This week, more than 4,000 people are expected in Las Vegas for Informex 2004, the 20th edition of the annual trade show of the Synthetic Organic Chemical Manufacturers Association. SOCMA represents 280 batch manufacturers of fine, specialty, and custom chemicals.
Informex has grown dramatically from its modest beginnings of 42 tabletop exhibits in 1984. Twenty years later, 450 exhibitors, including 206 SOCMA members, will set up shop in almost 250,000 sq ft of space at the Sands Expo Center. Attendees will be able to pursue business opportunities and also to further cement existing business relationships and gather business intelligence through networking roundtable discussions, educational workshops, and the popular exhibitor showcases.
Informex turns 20 at a time when many SOCMA members are hurting badly from the poor business climate. C&EN Senior Correspondent A. Maureen Rouhi talked to Joseph G. Acker, president of SOCMA, about the role of Informex during these tough times and the prospects for custom manufacturing in general. Acker became SOCMA president last April. Previously, he was president and chief executive officer of DanChem Technologies and president of Hickson DanChem Corp., in Danville, Va.
C&EN: How important is Informex for SOCMA?
ACKER: Informex is a major event for our members. Its main goal is to provide commercial opportunities for our members, which is one of SOCMA's strategic goals.
The show reflects what's going on in the chemical industry. As the chemical industry has become more global, so has Informex. We expect 30% of attendees to come from outside North America. Overseas participation is increasing by about 5% every year. We expect that trend to continue.
Informex has not changed its focus on contract manufacturing, although the industry segments have changed. The emphasis these days is in biotechnology. A few years ago, it was chiral chemistry. Informex keeps up-to-date. That's why it continues to be well received, even in a tough economy.
C&EN: Will this year's show be different because it is Informex's 20th anniversary?
ACKER: Being in Las Vegas is in itself a change. The venue is the Sands Expo Center, which is part of the Venetian Hotel, where most attendees will be staying. Everything will be under one roof; it will be very convenient to network. We are predicting a 5 to 10% increase in attendance. Las Vegas in general, for associations that have trade shows and meetings there, seems to attract additional people.
Furthermore, David A. Kessler, the former commissioner of the Food & Drug Administration, and K. Barry Sharpless, one of the winners of the Nobel Prize in Chemistry in 2001, will be speaking.
Another factor is that when times are really tough, trade shows become even more important for companies to attend. You would think it would be the opposite, that people will try to cut back on expenses. But the truth is, you cannot miss any opportunity to get new business. You can't afford not to be here, because everybody is looking for the slightest competitive edge.
C&EN: The other strategic goals of SOCMA are to influence passage of rational laws and to enhance public confidence in the chemical industry. What role does Informex play in the achievement of these goals?
ACKER: Informex helps indirectly. SOCMA's legislative group will be hosting a small-business roundtable to discuss how SOCMA can work with them and the government to improve their business. We will also have workshops on Responsible Care and current Good Manufacturing Practices (cGMP) manufacturing.
C&EN: In the 20 years that Informex has been taking place, what have been the major changes in the custom chemicals market?
ACKER: Over the past 20 years, the market has grown, but in the past three or four years, it has actually shrunk. One big change has been the decline in agrochemicals. A lot of custom manufacturers in that area have fallen on tough times.
Another is the movement of manufacturing overseas. A lot of small businesses in the U.S., not just contract manufacturers, have evolved to service manufacturing facilities. When manufacturing leaves, these other companies do not have the resources to follow.
The worst scenario would be if R&D functions move offshore. If R&D goes, innovation goes. If we don't have innovation here in the U.S., a lot of industries that support innovation will leave. That will be a real problem, not only for contract manufacturers but also for the standard of living that we are used to having in the U.S.
C&EN: Moving forward, how will the custom chemicals sector continue to evolve?
ACKER: As in the past, technology will drive this sector. As technologies evolve, companies will come up with new products. My sense is that polymers and other specialty areas will receive a lot of focus.
Custom manufacturers have a major role in the early stage of commercializing new products. Companies with new products don't have the desire to invest a lot of capital in uncertain markets. The alternative is to find someone to make the product during development and then determine what the market is like. As the market evolves, the company can then decide whether to invest in its own plant or to continue with the contract manufacturer.
C&EN: How are SOCMA members coping with the tough times?
ACKER: They are coping by focusing much more on the niches that they are in. Niches could be in technology (for example, high-pressure chemical reactions) or in industry segments (for example, adhesives or textile chemicals). Companies are concentrating on their core competencies.
C&EN: What needs to happen to improve the prospects of SOCMA members?
ACKER: There needs to be a sense that the business of chemistry is improving. The general economy is improving, but you don't get that sense from folks in the chemical industry. I still hear people saying business is good for one month and then down for the next month. That kind of uncertainty restrains optimism, which means people will not be spending capital, will not be investing, and will not be as quick to commercialize new products.
C&EN: As part of SOCMA's initiative to help members plan their businesses better, you asked representatives of the pharmaceutical industry during a SOCMA meeting last fall what they need from the custom manufacturing community in the next three years. What did they say?
ACKER: They expressed a lot of interest in biotechnology. That could mean a lot of things, from fermentation-based production to downstream processing of fermentation products.
Also of interest was generic drugs. Pharmaceutical firms are thinking of expanding their generic drugs businesses and are looking for help with manufacturing.
SOCMA members also want to be more involved in generics because that's what they are hearing from customers. Generics are a huge opportunity for small custom companies. Some develop active pharmaceutical ingredients or intermediates for which they have an edge in technology and then manufacture a multicustomer product. Others are invited by generic drug houses to supply an active pharmaceutical ingredient or an intermediate on an exclusive basis.
C&EN: How will SOCMA members do in 2004?
ACKER: It will be a little better than 2003. Optimism has been beaten out of people, and it will take sustained improvement in the business climate before companies will be more inclined to invest in R&D and emerging products. The economy really has to improve first to renew optimism.