This week’s package of two cover stories is C&EN’s annual report on custom chemicals. It is written by Senior Correspondent Ann Thayer, a veteran observer of this essential component of the global chemical industry. Thayer and Senior Editor Rick Mullin, another seasoned custom chemicals reporter, will attend the upcoming Informex trade show, one of the premier showcases of developments in the fine and custom chemicals world.
Custom chemical manufacturers, especially those in the U.S. and Western Europe, have been buffeted in recent years by challenging economic conditions and the rise of major competitors in China, India, and other Asian countries.
“No one can be sure the worst is over, and that’s the problem,” Thayer writes in the first of her two stories. “A rebound from the Great Recession arrived in 2010, but new economic setbacks followed in 2011. Hoping to finally put the recession behind it, the custom chemical industry sees signs that business is improving, but they aren’t clear enough to instill confidence. The slow recovery has created a ‘self-perpetuating hesitancy,’ laments one industry executive.”
Make no mistake, things are better, Thayer reports. One industry consultant projects 4.0 to 4.5% growth per year and suggests that the fine chemicals market will expand from $96 billion in sales in 2010 to about $120 billion by 2015. Many more companies reported reasonably healthy profits in 2010 than they did in the very tough year of 2009, and indications are that 2011 results will be similar to those of 2010.
The pharmaceutical industry makes up about two-thirds of the fine chemicals market, and as it evolves, the fine chemicals industry is evolving with it. Less business is coming from large drug firms and more from smaller ones. Big pharma is desperate for new products because, between 2012 and 2015, drugs totaling more than $100 billion in global sales will face generic competition. And pharma companies that once disdained generics are now embracing them and trying to maximize their value.
Thayer does an excellent job in examining how these economic forces are reshaping the fine and custom chemicals industry. In her second story, she examines another trend that’s reshaping the industry—sourcing beyond China and India. For a variety of reasons, Western pharmaceutical chemical manufacturers are seeing a return of some of the business that had been lost to China and India in the past decade. “But Western firms can’t rest,” Thayer writes, “because suppliers in several other countries are also vying for some time in the spotlight.”
According to Thayer’s sources, about 10% of pharmaceutical chemical suppliers are in the “second wave of emerging markets,” which includes Poland, Russia, South Korea, Taiwan, Argentina, Brazil, and Mexico. Although most of these firms aren’t ready to serve “regulated markets,” some are moving in that direction. How soon drug companies consider them as alternatives to current suppliers, Thayer writes, “will hinge on their cost, quality, reliability, regulatory compliance, technical capabilities, and IP protection.”
Another compelling story in this week’s issue is Associate Editor Carmen Drahl’s in-depth examination of the “arsenic-based bacteria” a team of researchers claimed to have discovered in arsenic-rich Mono Lake in California (C&EN, Dec. 6, 2010, page 36). The researchers, led by Felisa Wolfe-Simon, now a NASA postdoctoral fellow, maintained that their research showed that the bacteria incorporated arsenic in place of phosphorus in its DNA backbone, a claim that drew immediate and furious criticism (C&EN, Dec. 13, 2010, page 7).
One of the harshest critics of the work, University of British Columbia microbiologist Rosemary J. Redfield, and her collaborators have now presented mass spectrometric data that pretty conclusively show that the bacterium in question, dubbed GFAJ-1, doesn’t have any arsenic in its DNA. Drahl has talked to most of the researchers involved in this saga and many outside experts. Her report provides insights into how science works when researchers make a startling and potentially paradigm-shifting claim that’s almost certainly wrong.
Thanks for reading.