Rudjer Boskovic Institute
Division for Organic-Chemistry & Biochemistry
Laboratory for Stereoselective Catalysis and Biocatalysis
(CATBIO)
Business Plan 2003-2007
(Chiral)
Vitomir Sunjic and Vladimir Vinkovic
2002
PROJECT:Croatian Chiral Technologies
PROJECT PROPOSERS:Prof. Dr. Vitomir Šunjic
Dr. Vladimir Vinković
Business Plan
Part 1
1.1. Legislative surrounding
1.2. Economical surrounding
1.3. Vision
1.4. Mission
1.5. Objectives
1.6. Outline strategy
Part 2
2.1. Assumptions
2.2. Background
2.3. Current situation
2.4. SWOT and PEST analysis
2.41. SWOT
2.4.2. PEST
2.5. Marketing plan
2.5.1. Market segmentation and Market analysis
2.5.2. Products and services to be offered
2.5.3 projected demand
2.5.4. competition analysis
2.5.5. marketing strategies
2.5.6. promotion plan and channels of distribution
2.5.7. competence building
2.5.8. organization
2.6. Resource requirements
2.6.1. HR plan
2.6.2. Facilities plan
2.6.3. Business process improvements
2.6.4. Governance
2.6.5. Organizational plan
2.7. Financial plan
2.7.1. Assumptions
2.7.2. Income and expenditure projections
2.7.3. Cash Flow projections
2.7.4. Investment requirements and analysis
2.8. Action plan
Part 1
1.1. Legislative surrounding
Project Croatian Chiral Technologies will be implemented according to existing Croatian and international rules. The Croatian legislative at this moment are very similar as in EU.
1.2. Economical surrounding
The main clients for facilities of this Project are pharmaceutical companies. Although Croatia is small country it has relatively strong pharmaceutical industry. World known PLIVA Company has contracted with the members of Laboratory CATBIO analytical separations of racemic mixtures from its R&D programs, performed on HPLC columns with CATBIO original chiral stationary phases. Besides, in the last 10 years CATBIO has completed research projects within over 15 contracts with domestic and foreign companies.
1.3. Vision
Increasing demand in pharmaceutical industry, industry of agrochemicals, flaovours, and fine-chemical industry for chiral separation methods, and chiral stationary phases in particular, has recently open new chances for small high-tech companies, or knowledge-based companies.
Nowadays, chiral stationary phases prepared from polysaccharide derivatives are most frequently used. In the last 5-6 years CATBI group, however, has descovered and patented world-wide a novel type of stationary phases, based on small synthetic molecules. It is expected that such type of stationary phases will become concurrent on the world market to the polysaccharide type. They contain chiral selector covalently bound to solid support and are stable under elution conditions. In the conditions of massive application for analysis in industry, and particularly for industrial preparative chromatography, the chiral stationary phases must be robust and this is the great advantage of the phases that we have develped and patent protected.
1.4. Mission
Observing R & D and business activities of some world recognised research groups active in production of chiral stationary phases (CSPs)and their commercialisation we concluded that is necessary to offer to the customer not only the new CSPs but also a full service of separation of the samples of commercial interest for the customer. We have, therefore, founded new Croatian company called CROCHIT (Croatian Chiral Technologies), which will take over all contractual projects of CATBIO Laboratory. This company will take over advertising activity, patent activity, and commercialisation, all three activities completely oriented towards world market.
When successful separation of commercially important substances for the customer is achieved on our patented CSP, large production of this CSP will be contracted with the third partner. This company is able to assure cash flow form the very beginning of its activity, and thus soon became financially independent and assure profit. As mentioned the profile of research, service and production activities will extend form CSP pproduction to the area of custom chiral synthesis and area of chiral separations.
1.5. Objectives
The primary objective of this Project is to enlarge world market for Croatian chiral technologies. The initial results, marketing of chiral HPLC columns in USA, contractual research on chiral syntheses with Italian companies and development CSPs within contractual research with the third Italian group, are encouraging and promising.
The most important immediate, technical objective is production and patent protection of new chiral stationary phases with improved properties. More precisely, these CSPs are under investigation and involve rigid chiral structure and one or more strong -electron deficient aromatic units in addition with one strong -electron rich unit. We expect such chiral assemblies to give selectors that are universal and efficient for separation of enantiomers of numerous racemic compounds. Such material will be inert and stable under various HPLC conditions. The selected CSP material will be used for preparative, custom separation of enantiomers of pharmaceutically interesting compounds.
1.6. Outline strategy
The 5-year business projection of Laboratory CATBIO and CROCHIT Co. comprises following key steps
- Patenting in the period 2003-2004 a set of novel chiral stationary phases, now in development and testing, first in Croatia then world-wide.
- Signing of the contracts with strategic partners for the world-wide service on chiral technologies, both for chiral separation as well as chirla syntheses, in particular for the period 2003-2005. Such contracts are already signed with PLIVA d.d., and IRIS Technologies (USA). Intensive contacts are in due course, and contracts are envisaged to be signed with: Knauer GmbH (Germany), Caffaro S.p.A (IT)., EURAND S.p.A (USA and IT).
- Purchasing of the equipment for SMB technology.
- Construction a new laboratory space within "1st Building of the Institutes Ruđer Bošković", as a part of Croatian science park; period depending on how effective will be organisation of strategic partners in Croatia and abroad in support to this project.
- Regular marketing of the products and services on the world-market, as described above.
- Starting from the year 2005, total income planned around 200000-300000 EU/year.
Part 2
2.1. Assumptions
Primary assumption is that combined financial support to this Project, by domestic agencies and by the World Bank, as well as initial business started by the CATBIO Laboratory, will put the newly founded CROCHIT Co. to the competitive position on the international market of the knowledge-based technologies and services.
Further assumption is that generally bad climate in Croatia concerning private initiative (everybody who acts individually is mafioso!) will not perturb business activity in the frame of this Project.
Final assumption is that already achieved high standard in research, that resulted in over 90 scientific papers published after 1992 in the SCI/CC cited scientific journals and ca 20 patent applications, most of them abroad (IT, USA. JP, PC), will be maintained under pressure of the expected commercial success.
2.2. Background
Chiral technologies, comprising enantioselective catalytic and biocatalytic reactions, separations of enantiomers by crystallization and by chromatography - the later on the analytical and preparative scale, have been developed after 1990 in CATBIO.
In this period over 15 contracts with companies (Caffaro S.p.A., Italy, POLYtech S.c.r.L., Italy, PLIVA, Croatia) have been signed. In the frame of these contracts new technical solutions have been claimed, and some novel biocatalytic and catalytic enantioselective syntheses have been developed. Three IT patents on the methods have been granted to Caffaro S.p.A, with authors from CATBIO. Within contractual research with PLIVA in the years 2001/2002 a laboratory method for enantioselective step in the development of a new drug entity is under development.
Technical-problem solving scientific projects that have been successfully completed in CATBIO Laboratory comprise preparation of the large palette of biologically active compounds; from -lactam antibiotics, pesticides, fungicides, anticoagulants (in collaboration with Roferm S.p.A. and Caffaro S.p.A, both Italy), antihypertensives, immunostimulating agents and antimycotics (in collaboration with PLIVA d.d.). Through such collaboration projects we became particularly expert in developing original, effective lab-scale syntheses, optimisation of the accepted process for scale up and preparation of all necessary standards and accompanying substances for preclinical examinations. We expect that collaboration with PLIVA d.d. in the next period will be continued on development of synthesis of target new molecules possessing antiasthmatic activity. Project with Caffaro S.p.A. on the syntesis of a large number of chlorothalonile metabolites is in course. In the frame of these contracts with industrial partners ca 30 papers are published and 9 patents applied, most of them abroad, only one in Croatia
2.3. Current situation
Beside the mentioned contracts, signed after 1996, CATBIO Laboratory (http// has produced nearly hundred HPLC columns for commercialisation, mainly exported to USA market via IRIS Technologies L.L.C., Lawrence, Kansas, USA. In the last six years in our Laboratory broad research is completed in the field of chiral stationary phases; 12 scientific papers are published in the international journals, mainly in Chirality (publsihed in USA) and 5 patents applied, 3 are registered in Italy and two world-wide. Columns for HPLC filled with material protected by our patents are available on the USA market under trade name “Chiris”®. They are commercialized by, and can be purchased from the American company IrisTechnologies, Inc. (Lawrence, Kansas). Presently, under this name 7 different columns are on the world market, and several others are in the investigations phase. Several our chiral stationary phases are under investigation for application in SMB preparative systems in the laboratories of the world leading-companies such as Merck-Sharpe&Dohme (USA), GlaxoSmithKline (GB) and Pharmacia (USA) companies. Secrecy agreements are signed with all these companies by CATBIO representative, Prof. V. Šunjic, and by Director of IrisTechologies, Dr. A. Aced.
In conclusion, current situation is in the field of production, services and commercialisation of the knowledge in the filed of chiral technologies is characterised by the high entrance barrier, both regarding the know-how knowledge and venture capital. The first aspect of this barrier is already in part overcome; this Project to the World Bank is prepared and proposed in expectation that its support will help to overcome the second aspect of this barrier.
2.4. SWOT and PEST analysis
2.4.1. SWOT
- Strength of the Project is in highly qualified staff with ten-year experience in the area of the chiral technologies, and in research on the contractual projects under time amd money pressure. Our advantage to concurrency is our proper patent protective original materials, running contracts with the several companies, and, last but not the least, well equipped laboratory. The laboratory equipment is purchased in the last 10 years, and fits the best European standards
- Weaknesses are the need for seeding capital, new laboratory capacity, and lack of the experience in the continuous cash-flow business.
- Opportunities for the Project are the strong demand for the chiral technologies world-wide, for the enantiomerically pure compounds, particularly by the pharamaceuticla and agriculture industry.
- Threats are long lasting, rather slow evaluation of this Project, already postponed highly positive evaluation by the experts of the WB, given in written already in summer 2002!? We are also afraid of political influences in Croatia on the decision to finance this Project, after repeated eventual positive evaluation by the experts of the WB.
2.4.2. PEST
- Political/legal factors: It is obvious that the high dependence of Croatian government on various international political institutions might influence restructuring of Ruđer Bošković Institute. Its impact, positive or negative, on the herewith proposed Project and on the prosperity of the newly founded company CROCHIT cannot be anticipated at this moment.
- Economic factors: Besides the overall factors that influence the RTD sector in Croatia, important problems in connection with application of science to the benefit of the society are the high taxes imposed to the incomes coming outside the budgetary support, i.e. by the Ministry of Science and Technology. Next to the high tax rate on the state level (22% VAT) there is an additional tax on the level of the Institute (30%), so only 48% of the incomes actually remains to the CATBIO Laboratory where the research and/or services are performed for the customers from abroad and in Croatia.
- Social factors: Uncertain job positions for technical associates and joung scientists, potential participants on the Project represent an evident negative motivation.
- Technological factors: Continuous need for new, updated equipment and software, depending on the scientific and technological progress in the chiral synthetic and separation technology, both on analytical and preparative scale, should be considered from the very beginning of the commercial activity within this Project.
2.5. Marketing plan
2.5.1. Market segmentation and Market analysis
World-wide market of chiral drugs has in 2001 reached the value of 140 Billion $. The market of chiral stationary phases, chiral HPLC columns and chiral analytical services is segmented, in a steady growth, however, and difficult to evaluate. World-market of all other chiral products in the optically pure form is not estimated until know, but it presumably exceeds the former figures by the factor of 10.
The products and services proposed by this Project therefore are not oriented to the broad consumption (public market), there is no personal, final customers, rather, the products are oriented towards industrial consumption. The end-users are high-tech companies, in particular those in the field of catalytic processes in production of drugs. In other words, the users and customers are the same legal persons. The advantage of the new product BINAP, one of the leading chiral compounds proposed by this Project for production by enantioseparation on the patented CSPs, stays in its higher purity, then of that offered to the world-market by the two competitors. In particular, BINAP can be conveniently produced with the purity grade requested by the customer (e.g. with enantiomeric purity 98%, 99% and over 99%).
The advantage of the new product as compared to the existing products on the world market is, as already indicated, in its high and constant quality, assured by the specific technological process of production. Therefore the product is oriented to the EC market, and to the world-wide competition, i. e. to the high-tech pharmaceutical and fine-chemical companies world-wide.
2.5.2. Products and services to be offered
Technology behind new product consists of the production method for optically pure both enantiomers of BINAP. This product is presently produced by preferential crystallization of one of its intermediates. Our patent protected process is based on our patent protected chiral chromatography of the key intermediate, using simulated moving bed (SMB) technique. There is no similar method in production of BINAP, moreover, this method allows production of both enantiomers of the same, very high optical purity. As such, this product enables highly effective catalytic processes and thus enhances quality and lowers the costs of the technological process. Besides, the production costs, and consequently the price of the new product is lower than of the presently offered products on the market, which are of the lower quality.
Beside the leading product BINAP, selected by the CATBIO team, significant marketing activity and cash flow is expected from the separation services for separation of enantiomers of other racemic compounds in the enantiomerically (optically) pure products. This services will be offered to the third partners in USA and EC, specifically to the pharmaceutical and fine-chemical companies world-wide. These services are already contractually performed in the CATBIO Laboratory, though not yet on the permanent bases, to a number of companies from USA and EC. Following services were completed:
-separation services on HPLC
-commercialisation of chiral stationary phases in bulk (for HPLC columns)
-commercialisation of larger quantities of enantiomerically pure compounds, and
-development of the laboratory-scale enantioslective syntheses on the contractual bases
2.5.3. projected demand
The market request for larger quantities of enantiomerically pure BINAP is expected, since its application as the ligand in catalytic complexes for production of drugs, aromas, etc. is in the steady increase. Generally, market of enantiomerically pure compounds is in steep increase, and pharmaceutical companies are not able to complete many projects in this field. These companies often outsourcing the projects of chiral chromatographic separation to the specialised companies,. The funding and activity of such company, CROCHIT, is one of the main targets of this Project. Between CROCHIT and the PLIVA Co., head quarter in Croatia, the letter of intention is already signed, and a number of potential partners are companies abroad. Many companies in India, which are growing fast, do not yet develop chiral technologies for preparation of enantiomerically pure compounds. Croatian company, being outside of USA and EC market, could be highly interesting partner for those companies.
2.5.4. competition analysis
The offered product BINAP has no direct competition neither on domestic nor on the world market, in view of its broad spectrum of properties and applications. There is no import in Croatia; this product is exclusively oriented to the world-market.
There is one producer of BINAP, Digital Co (Japan), and one distributor of laboratory quantities of BINAP, Aldrich Co. There is low probability that small producers of gram scale- quantity will appear as the competitors. The large part of the world market posses Digital Co.
Competitive position of BINAP from CATBIO is based on technology, high, adaptable quality and price. Technology of CATBIO is effective, and the production price participates favourably in he total price of the product. Production cost at Digital Co. are estimated to 33%, whereas in CATBIO product they participate by 10-15%. Quality, measured by the chemical and optical purity of the product is nearly 100% for CATBIO product, what is not the case for Digital product. CATBIO process can supply he product of 98%, 99% or over 99% purity, what is again not the case with Digital product. Concerning the price, Digital is selling BINAP for 12 000 to 15 000 EU/kg, whereas CATBIO envisages the price of 5000 EU/kg to enter and stay on the market, since production cots allow such policy. CATBIO is counting on the share of 2-3% of the world market in this initial period.