The Development of a Global Small Chemical Business with

Chapter 17

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The Development of a Global Small Chemical Business with International Marketing and Outreach Sharon V. Vercellotti* and John R. Vercellotti V-LABS, INC., 423 N. Theard Street, Covington, Louisiana 70433, United States *E-mail: [email protected].

V-LABS, INC. was founded in 1979 as a laboratory specializing in carbohydrates with a vision of making available both products and services to researchers in biotechnology, biochemistry, and in the rapidly developing field of glycobiology with its potentially revolutionary approaches to solving biomedical problems. There was at that time a whole emerging field of biochemical research built on the ubiquitous metabolism of carbohydrates that spans the gamut of pharmacology, immune responses, cancer medicine, materials science, human nutrition, and renewable bioenergy. Through a global partnership we have built a network to supply researchers with rare, complex carbohydrate structures which are authentic standards in analytical instrumentation, enzymology, and immunology. This report will give examples of the kinds of oligosaccharides assembled and the distribution network through which they are expedited to researchers.

Introduction This chapter describes how a small chemical business from a somewhat remote Louisiana town has become involved as a global trading partner with New Zealand Pharmaceuticals, Ltd. (NZP) of Palmerston North, New Zealand, and its specialty carbohydrates subsidiary, Dextra Laboratories Ltd, from Reading, United Kingdom. This business is a niche in the very significant exchange of © 2016 American Chemical Society Cheng et al.; Chemistry without Borders: Careers, Research, and Entrepreneurship ACS Symposium Series; American Chemical Society: Washington, DC, 2016.

key fine chemical components for carrying out potentially lifesaving research in pharmacology, immunology, oncology, hematology, and cell metabolic surface signaling mechanisms. We are contacted daily by customers and colleagues from many branches of research to discuss their particular application and how we might provide them with very small amounts of highly purified compounds through our experience as well as the NZP-Dextra collection of very rare carbohydrate structures.


Foundations for the Business As background of how V-LABS came to be established thirty-six years ago, it became more apparent to us that there was a whole emerging field of biochemical research built on the ubiquitous metabolism of carbohydrates. Such chemical literature spans the gamut of pharmacology, immune responses, cancer medicine, materials science, human nutrition, and renewable bioenergy. The chemistry of the carbohydrates is one of the cornerstones of all of organic and biological chemistry. In 1979, V-LABS, INC., was founded as a laboratory specializing in carbohydrates with a vision of making available both products and services to researchers in biotechnology, biochemistry, and the rapidly developing glycobiology field with its potentially revolutionary approaches to solving biomedical problems (1). While still doing research in biochemistry at Virginia Tech prior to that time, the authors became increasingly aware that classes in business administration were essential to become an entrepreneur in biochemical technology. A summary of the economic pieces necessary to form the company are listed in Figure 1.

Figure 1. Economics of establishment of the business.

The Small Business Administration (SBA) guaranteed loan bore an interest rate of 11% per annum, closing costs were 7% and the loan bore a 10-year term. Although the SBA loan interest may sound high in 2015, the guaranteed loan had a great advantage over the 1979 prime rate of 21%. A downside of the loan was that there was a four-month wait for the final SBA approval. When construction finally began, it took six more months to build the 1600 sq. ft. laboratory, outfit 148 Cheng et al.; Chemistry without Borders: Careers, Research, and Entrepreneurship ACS Symposium Series; American Chemical Society: Washington, DC, 2016.


it with proper utilities or equipment, and move in all set-ups to begin laboratory work in March 1980. Establishment of a sustainable business not only involves the physical office or work area but also the many legalities for incorporation and government relationships in terms of tax structure and compliance with environmental law and regulations (Figure 2). The current business to be described has heavily depended on this earlier business infrastructure that was established.

Figure 2. Cost accounting for V-LABS, INC., operations over the years.

The following figures (Figures 3 and 4) list diverse laboratory interest areas that V-LABS, INC., has pursued over the years in carbohydrate chemistry. Such a cross section of experiences has equipped them with abilities to tackle effectively many kinds of challenges from industrial clients.

Figure 3. Processing of water soluble polysaccharides listed. In order to confirm the authenticity of these complex carbohydrates, analytical chemistry methodologies have been developed. Typical examples of techniques are listed in Figure 4. 149 Cheng et al.; Chemistry without Borders: Careers, Research, and Entrepreneurship ACS Symposium Series; American Chemical Society: Washington, DC, 2016.


Figure 4. Carbohydrate analytical applications being done by V-LABS, INC.

Many preparative or semi-preparative carbohydrate applications have been done over the years by the laboratory (2). These include mass balance or proximate analyses of biomass sources for applications in sustainable bioenergy developments (3). Among many other preparative isolations of nutraceutical polysaccharides, very notable is the immunopotentiating agent, yeast ß-1,3 1,6-glucan, carried out at V-LABS in industrial development as well as for its purification on large scale. The yeast beta-glucan must meet rigorous specifications for analytical values and microbiology as a GRAS nutritional supplement.

Interactions of Carbohydrate Stereochemistry in Molecular Systems Biological information from the many asymmetrical carbohydrate structures through ordered interaction with specific binding sites within organisms is the vast subject matter of the emerging field of glycomics. Essentially, the complex stereochemistry and branched carbohydrate arrays on the protein backbones give a further definition to the protein structure with unique sequences of carbohydrate linkages (Figure 5).

Figure 5. Carbohydrate asymmetrical stereochemical priorities. 150 Cheng et al.; Chemistry without Borders: Careers, Research, and Entrepreneurship ACS Symposium Series; American Chemical Society: Washington, DC, 2016.


Such molecular carbohydrate information in the life sciences is studied through glycobiology and is researched and unified through the broader field of glycomics. Initially, understanding of the chemical basis of the genetic code permitted an eventual development of the science of genomics. After elucidating the translation of the DNA genetic code to functional, unique, homogeneous protein structures, it was found that these molecules nearly all undergo co- or post-translational modification with carbohydrates and other groups for various reasons. The resulting protein-carbohydrate composition determines many kinds of inter- and intracellular signaling for their appropriate recognition on cell or organelle surfaces through their carbohydrate structures. V-LABS has provided hundreds of these cell surface recognition factor carbohydrate arrays to researchers. It has taken thirty-seven years to fill this niche. Examples of Blood Group A oligosaccharides are shown in Figure 6.

Figure 6. Carbohydrate recognition factors of Blood Group Substance A.

An International Business Bond Is Formed Our association with Dextra Laboratories, Reading, U.K., began in 1990, twenty-five years ago. In order to formalize the business, international agreements have been made with the parent firm, New Zealand Pharmaceuticals and Dextra Laboratories to distribute biologically active cell surface recognition molecules as very high quality chemical compounds. The following discussion illustrates the kind of complex chemistry to which our compounds are applied. 151 Cheng et al.; Chemistry without Borders: Careers, Research, and Entrepreneurship ACS Symposium Series; American Chemical Society: Washington, DC, 2016.


The central focusing site for collecting, cataloging, certification, storage, and distribution of these compounds is at Earley Gate, Whiteknights, Reading, UK. In addition to making many compounds there or through the New Zealand Pharmaceuticals home laboratory a network has been established worldwide for the synthesis and procurement of a steady supply of the compounds from fine carbohydrate organic chemical laboratories. Dextra handles organization and distribution of these compounds. All of the final analytical work is done at the Dextra Laboratories in Reading, UK (Figure 7). It cannot be emphasized enough that the quantities of these highly purified synthetic or isolated oligosaccharides are most often in the milligram to microgram scale. To ensure very high quality of each product is costly and a single order of a compound may run from hundreds to over a thousand dollars. In addition to compositional and elemental analyses, all of the compounds V-LABS distribute (Figure 8) are certified by complex analytical chemistry such as chromatography, MALDI-TOF mass spectra, and nuclear magnetic resonance spectroscopy to the customers. There are now more than seven hundred fifty compounds in the Dextra catalog which we distribute in North and South America. Most of the glycobiology and biochemistry industries depend on the availability of these well-defined molecules.

Figure 7. Oligosaccharide source of supply through the Dextra Laboratories network. The process of networking is intrinsic to the sharing of our experiences in our field. The intellectual boundaries of our product service must continuously be revisited. In his excellent chapter on the nexus of creativity, innovation and entrepreneurship in the global enterprise, Sadiq Shah has discussed the necessity for cross-disciplinary exchange (4). Although his chapter is more detailed than can be discussed here in the context of the V-LABS, INC, many of the marketing creativity concepts Shah describes have been essential to building our marketplace. The unique service made available to the industries in need of the products which we market has required much creative thought and interaction research. In our business as a chemical laboratory owner and manager we continually reach out to scientists as customers. Our daily orders are from the major biomedical and chemistry research centers at the National Institutes of Health, the research medical schools such as Harvard, Johns-Hopkins, Stanford, 152 Cheng et al.; Chemistry without Borders: Careers, Research, and Entrepreneurship ACS Symposium Series; American Chemical Society: Washington, DC, 2016.


Northwestern, Minnesota, University of California in San Francisco, and many others. Other institutes such as Scripps and the Center for Disease Control and Prevention also have need for these compounds. V-LABS has always had regular customers in Canada and are working to increase customers in Latin America. As a key US contact point for Dextra, V-LABS provides cost saving advice to glycobiology researchers. We spend much of our time on the telephone consulting with clients over fundamental carbohydrate chemistry and associated reactivity of compounds for cutting-edge carbohydrate investigation and research. Our business also manages foreign currency exchanges, service agreements, and shipping charges for all purchases. We represent Dextra to US- based clients and make it our business to have literature available at the American Chemical Society meetings as well as related organizations such as The Glycobiology Society. Maintaining a product website with algorithms that can handle daily pricing changes and shopping cart convenience (Figure 9) is our top priority. In addition to the on-line interactive catalog, V-LABS, INC., emphasizes Dextra’s custom synthesis service of high cGMP quality as well as ISO 9002 certification.

Figure 8. Carbohydrates and products available in the V-LABS and Dextra catalog listing, www.v-labs.com (accessed Feb 10, 2016).

Figure 9. On-line catalog selection of carbohydrate products from V-LABS, INC. 153 Cheng et al.; Chemistry without Borders: Careers, Research, and Entrepreneurship ACS Symposium Series; American Chemical Society: Washington, DC, 2016.


In our daily business at V-LABS we take orders from our customers through our website listing as they log in with their credit card number on the selected order (Figure 10). We also accept purchase orders through postal mail, e-mail or FAX. We, in turn, send this order as our V-LABS purchase to Dextra in England who then package the compounds with all necessary documents for express shipment to the U.S. Upon arrival in the US, all shipments are subject to US Customs and FDA approval in processing. The complicated paperwork and changing personnel in the US Customs and FDA Offices can be a challenge for independent research chemists.

Figure 10. Sequence of operations for processing a product order at V-LABS.

V-LABS remains on top of changing international market systems to streamline government regulation or clearance obstacles (Figure 11). Once an order is in place with Dextra, the turnaround time is typically one week. Independent researchers can run into delays associated with backlogs, paperwork, and inventory estimates. V-LABS has the experience to streamline this process. Thousands of our samples have been delivered via United Parcel Service and Federal Express. Customer invoices are processed through V-LABS to cover final international banking account payments to Dextra for samples and shipping.

Figure 11. Processing of orders through operational business channels. 154 Cheng et al.; Chemistry without Borders: Careers, Research, and Entrepreneurship ACS Symposium Series; American Chemical Society: Washington, DC, 2016.


Problematic aspects of doing international business on a far-flung global base is that at our end of the transactions V-LABS has very little control over the supply line of products coming from producing companies to the Dextra Laboratories collection. This reflects in the almost speculative nature of the projected delivery dates of compound through which the customer contracts for purchase. Although chancy, more often than not something is worked out and most of the products are eventually delivered. Eventual payment must be made through a two-fold money transaction, first by payment by the customers to V-LABS and then at another pricing schedule of V-LABS to Dextra in the UK. This arrangement also does present banking problems between the two countries involved. In Figure 12 some of the difficulties of doing currency accounting in a global entrepreneur situation are described.

Figure 12. Doing business on a day-to-day basis in international commerce.

The relative profitability of maintaining an international marketing position is sometimes more difficult to predict. Markers that have been beneficial to us are web-site “hits” on a per-month basis and traffic of weekly orders coming in. These are enumerated in Figure 13 as concluding observations.

Figure 13. Indicators of interest in the V-LABS products marketing and volume of sales. 155 Cheng et al.; Chemistry without Borders: Careers, Research, and Entrepreneurship ACS Symposium Series; American Chemical Society: Washington, DC, 2016.

In line with the ideas of Shah (4) we have identified a needed service and marketing approach which makes available these very rare and needed carbohydrate derivatives to the biomedical and biotechnology community. We attempt to make a smooth flow of these products to the clients even with the challenges enumerated above in managing the long-range global distribution. We also wish to ensure sparking new ideas through the prompting of creative concepts that these molecular building blocks may suggest.


Conclusions There are many opportunities for small chemical businesses to fill a niche such as we have followed through the years. The industries need steady supply lines of rare raw materials such as we sell. The global bridging of the needs to the biomedical or pharmaceutical researchers through importation of otherwise unavailable rare chemical compounds is a dedication that we have made over the years. We do appreciate Dr. Diane Grob-Schmidt inviting us to share our very enjoyable years at V-LABS with the readers. We would welcome further discussion with our colleagues and customers via our web site. Our web site with company history, services offered, and compound listings are at www.v-labs.com.

References 1.

2.

3. 4.

Vercellotti, S. V.; Vercellotti, J. R. In Careers, Entrepreneurship, and Diversity: Challenges and Opportunities in the Global Chemistry Enterprise; Cheng, H. N., Shah, S., Wu, M. L., Eds.; ACS Symposium Series 1169; American Chemical Society: Washington, DC, 2014; Chapter 18. Vercellotti, J. R.; Vercellotti, S. V.; Kahn, G.; Eggleston, G. In Sustainability of the Sugar and Sugar−Ethanol Industries; Eggleston, G., Ed.; ACS Symposium Series 1058; American Chemical Society: Washington, DC, 2010; Chapter 12. Vercellotti, J. R.; Clarke, M. A.; Godshall, M. A.; Blanco, R. S.; Patout, W. S., III; Florence, R. A. Zuckerindustrie (Berlin, Ger.) 1998, 123, 736–745. Shah, S. In Careers, Entrepreneurship, and Diversity: Challenges and Opportunities in the Global Chemistry Enterprise; Cheng, H. N., Shah, S., Wu, M. L., Eds.; ACS Symposium Series 1169; American Chemical Society: Washington, DC, 2014; Chapter 14.

156 Cheng et al.; Chemistry without Borders: Careers, Research, and Entrepreneurship ACS Symposium Series; American Chemical Society: Washington, DC, 2016.

The Development of a Global Small Chemical Business with

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