Pharmaceutical intermediates: hazardous chemistry: a safer route to profits growth?

Sales from hazardous chemistry services outsourced by the pharmaceutical industry are growing at double-digit percentage levels. Hazardous chemistry is defined as substances that are high-energy and therefore potentially explosive or toxic, and includes azide synthesis, brominations, and phosgenations.

A core group of contract manufacturing organizations (CMOs), including Dottikon Exclusive Synthesis (Dottikon, Switzerland), Groupe Novasep (Pompey, France), and Lanxess have vast experience in the field of hazardous chemistry. Experience in such a niche area means that the companies are well-placed for long-term growth, they say. Demand for hazardous chemistry services is increasing so rapidly because pharma companies want to avoid risks associated with handling hazardous materials in-house, but see benefits from gaining access to the novel molecules or lower cost synthesis that hazardous chemistry can provide, executives at CMOs say.

The hazardous chemistry market, although difficult to size accurately, "is relatively small, so it can't be 'the saviour' of the fine chemical industry," says Peter Pollak (Reinach, Switzerland), an independent consultant to the fine chemicals industry. U.S. and European CMOs dominate the market, but competition is emerging from low cost CMOs based in India. Certain leading Indian CMOs say they are being hired more and more frequently by multinational pharma companies to provide hazardous chemistry services (story, p. 32).

CMO Aerojet Fine Chemicals (AFC; Rancho Cordova, CA) says it has been adding capacity to keep up with demand for hazardous chemistry services. AFC says it increased azide chemistry capacity by 50% recently, to 24,500 gal. Sales generated by azide chemistry activities are increasing 15%/year, the company says. GenCorp. (Sacramento, CA), AFC's parent, recently agreed to divest AFC to American Pacific (AmPac; Las Vegas), a manufacturer of basic chemicals in the reactive, energetic field that is a long-term supplier of raw materials, including sodium azide, to AFC (CW, Aug. 10, p. 29). All of AFC's manufacturing takes place at a 20,000-acre site located more than 20 miles from Sacramento. The isolated nature of the location makes it highly suited to high-energy chemistry, the company says.

Handling hazardous chemicals involves risk, even for companies with a long history in the field. The dangers were highlighted last year, when an explosion and fire destroyed one of DSM's hazardous chemistry production units at Linz, Austria (CW, Sept. 1, 2004, p. 24). The unit produced glyoxylic acid, which is a fine chemical intermediate used to manufacture agchems, dyes, and pharmaceuticals. No one was hurt in the explosion, which wrecked a plant with 50-centimeter-thick concrete walls. The unit was in its third day of operation and featured novel DSM technology. The company says it has since abandoned the technology. DSM, prior to the explosion, had been planning to invest 7.5 million [euro] ($8.9 million) to introduce the technology at its two other glyoxylic acid plants. An accident had occurred two years earlier at the Linz site, damaging three glyoxylic acid plants and injuring 20 staff. That incident resulted from leakage of an inflammable material via a faulty flange, DSM says.

"We are investigating possibilities to restart production using a process that differs from the one formerly applied at the site," DSM says. "This other process should be safe as it does not entail the steps that led to incidents in the past." DSM declined to provide further details about the new process.

Novasep's Dynamit Nobel custom pharma intermediates division operates an explosive chemistry facility at Leverkusen that was established by Alfred Nobel in the 19th century when it started out as an explosives plant.

"Pharma companies rely on our strong experience rather than performing such chemistry by themselves." says Klaus Delpy, CEO for Dynamit Nobel. Hazardous chemistry often is the only feasible way to synthesise a new molecule, or it may be a more cost-effective alternative. "For both reasons our customers often accept dangerous chemistry as an alternative to standard technologies," Delpy says.

Novasep does not disclose specific financial details of the company's hazardous chemistry activities, but it says sales and profits in the sector are "at a very high level." Hazardous chemistry "is the most important field of our activities, and we intend to maintain its high share of our sales," Delpy says.

Substances Novsep manufactures at its Levekusen facility include nitroglycerine, which is used in large volumes in blood pressure-reducing drugs. More than 50% of Novasep's sales in hazardous chemistry are associated with sodium azide chemistry. Other materials the company handles include carbon disulfide, ethyl diazo acetate, hydrazines, nitroalkanes, and organic azides.

Novasep is developing novel processes involving diborane and diazomethane, both of which are highly toxic and can cause explosions. Novasep has developed dedicated equipment for reactions using each substance that it plans to make available to customers during the first quarter of next year. "There is clearly a need on the market for these two niche technologies," Delpy says. "So far we can handle both in lab and kilolab scale." Advantages of both substances include high selectivity, high yields, and few side reactions. Diazomethane can be used for esterifications and etherifications, cyclopropanations, epoxide generation, chain extension such as Arndt-Eistert reactions, and ring expansions. Diborane is used in the synthesis of several borane reagents.

Dottikon says it has been involved for more than 30 years in the production of advanced intermediates and active pharmaceutical ingredients (APIs) from chemistry. Reactions the company carries out include specialist nitrations, oxidations, and azide chemistry. The company has a specialized cGMP plant at Dottikon for manufacturing explosive materials.

Dottikon's key differentiator in the pharma intermediates field is expertise in the handling of potentially explosive chemistry, including specialty nitrations, says CEO Markus Blocher. The company features at least one hazardous chemistry step in most of its pharma intermediates contracts, Blocher says. Pharma companies typically come to Dottikon at the entry point of a production process where an energetic chemistry step is required. Dottikon works on small, development-scale volumes of intermediates, including energetic chemistry steps, to gain an understanding of the energetic chemistry, and can scale up to commercial-scale production of APIs at cGMP, he says.

Pharma companies historically have shied away from explosive...