Solvias Tunes Business Model

As recently as April 2002, Solvias Prospects--the house newsletter of Basel-based Solvias--was featuring articles on topics as diverse as quality assurance for the pharmaceutical and foodstuff industries and the use of ecotoxicology in developing relevant environmental data.

Although such technological support is still a big part of the company's revenues, Solvias' developmental focus has shifted to chiral chemistry and catalysis, polymorphism, and bioanalytics.

In fact, says Hansjörg Walther, the firm's chief executive officer, Solvias has wrought itself a new identity since it was formed in 1999 as a spin-off from the Ciba-Geigy operations of drug giant Novartis, formed by the merger of Ciba-Geigy and Sandoz.

"We started out with a portfolio of products and services that we thought would be okay," Walther says. Since then, the company has gained more experience in the international marketplace and has been adapting its capabilities to meeting the needs of the chemical and pharmaceutical industries.

"In the beginning, we started to do everything," Walther concedes. "For example, we had services for the chemical industry, the food industry, government agencies, and similar customers--our emphasis was more on services. Now, we are much more focused on growth in the physical products themselves," an embryonic business in Solvias but one that the company sees as particularly promising.

At its formation, Solvias had about 180 employees and annual revenues of a little more than $27 million. It now has about 210 employees and 2004 revenues of roughly $40 million, a 14% increase over 2003 results.

In January, Solvias signed an agreement with Pfizer's global R&D unit that allows Pfizer to access Solvias' chiral ligand and asymmetric catalysis technology for the process development and manufacture of single-enantiomer drugs.

Also in January, Solvias signed a cooperation agreement in catalysis technology with fellow Swiss firm Rohner to combine know-how in transition-metal catalysis and production of active pharmaceutical ingredients. Solvias will provide its chemocatalytic techniques for the chemical and pharmaceutical markets, drawing on its extensive library of chiral ligands and catalysts. Rohner, which recently became part of Novasep Synthesis, will then use its expertise and equipment for pilot- and large-scale production to scale up and produce optically active molecules for customers.

These agreements follow others last year with BASF and Merck. For Merck, for example, Solvias designed a new ligand for the enantioselective synthesis of ß-amino acids from enamines (C&EN, Sept. 13, 2004, page 28).

NOT SURPRISINGLY, given their common heritage in Basel, Solvias' early customers included Novartis and Syngenta. As Walther notes, though, "We are growing our customer base while retaining the old ones, too." To help it move beyond traditional customers, Solvias has built an international marketing force. It has expanded, for example, into Germany, France, Italy, Scandinavia, and the U.S.On the chemicals side, Solvias has four major areas of interest. Three have worldwide reach: catalysis, polymorphism, and bioanalytics. In contrast, the fourth area, analytical chemistry, tends to be more locally based, about 300 miles from Basel. Quality control, Walther points out, is typically more of a local issue reflecting regional regulations.

Currently, he says, Solvias' revenues from analytical services are more than twice those from its chemical technology in chiral ligands, among others. Walther predicts that the analytical unit will remain "a solid, basic business with a small percentage growth." Showing a stronger growth is the ligands business, part of the chemical business, which he sees eventually reaching parity in revenues with analytics.

Solvias is also starting to build up a specialty business in intellectual property management--a service to smaller customers, such as biotechnology firms, that need patents, for example.

Marc Thommen, product manager for catalysis applications and chiral ligands, says development work for the company is easiest when cutting-edge science is involved. "We can send an abstract to the appropriate person, and if they are interested, they can ask us for a meeting. There are many companies who want the very top science.

"Being a technology company makes a difference," Thommen adds. "We are not producers; our largest vessel is only 50 L--we don't have pots and vessels to fill. Our goal is to get new industrially proven technology used."

Part of the company's development work in ligands for asymmetric catalysis is in Japan, through a collaboration with Umicore, the Belgian metals company that now incorporates the former dmc² subsidiary of Degussa.

"With Umicore's worldwide network, we have a chance to have people in Japan represent us," Walther says. The collaboration, which began in 2002, already has yielded some results: "We have our first projects there, but on a smaller scale. The amount of business is comparable to our business in Scandinavia now, but the potential in Japan is much greater," he adds.

In the highly competitive employment environment of Basel, Walther notes, "we have to have something unique to compete" for employees. He sees as a plus the company's strong research tradition. "There is a tough economic framework," he emphasizes, "but we are still able to establish and maintain an innovative, cooperative, and fulfilling atmosphere. The spirit is still there."

Thommen adds: "This is not routine work--it is up-to-date, cutting edge. So our researchers must stay that way. People come to work for us because of the type of work we are doing and the variety of projects."

"To be on the market with these technologies and bring them to industrial application is a lot of fun," Walther agrees. "It is challenging and demanding, but fun."