As the world’s largest chemical company, how did you go about entering the pharma and biopharma space and which products are you most focused on?
BASF produces many of the ingredients that are used in the pharmaceutical industry, and it is challenging to find formulations that do not contain BASF products. Our portfolio is roughly split within three major categories: APIs (Active Pharmaceutical Ingredients), which are essentially the active drugs known to have a therapeutic effect; excipients, the inactive substances that make the drugs functionally work; and ingredients or intermediates, which are typically utilized upstream in the manufacturing of drugs, but not necessarily in the final formulation. For example, there can be up to 200 individual ingredients utilized for the manufacturing of biopharmaceuticals via cell culture. These specific biopharma drugs, such as monoclonal antibodies, are grown in 1000-liter tanks and go through a downstream purification and processing phase. The protein is ultimately extracted and turned into the final dosage consisting of an API and several other ingredients. BASF makes ingredients and chemistries that support each of these individual steps.
BASF has participated in the pharmaceutical industry since the invention of Polyvinylpyrrolidone (PVP) in 1939 by BASF chemist Walter Reppe. Its first use was as a blood plasma substitute during the Second World War for critically wounded soldiers. Today, this type of chemistry is ubiquitous in pharmaceutical formulation, often used as a tablet binder, disintegrant, pore former and solubilizer. At BASF, the Pharma Solutions business tends to be one of the lowest volume chemistries produced, but among the highest value due to the high-quality standards required. For example, we manufacture surfactants, where the same chemistry is used from the most basic detergents to cosmetic and food use, all the way to substances used in injectable formulations. We typically produce at the very tail end of that value chain across many of BASF's core chemistries including polymers, surfactants, lipids, catalysts, and chemical intermediates.
How do you manage to keep an edge in an industry that is so competitive?
Our competitive advantage is based on several key components and the first of them is digitalization. Over the past three years, we have made an enormous effort to digitize our entire customer-facing business model. We started by aggregating our specific knowledge in areas of formulation, quality, and regulatory information, and built them into convenient, online platforms that service our customers all over the world at their fingertips, where classically such information was only available in textbooks and journal articles. Second, is innovation; no company has produced and launched as many innovative and novel ingredients for the pharmaceutical industry. Our inventions have tackled some of the toughest industry challenges, from increasing yield of monoclonal antibodies to solubilizing drugs that are harder to dissolve than sand in water. Finally, sustainability, where we believe in sustainability at our core, and we continue to lead in this area, even when our customers cannot select a “sustainable” pharmaceutical product behind the counter. However, the raw materials (APIs, excipients, and intermediates) can make up to 60% of the total product carbon footprint of a final drug product, so our impact in this area is very significant.
To what extent is the revolutionary technology we have today the cause of an inflection point in innovation in the pharma industry?
In the classic small molecule industry, a great deal of the “easy” drugs has already been created over the past decades and the drugs that are left are increasingly difficult to formulate; this leads to many revolutions in technology to make these drugs effective.
On the biopharmaceuticals side, the game has just begun, with new technologies in immunotherapy, cell & gene therapy coming out each year crafting literal cures for life threatening diseases.
Yet, we should note that in the pharma industry, even these revolutions take time, and this is due to the very high risk, both to patients’ lives, as well as the financial risks taken on to bring new drugs to market.
Medicine consumption in the U.S accounts for less than 10% of the total global pharmaceutical industry by volume, while nearly 50% of the value produced is found here. Due to the way drug prices are negotiated in the US, compounded with the complex benefit management and insurance systems, drugs are often significantly more expensive to the average consumer versus the rest of the world. This is contrasted with the firsthand access to novel treatments the US gained by being a key gateway market for most new medicines, both from a financial and a regulatory perspective. R&D costs are ballooning to well over US$ 2 billion dollars per drug, and in one sense, these costs can be viewed as "subsidized" by the high drug prices in the US. It is a system that is likely unsustainable and, in my opinion, nearing an inflection point in either innovation, manufacturing or pathways to bring drugs to market in a more efficient manner.
Is there a specific client profile that you pursue when starting a new collaboration?
Taking into consideration the world scale manufacturing and distribution of these ingredients, it would be hard to find pharmaceutical clients that we do not work with. We work with leading innovative pharmaceutical companies and with generic companies whose goal is to provide better access to affordable medicines. Furthermore, we work in all the “pharmerging” regions of the world and have local technical laboratories and quality and regulatory professionals to support pharma companies located in these regions. Ultimately, our best collaborators and most successful innovations have come from those that have a problem that has yet to be solved.
At a personal level, what is more compelling for you: the beauty of the science or the way the industry works?
Being a trained scientist and engineer, when I wake up in the morning, I still think about science because I love the underpinning for how we do things at a first principles level. Lately, what has been more interesting to me is how we utilize that science to enable innovation in the future. On the business and industry side, I really enjoy the dynamic nature, fast pace, and rich possibilities to enable and unlock all these new technologies and innovations – particularly through digitalization. As an ingredient supplier, we may not have the glory of taking one molecule start to finish over a decade, but we get to play a small but essential role in hundreds if not thousands of medicines, and that is very rewarding for me personally.
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