BUSINESS
UPSWING AHEAD An emerging biotech bonanza riveted contract manufacturers at INFORMEX RICK MULLIN, C&EN NORTHEAST NEWS BUREAU
THE INFORMEX custom manufac| turing trade show in San Francisco ^ last month was abuzz about Pfizer's Ώ recently announced reorganization i plans, but not for the reason one ο might think. Although contract ser vice firms were heartened by Pfizer's plan to close manufacturing sites in the U.S. and Ireland, what seemed more exciting was the bellwether drug company's announcement that, every year beginning in 2010, it in tends to commercialize two products obtained from outside the company. In an industry that tends to nur ture latent trends that suddenly emerge to exert a real force on the market—the competitive threat from India and China being an obvious example—Pfizer's stance is tacit ac knowledgment that the new front of activ ity is now with emerging pharmaceutical andbiopharmaceutical companies that license product candidates to big drugmakers. Informex attendees agreed that small, innovative drug discovery companies that have traditionally fallen short on funding and viable drug candidates have seen their
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fortunes reverse and are now in the market for contract chemistry services. Contract manufacturers used to have little interest in pursuing relationships with emerging companies, instead focusing all MORE ONLINE
their attention on large-scale projects with bigpharma, says James Bruno, director of the consulting firm Chemical & Pharmaceu tical Solutions. But between the breadth of small molecules in the biotech pipeline and the challenges faced by bigpharma, contract manufacturers have changed their tune. "They are now starting to realize that work ing with Pfizer CONNECTIONS and Merck is not Fine chemicals the best strategy," makers were Bruno says. casting their nets Furthermore, for innovators at small biotech Informex in San Francisco last firms don't have month. the money, the manpower, or the experience to install their own Food & Drug Admin istration-approved manufacturing capacity, a scenario that translates into long-term opportunities for con tract manufacturing organizations. Statistics on venture capital invest ment and licensing deals in the bio tech sector highlight the upswing in opportunity for contract manufactur ers. According to biotechnology in dustry analyst Burrill & Co., U.S. ven ture capital investment in the sector rose from $3.5 billion in 2005 to $4.2 billion last year. The value of U.S. partnerships between drug companies and biotech firms rose from $17.2 billion in 2005 to $19.7 billion last
Visit C&EN Online at www.cen-online.org to learn about grow ing competition in the world of custom chemical trade shows.
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MARCH 5, 2007
year after a 55% increase from 2004 to 2005. This cash inflow has already translated into increased sales for custom manufac turers. "There is a tremendous amount of activity from the emerging companies/' says Steven M. Kiosk, executive vice presi dent of Cambrex' pharmaceutical products and services division. "They are better fi nanced, and some of them are doing licens ing deals with midsized and large-sized pharma whose pipelines are perhaps a little less robust than they had been."
MONEY MAGNET Biotech industry is increasingly attrac tive to venture capital financiers $ Billions
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AFTER A STRING of divestitures, Cam brex is now focused on the development and manufacturing of small-molecule phar maceutical chemicals for both innovator and generic drug companies. Kiosk says his division, which works mostly with innova tors, grew 50% last year, and he expects double-digit growth again in 2007. "A lot of it in the U.S. is driven by the emerging guys," he says. David Ager, principal scientist with DSM, agrees that the emerging companies now constitute a growth market for con tract firms that have traditionally focused
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NOTE: For U.S. industry. SOURCE: Burrill & Co.
on major drug companies. "The smaller, venture-capital-funded companies are re ally taking off," Ager says. "They need a lot of help to advance a compound. And it's not so much a matter of chemistry." The rise of the biotech sector is prompt ing fine chemicals suppliers to shift to more comprehensive services such as drug formulation, regulatory filing, and other steps needed to win FDA approval. But the chemistry also needs to fit, Ager adds.
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Biotechnology is the real source of in novation in the drug industry, says Xavier Jeanjean, commercial director for pharma ceuticals and cosmetics at French contract manufacturer Isochem. But the biotech companies need a lot of help. "They have none of the chemists, none of the tools, and none of the regulatory experience for ac tive pharmaceutical ingredients. They are coming to us for a full package of services," he says. Ultimately, he says, biotech com panies are looking for project management. "We have a huge track record with FDA. We are not delivering a commodity service." Jeanjean says Isochem's traditional focus on high-value, difficult-to-handle chemis try positions it well for the biotech market. "It's always been very risky," he acknowl edges. "But now we can see which compa nies are the good ones. And at the end of the day, it comes down to human chemistry. You have to be able to trust people." While SNPE, Isochem's parent com pany, said last year that it is studying the option of divesting the fine chemicals unit, Jeanjean claims such an action is not likely at this time. He notes that the business
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exceeded its targets in 2006 and has just finished a $4 million pilot-scale plant in Vert-le-Petit, France. The company also decentralized R&D last year. With the changes, Jeanjean says, the fo cus on small innovators will grow. "We see that big pharma is more interested in India and China and in insourcing," he says. Over at International Specialty Prod ucts, small innovators are also at center stage. The company is now better geared for business with biotechs thanks to a kilo lab in operation since 2005 in Columbus, Ohio, reports John E. Sim, general manager
of fine chemicals. The company, which spe cializes in low-temperature reactions and boronic acid chemistry, is experiencing an increase in requests for production of phar maceutical chemicals for Phase I clinical trials, according to Sim. "There is definitely a shift to biotech business, especially in can cer drugs," he says. According to Sim, this new business is increasing the need for risk management skills. "The real talent necessary to suc ceed is the ability to assess the biotech's technology, personnel, and finances," he says. "As a result, our scientists are more
TECHNOLOGY NEWS
Companies At Informex Show What They've G
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[email protected] 300 ketoreductases for converting carThe news at the recent Informex trade bonyls to chiral alcohols. show in San Francisco included technol BASF, meanwhile, promoted three ogy advances from custom chemical proprietary epoxide hydrolases for mak manufacturers. New bio- and chemoing quaternary stereocenters and six catalysts, as well as new organometallic new enoate reductases for selective and fluorinated reagents, were develop asymmetric reductions that it uses in ments that stood out. custom manufacturing. Both enzyme Through an alliance with the Dan types offer high enantioselectivity ish industrial enzyme producer Novounder mild conditions, reported John zymes, California-based Biocatalytics Banger, head of new busi has started marketing ness development for BASF NovoCat products. They Pe H 5 Intermediates. include previously unavail able enzymes formulated As further evidence for chemical synthesis of the increasing impor C H 6 5 and packaged for reaction tance of catalysis in chiral screening. The first set synthesis, Dowpharma's contains 16 hydrolytic en science and technology zymes for chiral resolutions. leader, Ian C. Lennon, de C H 6 5 ^ Biocatalytics sells the bioscribed several asymmetric C6H5 catalysts and provides sup hydrogénations for producDOUBLE DEAL port from research through ing metric-ton quantities Phenyl phospholane process development; of chiral products. Dowligands show Novozymes can supply pro pharma makes rhodium high activity duction-scale quantities. and ruthenium catalysts in and selectivity multikilogram amounts for Similarly, Codexis is in asymmetric these processes. making its biocatalysts hydrogénation. New phenyl phospholane ligands deavailable for the first time outside the veloped by the company are the subject company in 96-well arrays called Codex of recent patent filings and scientific panels. Customers pay an access fee papers, Lennon noted. Among these is a and, by screening an array for reactivity, l,2-bis(2,5-diphenylphospholano)methcan evaluate if an enzymatic reaction ane ligand proving useful in enantioseis feasible. Codexis then offers further lective hydrogénations (Tetrahedron optimization and customization around Lett. 2007,48,1831). successful hits.
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Meanwhile, DSM Pharma Chemicals reported developments in biocatalysis and homogeneous catalysis. The company has constructed what it says may
BUSINESS
business adept, and sales staff has become more science adept." At Degussa, meanwhile, emerging pharmaceutical and biotech companies will soon account for a third of the sales of its exclusive synthesis business, according to Rudolf Hanko, who heads the unit. "It was below 10% four years ago," he says. Hanko, however, sees the market segmenting less along the lines of bigpharma versus emerging pharma than along the lines of what he calls strategic versus opportunistic players. "There are companies, large and small, with a strategic policy that be the simplest possible catalyst for asymmetric hydrogénation. It's based on iridium and only one bulky phosphoramidite ligand (Angew. Chem. Int. Ed. 2007,46,1497). To meet growing demand for specialized intermediates and building blocks, Halocarbon has increased production of trifluoroethylamine (TFEA) and is working to do the same for hexafluoroacetone derivatives. The company had been supplying hundreds-of-kilogram quantities of TFEA, explained Technical Director Barry Jones, but it has now developed a new high-volume process to meet a customer request for multiton quantities. Fluorine also can be introduced into molecules with fluorinating agents. DuPont Fluorolntermediates says its new TFEDMA (/v,/v-dimethyl-l,l,2,2tetrafluoroethylamine) is more stable and safer than many reagents and more fluorine-efficient than similar fluoroalkyl amino ones. It is useful for converting alcohols to alkyl fluorides, carboxylic acids to acyl fluorides, and sulfonic acids to sulfonyl fluorides. DuPont offers TFEDMA only on a research basis but will employ it in-house on behalf of larger volume customers. To improve reagent handling and performance in other hazardous chemistries, Germany's Chemetall has joined with Penn Specialty Chemicals to market organometallic reagents, such as Grignard reagents, in 2-methyltetrahydrofuran (MeTHF). According to Penn, the solvent has chemical properties comparable with or better than THF's. Among these are the higher ability to dissolve Grignard reagents, increased reaction yields, and easier product recovery.-ANN THAYER
says, We don't invest in our own assets to produce APIs and intermediates/ " Hanko says. "These customers are the focus of our business. There are also opportunistic customers, who are, of course, welcome customers. At the same time, we have to deal with volatility if we deal with these opportunistic customers." CERTAINLY, those strategic customers that also are biotech firms come with their own brand of volatility: They are candidates to partner with or be acquired by big drug companies, most of which have plenty of their own manufacturing capabilities. Hanko, however, is not overly concerned about the loss of business that such a change of control could bring. Frank Wicks, president of SigmaAldrich's SAFC unit, agrees. "People worry that, once a small company is sold, the big pharma owner will take the manufacturing inside," he says. "We haven't found that it happens like that. The new owner is happy to have us continue working on the project. Most of the big guys are already outsourcing." He says SAFC's business with biotech
companies is growing as projects the company has been working on for years move into clinical trials. Looking across the industry, Wicks sees growing interaction between big drug companies and biotech firms and much money flowing into the sector. The average value of licenses, he says, has nearly quadrupled in the past four years. That increased interaction is influencing the respective roles of smallfirmsand their big pharma partners, Wicks suggests.
