma chemicals firm. Her replacement has not been named.
I haven’t spoken with Coppi since writing a C&EN Talks With feature about her earlier this year. But on hearing the news, I was reminded of the quote that ended that article: “I would have loved to have studied mathematics. But, I have to say, I am a chemist in the soul. Deep inside.”
Meanwhile FIS has been investing in Delmar, the Montreal, Quebec-area pharma chemical company it acquired shortly after Coppi came in, boosting capacity and adding significant new isolation and drying capabilities. Delmar will also be adding a kilo lab to its existing pilot plant and expanding its R&D lab to enhance small-scale cGMP synthesis. Delmar and FIS will continue to operate as separate companies, with Delmar making some material for FIS, says John Brady, business development manager. They will also coordinate on projects, leveraging their newly-established connection between Europe and North America, with Delmar passing some projects to FIS for larger-scale production.
FIS has invested about $19 million in developments at Delmar to date, with an additional $5 million per year slated for the next two years, according to Brady.
The day ended on the beach with the annual bonfire, which this year seemed to throw an inordinate quantity of sparks. Not enough to deter marshmallow roasting, however. The karaoke stage had a few takers. Fullish moon. All very nice.
The pharmaceutical chemicals sector returned to the miraculously unmolested Ocean Place Resort & Spa on the Jersey Shore this week. Unlike much of the coast to the north and south, Long Branch sustained only minor damage from Sandy, which hit shortly after last year’s meeting. The place has a fresh coat of paint, and the Tiki Bar looks pretty much like the one that was there last year.
There have been a few changes, however. Tighter security. Conference sessions held in the exhibit halls, and an increased emphasis on biopharma, reflecting the growing business in biotech drugs. There was also a kind of speed dating session—a stretch of the afternoon during which Merck, Pfizer, Novartis, Celegene, Gilead Sciences, Ironwood Pharma and other drug companies large and small had representatives at round tables around which contract chemical suppliers could sit and try to break the ice. This was a hit with attendees who are always looking for customers (ie drug company decision-makers) at pharma chemical trade shows, usually finding very few.
“Large and small” was a big theme in discussions on the exhibit floor and in one of the panel sessions (which was technically also on the exhibit floor—taking the sessions out of the conference rooms was not such a big hit with attendees). Focusing on contract work, both manufacturing and research, with biotech and emerging drug companies, the panel came to the conclusion that extra up-front planning is in order when passing work from a small drug firm to a contractor, but that the time to do that work is generally extremely tight.
“As we learned in grad school, a day in the library is worth more than a week in a lab,” said Stuart Levy, principal at SBL Chemistry Consulting, who chaired the panel. It is especially important to get the technical package in order before transferring a project to a contract manufacturing organization (CMO), he said. “You need to write up a good request for proposal and set the tone. If you don’t, trying to back-fill that later is extremely difficult.”
But windows of opportunity don’t always allow for much time in the library, said panelist Richland Tester, principal scientist at Celgene Avilomics Research. “Sometimes we are asked to do crazy things.,” he said. There is generally a deadline to deliver the next data point in a clinical trial in order to receive the next tranche of venture funding. “If you have until a particular date to do it, you have to do it,” he said. “It’s not like having a six-month timeline from a big drug company. Sometimes you don’t have that luxury.”
Time, on the other hand, is money. “I have heard clients comment that money is no object,” said panelist Cheryl D Garr, director of business development at PharmaCore. Such comments are, she noted, more often than not disingenuous.
Jeff Saunders, vice president of small drug design at Ember Therapeutics, responded that the object is value, not money.
Overall, the companies in the sector continue to be optimistic about business. James Bruno, president of consulting firm Chemical and Pharmaceutical Solutions, told me, however, that a shift is underway in the work being done, one that puts the installed manufacturing base a bit out of kilter.
“I’ve said for a number of years that I’m concerned about is what I call simple assets,” he said. “Some companies just have the wrong assets. We have large reactors when we really need smaller ones. We have big vessels that can make 100 tons when the product is only going to be two tons.” Oncology drugs and other high potency, highly active drugs make up an increasing proportion of the work being outsourced. And drug company pipelines are filling with more.
“We are still not pushing drugs out at a rate that makes everyone happy,” he says. “And if your pipeline is weak, the generic pipeline is weak.”
The current business environment in China was a prominent subject of discussion today, with a panel on the subject (see previous post The China Conundrum). More on this topic in the magazine (C&EN) soon. Another panel of interest covered “crowdsourcing,” an online, open innovation technique, as employed by Pfizer and Purdue Pharma—another topic ripe for coverage in C&EN, so I will keep my powder dry for the moment. But it’s an interesting topic at a conference like this.
And in the interest of full disclosure, this from David Zimmerman, CEO of Kalexsyn: “I am actually going to walk away from here tonight with three very good leads. Frankly, I came out of ACS [the Society's annual meeting in Indianapolis last week] with one!”