In the last few years, many fluorochemical companies have shown increased interest in the specialty fluorochemicals, especially those fluorochemical intermediates that find application in the manufacture of pharmaceutical molecules. This has been brought about by mainly the following reasons:
- Patent expiration of many pharmaceutical molecules requiring fluorochemical intermediates in their synthesis
- Phase out of CFCs, HCFCs in the future in compliance with the Montreal Protocol and Kyoto Protocol has made it necessary for the fluorochemical manufacturers to diversify into custom synthesis and high value specialty segments of the fluorochemical industry.
The global fluorochemical market can be broadly classified into three segments as shown below:
A wide range of pharmaceuticals across therapeutic categories require organic fluorochemicals, either aliphatic or aromatic, in their synthesis. In fact, industry experts believe that in the future, one in every 3 new active pharmaceutical ingredients (API) will be based on fluorine chemistry.
In order to focus more on the research and development of new molecules and introduction of new chemical entities in the market, many global pharmaceutical companies are increasingly outsourcing virtually everything from clinical trials and regulatory management to API manufacturing. The cost competitiveness of the Indian and Chinese bulk drugs manufacturers has been a major factor in the outsourcing decision of the global pharmaceutical companies. This shift in API manufacturing, especially for the generic pharmaceutical products, has created new opportunities for the basic and advanced fluorochemical intermediate manufacturers in the Asian region.
Currently, China has a strong manufacturing base for aromatic fluorochemicals such as benzotrifluorides, fluorobenzenes, fluoroanilines and fluorotoluenes. In addition to a large domestic API market, China exports significant volumes of aromatic fluorochemicals all over the globe. In the year 2003, China's production of benzotrifluorides was estimated to be about 25000 metric tons in terms of volume and $125 million in terms of value. Cephalosporins like cefazolin, ceftriaxone and fluoroquinolones like ciprofloxacin, moxifloxacin and gatifloxacin are also manufactured in large quantities in China for the local as well as export market. In 2003, it is estimated that China manufactured 4000 metric tons of 2,4-dichloro-5-fluoro-acetophenone, the main intermediate used in the synthesis of the anti-infective drug ciprofloxacin China cephalosporins like cefazolin, ceftriaxone and. china's dominance is expected to continue in the aromatic fluorochemicals segment in the coming years due to its cost competency and large manufacturing capacity.
European companies like Rhodia and Solvay Fluor dominate the aliphatic fluorochemicals market comprising CF2 and CF3 product range, which are used as building blocks in organic synthesis of pharmaceutical and agricultural molecules. CF3 products like trifluoroacetic acid and trifluoroacetyl chlorides are two high volume products but the market for these products has become saturated to an extent due to overcapacity. trifluoroethanol, a key intermediate in the inhalation anaesthetic isoflurane, has a global market estimated to be over 1000 metric tons.
Tosoh Corporation, based in Japan and Halocarbon Corporation, based in US are major manufacturers of Trifluoroethanol globally. Miteni in Italy, Lonza in Switzerland and Clariant are the other main European players in the custom synthesis of fluorinated intermediates for the pharmaceutical industry.
In the synthesis of fluorinated intermediates, Halogen Exchange (Halex), Diazotization and Electro-fluorination are the key technologies used. Hydrofluoric acid is a key raw material in the manufacture of a wide range of fluorinated intermediates. Most of the global fluorinated players are vertically integrated with capability to manufacture right from HF acid to complex advanced intermediates.
In terms of the therapeutic categories, the fluoroquinolone segment constitutes a major market for the fluorinated intermediates. Fluoroquinolones like ciprofloxacin, gatifloxacin, moxifloxacin, levofloxacin, and ofloxacin together constitute a fluorinated intermediates market worth $100 million, considering both the regulated and non-regulated pharmaceutical markets. Antidepressants like citalopram, escitalopram and paroxetine are some of the molecules based on fluorine chemistry that have shown impressive growth in the last few years. Anti-cholesterol drugs such as the blockbuster drug atorvastatin (global formulation revenues $10 billion) and fluvastatin also require fluorinated intermediates in their synthesis.
During the R&D stage of a new pharmaceutical product, the pharmaceutical companies source their kilogram quantity requirements of fluorochemicals from catalogue chemical suppliers such as Apollo Scientific (Based in UK), Lancaster Synthesis (A Clariant group company) or SynQuest Laboratories (A subsidiary of Central Glass, Japan). Once a pharmaceutical product passes the initial tests and the production needs to be scaled up to a commercial level from research scale, the sourcing is done from commercial fluorochemical manufacturers. An interesting trend that has been observed in recent years has been the alliances developed through mergers and acquisitions between the catalogue chemical manufacturers and the bulk scale manufacturers. One such example is the acquisition of SynQuest Laboratories, Inc, a catalogue fluorochemical manufacturer based in Florida, USA by Central Glass of Japan, a bulk fluorochemical manufacturer, in 2002. Such alliances give a pharmaceutical company the opportunity to source its fluorochemical requirements from the development stage to the commercial stage from a single fluorochemical supplier.
The key challenges facing the specialty fluorochemical intermediates suppliers at present are as follows:
- Overcapacity
- Pricing pressures created by the Asian competition.
- Slowdown in the agrochemical sector
- Slowdown in the launch of new fluorine chemistry based pharmaceutical molecules due to lengthy FDA approval process
In order to succeed in the fluorinated intermediates business, the suppliers would have to develop long term relationship with the global pharmaceutical manufacturers. The suppliers would have to work in close interaction with the drug development teams and provide the right fluorine chemistry to develop new pharmaceutical molecules with better therapeutic efficacies. In the short term, suppliers would have to develop relationships with generic manufacturers of the drugs that have recently gone off-patent or will go off-patent in the near future.
- (Frost & Sullivan Research- Chemicals, Materials & Food Practice. For queries mail to sdedhia@frost.com)