SAFC's Q4 hit by lack of visibility in drug sector

By Gareth Macdonald

- Last updated on GMT

Related tags Safc

SAFC’s fourth quarter performance was hurt by dip in demand from big pharma in the US and Europe combined with lower sales to the chemical industry, according to parent company Sigma Aldrich.

Despite growth of 5 per cent for 2008 as a whole, SAFC’s revenues for the fourth quarter fell 6.5 per cent to $145m (€112.7m) due to pharma customers delaying projects or order delivery times, according to Sigma CEO Jai Nagarkatti.

Nagarkatti, who was fielding questions at Sigma’s full year results presentation, said there had been no major cancellations from the pharmaceutical industry and added that, while it has not grown significantly, SAFC’s order book is stable going into the second quarter of 2009.

These are unusual times with limited visibility into the future and we really don't have a good understanding of how the customers will react to the current economic situation​,” he added.

One prediction that Nagarkatti did make was that the market for both fine and research chemicals would shrink this year as ongoing industry consolidation is making pharmaceutical clients more cautious about placing orders.

The statements coincides with the news that SAFC’s Supply Solutions operations, which offers a range of compliance services to regulated industries, has added 50 new certified organic products to its range of flavour and fragrance raw materials.

The new organic products are certified by the Midwest Organic Services Association (MOSA) and will meet both the US National Organic Program (NOP) and the European Organic Standards.

While SAFC has never been purely focused on serving the pharmaceutical industry, the decision to further expand its organic food industry offering suggests that this area of its business may take on additional importance.

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