Making More In America | June 23, 2008 Issue - Vol. 86 Issue 25 | Chemical & Engineering News
Volume 86 Issue 25 | pp. 19-20
Issue Date: June 23, 2008

Making More In America

Cambridge Major is moving up to commercial-scale production of active pharmaceutical ingredients
Department: Business
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RESOLUTE
Major insists that new capacity is needed to hold on to customers that are advancing drugs through the pipeline.
Credit: Cherish Grohs/Cambridge Major
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RESOLUTE
Major insists that new capacity is needed to hold on to customers that are advancing drugs through the pipeline.
Credit: Cherish Grohs/Cambridge Major

"AND WE THOUGHT this kind of thing was only supposed to be happening in China and India," said Joseph Acker, president of the Synthetic Organic Chemical Manufacturers Association. Acker was speaking earlier this month at the groundbreaking ceremony for a commercial-scale active pharmaceutical ingredient (API) manufacturing facility that Cambridge Major Laboratories (CML) is building in Germantown, Wis.

Acker and others at the podium, which was set up near CML's existing clinical-scale API facility, lauded Michael W. Major, the company's founder and chief executive officer, for his $30 million bet on U.S. API manufacturing. They noted that the investment goes counter to the general trend of siting such projects in lower cost Asian countries.

"Successful entrepreneurs see possibilities others don't," Acker said of Major, pointing to several factors—including the Food & Drug Administration's difficulty in ensuring the quality of imports—that may put Major at the leading edge of a reversal in the off-shoring trend for contract pharmaceutical chemical production. "U.S. firms have always been able to compete on quality," Acker observed.

Wisconsin Gov. James Doyle Jr. spoke of the importance of high-tech industry investment in the state. Doyle noted that Wisconsin's state colleges are notorious for educating skilled scientists and engineers who leave for jobs on the East and West Coasts. "Wisconsin's economy depends on providing jobs to support a high-tech workforce," Doyle said, as Major's son Jake provided a moment of levity by running behind the podium and jumping into his father's arms wearing an "INY" T-shirt.

Both speakers highlighted the defining qualities of the company, started by Major in 1998 when he launched Major Laboratories and a year later merged it with Cambridge Laboratories. He figured Wisconsin could provide a lower cost alternative to the API manufacturing available in states like California and New Jersey. Major speaks of an emerging "Third Coast" that includes other pharmaceutical chemical firms along Lake Michigan, including Cedarburg Pharmaceuticals and Regis Technologies near Chicago.

CML, which still operates its original kilo lab for chemical process development, added a pilot "miniplant" at the Germantown site in 2004. It now operates a current Good Manufacturing Practices (cGMP)-certified API facility there with a total capacity of 4,000 gal using vessels no larger than 500 gal. Last year, the company purchased ChemShop, a small-scale API operation in Weert, the Netherlands, that added production capacity and increased CML's staff to more than 160 employees.

Major got his start by providing contract research, process development, and small-scale API production services, mainly to start-up drug companies or virtual companies with no actual infrastructure of their own. Yet he has long been lured by the prospect of larger scale API manufacturing, even as much of this kind of production was going overseas.

GOLDEN SHOVELS
Major (left), with his son Jake and Wisconsin Gov. Doyle, breaks ground on a $30 million manufacturing expansion.
Credit: Cherish Grohs/Cambridge Major
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GOLDEN SHOVELS
Major (left), with his son Jake and Wisconsin Gov. Doyle, breaks ground on a $30 million manufacturing expansion.
Credit: Cherish Grohs/Cambridge Major

THE NEW PLANT will move CML in this direction. It will add 15,000 gal of chemical synthesis capacity, made up of reactors ranging in size from 300 to 2,000 gal, some capable of hydrogenation and cryogenic reactions, and 40 to 50 new jobs. The building will include a wing for later expansion that could include as many as four 4,000-gal vessels and bring the total cost up to $50 million.

In an interview prior to the ground breaking, Major told C&EN that the new capabilities will not fundamentally change CML's contract research organization business model. "We will remain a research-based organization," he said. "We started with kilo labs, heavily based on research and our ability to solve and resolve problems, and this has never changed."

According to Major, CML has expanded at an average rate of 30% per year since its inception. In 2007, sales grew almost 50%, he said, and now exceed $40 million per year. The current facility is approaching its maximum operating capacity at a time when it needs to accommodate production of later stage clinical drugs and commercial APIs for existing clients. CML expects to complete more than 400 chemical development projects for customers in 2008.

"It is vitally important for us to extend our service offering, as we have numerous projects in Phase III clinical trials," Major said. "Our desire is to retain the technology and customers for the initial several years of commercial manufacturing." He reasons that customers will save time and money by keeping higher volume production with CML, rather than embarking on the arduous and risky process of transferring technology to overseas companies.

The 2,000-gal vessels will also allow CML to pursue business with large drug companies that it had been unable to accommodate before, Major said. "Our approach will be to tap into business with big pharma—bigger drugs targeted to be blockbusters," he said. While large pharmaceutical companies may not require the kind of research and process development services that have been a CML staple, ultimately they require tons of material. "Quite often we were not considered for projects because we didn't have the capacity to serve at the end," Major said.

Conceding that he is investing at a time when blockbuster drug prospects are few in big-pharma pipelines, Major noted that he's taken successful risks in the past. Contract research and manufacturing was in a serious slump in 2003 when the company built its first small API facilities; they are now near capacity. Besides, independent of the state of their pipelines, major drug companies are generally exiting pharmaceutical chemical manufacturing in favor of outsourcing, he pointed out.

NONETHELESS, CML is taking on a high level of risk, which it now shares with Arlington Capital Partners, a private equity firm that became a majority owner of the company early last year. Major currently owns about 20% of the firm he founded.

Industry watchers agree that several signs point to API manufacturing picking up in the U.S. Larry W. McCoy, head of the Business Development Counsel, a fine chemicals consulting firm, is encouraged to see investment in domestic API production. "For the last 10 years, we've felt like we were pretty much done for in this country," said McCoy, who attended the ground breaking. He noted that proximity to contractors is important, especially for the smaller firms that Major says will continue to make up well over half the company's customer base.

Charles Boland, executive vice president of Cedarburg Pharmaceuticals, was also on hand for the ceremonies. Boland says his firm has its eyes on expansion as well. "We are looking at our options, one of which is an acquisition that would give us commercial scale," Boland said. Cedarburg, which currently operates a pilot-scale facility of 1,800 gal, is in due diligence on one such acquisition, he added.

Are Major's fingers crossed as they were in 2003? "Well, the indication is that we will get enough business after we get the facility open," he said. On the basis of the number of project proposals CML receives, he estimates that the firm will bring one or two drug candidates per year into commercial production. "That is the result of the numbers game," he said. "And we need the new building to do it." Major hopes to be producing pharmaceutical chemicals by the ton by the end of next year.

 
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