Fine chemicals industry needs to reinvent itself - Lonza CEO

18 March 2010 23:00  [Source: ICIS news]

NEW YORK (ICIS news)-- Lonza CEO Stefan Borgas said on Thursday that the future of the fine chemicals industry lies in industry players taking the initiative to reinvent their current business models and take a more collaborative approach to innovation.

“We need to invest in strategic networking, not tactical networking, and a culture of negotiation must be replaced with a culture of collaboration. Let us not just leave things to big pharma; we have more grassroots power than we realize,” said the Swiss fine chemicals firm executive at the annual luncheon in New York held by the Society of Chemical Manufacturers & Affiliates (SOCMA).

At the luncheon, Borgas started by redefining the “fine chemicals” market as the “fine molecules” market, which includes all active substances that are developed and produced for life sciences applications.

“Fine chemicals” has grown outdated “because today, this industry is more than just chemicals”, Borgas explained in reflection of what the industry’s past was and how the industry’s future must now become.

The growth rate of the industry will go from the 15-20% that it has been in the past decade to closer to 3-6% over the next five years, he said.

“If we look at drug approval rates and what’s in the pipeline: 25% of all products fail in efficacy. Mostly they fail in Phase III clinical development because we can’t find ways to kill these projects earlier. Clinical safety concerns account for 12% of product failures and toxicity findings account for 20%,” he added.

“New drug approvals are at an all-time low, and there’s no indication that this will go up significantly. Manufacturing innovation is the one important thing we can deliver in this entire line of value chain,” he said.

Such innovations include sustainably-driven manufacturing, microreactor technology, green chemistry, elimination of solvents, and investigation into use of different reagents that take the environment into consideration, he listed.

In order to survive independently of the pharmaceutical industry’s highs and lows, fine molecule players will need to learn to put aside old ways of doing business and improve the entire value chain instead of just specific elements.

In 2009 the fine molecules market for life sciences as a whole amounted to $100bn (€73m), 80% of which was in chemicals.

Eight of the top 10 pharmaceutical drugs are chemicals, according to Borgas. In 2012, $3 out of $4 from prescription sales, generic and branded, will still be from chemicals.

However, the pharmaceutical pipeline today contains not only 5,000 small molecules but also 3,000 biological molecules, reflecting a shift towards biologics, an area that provides a market opportunity for fine molecule players, Borgas said.

($1 = €0.73)

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