Fine chemicals firm makes leap from India to US

By Kirsty Barnes

- Last updated on GMT

Related tags North america Chemistry

Indian custom chemical synthesis firm Denisco has opened up shop in
the US to capitalise on the growing demand in North America for
high-quality, low-cost complex organic molecules.

For more than ten years, Denisco has delivered low-cost custom chemical compounds under contract to global pharmaceutical firms throughout Europe and Asia, however, this is the company's first foray into the lucrative North American market.

According to market research analysts Frost & Sullivan, revenues in the North American fine chemicals sector will grow from $21.29bn (€17.78bn) in 2005 to reach $28.62bn in 2011.

Denisco's newly-opened sales and customer support office in Dallas, Texas, will now allow it to supply pharmaceutical manufacturers and catalogue distributors in the region and compete for a slice of this pie.

The company, who said it has been experiencing "consistent annual growth"​ through its long-term customers in Europe and Asia, is anticipating a similar level of success in this new market and plans to increase its manufacturing capacity tenfold in the next twelve months with a new ten-acre production facility near its current headquarters in Hyderabad, India.

"Customers in North America face tight margins and fierce competitive pressure for time-to-market,"​ said Venkat Ram, president of Denisco Chemicals.

"Our ability to quickly, safely and efficiently produce pharmaceutical lab samples, and then rapidly ramp up for commercial-level volumes, will help lighten these pressures."

Denisco's specialty lies in chemistries such as large-scale Grignards, cyanations, diazotizations, thiophosgenations, reductions and hydrogenations and the firm also performs specialised services with low-temperature reactions and difficult reagents.

The company who supplies its European customers from facilities in Nancy, France, is one of several low-cost Indian manufacturers that are posing challenges to European active pharmaceutical ingredient (API) producers as their manufacturing capabilities mature.

While European API manufacturers will see their share of the global market fall in the next few years, Asian markets are growing at phenomenal rates, with India set to supplant Italy as the second largest API manufacturer on a worldwide scale by 2010, according a new report by Italy's Chemical Pharmaceutical Generic Association (CPA).

India is well positioned in this sector thanks to low labour and environmental costs, the size and dynamism of its economy, and incentives provided by the Indian government, not only to further squeeze the profits of European producers, but in the long term even threaten the dominance of China as top API producer.

With sales of $2bn in 2005, the Indian API manufacturing industry is the third largest in the world and is expected to make sales of $4.8bn by 2010, an average yearly growth rate of 19.3 per cent.

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