Chemprotech

CHEMICAL PROCESS T E C H N O L O G I E S ( P T Y ) LT D

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CHEMICAL PROCESS TECHNOLOGIES (PTY) LTD

CPT

A Very Active Ingredient PRODUCTION: Colin Chinery

With imported active pharmaceutical ingredients accounting for 60 to 65% of a finished product, the prizes for a strong South African entry into the sector are clear. Pretoria’s Chemical Process Technologies is the front runner. “All of a sudden it makes sense for South Africa to look at manufacturing for itself,” says Managing Director, Dr Hannes Malan. www.enterprise-africa.net / 3

INDUSTRY FOCUS: SCIENCE AND TECHNOLOGY

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The growth of the pharmaceutical industry in South Africa – at R44b the largest drug market in Africa - is seeing a parallel demand for process technology, raw materials and services.

And with it comes exciting and lucrative opportunities for players in the raw material market.

In front is Chemical Process Technologies of Waltloo, Pretoria, an innovative chemical synthesis company with the ability to develop and commercialise competitive organic synthesis routes.

A Top Three SA manufacturer of formulated animal health products and exporter of animal health API’s (Active Pharmaceutical Ingredient), CPT also supplies intermediates to the pharmaceutical industry,

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and manufactures fine chemicals chemical substances prepared to a very high degree of purity for use in research and industry.

UNIQUELY PLACED This combined capacity to synthesise and formulate products gives it a unique position in Southern Africa.

“The company was started by looking at the development and commercialisation of chemical synthesis technology and to become involved in the pharmaceutical industry,” said Managing Director, Dr Hannes Malan “The products for the pharmaceutical industry are very basic intermediates and represent an easy way to get an income to support development. Ever since then, the focus of the company

has been on the development and commercialisation of synthesis technology.”

Drugs have two main components: active pharmaceutical ingredients (API), which provide the medical benefit; and the bulk substance used to make the tablet or liquid used to carry the API. South African pharmaceutical factories currently import 90% of their APIs before formulating the medicines in their own plants.

And with active pharmaceutical ingredients accounting for 60 to 65% of the final manufacturing cost, South African production should lead to price cuts as well as the emergence of a promising new player on the national manufacturing base.

Local production is a key

CHEMICAL PROCESS TECHNOLOGIES (PTY) LTD

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// ALL OF A SUDDEN IT MAKES SENSE FOR SOUTH AFRICA TO LOOK AT MANUFACTURING FOR ITSELF AND NOT BEING DEPENDENT FOR CRITICAL PRODUCTS ON ONE OR TWO COUNTRIES // strategy if sustainable, predictable and equitable access to medicines is to be achieved. And given the high-spec quality and technical expertise CPT is bringing to the market, it is a further inducement to the big companies, whose increasing reliance on external partnerships is driven by issues of cost and technology.

“In South Africa some 90%+ of all API active pharmaceutical ingredients are imported, mostly manufactured in China and India, and apart from us, only one other company here is manufacturing APIs,” said Dr Malan.

COST-COMPETITIVE SA OPPORTUNITY “With imports carrying quality and environmental issues, we saw there was an opportunity for a local producer, and we are looking at the products currently being used for treatment in South Africa to see whether we can develop the technology to manufacture those molecules cost-competitively.”

CPT was formed in 2001 by one of Dr Malan’s fellow partners and Director Business Development, Dr Gerrit van der Klashorst. With his interest in the development of

chemicals and process technology, Dr van der Klashorst was approached by a local animal health company looking for guidance in the development of technologies and the synthesis of a specific active ingredient for one of their products.

Around the same time, another operator approached him to take over the production of some very basic intermediates for a South African pharmaceutical company. This was to be the birth of Chemical Process Technologies. In 2003 a second partner, looking for an investment opportunity, arrived, and four years

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INDUSTRY FOCUS: SCIENCE AND TECHNOLOGY

later Dr Malan joined the business.

“For the animal health sector we are a pure technology company manufacturing on behalf of the multinationals. We do not own registrations. Although formulation is the biggest part of our business, the essence and focus of the company is still the development of technology and its commercialisation.”

With the capacity to synthesise various molecules, the 70-employee CPT develops its own process technology, with the emphasis on current and environmentally responsible processes.

Typical chemical manipulations include oxidation, amidation, alkylation and heterocyclic chemistry, with a dynamic Research and Development team which includes four PhD researchers,

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responsible for the development of proprietary synthesis routes for molecules with an identified viable local market.

Last November CPT took a major advance with the opening in Pretoria of a pilot plant for the manufacture of generic active pharmaceutical ingredients, a R50m joint project between CPT, the Industrial Development Corporation, and the Technology Innovation Agency, and with the support of the Departments of Science and Technology, Trade and Industry, and Health.

“Over the past 18 years we have been able to fund our own growth,” said Dr Malan. “But with this project far bigger than we could deal with as a company, we knew we needed some financial support and so we approached the Government.”

GOVERNMENT BACKING As a result, the Department of Science and Technology’s Technology Innovations Agency provided a grant for equipment, and the Industrial Development Corporation support for the building and equipment. “We have got some very good partners in these organisations in terms of this project.

“To go commercial with our technology, we had to build a pilot plant, advancing to the point where we have the capacity to manufacture products on a big enough scale.

The pilot plant is a small but very significant step in the establishment of a South African API manufacturing industry.

“The fact that we are relative newcomers in the field of generic API production gives us an edge

CHEMICAL PROCESS TECHNOLOGIES (PTY) LTD

// THE PILOT PLANT IS A SMALL BUT VERY SIGNIFICANT STEP IN THE ESTABLISHMENT OF A SOUTH AFRICAN API MANUFACTURING INDUSTRY // over established producers, since we are using the latest manufacturing technology whereas they have invested heavily in older technologies.”

And with stricter environmental and safety regulations and enforcement raising Chinese producer prices, CPT is confident its products would be competitive. “We have the resources in South Africa to participate in the global pharma industry.”

It’s a vision shared by the Industrial Development Corporation’s Head of Basic and Speciality Chemicals, Hilton Lazarus. “CPT is an example of the role the IDC can play in setting up our own API manufacturing facilities.” Local production of APIs significantly shortens the supply chain for the South African pharmaceutical industry.

For TIA CEO Barlow Manilal, the new pilot plant is a “great achievement,” in line with its object of funding the transformation of knowledge and ideas into commercial products, and helping to develop the economy and ultimately improving the lives of all South Africans. “CPT ticks all these boxes - a perfect fit for TIA.” Close collaboration with local universities allows access to sophisticated analytical equipment and expertise, with lecturers and students given the opportunity to visit the company for exposure to commercial fine chemical manufacturing.

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INDUSTRY FOCUS: SCIENCE AND TECHNOLOGY

NATIONAL ASSET “We see the plant as a national asset because nobody else is doing what we are doing. It’s a facility with many purposes and the most critical one for us is to give proof of the technology we are developing,” says Malan.

But in the South African pharma sector as in others, skills shortage is a major issue, with Dr Anban Pillay‚ Deputy-Director General of regulation and compliance in the department of health‚ saying that of the factors impacting on South Africa’s capacity to compete, “firstly and most importantly, is access to appropriately skilled persons to develop production capacity.”

Dr Malan agrees. “We have excellent scientists in South Africa,

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but the biggest problem is that we don’t have enough commercial opportunities for them to apply their skills. We do not have the industries to support them, and the markets are quite small.

“When we look for somebody specifically on the chemical side, we will not find somebody with applicable knowledge such as you find in Europe or the US. This is the biggest issue, so we work closely with the number of universities, we train, broaden our current workgroup, and identify people we would like to employ to help us grow.

“And when you have given them the opportunity, these guys just fly; people with the knowledge and the passion.”

GOING GLOBAL As one of South Africa’s Top Three manufacturers in the animal health segment, CPT is looking to secure approvals from other animal health companies to start manufacturing for them. “Longer term, we are looking at establishing ourselves as an international manufacturer for animal health products. This will require more capital, and we are slowly but surely putting this in place.

“On the fine chemical side there are some real opportunities here in South Africa. For pharmaceuticals, the first thing is to get approval of our facility from the South African Medical Council, and this will happen before the end of the year.

“We will use the pilot plant

CHEMICAL PROCESS TECHNOLOGIES (PTY) LTD

// IN THE DECADES AHEAD, WE WOULD LIKE TO HAVE A COMMERCIAL AIP MANUFACTURING PLANT RUNNING HERE IN SOUTH AFRICA // as a combination of R&D and manufacturing, and hopefully generate income to fund more commercial products. In the near future, we would like to have a commercial AIP manufacturing plant running here in South Africa.”

An independent business, CPT will be an independent manufacturer able to supply to any of the pharmaceutical companies in the country, says Dr Malan.

CHANGING DYNAMICS “We have spoken to most of the pharmaceutical companies in South

Africa and they are all interested in talking to us with regard to processes for specific products. On the pharma side it is very important to show that we can do what we said we can do. Once you have done that the dynamics will change “It’s a very competitive environment, and it’s our objective to grow as a sustainable organisation and continue to develop technology and its commercialisation.

The playing field is definitely levelling out, says Dr Malan, with the cost of manufacturing changed dramatically. “All of a sudden it makes

sense for South Africa to look at manufacturing for itself and not being dependent for critical products on one or two countries.

“For us the opportunities are clear, and we have a very good chance to become participants in this industry and making a valuable contribution to South Africa and its economy.”

WWW.CHEMPROTECH.CO.ZA

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June 2018

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