18 May 2012 11:05 [Source: ICB]
With Brussels as active as ever in amending and bringing forward new legislation, the work of the Fecc and its committees is vital in ensuring the distribution sector continues to operate successfully
Monument to the Discoveries: Lisbon is hosting this year's Fecc congress
Copyright: Rex Features
Besides ongoing work with the EU's Reach chemicals policy and its implementation of the Classification, Labelling and Packaging (CLP) regulations, there are new and upcoming legislative initiatives to anticipate and address, notes Fecc director general Uta Jensen-Korte.
"Our committees are very active in supporting Fecc to gather industry views and prepare and develop guidance documents that address various aspects of legislation." This work is ongoing and vital to ensure the smooth business operations of chemical distributors across Europe.
Jensen-Korte points to two recent examples where Fecc has been active on its members' behalf: the establishment earlier this year of EXCiPACT, the international pharmaceutical excipients certification scheme, and input into the EU's review and revision of the EU's Seveso II Directive that addresses safety of major installations producing hazardous chemicals.
EXCiPACT was launched in January 2012 after several years of gestation and establishes a voluntary scheme for third-party certification of the supply chain for pharmaceutical excipients - non-active ingredients used in formulating tablets and pills. It covers manufacturers, suppliers and distributors worldwide, but will focus initially on European and North American markets.
Fecc was represented on the global steering committee for EXCiPACT and took the lead in coordinating communication and marketing issues. Frank Milek of Aug. Hedinger, chairperson of Fecc's Good Trade and Distribution Practice committee, has taken a leading role in the setting up of the European EXCiPACT organization and is also chair of the International Pharmaceutical Excipients Council (IPEC) Europe.
Jensen-Korte notes that the scheme builds on existing ISO international standards and is intended to ensure patient safety through supplier quality.
Certification will reduce costs arising from auditing that will be required under proposed legislation that will call for excipients to be produced under cGMP in the US and cGMP and cGDP in Europe. EXCiPACT will provide a cost efficient method for ensuring that cGMP and cGDP are applied throughout the pharmaceutical supply chain by reducing the audit burden and related costs.
On the Seveso II review, says Jensen-Korte, it was essential Fecc made its point of view known to the European Commission to avoid even more chemical distribution sites falling under the Seveso Directive. In 2011, based on data collected via the online single questionnaire for the Fecc national associations, the number of such sites was 159, an increase from the 2010 figure of 139. Most are in the lower tier of Seveso reporting, with 56 in the higher tier.
Some of Fecc's called-for amendments have found their way into the draft that was discussed in the trialogue between the EU Council, the Presidency and Parliament at the end of May. This resulted in agreement at the first reading stage, but the Seveso III proposals still have to go to the Council and Parliament for approval, which is now expected in June. Adoption would then take place in the second half of 2012, for application of the new rules by 2015.
Says Jensen-Korte: "It was important to avoid the extension of scope of Seveso and also to ensure that public access to information remains proportionate. However, it is still difficult to say what the specific results will be, as information from the trialogue discussion is proving hard to come by."
However, she is still concerned that the adaption to the CLP and its associated hazard classification might bring more installations under Seveso.
Another area in which Fecc has been making representations is the EU Chemical, Biological, Radiological-Nuclear (CBRN) action plan adopted in December 2009 by the EU Council.
CBRN ACTION PLAN
Based on an all-hazard approach, the action plan's overall goal is to reduce the threat and damage from CBRN incidents of accidental, natural and intentional origins, including terrorist acts. The action plan contributes to the implementation of the EU Counter Terrorism Strategy.
Fecc is actively engaged in the CBRN advisory group and chemicals sub-group and has been working with Cefic, the chemical producers association, on CBRN chemical thresholds and the industry position.
"We have been working with the consultants brought in by the European Commission and are now giving them our thoughts. The original list of more than 400 chemicals to be covered by CBRN has now been brought down to a much more sensible list of substances, to cover around 30-40 - but the detail is still under discussion," says Jensen-Korte.
"The whole area of security and precursors is still a very active one, involving also drug and explosive precursors. We hope to get agreement soon in the EU trialogue process on explosive precursors."
Reach of course still remains an area of intense activity for Fecc and its members. The end of May next year is the deadline for the next phase of Reach, extending it to substances produced in or imported into the EU in volumes of over 100 tonnes/year. This will inevitably draw many more producers and distributors into the scope of Reach and Fecc is focused on producing guidelines to ensure members are aware and equipped to meet the deadline.
Jensen-Korte points also to several ongoing issues and activities. One is the extended safety data sheets (eSDS) required under Reach, providing exposure scenarios for products in use; another is the review of Reach being undertaken by the European Commission after the first phase of implantation, which began in 2010.
"Extended data sheets are quite an issue at the moment," explains Jensen-Korte. "There are various formats in use and people are still trying to find their way through these and how they can be used and passed along the supply chain from producers to distributors and customers." Fecc is working with Cefic, fuel-producers body Concawe and the Downstream Users Chemicals Coordination (DUCC) group to develop guidance on how to handle exposure scenarios.
It is also a member of the European Chemicals Agency's (ECHA's) Export Exposure Scenarios Network. This held its first workshop in November last year, involving mainly industry representatives, and a second in February this year, mainly for competent authorities. A further meeting is planned for May 21-22, in which Fecc will participate.
"The network has been set up to solve issues relating to the eSDS and to find a more workable and pragmatic way to work with them. Even with the first phase of Reach in operation, we are still working on the practise of eSDS and exposure scenarios", points out Jensen-Korte. "The network will prove useful through a 'learning by doing' approach but it will still take some time. It is very good that ECHA and the Commission have recognised that cooperation with the industry is needed."
On the Commission's review of Reach this year, Jensen-Korte says Fecc is giving its feedback on matters from the distributor point of view. But it is unlikely, she believes, that the Commission will make any changes at this still-early stage in the regulation's lifetime. "There is still a lot of improvement than can be made through guidance and changes to guidance, rather than to the legislation itself."
Aside from the advocacy and committee efforts on legislative matters, the development of the Fecc Responsible Care program is a second key priority for Fecc and its members. The association launched its own pan-European program in September 2009 and really started to gain traction in 2011. Jensen-Korte views it still as in the implementation phase, but notes that already more than 15 subsidiaries of top distribution companies have joined, especially from the East European countries.
"Everything seems to be working well and we are gaining experience all the time. There is no need at present to make any modifications." She is expecting 2012 to continue the good uptake of the program.
The program includes independent third-party verification through, for example, the SQAS Distributor/ESAD schemes. These have recently been revised and were relaunched in April 2011, with the augmented schemes now covering GMP, Responsible Care and issues related to Reach. Offering such facilities for third-party verification "is really something that can prove our commitment to Responsible Care," says Jensen-Korte. It is also a key part of the industry's development of sustainable practices and business.
Fecc is also active in helping its members deal with trade issues, a growing concern as European distributors are increasingly active outside their home region, either in sourcing materials from Asia or setting up distribution operations in places such as Russia, North Africa, Turkey, the Middle East and Asia. Besides this, Fecc is also working on an analysis East European countries and the distribution market there.
This year's Fecc Congress in Lisbon, Portugal, reflects most of the above topics under the overall banner of "Sustainable and responsible distribution: the formula for success."
The business sessions, says Jensen-Korte, have been carefully designed to present producers', distributors' and customers' views on a range of issues, covering the chemical distribution landscape, doing business in the pharma sector, legislation, sustainability and human resources.
This final session, she explains, will address the issues besetting the sector as it tries to recruit and retain well qualified employees in a very competitive employment market. "Finding the right people with the right expertise and keeping them is a very real issue for the industry. Graduates like to go to big companies with well-known brands and a good image," explains Jensen-Korte.
"The session will offer ideas to overcome present difficulties, and advise on how to use your passion as a driver for excellence and translate this to the rest of your organization."
NORTH/SOUTH DIVIDE CAUSES CONCERN FOR EUROPE'S DISTRIBUTORS
The European distribution market is showing mixed development this year, says Fecc president Edgar Nordmann, chairman of German distributor Nordmann, Rassmann. "The position is certainly not negative, and the Nordic region and Germany are still quite positive", he notes.
But the continuing economic slowdown in Europe is evidently having a drag on the market, especially in the harder hit southern EU member states. "This is a concern for us on the consumer side", says Nordmann. "It's not a problem further north, but in the South unemployment is an issue in Spain, Italy and France, and so we are beginning to miss these people as consumers."
Thus, the record performance of the last two years does not look likely to be maintained. "From Fecc's point of view, 2012 will not be as good as 2010 or 2011, but 2013 will be better - the economy will begin to grow again and we are quite optimistic on the outlook." In 2011, major players saw growth driven both by volume and pricing, he notes.
However, there are still positive trends in the market to advantage distributors, explains Nordmann. In difficult times, principals are still trying to save costs and use distributors wherever they can.
"This will become more apparent as time goes on and distribution companies will have to be prepared to offer more services and to invest in a range of hardware to be able to offer filling, bagging/debagging, basic compounding and formulation services and the like."
Also, many small and medium-sized distributors are undertaking intensive product development work on products that will be commercialized and enter the market in 12-24 months.
Fortunately, many distribution players have the resources to invest in facilities and development after several financially healthy years. Others are acquiring the necessary expertise and market position through merger and acquisition activity. The larger distributors have been active in this respect for many years, but, says Nordmann, there is a growing wave of activity by the mid-sized companies.
"This is not so well publicized, but mid-sized companies are buying up smaller ones, which often prefer not to sell-out to the bigger players. In many cases, he adds, these purchases are cross-border, so that the medium-size concerns are expanding their network into areas where they previously have not been active, for instance in Eastern Europe.
The market is thus seeing a continuing consolidation, says Fecc treasurer Peter Skou, managing director of Denmark's R2 Group, "not just at the large company level but among the smaller ones as well."
Looking at the distribution market by sector, Nordmann notes that specialties and especially life sciences are doing well - including pharma, food and feed, and cosmetics. In the past, these specialty areas have been handled by a lot of large and medium suppliers. Now the big players are branching out into this area.
There is a trend to higher quality products and better performance in these areas, and distributors are having to compete on world markets. The consumer is appreciative of this higher quality and is largely happy to pay for it. Also, a vast middle class is arising in Southeast Asia and China, creating much bigger markets for these types of product. "They don't want 'cheap, cheap'," says Nordmann, "they want quality, which is giving Europeans the chance to export to China."
While business may be doing relatively well, a number of issues need to be addressed. Nordmann believes there may well be some increased regulatory activity on transportation in Europe, on safety rules and regulations as well as carbon emissions. "How much we can influence, this we need to see, but we need to get closer to the process than in the past."
The distribution sector will need to see how it can improve its use of logistics and also advise its customers on how to purchase better - buying less frequently and in bigger consignments. The goal will be to reduce transport overall and also increase safety, adds Skou.
Also high on the agenda are third-party verification of performance under Responsible Care - which will be a priority globally through ICCTA this year as the US assumes the chair again, and the move to sustainability and increased demand for and use of renewable materials along the supply chain.
"Sustainability will get higher on the political agenda and feature more in corporate governance," notes Nordmann. While the bigger companies have the wherewithal to embrace the concept and move ahead with implantation, so too are many small and medium-sized distributors, says Skou.
"They are still very aware of CSR and are looking at it - it does not necessarily have to be a cost and can be used to good advantage and even profit. The trend is moving and CSR is coming as a necessity."
Nordmann points out that the move to CSR and sustainability can be done non-competitively and thus give scope for collaboration and partnerships among large and small players alike.
The Fecc, he points out, can facilitate and encourage this and give assistance among its members. In this respect, Responsible Care is already playing a big part as a component in the drive to sustainability.
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