Pharma Market Looking Bright

“Innovation is back in the pharmaceutical industry,” said Xavier Jeanjean, vice president of sales and business devel­opment at Isochem, a French firm that regularly exhibits at CPhI, the annual conference and exhibition for pharmaceutical chemicals. “This is especially true with the small and medium players.”

Jeanjean nicely framed the general consensus at CPhI, which was held last month in Frankfurt. Pharmaceutical chemical companies managed to climb back from the deep slump that set in after the recession and now are expanding as their customers’ new product pipelines fill up. The molecules coming out of that pipeline, however, are more complex than those that emerged as recently as five years ago.

Vendors at CPhI agreed that contract manufacturing organizations, or CMOs, need to enhance their capabilities with high-tech chemistry involving such techniques as low-temperature, high-pressure, or hazardous reactions. In addition to that, they need to bundle chemical manufacturing with services such as R&D, process development, regulatory and quality compliance, and finished-dose production.

This bundling of services is becoming increasingly important as small drug companies bring their first compounds into the clinic and major pharmaceutical firms downsize their internal manufacturing and R&D capabilities. CMOs across the sprawling multitiered Messe Frankfurt, where the conference took place, spotlighted new technologies and services as well as new products such as polymer systems that improve drug solubility.

Indeed, honing a technology edge has been a theme for some time in the industry, partly as a means for Western firms to compete with low-cost companies from Asia. But the tenor of announcements and discussion at CPhI this year suggests that a long-anticipated new generation of complex drugs is arriving. There was a palpable sense that 2014 will be go time for the industry.

Among the busier firms exhibiting at CPhI was Paris-based CMO Axyntis, which has the motto “Active for your synthesis.” The firm has been active in expanding services this year through acquisitions and partnerships. It formed a joint venture with Japanese silica specialist Fuji Silysia Chemical to acquire Kyralia, a chromatography services firm that Axyntis has worked with in recent years. Kyralia’s assets will be moved to Axyntis’s plant in Pithiviers, France, and it will operate as a company called Kyrapharm.

Meanwhile, Axyntis has formed a partnership with Provence Technologies Group, a French R&D services firm focused on scouting chemical synthesis pathways, process design, and analytics. The partnership will allow Axyntis to offer “greater continuity in the chemistry it develops,” according to David Simonnet, the firm’s chief executive officer, by linking early-stage drug development services to industrial-scale manufacturing at the company’s plants in France.

Axyntis also acquired a plant in Calais, France, that it intends to integrate with a small manufacturing and R&D facility it already owns in the region. Axyntis bought the plant from International Chemical Investors Group, a German holding company that acquired it only a year ago from the Belgian firm Tessenderlo.

With the acquisition, Axyntis will operate five plants in France with a total of 700 m³ of capacity. But with the manufacturing assets comes R&D and other services, Simonnet emphasized. “We want to change our strategic position from pure custom manufacturing to manufacturing plus services.”

Solvias, a Swiss pharmaceutical services firm, has in recent years added manufacturing scale by partnering with the nearby CMO Rohner for large-scale production. According to CEO Hansjörg Walther, Solvias is reassessing the balance between manufacturing and services and looking to expand in its core area of analytical, solid-state, and chemical development support. The company also is considering expanding services in biomolecule analytics and may build this capacity “from scratch,” Walther said.

Solvias boosted its biopharma services this year with the acquisition of Confarma, a French firm offering services in areas including microbiology, immunology, and chemistry. Confarma will operate independently, according to Walther, but will also collaborate with Solvias.

Walther expects sales to increase 10% this year to about $55 million, an improvement over 3% growth in 2012. He attributes the better prospects to improvements in the pharmaceutical services market and the return of business from biotech and start-up pharmaceutical companies that went dark after the recession in 2008.

At Swiss CMO Dottikon Exclusive Synthesis, which specializes in process design and chemical manufacturing, a campaign of spending 12% of annual revenues on R&D over the past three years has been good preparation for the emerging upturn in business, according to CEO Markus Blocher. “The actual work is coming,” he said. “A new phase is just starting in pharmaceuticals, and anything that was put off into the future has to be done now.”

Blocher is looking for process development business to pick up considerably as compounds in drug company pipelines begin moving into the clinic and on to commercial-scale production. “Usually you have crappy chemical processes and complex molecules,” he said, which means his folks will be rolling up their sleeves. In its last fiscal year the firm achieved sales of $93 million, which is up slightly from the previous two years but still well off the firm’s pre­recession sales performance.

CPhI attendees agreed that a principal challenge presented by compounds coming through the new drug pipeline is solubility. The standard means of getting them into patients’ bodies will not be effective for many new therapies, given the complexity of the molecules involved, according to Christophe Massip, global marketing director for Dow Chemical’s pharma and food solutions business. Some 70% of drugs currently in the pipeline are designated class 2, which means poorly soluble, or class 4, which means poorly bioavailable, Massip said.

His business exhibited Dow’s newly extended line of water-soluble polymers designed to maintain stable solid dispersions in applications including spray drying. Other new polymers are designed to inhibit active ingredient crystallization in solution. Ashland also exhibited new polymer products, including a solid dispersion matrix system for tableting applications.

Portugal-based Hovione is addressing drug solubility and delivery problems with its particle design business. CEO Guy Villax said pharmaceutical companies have not been quick to adopt new technologies in this area because “the industry is so risk averse.” Nonetheless, new technology is what the sector needs, Villax said, especially when it comes to the “completely pervasive issue” of poor solubility.

And it will be technology, Villax believes, that gives a CMO a leg up on the competition. “As sad as this may sound—and anyone in these halls over age 45 would be mortified to hear—chemistry is not a differentiator,” Villax said, because customers have a lot of good chemistry providers to choose from. “The only way we can stay ahead is by constantly learning” about new technologies, he said.

Hovione has invested heavily in particle design technology to formulate inhaled drugs, a complex, lengthy, and risky business in which the firm believes it may be able to stake out a market advantage. “In solubilization, people can catch up, but inhalation is a business area with so many barriers to entry,” Villax said.

Almac, based in Northern Ireland, announced at CPhI that it is harnessing large-molecule research capabilities to address drug delivery problems in partnership with Novozymes Biopharma, part of the Danish enzyme producer Novozymes. The collaboration combines Novozymes’ Recombumin Flex technology for designing protein-based therapeutics with Almac’s capabilities in small-molecule and peptide manufacturing and in drug-protein conjugation.

Novozymes’ technology modifies human albumin to alter its receptor affinity. These changes dictate both the protein’s half-life and binding in the body. By linking a drug molecule to the albumin, its pharmacokinetics and targeting can be adjusted, said Hans Ole Klingenberg, global marketing director for Novozymes Biopharma.

Almac and Novozymes are already working with drug industry partners such as Haemostatix, in Nottingham, En­gland. Haemostatix is developing PeproStat, a peptide applied directly to wounds to control bleeding during surgery. Almac will manufacture the peptide and link it to albumin that Novozymes will supply. The therapy is scheduled to enter clinical trials in 2014.

The flurry of investment by CMOs in the rapidly growing market for antibody-drug conjugates (C&EN, Oct. 21, page 7) had some attendees concerned that a manufacturing niche will become overpopulated. But Andreas Weiler, global head of strategic marketing at SAFC, the custom manufacturing arm of Sigma-Aldrich, claimed that a contractor can set itself apart from the growing pack by having the analytical expertise required to prove that the conjugation is done correctly and to characterize the complex final product.

Separately, SAFC announced an alliance with CatSci, a process development and optimization business focused on catalyst systems. SAFC had previously worked with the CatSci group when it was part of Astra­Zeneca’s internal process development operations.

Back at the Isochem booth, Jeanjean said his company, a supplier of fine chemicals to several industries, is recommitting itself to customers in the drug business. Although Isochem did not announce any new deals or products at CPhI—it is working on integrating Wychem, a U.K. manufacturer of drug intermediates it acquired last year—Jeanjean said the firm is ready to push forward in a rebounding pharmaceutical chemical sector.

With reporting by Ann Thayer