Albemarle says it is seeing a flight to quality as pharmaceutical fine chemical customers begin to return to western suppliers.
The trend was highlighted by Albemarle’s director of fine chemistry services David DeCuir, who told attendees at CPhI this week that drug industry customers once attracted by lower prices in Asia are changing their minds as a result of quality issues and potential interruptions.
“When you save $1.50 somewhere and lose everything by not having a product…people are starting to realize that is not the best option” he said, adding that increasing costs in Asia are also driving customers to seek western suppliers.
Fine chem performance
DeCuir also spoke more widely about Albemarle’s fine chemicals business - which saw sales increase 13 per cent to $208.7m and income grow 17 per cent in the three months to the end of June . He cited Albemarle's line of generic active pharmaceutical ingredients (API) – like ibuprofen – as the key growth driver for the firm in recent times.
This contrasts with the custom synthesis unit - the other division of Albemarle’s fine chemicals business - which, while still showing growth, “has lagged a little” according to DeCuir.
He said this was due in part to the long gestation period of custom synthesis contracts, explaining that customer projects at Phase III are still three years away from commercial sales.
To help counter this and expand Albemarle’s business more generally DeCuir said the firm intends to do more work with ‘virtual pharmas’ that are in need of manufacturing capacity.
He also said Albemarle is open to the idea of growing its pharma business through acquisitions, adding that the firm has come close to making deals on a few occasions
DeCuir explained that although Albemarle had worked hard on the deals “we won’t over pay” adding that “we haven’t found any [acquisition candidates] that our under our limit.”
Albemarle is due to announce its Q3 results next week.