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SAFC New President Outlines Growth Strategies
SAFC (St. Louis, MO), part of the life-sciences chemicals giant Sigma-Aldrich (St. Louis, MO), is moving ahead on a plan to deliver growth and market share in 2009 and beyond. Gilles Cottier, who took over the helm of SAFC in January 2009, hopes to continue the progress made by his predecessor, former SAFC president Frank Wicks, which saw SAFC transform from a $200-million bulk-chemicals provider to one of the top 10 fine-chemicals organizations with sales exceeding $600 million during his recent five-year tenure. Wicks became president of Sigma-Aldrich’s research specialties and research essentials business in January 2009. Cottier had previously held the post of president of research essentials.
SAFC achieved this transformation through organic growth and acquisitions in the biosciences and select technology-based companies to build its position in contract manufacturing for active pharmaceutical ingredients (APIs) and intermediates, customized raw materials in fine chemicals and biosciences, and contract manufacturing for niche biologics areas. The company is organized into four major businesses. SAFC Supply Solutions is the largest part of SAFC and provides customized raw materials and related support services such as regulatory compliance to the pharmaceutical, diagnostics, and flavor and fragrances industries. SAFC Biosciences, the next largest piece of SAFC, provides raw materials for cell-culture manufacturing, including media, sera and supplements, and custom-media development and manufacturing services. SAFC Pharma offers contract small-molecule and biologics manufacturing. And SAFC Hitech offers specialized chemistry services to the electronics industry.
Expanding through acquisitions
SAFC Pharma, the custom-manufacturing arm of SAFC, achieved double-digit growth for the past four years, says Wicks. Although SAFC Pharma increased its large-scale manufacturing capacity, most notably through the 2006 acquisition of Iropharm, a former custom-manufacturing unit of Honeywell (Morristown, NJ) with manufacturing facilities in Arklow, Ireland, SAFC’s real strength has been in building its position in niche technologies.
“We are well-positioned as a technology leader with expansions and acquisitions in emerging complex technologies,” says Cottier. These areas include solid-state chemistry research, viral manufacturing, high-potency APIs, potent and nonpotent bioconjugation, and fermentation.
Key acquisitions for SAFC included: Tetrionics in 2004 to gain a base in high-potency APIs; the contract chemistry-services provider Ultrafine in 2004; Pharmorphix, a firm offering solid-form research services such as polymorph investigation, structure and crystallization characterization, and salt selection, in 2006; and Molecular Medicine Bioservices, a contract biologics manufacturer of viral products, in 2007.
SAFC also enlarged the size and depth of SAFC Biosciences through the $370-million acquisition of CSL’s former JRH Biosciences division in 2005. It also added Proligo, a producer of raw materials for oligonucleotide manufacture, in 2005 to augment the offerings of SAFC Supply Solutions.
Growth through expansions
Following these acquisitions, SAFC expanded its operations in these niche technologies and also geographically in Asia. In January 2009, it began operations at a 7000-ft2 laboratory complex in Carlsbad, California, next to its viral production substance facility, which the company gained in its acquisition of Molecular Medicine Bioservices. Commissioning of the new laboratories at Carlsbad follows SAFC’s 2008 announcement of a $12-million expansion at the site to construct two fully segregated manufacturing suites, which are scheduled to be operational by the end of 2009.
SAFC also invested $16 million in the expansion of a large-scale protein extraction and purification facility in St Louis that was completed in 2007.
High-potency APIs. SAFC Pharma also is investing $30 million to expand its Madison, Wisconsin, facility, by increasing its capacity to produce commercial-scale high-potency APIs. The investment includes the purchase of 15 acres of green space in Verona, Wisconsin, near its existing high-potency API production site, where the company will build a new 45,000-ft 2 manufacturing facility that will house commercial-scale reactors capable of producing batch sizes up to 4000 L. Construction of the new plant is expected to be completed by year-end 2009. The new facility’s design will adhere to Safebridge Category IV standards. The facility will include development laboratories, a 150-L mini processing plant, and two large-scale CGMP (current good manufacturing practices) manufacturing suites with reactors up to 4000 L.
SAFC has invested more than $75 million in developing its high-potency manufacturing capabilities in recent years. These investments include a $4.5-million project to add a CGMP pilot-plant and kilo-laboratory capacity at Madison, completed in early 2008; a $29-million investment to expand bacterial and fungal fermentation-derived high-potency capacity at its facility in Jerusalem, scheduled for completion in 2009; and the $30-million investment to build the commercial-scale high-potency API facility at Madison and a high-potency bioconjugation suite in St. Louis that was validated in early 2008.
Large-scale API capacity. In September 2008, SAFC began operations at a new reactor at its Arklow site, which increased its large-scale API capacity by 15%. The $4-million project involved the installation and start-up of a 6000-L “Hastalloy” reactor for large-scale API manufacturing, increasing the total capacity at the site to 96,000 L. The investment complements two additional expansion projects at the Arklow site: the building of a $2.25-million, 15-kg pilot-scale filter dryer designed to double the facility’s capacity for small-scale (10–150 kg) manufacturing of APIs, which is scheduled to be commissioned in the third-quarter of 2009; and a $1.8-million expansion of the site’s CGMP warehouse capacity, also scheduled for completion in 2009. These investments follow a $10-million expansion of commercial-scale API manufacturing and storage capacity at its Arklow, and Buchs, Switzerland, facilities, respectively, in 2007.
Solid-state chemistry. In 2008, SAFC completed the second phase of a $600,000-expansion of its solid-state services research facility in Cambridge, England, by adding 7500 ft2 of laboratory capacity.
Investment in Asia. As part of its growth strategy, SAFC is proceeding with its first greenfield manufacturing project in China. The company is investing $25 million in Wuxi for building a large-scale, non-CGMP multipurpose plant to produce raw materials, intermediates, and final products to support SAFC Pharma, SAFC Supply Solutions, and SAFC Hitech. The Wuxi site will include a manufacturing plant and analytical, packaging, and warehousing facilities. The first construction phase is expected to be completed by 2010. Future development phases at the site will support SAFC's parent company, Sigma Aldrich's research chemicals business by further expanding analytical, packaging, and warehousing facilities.
In 2006, SAFC invested $12 million and opened a 139,000-ft2 medicinal-chemistry facility in Bangalore, India. The facility has more than 60,000 ft2 of production and research and development laboratory space and includes manufacturing suites for chemical development and production to a 50-L scale and an onsite warehouse.
Cottier says that SAFC’s entry in Asia, specifically China and India, reflects an extension of the company’s overall strategy and is not for merely creating a base for lower-cost production. “We are positioning our Asia footprint as an effective extension of our quality-focused resources not as an access point for low-cost manufacturing,” he says.
Cottier underlines that these investments support the company’s future focus that emphasizes technology, regulatory support, growth in Asia Pacific, customization, and supporting the global pharmaceutical supply chain. “We will continue to use emerging technologies to help customers explore opportunities across biologics and traditional chemistry,” says Cottier. “We also will continue to build upon our traditions of specialization and customization,” he adds, and “support customers through changing regulatory compliance requirements and in removing complexities associated with securing a supply chain.”
Cottier emphasizes to drive top-line growth, SAFC will continue supply-chain and quality improvements at SAFC Supply Solutions, expand its offerings and capabilities in high-potency API manufacturing, acquire additional Phase II and Phase III projects for its biosciences business, and selectively add resources in the CAPLA (Canada, Asia-Pacific, Latin-America) region.