In chemistry, fine chemicals are complex, single, pure chemical substances, produced in limited quantities in multipurpose plants by multistep batch chemical or biotechnological processes. They are described by exacting specifications, used for further processing within the chemical industry and sold for more than $10/kg (see the comparison of fine chemicals, commodities and specialties). The class of fine chemicals is subdivided either on the basis of the added value (building blocks, advanced intermediates or active ingredients), or the type of business transaction, namely standard or exclusive products. Fine chemicals are produced in limited volumes (< 1000 tons/year) and at relatively high prices (> $10/kg) according to exacting specifications, mainly by traditional organic synthesis in multipurpose chemical plants. Biotechnical processes are gaining ground. Fine chemicals are used as starting materials for specialty chemicals, particularly pharmaceuticals, biopharmaceuticals and agrochemicals. Custom manufacturing for the life science industry plays a big role; however, a significant portion of the fine chemicals total production volume is manufactured in-house by large users. The industry is fragmented and extends from small, privately owned companies to divisions of big, diversified chemical enterprises. The term "fine chemicals" is used in distinction to "heavy chemicals", which are produced and handled in large lots and are often in a crude state. Since the late 1970s, fine chemicals have become an important part of the chemical industry. Their global total production value of $85 billion is split about 60-40 between in-house production in the life-science industry—the products' main consumers—and companies producing them for sale. The latter pursue both a "supply push" strategy, whereby standard products are developed in-house and offered ubiquitously, and a "demand pull" strategy, whereby products or services determined by the customer are provided exclusively on a "one customer / one supplier" basis. The products are mainly used as building blocks for proprietary products. The hardware of the top tier fine chemical companies has become almost identical: the design, lay-out and equipment of the plants and laboratories have become practically the same globally; most chemical reactions performed go back to the days of the dyestuff industry; and numerous regulations determine the way labs and plants must be operated, thereby contributing to the uniformity.
History The term "fine chemicals" was in use as early as 1908. The emergence of the fine chemical industry as a distinct entity dates to the late 1970s, when the overwhelming success of the histamine H2 receptor antagonists Tagamet (cimetidine) and Zantac (ranitidine hydrochloride) created a strong demand for advanced organic chemicals used in their manufacture. As the in-house production capacities of the originators, the pharmaceutical companies Smith, Kline, & French and Glaxo, could not keep pace with the rapidly increasing requirements, both companies (now merged as GlaxoSmithKline) outsourced part of the manufacturing to chemical companies experienced in producing relatively sophisticated organic molecules. Lonza, Switzerland, which had already had supplied an early intermediate, methyl acetoacetate, during drug development, soon became the main supplier of more and more advanced precursors. The signature of a first, simple supply contract is generally acknowledged as the historical document marking the beginning of the fine chemical industry.
In subsequent years, the business developed and Lonza was the first fine chemical company to enter into a strategic partnership with SKF. In a similar way, Fine Organics, UK became the supplier of the thioethyl-N'-methyl-2-nitro-1,1-ethenediamine moiety of ranitidine, the second H2 receptor antagonist, marketed as Zantac by Glaxo. Other pharmaceutical and agrochemical companies gradually followed suit and started outsourcing the procurement of fine chemicals. For example, F.I.S., Italy, partnered with Roche, Switzerland for custom manufacturing precursors of the benzodiazepine class of tranquilizers, such as Librium (chlordiazepoxide HCl) and Valium (diazepam). The growing complexity and potency of new pharmaceuticals and agrochemicals requiring production in multipurpose, instead of dedicated, plants and, more recently, the advent of biopharmaceuticals, has had a major impact on the demand for fine chemicals and the evolution of the fine chemical industry as a distinct entity. For many years, the life science industry continued considering captive production of the active ingredients of their drugs and agrochemicals as a core competency. Outsourcing was used only in exceptional cases, such as capacity shortfalls, processes requiring hazardous chemistry or new products, where uncertainties existed about the chance of a successful launch.
Products In terms of molecular structure, one distinguishes first between low-molecular-weight (LMW) and high-molecular-weight (HMW) products. The generally accepted threshold between LMW and HMW is a molecular weight of about 700 g/mol. LMW fine chemicals, also designated as small molecules, are produced by traditional chemical synthesis, by microorganisms (through fermentation or biotransformation), or by extraction from plants and animals. In the production of modern life science products, total synthesis from petrochemicals prevails. HMW products, or large molecules, are obtained mainly through biotechnology processes. Within LMWs, the N-heterocyclic compounds are the most important category; within HMWs, it is peptides and proteins.
Small molecules As aromatic compounds have been mosely exhausted as building blocks for life science products, N-heterocyclic structures prevail nowadays. They are found in many natural products, such as chlorophyll, hemoglobin, and the vitamins biotin, folic acid, niacin (PP), pyridoxine (vitamin B6), riboflavin (vitamin B2), and thiamine (vitamin B1). In synthetic life science products, N-heterocyclic moieties are widely used in both pharmaceuticals and agrochemicals. Thus, β-lactams are structural elements of penicillin and cephalosporin antibiotics and imidazoles are found both in modern herbicides, such Arsenal (imazapyr) and pharmaceuticals, such as the antiulcerants Tagamet (cimetidine. see above) and Nexium (omeprazole), the antimycotics Daktarin (miconazole), Fungarest (ketoconazole) and Travogen (isoconazole). Tetrazoles and tetrazolidines are pivotal parts of the "sartan" class of hypertensives, such as Candesartan cilexetil (candesartan), Avapro (irbesartan), Cozaar (losartan) and Diovan (valsartan).
A vast array of pharmaceuticals and agrochemicals are based on pyrimidines, such as Vitamin B1 (thiamine), the sulfonamide antibiotics, e.g. Madribon (sulfadimethoxime) and – half a century later – the sulfonyl urea herbicides, e.g. Eagle (amidosulfuron) and Londax (bensulfuron-methyl). Benzodiazepine derivatives are the pivotal structural elements of breakthrough CNS drugs, such as Librium (chlordiazepoxide) and Valium (diazepam). Pyridine derivatives are found in both well-known Diquat and Chlorpyrifos herbicides, and in modern nicotinoid insecticides, such as Imidacloprid. Even modern pigments, such as diphenylpyrazolopyrazoles and quinacridones, and engineering plastics, such as polybenzimidazoles, polyimides, and triazine resins, exhibit an N-heterocyclic structure.
Big molecules Big molecules, also called high molecular weight (HMW) molecules, are mostly oligomers or polymers of small molecules, or chains of amino acids. Thus, within pharmaceutical sciences, peptides, proteins and oligonucleotides constitute the major categories. Peptides and proteins are oligomers or polycondensates of amino acids linked together by a carboxamide group. The threshold between the two is at about 50 amino acids. Because of their unique biological functions, a significant and growing part of new drug discovery and development is focused on this class of biomolecules. Their biological functions are determined by the exact arrangement or sequence of different amino acids in their makeup. For the synthesis of peptides, four categories of fine chemicals, commonly referred to as peptide building blocks (PBBs), are key: amino acids (=starting materials), protected amino acids, peptide fragments and peptides themselves. Along the way, the molecular weights increase from about 102 up to 104 and the unit prices from about $100 up to $105 per kilogram. However, only a small part of the total amino acid production is used for peptide synthesis. In fact, L-glutamic acid, L-methionine, L-aspartic acid and L-phenylalanine are used in large quantities as food and feed additives. About 50 peptide drugs are commercialized. The number of amino acids that make up a specific peptide varies widely. At the low end are the dipeptides. The most important drugs with a dipeptide (L-alanyl-L-proline) moiety are the "-pril" cardiovascular drugs, such as Alapril (lisinopril), Captoril (captopril), Novolac (imidapril) and Renitec (enalapril). The artificial sweetener Aspartame (N-L-α-Aspartyl-L-phenylalanine 1-methyl ester) is also a dipeptide. At the high end, there is the anticoagulant hirudin, MW ≈ 7000, which is composed of 65 amino acids. Apart from pharmaceuticals, peptides are also used for diagnostics and vaccines. The total production volume (excluding Aspartame) of chemically synthesized, pure peptides is about 1,500 kg (3,300 lb) and sales approach $500 million on the active pharmaceutical (API) level and $10 billion on the finished drug level, respectively. The bulk of the production of peptide drugs, which also include the first generation anti-AIDS drugs, the "...navirs", is outsourced to a few specialized contract manufacturers, such as Bachem, Switzerland; Chengu GT Biochem, China; Chinese Peptide Company, China; Lonza, Switzerland, and Polypeptide, Denmark. Proteins are "very high-molecular-weight" (MW > 100,000) organic compounds, consisting of amino acid sequences linked by peptide bonds. They are essential to the structure and function of all living cells and viruses and are among the most actively studied molecules in biochemistry. They can be made only by advanced biotechnological processes; primarily mammalian cell cultures. Monoclonal antibodies (mAb) prevail among human-made proteins. About a dozen of them are approved as pharmaceuticals. Important modern products are EPO (Binocrit and NeoRecormon), Enbrel (etanercerpt), Remicade (infliximab), MabThera/Rituxin (rituximab), and Herceptin (trastuzumab). PEGylation is a big step forward regarding administration of peptide and protein drugs. This method offers the two-fold advantage of substituting injection by oral administration and reducing the dosage, and therefore the cost, of the treatment. The pioneer company in this field is Prolong Pharmaceuticals which has developed a PEGylated erythropoietin (PEG-EPO). Oligonucleotides are a third category of big molecules. They are oligomers of nucleotides, which in turn are composed of a five-carbon sugar (either ribose or desoxyribose), a nitrogenous base (either a pyrimidine or a purine) and 1–3 phosphate groups. The best known representative of a nucleotide is the coenzyme ATP (Adenosine triphosphate), MW 507.2. Oligonucleotides are chemically synthesized from protected phosphoramidites of natural or chemically modified nucleosides. The oligonucleotide chain assembly proceeds in the direction from 3'- to 5'-terminus by following a procedure referred to as a "synthetic cycle". Completion of a single synthetic cycle results in the addition of one nucleotide residue to the growing chain. The maximum length of synthetic oligonucleotides hardly exceeds 200 nucleotide components. From its current range of applications in basic research as well as in drug target validation, drug discovery, and therapeutic development, the potential use of oligonucleotides is foreseen in gene therapy (antisense drugs), disease prevention and agriculture. Antibody-drug conjugates (ADC) constitute a combination between small and big molecules. The small molecule parts, up to four different APIs, are highly potent cytotoxic drugs. They are linked with a monoclonal antibody, a big molecule which is of little or no therapeutic value in itself, but extremely discriminating for its targets, the cancer cells. The first commercialized ADC was Pfizer's (formerly Wyeth) mylotarg (gemtuzumab ozogamicin). Examples of ADCs in phase III of development are Abbott's/Isis's alicaforsen and Eli Lilly's aprinocarsen.
Technologies Several key technologies are used for the production of fine chemicals, including:
Chemical synthesis, either from petrochemical starting materials or from natural products extracts. Biotechnology, specifically biocatalysis (enzymatic methods) and biosynthesis (fermentation) for small molecules, and cell culture technology for big molecules. Extraction from animals, microorganisms, or plants; for example, isolation and purification is used for alkaloids, antibacterials (especially penicillins), and steroids. Hydrolysis of proteins, especially when combined with ion exchange chromatography, used, for instance, for amino acids. Chemical synthesis and biotechnology are most frequently used, sometimes in combination.
Traditional chemical synthesis A large toolbox of chemical reactions is available for each step of the synthesis of a fine chemical. The reactions have been developed on laboratory scale by academia over the last two centuries and subsequently adapted to industrial scale, such as the manufacture of dyestuffs & pigments. Methods of Molecular Transformations describes 26,000 organic synthetic methods, about 10% of which are currently used on an industrial scale for fine chemicals production. Amination, condensation, esterification, Friedel–Crafts, Grignard, halogenation (especially chlorination), hydrogenation, and reduction (both catalytic and chemical) are the most frequently mentioned techniques on the websites of individual companies. Optically active cyanohydrins, cyclopolymerization, ionic liquids, nitrones, oligonucleotides, peptide (both liquid- and solid-phase), electrochemical reactions (like perfluorination) and steroid synthesis are promoted by only a limited number of companies. With the exception of some stereospecific reactions, particularly biotechnology, mastering these technologies does not represent a distinct competitive advantage. Most reactions can be carried out in standard multipurpose plants. The very versatile organometallic reactions (e.g., conversions with lithium aluminum hydride, boronic acids) may require temperatures as low as −100 °C (−148 °F), which can be achieved only in special cryogenic reaction units, either by using liquefied nitrogen as coolant or by installing a low-temperature unit. Other reaction-specific equipment, such as filters for the separation of catalysts, ozone or phosgene generators, can be purchased in many different sizes. The installation of special equipment generally is not a critical path on the overall project for developing an industrial-scale process of a new molecule. Since the mid-1990s, the commercial importance of single-enantiomer fine chemicals has increased steadily. They constitute about half of both existing and developmental drug APIs. In this context, the ability to synthesize chiral molecules has become an important competency. Two types of processes are used: physical separation of the enantiomers and stereo specific synthesis using chiral catalysts. Among the latter, enzymes and synthetic BINAP (2,2'–Bis(diphenylphosphino)–1,1'–binaphthyl) types are used most frequently. Large volume (> 103 mtpa) processes using chiral catalysts include the manufacture of the perfume ingredient l-Menthol, as well as herbicides, such as Syngenta's Dual (metolachlor) and BASF's Outlook (dimethenamid-P). Examples of originator drugs, which apply asymmetric technology, are AstraZeneca's Nexium (esomeprazole) and Merck & Co's Januvia (sitagliptin). The physical separation of chiral mixtures and purification of the desired enantiomer can be achieved either by classical fractional crystallization (which has an image of being "low-tech" but is still widely used), carried out using standard multipurpose equipment or by various types of chromatographical separation, such as standard column, simulated moving-bed (SMB) or supercritical fluid (SCF) techniques. For peptides, three main types of methods are used: chemical synthesis, extraction from natural substances, and biosynthesis. Chemical synthesis is used for smaller peptides made of up to 30–40 amino acids. There is an important difference between "liquid phase" and "solid phase" synthesis. In the latter, reagents are incorporated in a resin that is contained in a reactor or column. The synthesis sequence starts by attaching the first amino acid to the reactive group of the resin and then adds the remaining amino acids, one after the other. In order to ascertain a full selectivity, the amino groups have to be protected in advance. Most developmental peptides are synthesized by this method, which lends itself to automation. As the intermediate products resulting from individual synthetic steps cannot be purified, a selectivity of effectively 100% is essential for the synthesis of larger-peptide molecules. Even at a selectivity of 99% per reaction step, the purity will drop to less than 75% for a decapeptide (30 steps). Therefore, for industrial quantities of peptides not more than 10–15 amino acids, peptides can be made using the solid-phase method. For laboratory quantities, up to 40 are possible. To prepare larger peptides, individual fragments are first produced and purified, and then combined to the final molecule by liquid phase synthesis. Thus, for the production of Roche's anti-AIDS drug Fuzeon (enfuvirtide), three fragments of 10–12 amino acids are first made by solid-phase synthesis and then linked together by liquid-phase synthesis. The preparation of the whole 35 amino acid peptide requires more than 130 individual steps. Microreactor Technology (MRT), used for process intensification, is a relatively new tool that is being developed at several universities, as well as fine chemical companies, such as Bayer Technology Services, Germany; Clariant, Switzerland; Evonik-Degussa, Germany; DSM, The Netherlands; Lonza, Switzerland; PCAS, France; and Sigma-Aldrich, US. The lattermost company produces about 50 fine chemicals up to multi-kilogram quantities in microreactors. From a technological point of view, MRT, or continuous flow reactors, represents the first breakthrough development in reactor design since the introduction of the stirred-tank reactor, which was used by Perkin & Sons when they established a factory on the banks of what was then the Grand Junction Canal in London in 1857, in order to produce mauveïne, the first-ever synthetic purple dye. For a comprehensive coverage of the subject see Micro Process Engineering. Reactions that have worked in microreactors include aromatics oxidations, diazomethane conversions, Grignards, halogenations, hydrogenations, nitrations, and Suzuki couplings. According to experts in the field, 70% of all chemical reactions could be done in microreactors; however, only 10-15% are economically justified. With the exception of some stereospecific reactions, particularly biotechnology, mastering these technologies does not represent a distinct competitive advantage. Most reactions can be carried out in standard multipurpose plants. Reaction-specific equipment, such as ozone or phosgene generators, is readily available. The installation is not generally a critical path on the overall project for developing an industrial-scale process of a new molecule. Whereas the overall demand for outsourced pharmaceutical fine chemicals is expected to increase moderately, the estimated annual growth rates for the above-mentioned niche technologies are much higher. Microreactors, and the SMB separation technology, are expected to grow at a rate of 50–100% per year. The total size of the accessible market typically does not exceed a few hundred tons per year at best.
Biotechnology Industrial biotechnology, also called "white biotechnology", is increasingly impacting the chemical industry, enabling both the conversion of renewable resources, such as sugar or vegetable oils, and the more efficient transformation of conventional raw materials into a wide range of commodities (such as cellulose, ethanol and succinic acid), fine chemicals (such as 6-aminopenicillanic acid), and specialties (such as food and feed additives). As opposed to green and red biotechnology, which relate to agriculture and medicine, respectively, white biotechnology seeks to improve the economic and sustainable production of existing products, and provide access to new products, especially biopharmaceuticals. It is expected that revenues from white biotechnology will account for 10%, or $250 billion, of the global chemical market of $2,500 billion by 2013. In ten to 15 years, it is expected that most amino acids and vitamins and many specialty chemicals will be produced by means of biotechnology. Three very different process technologies — biocatalysis, biosynthesis (microbial fermentation), and cell cultures — are used. Biocatalysis, also known as biotransformation or bioconversion, makes use of natural or modified isolated enzymes, enzyme extracts, or whole-cell systems for enhancing the production of small molecules. It has much to offer compared to traditional organic synthesis. The syntheses are shorter, less energy intensive and generate less waste, and are thus both environmentally and economically more attractive. About 2/3 of chiral products produced on large industrial scale are already made using biocatalysis. In the manufacture of fine chemicals, enzymes represent the single most important technology for radical cost reductions. This is particularly the case in the synthesis of molecules with chiral centres. Here, it is possible to substitute the formation of a salt with a chiral compound, such as (+)-α-phenylethylamine, crystallization, salt breaking and recycling of the chiral auxiliary, resulting in a theoretical yield of not more than 50%, with a one step, high yield reaction under mild conditions that results in a product with a very high enantiomeric excess (ee). An example is AstraZeneca's blockbuster drug Crestor (rosuvastatin).
Further examples of modern drugs where enzymes are used in the synthesis include Pfizer's Lipitor (atorvastatin), where the pivotal intermediate R-3-Hydroxy-4-cyanobutyrate is now made with a nitrilase, and Merck & Co.'s Singulair (montelukast), where the reduction of a ketone to S-alcohol, which had required stoichiometric amounts of expensive and moisture sensitive "(-)-DIP chloride" is now replaced by a ketoreductase enzyme catalyst step. Similar switches from chemical steps to enzymatic ones have also been achieved in steroid synthesis. Thus, it has been possible to reduce the number of steps required for the synthesis of dexamethasone from bile from 28 to 15. Enzymes differ from chemical catalysts, particularly with regard to stereoselectivity, regioselectivity, and chemoselectivity. They can also be modified ("reshuffled") for specific reactions, for use in chemical synthesis. Immobilized enzymes are fixed on solid supports, and can be recovered by filtration after completion of the reaction. Conventional plant equipment can be used with no, or only modest, adaptations. The International Union of Biochemistry and Molecular Biology (IUBMB) has developed a classification for enzymes. The main categories are oxidoreductases, transferases, hydrolases, lipases (subcategory), lyases, isomerases and ligases. Companies specializing in making enzymes include Novozymes and Danisco (Genencor). Codexis is the leader in modifying enzymes to specific chemical reactions. The highest-volume chemicals made by biocatalysis are bio-ethanol (70 million metric tons), high-fructose corn syrup (2 million metric tons), acrylamide, 6-aminopenicillanic acid (APA), L-lysine and other amino acids, citric acid and niacinamide (all more than 10,000 metric tons). Biosynthesis, the conversion of organic materials into fine chemicals by microorganisms, is used for the production of both small molecules (using enzymes in whole cell systems) and less complex, non-glycosylated big molecules, including peptides and simpler proteins. The technology has been used for 10,000 years to produce food products, like alcoholic beverages, cheese, yogurt, and vinegar. In contrast to biocatalysis, a biosynthetic process does not depend on chemicals as starting materials, but only on cheap natural feedstock, such as glucose, to serve as nutrient for the cells. The enzyme systems triggered in the particular microorganism strain lead to the excretion of the desired product into the medium, or, in the case of HMW peptides and proteins, to the accumulation within so-called inclusion bodies in the cells. The key elements of fermentation development are strain selection and optimization, as well as media and process development. Dedicated plants are used for large-scale industrial production. As the volume productivity is low, the bioreactors, called fermenters, are large, with volumes that can exceed 250 m3 (8,828.67 cubic feet). Product isolation was previously based on large-volume extraction of the medium containing the product. Modern isolation and membrane technologies, like reverse osmosis, ultra- and nano-filtration and affinity chromatography can help to remove salts and by-products, and concentrate the solution efficiently and in an environmentally friendly manner under mild conditions. The final purification is often achieved by conventional chemical crystallization processes. In contrast to the isolation of small molecules, the isolation and purification of microbial proteins is tedious and often involves a number of expensive large-scale chromatographic operations. Examples of large-volume LMW products made by modern industrial microbial biosynthetic processes are monosodium glutamate (MSG), vitamin B2 (riboflavin), and vitamin C (ascorbic acid). In vitamin B2, riboflavin, the original six- to eight-step synthetic process starting from barbituric acid has been substituted completely by a microbial one-step process, allowing a 95% waste reduction and an approximately 50% manufacturing cost reduction. In ascorbic acid, the five-step process (yield ≈ 85%) starting from D-glucose, originally invented by Tadeus Reichstein in 1933, is being gradually substituted by a more straightforward fermentative process with 2-ketogluconic acid as pivotal intermediate. After the discovery of penicillin in 1928 by Sir Alexander Fleming from colonies of the bacterium Staphylococcus aureus, it took more than a decade before a powdery form of the medicine was developed. Since then, many more antibiotics and other secondary metabolites have been isolated and manufactured by microbial fermentation on a large scale. Some important antibiotics, other than penicillin, are cephalosporins, azithromycin, bacitracin, gentamicin, rifamycin, streptomycin, tetracycline, and vancomycin. Animal or plant cells, removed from tissues, will continue to grow if cultivated under the appropriate nutrients and conditions. When carried out outside the natural habitat, the process is called cell culture. Mammalian cell culture fermentation, also known as recombinant DNA technology, is used mainly for the production of complex big molecule therapeutic proteins, or biopharmaceuticals. The first products made were interferon (discovered in 1957), insulin, and somatropin. Commonly used cell lines are Chinese hamster ovary (CHO) cells and plant cell cultures. The production volumes are very small. They exceed 100 kg (220 lb) per year for only three products: Rituxan (Roche-Genentech), Enbrel (Amgen and Merck & Co.), and Remicade (Johnson & Johnson). Fine chemical production by mammalian cell culture is a much more demanding operation than conventional biocatalysis and biosynthesis. The bioreactor batch requires more stringent controls of operating parameters, since mammalian cells are heat and shear sensitive. In addition, the growth rate of mammalian cells is very slow, lasting from days to several months. While there are substantial differences between microbial and mammalian technologies (the volume / value relationships are $10/kg and 100 tonnes for microbial and $1,000,000/kg and 10 kilograms for mammalian technology; the cycle times are 2–4 and 10–20 days, respectively), they are even more pronounced between mammalian and synthetic chemical technology (see Table 1).
The mammalian cell production process, as used for most biopharmaceuticals, is divided into the four main steps: (1) Cultivation, or the reproduction of the cells; (2) Fermentation, or the actual production of the protein, typically in 10,000 Liter bioreactors; (3) Purification, or the separation of the cells from the culture medium and purification, mostly by chromatography; (4) Formulation, or the conversion of the sensitive proteins to a stable form. All steps are fully automated. The low productivity of the animal culture makes the technology expensive and vulnerable to contamination, as a small amount of bacteria would soon outgrow a larger population of animal cells. Its main disadvantages are low volume productivity and the animal provenance. It is conceivable that other technologies, particularly plant cell production, will gain importance in future. Given the fundamental differences between the two process technologies, plants for mammalian cell culture technologies have to be built ex novo. The pros and cons of an involvement of a fine chemical company in cell culture technology are listed below: Pros:
Strong growth of demand: today, biopharmaceuticals account for about $55–$80 billion, or 15% of the total pharmaceutical market. They are growing by 15% per year, three times faster than LMW drugs, and are expected to pass the $150 billion per year threshold by 2015. Whereas just one out of the world's top ten drugs was a biopharmaceutical in 2001, the number went up to five in 2010 and is expected to increase further to eight by 2016 (see Table 2).
The likelihood of developing a new biopharmaceutical successfully is significantly greater than in traditional drug development. 25% of biopharmaceuticals that enter Phase I of the regulatory process eventually are granted approval. The corresponding figure for conventional drugs is less than 6%. The traditionally large share of outsourcing. Small number of custom manufacturers with industrial-scale manufacturing capabilities in this demanding technology. In the Western hemisphere, primarily Boehringer-Ingelheim of Germany and Lonza of Switzerland; in the Eastern hemisphere, Nicholas Piramal of India (through the acquisition of a former Avecia operation) and the joint ventures between AutekBio and Beijing E-Town Harvest International in China and between Biocon in India and Celltrion in South Korea. Same customer category: life science, especially the pharmaceutical industry. Similar business types: custom manufacturing of proprietary drugs; opportunities for generic versions, called biosimilars. Similar regulatory environment: FDA regulations, especially GMP. Existing infrastructure (utilities, etc.) can be used. Cons:
High entry barriers because of demanding technology: the construction of a large-scale plant for the production of biopharmaceuticals by cell culture fermentation costs around $500 million and takes four to six years. As the specifications of the plant and process types for biopharmaceuticals differ substantially from traditional chemical synthesis, they cannot be produced in conventional multipurpose fine chemical plants. High financial exposure, due to high capital intensity (as massive investments are needed at a time when chances of success are still very low) and risk of batch failures (contamination). Unlike the biopharmaceutical start-ups, the emerging big biopharmaceutical companies are adopting the same opportunistic outsourcing policy as larger pharmaceutical companies. Thus, Amgen, Biogen Idec, Eli Lilly, Johnson & Johnson (J&J), Medimmune, Novartis, Roche-Genentech and Pfizer are investing heavily in in-house manufacturing capacity. With three plants in the US, two in Japan and one each in Germany and Switzerland, Roche has the largest production capacity. New developments in expression systems for mammalian and plant cell technology could reduce capacity requirements substantially: the titer in large-scale mammalian production, 2–3 grams/liter, is expected to double to 5–7 by 2015 go up to 10 by 2020. Furthermore, the widespread application of "single-use disposable bioprocessing technology" advantageously substitutes for stainless steel production trains, at least for short production campaigns. New transgenic production systems are emerging, such as transgenic moss, lemna, fungal or yeast expression systems, transgenic animals and plants such as tobacco plants, which possess the potential to become economically and industrially successful. Legislation and regulation of biotechnology is not well defined yet and leads to differences in interpretation and other uncertainties. In the US, legislation is not yet in place for biosimilars, the generic counterpart of generics in small molecule pharmaceuticals. The inherent risks of the mammalian cell technology led several companies to opt out of mammalian cell technology or to substantially reduce their stake. Examples are Cambrex and Dow Pharma in the US, Avecia, DSM and Siegfried in Europe and WuXi App Tech in China. In conclusion, biocatalysis should be, or become, part of the technology toolbox of any fine chemical company. Mammalian cell culture fermentation, on the other hand, should be considered only by large fine chemical companies with a full war chest and a long-term strategic orientation.
The industry Within the chemical universe, the fine chemical industry is positioned between the commodity, their suppliers, and specialty chemical industries, their customers. Depending on the services offered, there are two types of fine chemical companies. Fine chemical companies are active in industrial scale production, both of standard and exclusive products. Fine chemical companies tend to fall into one of three categories: producers are referred to as Custom Manufacturing Organizations (CMOs); Contract Research Organizations (CROs)' main assets are their research laboratories; and CRAMS (Contract Research and Manufacturing Organizations are hybrids between the two.
Fine Chemical/Custom Manufacturing Companies Fine chemical/Custom Manufacturing companies, in a narrow sense, are active in process scale up, pilot plant (trial) production, industrial-scale exclusive and non-exclusive manufacture and marketing. Their product portfolios comprise exclusive products, produced by custom manufacturing, as a main activity, as well as non-exclusive products, such as API-for Generics, and standard products. Characteristics are high asset intensity, batch production in campaigns in multipurpose plants, above-industry-average R&D expenditures and close, multi-level and multi-functional relationships with industrial customers. The industry is very fragmented. 2000 – 3000 fine chemical companies exist globally, extending from small, "garage-type" outfits in China making just one product, all the way to the big, diversified enterprises, resp. units. The main reason for the fragmentation is the lack of economy of scale (see below). The industry is subject to a high degree of regulation, even more so than the chemical industry as a whole, particularly if pharmaceutical fine chemical production is involved. The most important regulatory authorities are the Food and Drug Administration (FDA) in the US, and the State Food & Drug Administration (SFDA) in China. Their main responsibilities include formulating comprehensive supervision policies ("Good Manufacturing Practice"), controlling drug implementation and registration, drawing up criteria for marketing authorization and formulating national essential medicines lists. The European authorities are the European Medicines Agency (EMEA), which is manly responsible for the scientific evaluation of medicines developed by pharmaceutical companies for use in the European Union, and enforcing the Registration, Evaluation, Authorization and Restriction of Chemicals (REACH) regulation. The U.S. Pharmacopeia codifies quality standards for Active Pharmaceutical Ingredients. As these standards are observed worldwide, they also contribute to the emergence of a uniform worldwide set-up of the top tier fine chemical companies. In terms of size, resources, and complexity of the chemical process technologies mastered, the fine chemical companies can be broadly divided into three segments, each of them accounting for approximately the same turnover of about $10 billion. The top tier, about twenty companies, has sales in excess of $250 million per year (see Table 3). Most are not pure players but divisions or business units of large, multinational companies. Their share varies between one percent or less for BASF and Pfizer, all the way to 100% for Cambrex, USA; Divi's Laboratories, India, and F.I.S., Italy. All have extensive resources in terms of chemists and other specialists, plants, process knowledge, backwards integration, international presence, etc.
The combined revenues of the top 20 fine chemical companies amounted to $10 billion in 2009, representing about 30% of the whole industry. The leading companies are typically divisions of large, diversified chemical companies. In terms of geography, 9 of the top 20 are located in Europe, which is recognized as the cradle of the fine chemical industry. This is the case for the world's #1 company, Lonza, which is headquartered in Basel, Switzerland. Custom manufacturing prevails in northern Europe; the manufacture of active substances for generics, in southern Europe. The second largest geographic area is Asia, housing 7 of the top 20. With 4 large companies, the US ranks last. Whereas the European and U.S. pharma industry constitutes the main customer base for most fine chemical companies, some have a significant share of products and services for the agrochemical industry. Examples are Archimica, CABB, Saltigo (all Germany); DSM, The Netherlands; and Hikal, India. Several large pharmaceutical companies market fine chemicals as subsidiary activity to their production for captive use, including Abbott, USA; Bayer Schering Pharma, Boehringer-Ingelheim, Germany; Daiichi-Sankyo (after the takeover of Ranbaxy), Japan; Johnson & Johnson, USA; Merck KGaA, Germany; and Pfizer (formerly Upjohn), US. Large fine chemical companies, in contrast to mid-sized and small ones, are characterized by:
A lack of economy of size: as most fine chemicals are produced in quantities of less than a few 10 tons per year in multipurpose plants, there is little or no economy of size. The reactor trains of these plants are similar throughout the industry. Regardless of the size of the companies, their main constituents, the reaction vessels, have a median size of 4–6 m3 (140–210 cubic feet). Various products are made throughout a year in campaigns. Therefore, the unit cost per m3 per hour rarely varies with the size of the company. A dichotomy between ownership and management: the company's shares are listed on stock exchanges, and their performance is scrutinized by the financial community. Postponement of a single important shipment can affect a quarterly r