Rethinking The One-stop Shop | January 14, 2008 Issue - Vol. 86 Issue 2 | Chemical & Engineering News
Volume 86 Issue 2 | pp. 33-34
Issue Date: January 14, 2008

Rethinking The One-stop Shop

Aptuit is assembling the parts of what it hopes will be a full-service partner for drug companies
Department: Business
Speedy Science
Aptuit believes it can help customers get their molecules to the clinic faster.
Credit: Aptuit
Speedy Science
Aptuit believes it can help customers get their molecules to the clinic faster.
Credit: Aptuit

IN THE PHARMACEUTICAL outsourcing world, the "one-stop shop" has not always been successful. Contract research and manufacturing firms that tried it were often stymied by the task of integrating all the operations needed to service the entire drug development and commercialization chain. Though many companies heralded the strategy in the late 1990s, most have since abandoned it; in fact, some have even abandoned the outsourcing business altogether.

Greenwich, Conn.-based Aptuit believes it can do things differently. Formed just three years ago by three former ChiRex executives, the pharmaceutical development and manufacturing firm acquired by Rhodia in 2000, the company believes it can successfully pull together a suite of services to support customers' drug development and commercialization.

A one-stop shop can offer unmatched convenience, particularly for small biotechnology companies with limited resources, says Stefan Loren, vice president of the hedge fund Perceptive Life Sciences. "In some cases, customers don't like the 'all things to all people' model, but in many cases, it is just a lot less complex to deal with one company," he notes.

Yet many contract research organizations (CROs) have since switched gears and started discovering drugs on their own, Loren notes. ArQule, Pharmacopeia, and, more recently, Albany Molecular Research have all followed that path. Rhodia eventually became disenchanted with ChiRex and sold it to an Indian firm for a fraction of its original price of more than $500 million.

The shifts in strategy have generally stemmed from not being able to consistently generate cash to keep shareholders happy. The challenge for CROs has always been to become diversified enough to sustain the loss of a big contract.

Aptuit appears to be taking the shortcomings of earlier CROs to heart. According to Michael A. Griffith, its founder and chief executive officer, the company's strategy is to help pharmaceutical companies both small and large focus on what they are good at.

For small, entrepreneurial firms, Griffith says, Aptuit provides the industrial strengths needed to commercialize their products. A virtual biotech can access traditional preclinical technologies, such as toxicology and pharmacology screening, as well as informatics and clinical trial services. But it can also tap into Aptuit's consulting business to develop a marketing and regulatory strategy for the fastest path to market for its drug.

For big pharma, which has commercialization down cold, Aptuit seeks to inject the organization with some of the innovative spirit that thrives at biotech firms. Meeting the needs of both pharmaceutical worlds has, for Aptuit, meant working toward a business that spans the entire suite of services from drug discovery support to manufacturing and formulating the active pharmaceutical ingredient (API). It has also meant trying to create a business that can perform that entire range of functions globally.

TO THAT END, Aptuit has been on a buying spree, assembling first the clinical development and informatics components of its business and, in the past year, developing a pharmaceutical chemical manufacturing infrastructure.

Over the past 18 months, Aptuit acquired EaglePicher Pharmaceutical Services, which included API manufacturing sites in Lenexa, Kan., and Harrisonville, Mo.; the solid-state chemistry technology firm SSCI; and the chemical and pharmaceutical development business of Oxford, England-based Evotec. Today, the company has annual sales of about $400 million, Griffith says.

Last year, Aptuit followed a growing trend in the pharmaceutical chemicals industry by establishing a manufacturing base in Asia. The phased acquisition of Hyderabad, India-based Laurus Labs gives the company an R&D center there and a recently opened API manufacturing facility in Visakhapatnam, on India's east coast. Aptuit is investing $100 million over the next four years in the Indian operation.



    December: Global Pharmaceutical Development founded by former ChiRex executives Michael Griffith, Frank Wright, and Jon Tropsa


    January: Initial funding from Welsh, Carson, Anderson & Stowe

July: GPD becomes Aptuit

September: Almedica acquired

October: Quintiles EDP acquired


    March: InfoPro acquired

April: $750 million in private equity secured

May: Pharma Consulting acquired


    February: $100 million internal investment; EaglePicher and SSCI acquired

June: Laurus joint venture announced

September: Evotec's chemical and pharmaceutical development business acquired

In addition to technology and manufacturing capabilities, each acquired company brought customers that Aptuit hopes will become clients for its other services. The EaglePicher and SSCI purchases were particularly critical in broadening its exposure to new customers, Griffith says. Today, the company has about 750 clients, he notes, the majority of which are biotech companies.

With so many moving parts coming together so quickly, Aptuit's success or failure will come down to integration, Loren says. The company's managers did this with ChiRex in the 1990s, but it was a simpler firm focused on chemistry. Today they must bring together multiple chemistry, biology, clinical, and information technology (IT) pieces without losing the efficiency and talent of any one part.

On that front, Griffith says his team is making a conscious effort to impart Aptuit's overall systems, infrastructure, and quality philosophy to each acquisition. It also intends to tap the perspective of the leaders of the acquired firms. For example, when SSCI was purchased, "we took seven of their top 10 people and promoted them within Aptuit," Griffith says.

Though some of Aptuit's moves are reminiscent of strategies employed by earlier CROs, Loren says the company is also trying new approaches. It has a diverse client list and is offering some unique services. "They're going places where contract manufacturers never dared to tread, such as consulting and IT," Loren points out. "It's a bit of a departure from past models in that they're really trying to cast a broad net."

Moreover, its global infrastructure taps into a rapidly growing potential customer base; for the first time, there are more biotech firms outside the U.S. than inside, Loren notes.

Aptuit enjoys one other critical advantage as it executes its strategy: access to a deep well of private funding. Between an initial influx of funds in 2005 that kick-started the business and a big private investment one year later, Aptuit has $750 million in cash to execute its lofty growth strategy without needing an initial public offering of stock.

"I'm not sure I'd ever want to be public again," Griffith says, referring to the pressure of running ChiRex. Though he admits that public money is cheaper than private capital, he also believes there is a major benefit to operating without the distraction of shareholder expectations.

YET THE REALITY is that private investors will always want to cash out at some point. "I expect the liquidity end game for this company will likely be a sale," Loren says.

In the meantime, Aptuit is trying several unique strategies to attract new customers and introduce older ones to other parts of its business. One tack has been to approach venture capital funds that have a portfolio of small biotech companies, some of which may already be working with Aptuit, and establish a relationship across a larger spectrum of their firms.

"We haven't offered them a discount or a package," Griffith emphasizes. "This isn't one-stop shopping like Wal-Mart where you get a low price." Instead, Aptuit is trying to appeal to the venture capitalist's need for a trusted partner that has a sense of urgency about bringing drugs to market. "We're giving them a global partner with a single quality system that will allow them to move quickly to the clinic," he adds.

Another recent initiative is Aptuit INDigo, a program for big pharma clients that taps the solid-state chemistry technologies captured in the SSCI acquisition. The idea is to breathe new life into compounds that are known to be active but have proven too amorphous or insoluble to put into the clinic. Griffith believes Aptuit can solve formulation problems and get molecules ready for an investigational new drug (IND) application in less than six months.

For the program to work, the big pharma customer needs to commit to breaking out of its usual ways of operating. "If they work with us in a traditional large-pharma industrial kind of way, we won't take them," Griffith says. The drug company has to agree to put forward a dedicated team—usually consisting of a formulator, an API person, a chemistry manufacturing controls expert, a toxicologist, an analytical chemist, and a project manager—to work together with Aptuit to solve the problem.

Aptuit ran a pilot program of its own to prove its mettle and was able to get a nonpatented molecule IND-ready in just over six months. Griffith says the company learned a lot in the trial project and is confident it can become even more efficient with its partners.

Looking ahead, Aptuit shows no signs of slowing down. A few gaps in the discovery-to-clinic chain still need to be filled, Griffith says. Aptuit wants to offer discovery to proof-of-concept services in every geography but lacks them in North America and Asia. It is as yet unable to offer certain services to customers with products in Phase I and II clinical trials.

The company is also lacking biological capabilities. "We need to be able to handle large molecules evenly with small molecules," Griffith says. He claims to have wanted to acquire a biologics facility since his ChiRex days but says he has yet to find the right combination of manufacturing and process development capabilities.

To fill these gaps, Aptuit plans to spend $150 million over the next 18 months—a figure that does not include what it has already committed in India. "We're not thinking small," Griffith says. "We've got the cash and are expecting to grow."

Chemical & Engineering News
ISSN 0009-2347
Copyright © American Chemical Society

Leave A Comment

*Required to comment