IHS Chemical Week


Fine Chemicals: SAFC Targets $1 Billion Sales, Boosts its Offering (with video)

7:44 AM MDT | September 22, 2011 | By ALEX SCOTT

SAFC, the custom fine chemical manufacturing arm of Sigma-Aldrich Corp., is targeting sales from organic growth of $1 billion/year in the next four years. SAFC generated sales in 2010 of $647 million and expects to increase that by 9% in full-year 2011. The company undertakes a range of fine chemicals services including contract manufacturing for the pharmaceuticals and electronics sectors. 

SAFC grew sales 13% in the first half of 2011. Strongest growth has been in the company’s fine chemical activities in biopharmaceuticals and electronics. “Overall, it’s going to be a good year again for SAFC,” says Gilles Cottier, president of SAFC. The company has established capabilities in niche areas including the production of high potency active pharmaceuticals (HPAPI) and conjugation of a variety of molecules. SAFC is “playing in the right areas and is not dependent on one customer or aspect of the business.” Providing technology solutions for small and large molecule pharmaceutical manufacture means that “it makes sense for our customers to work with us rather than our competitors,” Cottier says. 

SAFC: Expanded media capacity at Irvine, U.K.

Additionally, the company plans to “become more aggressive in its acquisition strategy,” Cottier says. Already this year the company has made three acquisitions, including one which plays to SAFC’s market activities in Brazil. Details about how much the company would spend on acquisitions in the next few years were not disclosed.

SAFC’s strategy is based on being selective about the areas of the fine chemicals sector that it plays in, being distinctive by having a global presence and an intimacy with customers, and driving revenue growth by motivating staff, Cottier says.  

To underpin organic growth the company in the past year has invested about $100 million in new manufacturing capacity around the world. Of that $100 million, the company has spent a total of $20 million on dry powder and liquid media manufacturing capacity at Irvine, U.K., St. Louis, MO[], and Lenexa, []. The media are used in a range of applications by the biopharma sector to produce biologic drugs. Other recent capacity developments by SAFC include fermentation capacity for making biopharmaceuticals at Jerusalem. The facility is primarily dedicated to custom manufacturing projects but in future also will provide catalog products. 

The company also by the first quarter of 2012 is set to introduce new capacity in Taiwan for light emitting diode (LED) precursors for the silicon semiconductor market. “We have been in this space since 2007 and we are looking to go further,” Cottier says.

On the technology front, within the past year or so the company has started offering its customers its Zinc Finger Nuclease (ZFN) technology for optimizing cell lines used in the manufacture of biopharmaceuticals. ZFN enables the easy deletion of unwanted genes in a cell line which can then lead to enhanced productivity and therapeutic protein quality, “It’s very early days [for manufacture using ZFN], but this is an incredible game changing technology,” says Archie Cullen, v.p./sales at SAFC.

The company in the past year also has enhanced distribution and packaging activities at Wuxi, China; Bangalore, India; and Rio de Janeiro, Brazil. The company’s activities at Wuxi, Banngalore and Rio are also about sourcing intermediate chemicals, Cottier says.

Key market trends that SAFC expects in the coming years include a steady shift toward more specialized drugs; faster growth of bio-based drugs; and faster growth in the emerging markets of Brazil, China and India. The company also expects vendor consolidation and the issues and challenges within the global pharmaceutical supply to continue.

There is a need for a greater focus on product quality because regulations around the world have never been so tough. The market needs more quality, while it is experience a supply chain with increasing complexity and uncertainty. The company’s customers in Asia are willing to pay a premium for quality products of perhaps 20-40% more than local suppliers, Cottier says.

SAFC is closely involved in Rx360 the pharma industry organization focused on sharing best practices to ensure supply chain quality in the pharma sector, which emerged following the death of more than 80 individuals following the contamination of the blood thinning drug Heparin. SAFC has audited its activities relating to product quality and now offers its customers a range of enhanced quality standards under its Enhanced Quality Program. “We’ve got some real strengths [when it comes to product quality systems] that we can leverage,” says Ed Roullard, v.p./marketing and supply chain for SAFC.

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