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and sales at the Swiss company Helsinn, who in 2004 replaced Bozzoli, 66, as general manager of marketing, sales, and R&D. Laforce, only the second non-Italian employee at the 500-person Montecchio site, describes the move from Helsinn, which is a smaller family-owned specialist in high-potency APIs, as aventure into the broader fine chemicals arena. FIS's main plant in Montecchio has a capacity of 1,115 m 3 · The firm's other facility, in Termoli in southern Italy, has 340 m3 of capacity. "What I saw was a company with a very strong base of assets, capacity, and knowhow, as well as financial solidness," he says. "The only critical need was to improve the organization and the company's position in the market." LEADING THE WAY Laforce is guiding one of Europe's oldest and largest pharmaceutical chemical suppliers into the mainstream.
MEET THE ITALIANS FIS rebounds from a big slump with a NEWFOUND DIRECTION in marketing RICK MULLIN, C&EN NORTHEAST NEWS BUREAU
AT LUNCH, alfresco in the Montecchio region of northern Italy not far from Venice, Vittorio Bozzoli, a member of the executive committee of Fabbrica Italiana Sintetici (FIS), points out the castles of Romeo and Juliet on a nearby foothill of the Alps. He discusses the local wine industry, motioning to the vineyards in every direction. And after lunch, he's discussing chemistry on a short drive to one of the largest active pharmaceutical ingredient (API) manufacturing facilities in Europe. Celebrating a half-century in business this year, FIS is itself a local legend and, until recently, was something of a well-kept secret.. Wholly owned by the Ferrari family (no relation to the automotive clan), FIS got started when small-scale API manufacturing flourished as a regional cottage industry, supported by the lax patent laws that prevailed in Italy until the late 1970s. The Ferraris—four of whom, including President Gianfranco Ferrari, 85, remain on the executive committee—kept FIS's profile low as it amassed a portfolio of generic APIs. In the 1990s, the company took the logical next step and began custom manufacturing APIs for big pharmaceutical companies. Sales grew to $200 million in 2000. Then FIS joined the mainstream. With the loss of a single contract in
2000, the company's revenues went into a tailspin, just as the rest of the sector fell into a severe slump. The company hit bottom in 2005 with sales ofjust $90 million. Like some of its peers, FIS found itself with a lot of spare capacity and a need to rebuild its custom API operations. The company's conservative approach to business proved to be a saving grace, according to Bozzoli. Family ownership, he says, kept FIS from having to close down plants and lay off staff. The excess capacity played in the company's favor when drugmakers returned to outsourcing chemical production to cut costs. Most important, Bozzoli notes, FIS could trade on a solid reputation. One of its largest contracts today is with the same Swiss drugmaker whose product failure slammed FIS seven years ago. Now, with custom API manufacturing rebounding in Europe, FIS is clearly one of the survivors—something that cannot be said of several large diversified firms that also entered the sector in the 1990s. Revenues climbed back to $172 million last year, and the company expects sales of $193 million for 2007. In the depths of the downturn, Bozzoli notes, FIS decided to bring in a fresh management perspective. Enter Roger Laforce, the former senior manager for marketing
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TIMING HELPED. Starting in 2004, Laforce says, large drug companies began cutting back on in-house production and began outsourcing again. "Merck announced a reorganization [of manufacturing], and Roche followed them, as did GlaxoSmithKline, Bristol-Myers Squibb, and Lilly," he says. "Today, name any bigpharma company, and they are changing their outsourcing policy." Under these circumstances, Laforce says, a low profile doesn't work. He initiated a marketing and communications push in coordination with Steven DeSalvo, the company's New Jersey-based U.S. marketing manager. Laforce hired a second full-time person, chemist Gail Underiner, to work as a technical sales consultant for the U.S. operation. Laforce tripled the company's advertising budget and put together a plan to replace what he calls an ad hoc approach to advertising. And he went to work on changing management's concept of business travel as an administrative expense. Laforce quips that he had to convince management that failure to show up at major industry conferences leads to speculation that a company maybe in trouble. "There is one simple principle," Laforce says. "The number of contacts is directly proportional to the hit rate for new projects. Therefore: Hit the road!" But the big challenge, Laforce realized, would be balancing the product portfolio as custom manufacturing customers returned. Given the volatility of that part
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of the business, he pushed FIS to firm up its base in generics, which tend to enjoy steadier sales. "With generic APIs," he says, '"we can better define our destiny." Over the past two years, FIS has increased its generics portfolio to 40 products with additions such as terbinafme, an antifungal agent; sumatriptan, a migraine drug; quetiapine, an antipsychotic; and entacapone, for Parkinson's disease. "And we are trying to improve customer service," Laforce says. "Many things come together at marketing and sales." Part of the effort is Pharmaceutical Holding FIS (PHF), a separate company in Switzerland owned by a holding company established by FIS in the 1980s. PHF, which was launched to market generic APIs in the U.S., recently hired a project manager to work on launching a dosage-form drug business to compete with similar operations that are emerging in India. Laforce says PHF will likely evolve over the next two years into a small generic drug company that is supplied with APIs by FIS and other pharmaceutical chemical firms. Although FIS has been emphasizing
generic APIs, they and a small roster of intermediates accounted for only 30% of its sales; 70% of the company's sales last year were generated from custom synthesis. The company, according to Laforce, is trying to avoid becoming dependent on any large contract. "We have one customer with nine projects, making up 25-30% of our total income," Laforce acknowledges. "But there are lots of small projects. We have three hundred customers for our generics, but the classic problem is always in custom manufacturing." THE TRICK to managing a large business in the volatile custom synthesis arena, he says, is flexibility, which he defines as having plenty of capacity, broad technology know-how, and the ability to make quick decisions. "Anyone can respond in two weeks with paperwork," Laforce says. "Real flexibility means you adjust reaction lines, move reactors, buy new equipment, and put it in on time to have it ready when it's needed. That's industrial flexibility, and it's something a small company doesn't have."
FIS spent $11 million last year to increase API capacity in Montecchio and $14 million to enclose the Termoli facility and bring it up to FDA's current Good Manufacturing Practice (cGMP) standards. Laforce says the firm is currently working on four or five blockbuster projects. It is one of the firms manufacturing intermediates for Roche's antiviral drug Tamiflu. Meanwhile, projects under development with drug companies prior to Laforce's arrival are coming to fruition. James Bruno, director of the consulting firm Chemical & Pharmaceutical Solutions, says FIS has done well in balancing its product offering in recent years. And he credits Laforce with giving FIS a much higher profile. "If I looked at FIS before Roger got there, I would have thought they were focused on generics, very large products, not so much on technology," Bruno says. His view of the company today is quite different. "Their focus seems to be more toward innovator-type products and custom products as opposed to other suppliers that say, 'we've got 100 m3 of capacity, let's just
Outstanding API manufacturing opportunities
