BUSINESS built up to manage new projects, then closed down as the projects are transferred to regular production. Germani says this structure builds on BASF's Verbund concept ofintegrated pro duction, with a shift in emphasis to inte gration of knowledge, technology, and re search. Some skeptics charge that the contract manufacturing unit is, in practice, still a platform for pushing certain BASF products and technologies, but Germani tamination of information," Germani says. ASF S FLEDGLING PHARMACEUsays his group is customer focused and will "Intellectual property is always on the cus tical contract manufacturing use "whatever technology it takes" to meet tomers' minds, and you can't deal with business is defying the odds by their needs. them in a free way" posting strong sales gains at a time of general malaise in the And the technology at BASF's disposal However, the sale removed this imped fine chemicals business. Still to be achieved is considerable. As one of the world's largest iment and allowed BASF to pursue con is the leading industry position that the chemical companies, BASF is strong in nu tract manufacturing more vigorously Im company has vowed to reach. merous chemistries, including specialties portantly, although BASF sold Abbott such as electrochemistry, photochemistry, certain active-ingredient and drug-finish BASF announced the launch of its con polymerization, andphosgenation, that are ing plants, it kept pharmaceutical chemitract business at an inauspicious time: just ο not found at most competitors. In days before Sept. 11,2001. Industry | addition, the contract manufacturwatchers doubted the company's ft ing group draws on biocatalytic ca ability to succeed, noting that it was pabilities like BASF's Chipros tech a latecomer in an overcrowded sec nology for making chiral alcohols, tor and that its strong product ori amines, and carboxylic acids using entation didn't fit in a service-ori enzyme catalysis. ented business. Germani says it was natural for But Antonio Germani, director BASF to draw on this chemistry of BASF's pharma contract manu expertise—along with its process facturing unit, says initial results development and scale-up knowhave been promising. The business how—for the benefit of the drug posted sales of between $40 mil industry Plus, he points out that lion and $50 million in 2002—all the new businessfillsa space in the active pharmaceutical ingredients company's interaction with that in or advanced intermediates, he dustry, which already buys its in says—double the roughly $20 mil termediates, excipients, and largelion a year that BASF recorded in volume generic actives like caffeine contract manufacturing before it HELPING HAND This pilot plant at BASF and pseudoephedrine. "There was formally started the business. headquarters in Ludwigshafen supports full-scale a gap, and contract manufacturing Germani is a Ph.D. c h e m i s t - pharmaceutical production at two other sites. closes this gap," he says. earned in his hometown of Rome Indeed, although the contract manu and at the University ofMilan—with a spe cals units in Minden, Germany, and Cramfacturing unit is modest in size, Germani cialization in pharmaceutical technology lington, England—both of which were points out that BASF's fine chemicals busi After graduation, he worked for Abbott inspected by the Food & Drug Adminis ness, where the contract unit resides, has Laboratories in production and EniChem tration last year— and a pilot plant in Lud overall sales to pharmaceutical companies in research before joining BASF in 1991 as wigshafen, Germany of roughly $500 million per year—placing a project manager in new business devel Complementing these facilities, Ger it in the top ranks of suppliers to that in opment. He moved through business de mani says, are the 6,000 BASF employees dustry And he wants to go even further. His velopment, marketing, and sales positions working in R&D, mostly in Ludwigshafen. goal is for BASF to become one of the most before joining the contract manufacturing "The idea is not to build many assets at the important players in the pharmaceutical business at its start. beginning," he says. "The idea is to use the contract manufacturing segment itself. extensive capabilities of BASF." That start occurred, not coincidentally, just six months after BASF sold its Knoll He says BASF will take its time. Unlike pharmaceuticals unit to Abbott Laborato TO THIS EN Dp the business is run using some competitors, it isn't saddled with a lot ries. Although the firm had long conduct of debt from an expensive fine chemicals what Germani calls a virtual structure. A ed a modest amount ofpharmaceutical con acquisition. It has the regulatory, quality core group of people in project manage tract manufacturing, according to Germani control, and manufacturing expertise of ment, regulatory affairs, marketing, and it wasn't prepared to begin a concerted push former Knoll employees. And perhaps R&D—many of whom are former Knoll while it was still in the drug business. most important, it has the R&D firepow employees—are complemented, as need er of the 6,000 chemists and other scien ed, by sales, research, legal, and other pro This is because BASF found it difficult tists in Ludwigshafen. "This brain-factory fessionals within the larger company He to be both competitor and supplier to oth of BASF's is our leverage," Germani says.— says the size of the contract manufactur er drug companies at the same time. " % u MICHAEL MCCOY ing organization fluctuates as teams are are not in a position to avoid cross-con
BASF STAKES CLAIM IN CONTRACT PHARMA
The German firm is a relative newcomer, but it has a good pedigree and strong research muscle
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