Z ACH ( BOT H)
BUSINESS
not so much based on having a bad business but on an investment adventure from which we are recovering.” ZaCh is proceeding with a five-year plan that includes a return to profitability by 2015, LaForce says. The company has divided its activities into three businesses: generic APIs, representing 40% of revenue; custom synthesis, 30% of revenue; and a new “product dossier” business, in which ZaCh develops a generic product and sells the dossier to a generic drug firm, 2% of revenue. Captive production for Zambon accounts for the remaining 28% of ZaCh’s business. SETBACK ZaCh
System’s plant in Lonigo, Italy, took a hit because of competition over the generic drug gabapentin.
WAKE-UP CALL ZaCh System’s NEW CEO hopes to get the Italian fine chemicals firm back on its feet
LAFORCE ALSO HIRED a business development manager for North America, Sean M. Diver. Diver is a former manufacturing and procurement manager at Merck & Co. with more recent experience in business ana Sintetici (FIS). His charge was straightdevelopment at Lonza, Dr. Reddy’s Laboraforward but challenging: Return ZaCh to tories, and Cambridge Major Laboratories. profitability and strengthen the company’s Last year ZaCh’s sales rose 6% to presence in the global API market. $145 million, LaForce says. He is targetMany in the fine chemicals industry ing $250 million for 2017, the end of the were surprised to hear that LaForce had left five-year plan. The growth drivers, he says, FIS, but the announcement that he would will be custom synthesis and the dossier take the reins at ZaCh made sense, given his business. success at developing FIS. ZaCh seemed a LaForce notes that the Avrillé site, which comparable challenge. “The decision was is predominantly used for custom synthemade before I was hired to maintain and sis, is already profitable. The relaunch the fine chemicals generics business in Lonigo, business at ZaCh,” LaForce however, has taken a hit besays, “and I saw a chance to cause of Chinese and Indian do a turnaround.” competition for the seizure It is difficult to resist medicine gabapentin. ZaCh, comparing LaForce’s chalthe largest supplier of the lenges at ZaCh to what he generic API in Europe, sold faced at FIS, where during 500 metric tons of gabapenhis eight-year tenure sales tin last year, but LaForce doubled and the company’s expects volume to drop 50% international profile rose sigthis year. Nevertheless, the nificantly, culminating in its company is scaling up its acquisition of a Canadian API overall generics production, producer, Delmar Chemicals, LaForce says, targeting the in 2012. “But here, we are in TURNAROUND MAN LaForce introduction of two APIs per a worse situation,” he says is credited with leading a year. of ZaCh. “We are, at the mobig boost in business at his Zambon established a ment, not making money. former employer, FIS. $93 million capital budget But we are going back to for ZaCh to cover the fivemaking money.” year plan. ZaCh is installing LaForce insists that as a new spray dryer in Avrillé that will add a fine chemicals company with a longsolvent-based capacity to the aqueous standing manufacturing base in Lonigo, system in place now. The company is also Italy, and a solid operation now in France, installing a midrange-capacity manufacZaCh is poised for growth. “The shock or, turing plant—complementing its pilot let’s say, the disturbance to the system was
RICK MULLIN, C&EN NORTHEAST NEWS BUREAU
THE YEAR 2007 marked the end of
a tumultuous time in pharmaceutical chemicals. Diversified chemical firms were scrambling to exit the sector, and the field was passing to medium-size specialists with long-standing experience in producing active pharmaceutical ingredients (APIs) and other fine chemicals. Among the players vying for position that year was Zambon, a 100-year-old family-owned drug company located near Milan. Zambon’s first step was to separate its well-established fine chemicals operation from the rest of its business, forming a new company called ZaCh System. It followed up by acquiring plants in La Porte, Texas, and Avrillé, France, from PPG Industries for $65 million. The deal marked Zambon’s first significant foray outside of Italy. But for ZaCh the tumult continued. “The acquisition of the PPG plants did not work out as expected,” says Roger LaForce, ZaCh’s chief executive officer for one year now. “Quite a lot of money was lost.” Zambon sold the Texas plant to Ampac Fine Chemicals in 2010 “for an apple and an egg,” LaForce says, using a colloquialism popular in his native Switzerland. Meanwhile, employment at the plant in France was cut in half. Both actions were taken by Paolo Piatesi, a longtime Zambon executive whom the owners brought out of retirement to stabilize ZaCh when the PPG deal put it in a tailspin. LaForce was hired in June 2012 after eight years as general manager at another Italian fine chemicals firm, Fabbrica Itali-
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and commercial-scale plants—to better accommodate customers launching new products, LaForce says. LaForce ticks off a broad menu of technologies at ZaCh, including chiral separations, high- and low-temperature reactions, organometallic chemistry, and an accelerated Grignard technology that ZaCh calls “turbo Grignard.” The company uses continuous microreactor processing in Lonigo and ozonolysis in Avrillé. And LaForce points to ZaCh’s access to a synchrotron, a particle beam technology related to the cyclotron that the firm uses for crystal and polymorph analysis. “I am always thrilled by it,” he says. “It is used generally for basic science, but instead we can directly use the data from the beam analysis for industrial and commercial purposes. It is like a shortcut from science to industry.”
“That family-owned culture is one of our greatest strengths,” he says, noting that family ownership in Italy is not a barrier to global expansion. Diver points to FIS’s relationship with Delmar under LaForce as a template for partnerships at ZaCh. LaForce plays down the notion that he is ushering in any great change. “It’s more a matter of waking up the potential capabili-
ties that already exist,” he says. Despite the failed 2007 acquisition, LaForce says he wants to motivate company managers to take risks. “When you make an industrial offer for a product that may be on the market in 10 years, you are making a financial bet,” he says. “In order to be profitable, you need a business model, and you need to give people the responsibility to do things well.” ◾
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BUT TECHNOLOGY and capacity are taken
for granted in pharmaceutical chemicals, LaForce acknowledges. What matters are the “soft factors,” he says: service and customer relations. Partnerships are also important, LaForce adds, in the product dossier business, for example, where ZaCh works with firms such as Catalent Pharma Solutions, a New Jersey-based contract research organization, to develop generics products. ZaCh also has research partnerships with the University of Milan studying synthetic routes and with the University of Rouen, in France, studying solid-state API formulation. The challenge of communicating these capabilities to potential customers in North America falls to Diver, who is based in Doylestown, Pa. “We have a stronger name in Europe and a broader customer base,” he acknowledges. “The customers we do have here are large pharma companies, but certainly the medium-size and emerging pharma market makes sense for us.” James Bruno, president of Chemical & Pharmaceutical Solutions, a consulting firm in Princeton, N.J., sees LaForce taking on a turnaround assignment similar to the one he completed at FIS. There “he took a standard, run-of-the-mill company and said, ‘I can make it better.’ ” This time, LaForce is involved in a revitalization, Bruno adds. “Ten years ago, ZaCh was a leader in technology,” he says. “He is trying to reestablish that.” Diver would agree, calling the company’s manufacturing infrastructure and family ownership solid bases for growth.
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