Euticals on Chemistry Today: a partner of choice for pharma and chemical manufacturing

Euticals Spa is a privately owned pharmaceutical company where shareholders are managers and institutional investors.




Could you please spend a few words on Euticals and its growth?
Maurizio Silvestri (M.S.) - For more than half of a century, Euticals has been a company involved in the manufacturing of Active Pharmaceutical Ingredients (APIs). For many years the company has worked in the European and US market, reaching a turnover of about 15M €, selling products manufactured in its only production site located in Lodi. At end of 2001 the shareholders decided to expand the growth of the company through an M&A process. Four plants in Lombardia (Italy), around the Milan area, were acquired: Probiosint (Varese), Prochisa (Casaletto Lodigiano), Diaspa (Corana, Pavia) and Rozzano Ambrosia from Norpharma. Diaspa was then divested in 2006. The strategy was to create an industrial player with an articulated technology platform ranging from chemical synthesis to fermentation and enzymatic process, able to offer generic APIs in several therapeutic areas. In December 2008 Mandarin Capital Fund acquired the majority of shares of Euticals Spa. Mandarin is a Private Equity sponsored by Banca Intesa (Primary Italian Bank), China Development Bank (Primary Chinese Investment Bank) and China ExIm Bank (Primary Chinese Investment Bank). The institutional role of Mandarin is enabling cross border investment of Italian companies in China and Chinese companies in Europe. In March 2010 Euticals acquired Polichimica Spa (about 29 M € sales in 2009).
Among various opportunities, Polichimica brought fermentation technology for immunosuppressant drugs, chiral chemistry for difficult-to-make API, hormones steroids and HAPI like neuromuscular blockers. At the end of 2010 a minority shareholdership of Tianma Tianji (TT) was acquired. TT is a Chinese pharmaceutical company specialized in injectable dosage forms, directly sold in the local hospital market as well as in the manufacturing of peptides as API and injectable dosage forms (two of them have already been approved and marketed). Recently, in February 2011, Archimica Group, very active in Custom Synthesis, CMO and Generic APIs, has been taken over by Euticals. Archimica, an international company having plants in US , Germany, France, UK and Italy, performed in 2010 a sales turnover of about 120 M euro. As of today Euticals is an international company with a portfolio of about 200 registered APIs and a pipeline of about 50 generics to be developed and launched in the following 5 to 8 years. We have most of the technologies we need and basically all the therapeutic fields are covered. On 2011 Euticals is forecasted to consolidate about 215 M € sales.


What are Euticals’ milestones and achievements since its establishment?
(M.S.) - Euticals’ growth in the last six years has been remarkable. At the end of 2004 the turnover (without Diaspa) was about 35M € with an EBITDA of 2 M. Following a restructuring process oriented to reduce fixed
cost, to centralize indirect corporate functions (i.e. Sales, Sourcing , HR , Engineering, R&D etc.), to refocus and revitalise the existing product portfolio, to expand the Custom Synthesis and to create new markets in Eastern Europe and Far East, Euticals reached a turnover of 50M € in 2008 and an EBITDA of 10M. The acquisition steps boosted both the revenues of the Group and an organic growth of about 15M euro. Revenues above 200 M euro and about 40 M EBITDA are expected for 2011. The company is financially stable and well supported by the investors and the financing banks. During the M&A process, Carinelli’s family (Euticals’ former shareholder with about 10%) and Poli’s family (Polichimica’s former shareholder with about 25%) maintained a remarkable shareholdership position in the capital of Euticals, showing a strong willingness to support the company and believing in the business plan of the company for the upcoming years.
Could you enter into details of the acquisition of the 30% of the Chinese Tianma Tanji, made by Mandarin Capital Partners, the largest Italo-Chinese Private Equity Fund?
(M.S.) - The acquisition in China is in line with the globalization strategy of the company. Tianma Tianji offers Euticals the possibility to add to its portfolio peptides and injectable dosage forms and to enter
the Chinese pharma market. Euticals strategy relies very much on the growth of the Chinese market which reaches today 50 B USD and is expected to reach 120B USD in 2015, overtaking Japan and
becoming the 2nd largest market in the world.

How does Euticals pose itself on the Chinese market? Does it fear Chinese competition?

(M.S.) - Euticals’ approach is not defensive per nature. We know that production costs in China are lower than ours, but differences are decreasing and, when China will comply with international cGMP and EHS
regulations, the gap will be reduced. For us it is important to be present on the market with the highest potentiality in terms of absolute and percentage growth. This growing market is increasingly demanding
for high quality and global approach. We are therefore registering many products at the Chinese SFDA, in order to acquire market shares. Production, if necessary, will be carried out locally for the Chinese market.
That’s the reason why we are evaluating new acquisitions and partnerships in China.

What is the reason for Archimica’s acquisition from TowerBrook Capital Partners?
(M.S.) - Archimica’s acquisition offers both advantages and challenges to be taken up. One of the advantages is the internationalization of Euticals which, in the past, was considered as a medium-small Italian operator. Moreover, Archimica offers Euticals a very important and complementary technological portfolio. Archimica brings also a market presence and an interesting client portfolio which, joined with Eutical’s one, will multiply growing opportunities. It will be important to have a balanced management structure, maintain a strong client orientation, a sense of urgency in the strategy performance, a speedup of the research activity and a strong integration between production and commercial structures.
What is your strategy to ensure that you can provide quality products that meet your customer’s requirements?
(M.S.) - Our goal is to offer high quality products in compliance with the most modern guidelines.
Investments on technical skills and personnel training, the continuous upgrading of industrial structures in order to comply with the cGMP evolution and an ethical approach, are the ingredients that make Euticals a reliable partner in terms of quality.
What makes Euticals more competitive than other companies? How is the current state of competition with India and China?
(M.S.) - We would like to build a company capable of adapting to clients’ needs, of satisfying them in terms of quality, costs and services. Euticals is client oriented as a primary value, and every decision is taken under this value, being aware that the final result will be positive also for Euticals’ shareholders.

Where is Euticals heading? East or West?
(M.S.) - Competition in China and India exists. We respect it but we aren’t afraid of it. Western industry has grown and today the difference of costs is highly reduced. Moreover, the complying of China and India to international regulation will increase their costs, reducing the economical gap. Anyway, the real challenge for Euticals is to access the Chinese and Indian markets, that today are growing very fast. Euticals will go “Glo-cal” that means global in the local approach understanding clients’ needs. The goal is to create a worldwide player with its Headquarters in Italy where Pharmaceutical Chemistry in the past 60 years has strongly developed, creating huge competences in this field and making Italy become one of the strongest player.

What is your current Portfolio in terms of techniques and products? Do you have a development program?
Gianmario Baccalini and Riccardo Anzuini - CEuticals strategy for the future business development is based on the fact that the market is undergoing a dramatic change; the company, therefore, needs to be present significantly in three basic fields: Generic API’s, CMO and Custom Synthesis. Due to this situation our company is strongly engaged in R&D activities for the development of the main future generics and in the fields in which we have a consolidated experience: antineoplastics, cardiovasculars, CNS products, immunosuppressants, neuromuscular blocking agents, phospholipids and nootropics. Furthermore we are going to concentrate our efforts in expanding our competences in antibiotics like monobactams, the Minocycline derivatives and some other specific new generics that are fitting our technologies large portfolio. Consequently generic APIs will represent about 60-65% of our total revenues. Moreover due to the recent acquisition of Archimica, we have improved our contacts both with big pharma and with some new important biotech companies. Our relationships with these companies are getting stronger due to the fact that we are sharing marketing activities risks needed to develop new projects.
We fix Contract manufacturing at 15-20% of our future revenues.
To end with, we want to be a primary partner for Custom Synthesis, due to both our wide technology portfolio and our growing consolidated presence in many different countries. In order to be in a position to
implement the best conditions to support the development of the future “new chemical entities”, we offer a global Custom Synthesis service (thanks to our presence in different countries), both from a regulatory and
strategical point of view (R&D, marketing, production, quality system). Concerning technologies, I would like to highlight Euticals’ significant presence in fermentation – performed by our Rozzano production facility –
as well as in other key technologies as T3P, chiral resolution, organometallics, hydrogenation, steroids, limus technology, ergoline derivatives. Moreover we have a long lasting experience in nutraceutical products by
using the more advanced technologies in chromatography purification.
Although we are focusing on niche and small volume products, we can offer specific skills not only in APIs but also in large volume intermediates manufacturing, offering high quality products at worldwide competitive prices.

Euticals acts as a fully integrated API contract manufacturing organization (API CMO). How is Euticals relationship with customers?
Riccardo Anzuini - Euticals acts as a fully integrated API contract manufacturing organization (API CMO). How is Euticals relationship with customers? Customers come first. Our goal is to make them feel they come first.
Due to Archimica's acquisition, Euticals has expanded its customer base and worldwide market presence.
This has led Euticals to become a customer - oriented firm. We think customer service is about more than selling products: the delivery of the right product in the correct quantity and on time is taken for granted.
Customer service is based on reliability, listening to customers and meeting their needs, helping them take better solutions for their activity. Achieving on time what we have promised, helps us build strong relationships with our customers, and helps them keep a competitive position on the market. All people connected to Euticals are strongly aware of the fact that our success is strictly dependent on their success. Our philosophy
brought us to sell to more than 400 customers located in 61 different Countries. The main markets are still U.S.A. (28% of total revenues) and Western Europe (46%), but Euticals is progressively increasing its presence
in BRIC countries, Far East, Middle East, Eastern Europe, Latin America, Africa and Australia. Moreover we are offering our products and services to different types of customers operating in various fields: mainly pharmaceutical but also food supplement, cosmetic, veterinary, agrochemical and fine chemicals.

Human capital has been certainly one of the main drivers of the growth of a company.
What is your strategy to attract the best experts who have reference value as well?
Caterina Majocchi - Euticals has always heavily invested in human resources, in total alignment with the principles set out in its Code of Ethics. The policy of Human Resources has never been to attract the best experts in the field but, on the contrary, to cultivate the potential of the staff that, as it has grown with the company, is part of its heritage, knows the issues and shares its values. The young talents, who participated in the company’s growth, have been accompanied during their career by the veterans of the organization, with their experience and ability in supporting and advising them and today these young talents and veterans hold together top management roles. The recent acquisitions have brought an enrichment of human resources in terms of know-how, professionalism and for the presence of bright future managers who will grow professionally contributing in the meantime to the company’s growth.
As for the future, Euticals is aware of the complexity and richness of the professional value of the profiles on the market and it is certainly willing to welcome all the high experts who want to be part of this challenge. In the meantime Euticals will always try to cultivate “its talents”, with an eye to the past.

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