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Feature Articles : Nov 1, 2010 ( )
SAFC Expands to Meet Customer Demands
Firm Focuses on Technology Upgrades and QA/QC for Increasingly Specialized Products
Suppliers to the biotechnology market, like Sigma-Aldrich’s SAFC division, are kept on their toes by constantly evolving customer demands. As a result, vendors have built larger and larger catalogs of products, moving into complex and challenging areas over the years.
Diversity has been a fundamental component of SAFC’s business model since its inception.
“We have been careful to assure that no customer is more than 2–3% of sales,” states SAFC president, Gilles Cottier. “In this way we have avoided the blockbuster trap, in which companies come to depend upon a single successful product, which can pull the company down when it comes off patent or when the market dries up.”
Despite soft worldwide economic conditions, Cottier foresees continued growth in his company’s outsourcing capability to meet the demands of emerging markets. He claims that sales have increased several fold in the past five years, due to a combination of natural growth and acquisitions.
“We anticipate outsourcing to continue due to the need for expertise in niche technologies and growth in key applications areas,” Cottier says.
Among the important industrial trends that SAFC is facing is the growing Asian market. While there are significant opportunities in China, India, and other expanding economies, there are substantial challenges that have encouraged a go-slow approach at SAFC. “We will continue to develop our manufacturing capability in the Asian continent,” Cottier remarks, “but reserve our high-tech production to the U.S. and Europe.”
A Changing Regulatory Climate
“Global events have increased customer requirements,” reports Tom Bell, vp for quality control. Tracing the arc of events back to 1990, Bell says that the baseline for market entry was a high level of quality control. By 2000, concerns over prion contamination of animal products ratcheted up the level of production oversight, while in 2004, lean manufacturing practices motivated customers to demand adherence to tight delivery schedules.
New challenges and concerns regarding contamination of heparin with melamine are now taking the front seat, as companies and regulatory agencies struggle with products from Asia that have been compromised through negligence or criminal activity.
“Unfortunately, our regulatory infrastructure was not designed to detect criminal malfeasance,” Bell says. To prevent intentional product contamination, Bell believes that upstream supply chain transparency is required.
“We have to be aware of the level of worldwide malicious activity in the global supply chain. And, we have to constantly keep our guard up and make sure that we are doing everything possible to detect illegal contamination of the supply chain.”
In order to create and monitor a global quality system, SAFC and other members of the industry have formed the Rx-360 Mission, a cooperative program to meet the expectations of the industry and regulators by enhancing product quality and authenticity throughout the supply chain.
The consortium is a holistic approach, consisting of four distinct functions: shared supplier audits, adoption of standards and best practices, a political macroeconomic monitoring and clearing-house for suspicious events, and a cooperative technology-development arm. “Through sharing of issues and practices, we can overcome these complex malicious criminal activities that could take our industry down,” Bell concludes.
Trends in Differentiating Technologies
“The pharma/biopharma market, already one of the most technologically diverse sectors of the economy, is increasing in complexity as the industry moves to the next generation of drugs,” states David Feldker, SAFC vp. He stresses that the passage of the healthcare reform legislation has many components designed to drive down costs within the system.
“The need for unique technologies will keep increasing, fueled by the reduction in the pharma manufacturing footprint.” The implication is that service providers will be increasingly important in supporting much more complex technology platforms.
Feldker describes an SAFC “virtuous circle” in which technology development moves business development, which moves technology applications, driving customer relations and feeding back as a driver of technology development. “This feedback loop drives our technology portfolio, enabling us to understand new technology developments and leverage our research relationships,” he says.
“We embrace a centers of excellence approach,” Feldker adds, “in which we bundle our technologies to improve our global footprint to meet customer needs. These centers of excellence are not physical structures but rather a coordination of intellectual resources to improve knowledge sharing, innovation management, quality, and systems integration.”
These are tumultuous times for the pharma/biotech industry. With patents expiring, many companies are looking at depleted pipelines. Analysts are saying that big pharma may undergo a radical transformation in the coming years and emerge a totally altered industry. To adapt and flourish in such a troubled era will require imagination and flexibility.
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