Siegfried chemicals under pressure, but biologics healthy
general downturn in the chemicals industry, but has finally
succumbed and been forced to lose staff and cut back production,
writes Phil Taylor.
But the biologics and generics businesses are growing strongly and are becoming increasingly important to the company, according to Michael Bavand, general manager of Siegfried Biologicals.
In an interview with In-Pharmatechnologist.com, Bavand said that contrary to a report in a local newspaper, Siegfried's biologics business is fully booked and there are plans to dramatically increase capacity with the addition of two new production suits that should be on-line in 2006.
Since the company entered the contract biomanufacturing sector via the acquisition of Berlin-based Alpha Biover in 2001, it has been consolidating the business and adding staff, with the aim of building up its capabilities to the extent that it can support commercial-scale projects, in addition to the clinical projects it is currently handling.
Moreover, the company has just implemented a project organisation based in Geneva that is tasked with identifying biologics that could benefit from Siegfried's process development expertise.
This effort could even see the company taking ownership of promising biologics in rare cases, said Bavand, although he stressed that there is no plan to enter into clinical trials or market drugs. The strategy is to add value to the projects for later out-licensing.
However, Siegfried's fine chemicals business has run into trouble - like most of the European chemicals sector which has been hit by escalating raw material and energy costs, currency factors and softening demand. As a result, Siegfried has been forced to reduce staff at one site and cut production from seven days a week to five.
That Siegfried has resisted the downturn so long is thanks to its relatively small size, which makes it a good partner for emerging pharmaceutical companies - a business market that has really taken off in the last few years. It is also a result of a focus on neurological compounds, which have been a growth sector in the drug industry of late.
Like many companies in the fine chemicals industry Siegfried over-invested in the last upturn, and this has contributed to its current problems. However, Bavand said that plans are afoot to broaden the focus from neurologicals - which have the major disadvantage of being particularly prone to failure because of toxicities - and he hopes this business will recover by 2006.
Finally, the recently formed generic active pharmaceutical ingredient (API) business has taken off, and is expected to be a major earner for the company in the future as investments in infrastructure pay off.
The company recently announced a new plant in Malta that has the benefit of lying outside the patent laws of the European Union - meaning that Siegfried can conduct all the development work on APIs that are still in-patent, and be ready for launch the day the patent expires in Europe.
The plant is due to start production in early 2006, and Siegfried believes it has a window of opportunity of around 20 years, which will close once pharma companies wise up to the shortcut and start filing for protection in Malta.
Meantime, Bavand suggested that it would be hard for competing companies to follow its lead in Malta, as it has first-mover advantages such as employment of a large proportion of the qualified workforce on the island.
