SAFC Sets Forth an Ambitious Growth Strategy

SAFC is delivering on its plan for double-digit annual growth by increasing its businesses through organic growth and targeted technology acquisitions.
Mar 02, 2008
Volume 32, Issue 3

SAFC (St. Louis, MO), part of the life sciences chemicals giant Sigma-Aldrich (St. Louis, MO), is moving ahead on a plan to deliver double-digit growth in 2008 and beyond. After achieving revenue gains of more than 10% in 2007, SAFC president Frank Wicks recently outlined the company's strategy. This strategy involves growing organically and by targeted technology acquisitions.

"We hope to achieve sales of greater than $600 million in 2008," says Wicks. "We feel this goal is possible as we grow the business internally and through acquisitions that build our technological capabilities and in turn, broaden our talent pool."

SAFC had sales of roughly $573 million in 2007. The company consists of four major businesses. SAFC Supply Solutions is the largest part of SAFC, accounting for 41% of revenues. It provides customized raw materials and related support services such as regulatory compliance to the pharmaceutical, diagnostics, and flavor and fragrances industries. SAFC Biosciences is the next largest piece of SAFC, accounting for 27% of sales. This business provides raw materials for cell-culture manufacturing, including media, sera and supplements, and custom-media development and manufacturing services. SAFC Pharma, representing 20% of SAFC's revenues, provides contract small-molecule and biologics manufacturing. And SAFC Hitech, which accounts for 12% of revenues, offers specialized chemistry services to the electronics industry.

Wicks is optimistic that SAFC can continue to deliver double-digit growth, a goal that it has achieved since 2005. "Our diversification strategy has worked," he says. "Overall consistency between segments and regions suggest that the business remains strong. For 2008, we expect to deliver on our goal of 10% annual growth," says Wicks. "We will seek niche technology opportunities in pharma to complement our current performance profile. We will also strengthen our existing skills as the responsive experts to the biopharmaceutical industry and will continue our focus and innovation with supply solutions."

Wicks also plans to continue diversifying the business with the goal of each business segment (SAFC Pharma, SAFC Biosciences, SAFC Supply Solutions, and SAFC Hitech) contributing roughly 25% of SAFC overall revenues by 2011. This strategy involves sustaining recent growth patterns for SAFC Supply Solutions and raising revenue expectations for SAFC Pharma and SAFC Biosciences, two business segments that support the pharmaceutical and biopharmaceutical industries. An analysis of SAFC Pharma's investments in 2007 illustrates the path on how this segment plans to attain that growth.

SAFC Pharma expands in China

As part of its strategy for growth, SAFC is planning its first greenfield investment in China. The company is investing $25 million in Wuxi for acquiring 20 acres of land and building a large-scale, non-CGMP (current good manufacturing practices) 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. It is expected to be completed by 2009. Future development phases at the site will support SAFC's parent company, Sigma Aldrich's research chemicals business by further extending analytical, packaging, and warehousing facilities. The ground-breaking for the Wuxi site is scheduled for this month.

SAFC's investment in China was one of several major expansions announced or completed by SAFC Pharma last year. "We invested in both our core businesses—commercial-scale active pharmaceutical ingredients (APIs) and process-development capabilities as well as broadening our technology base with niche technology investments," says David Feldker, vice-president of US sales and operations of SAFC Pharma.

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