Openess. Transparency. Traders and agents, at least when talking to each other in private, do not much care for these terms. Traditionally they have made their living by exploiting gaps in the transparency of the market, where ther unique knowledge can help them to reap the benefit. However, an industry veteran in a new guise is making them his watchwords and hopes to offer a completely new business model for hard times.
Mark Roberts was for many years sales director at Ubichem, a sourcer and distributor of hard-to-find chemicals that more recently got into cGMP manufacturing services via a wholly owned subsidiary in Hungary called Ubichem Research. His father John Roberts actually founded the company 35 years ago.
Mark himself left Ubichem in March 2010 and was unable to participate in the market again until this April, beyond some work for Discovery Fine Chemicals, under the terms of a strict non-compete clause in his severance package. Now that this has expired, he has started his own business.
“Leaving gave me the time to look at the industry from the outside for the first time in 20 years,” Roberts says. “I took my time over it quite deliberately, so that I could evaluate what I could offer in the long-term, based on over 30 years of experience of finding niche materials in the market and customers to sell them to and the knowledge I had accumulated in the process.”
The new company is called simply ‘Roberts Chemicals’. This is a common enough surname in the UK and Roberts did consider not naming the company after himself but was advised by industry contacts that his name was the best currency he has.
The central idea is to bring chemical intelligence to the party – hence the strapline ‘Managing Solutions’ – and to find solutions to supply chain challenges on behalf of customers. For this to succeed, Roberts says, “not only do you have to be very good at what you do, you also have to do it in a completely open and transparent way and integrate totally with your customers, otherwise you cannot bring the value by which you measure your service.”
Roberts is being aided in his new venture by another industry veteran who has also struck out on his own, Mike Norman. Norman spent many years with Merck KGaA, working both in the UK and in Germany, before he left in June 2010. He was also under a non-compete clause that happened to run out at the same time as setting up his new firm, Niche Materials, out of his home in Pool late that year.
Niche Materials is dedicated to finding chemicals from approved suppliers of rare chemicals in Europe, Eastern Bloc and Asian companies who have proven track records in the pharmaceuticals, laboratory supplies and microbiological markets.
Norman brings to the table an expertise in inorganic chemistry and experience in developing some very high purity materials, notably in coating and other applications for the UK Ministry of Defence, among many other things. He also had access to a producer of inorganic sulphides in India and the Middle East who, Roberts believes, could be the starting point for a lot of interesting products.
“I saw sense in joining forces with someone who had an equally good knowledge base and contacts book, someone who could complement my experience, while still being quite different,” Roberts says. “We believe that the combination of the two of us would enhance the potency of what we are doing.”
In his view, the timing is perfect precisely because of the weak state of the world economy. “The industry has come to a grinding halt. That doesn’t mean people aren’t innovating, but no company is leading the way, especially in traditional areas. A lot of people are falling by the wayside or are just failing to do very much.”
Companies in the chemicals industry are finding it increasingly hard to grow their business, Roberts adds. Staff levels are falling at many companies, traders included, and the working environment has become more and more difficult. And he believes that this will continue at least for the next four to five years, with companies keeping a hawkish attention to costs at every stage.
“All this crystallised my wish to set this up as a remote and virtual business but also a trading company in its own right,” Roberts says. The operation is fully computerised and server-integrated, based on an Apple office suite in which all elements are integrated. There is no long drawn-out ordering process and he has access direct to customers, thus cutting out unnecessary travel. It is currently based at his home in Bracknell, though it will in time move to a dedicated office “I offer a remote access to excellence in sourcing and supply in a wide range of industries, integrated into customers’ companies without huge overhead costs. This can add tangible value – it is like getting a sales manager, a sales director, a rep or a technical director, without having to pay £80,000/year to employ a sales director.”
Roberts Chemicals is not a one-man band, however. From his contacts, Roberts has identified others to work with in many markets, including France, Italy, Spain, the Czech Republic, Hungary, the USA, Canada and India. All, he says, are very competent industry professionals who share his basic view that there is an opportunity for something like this to fly while the world economy remains in the doldrums and that the value-added chemical intelligence it offers would naturally fit into the new environment as the economy improves.
Also vital is access to people with the right regulatory and product compliance knowledge, particularly with regard to REACH and CLP. “REACH compliance is always at the forefront of any new products we take on,” says Roberts, citing as an example some work he did on REACH- and CLP-compliant Safety Data Sheets for a UK based pharmaceutical CMO.
The expertise of others in logistics and tax is no less vital. Via Norman, Roberts has found an excellent account, who has established a way to generate orders and invoices by simply filling out a template, so that he does not have to manage the whole procedure in detail.
Cash flow was a problem during the time building up to the official launch, Roberts admits, not least because the fees he is quoting are much less than the 50:50 basis that many quote and because the banks and other financial backers want their cut.
To bring money in, he first looked at industries he knew and could work with. It transpired that there was huge demand for a simple physical solution going into the photographic industry. This is a 100 tonnes/year market that is dominated by traditional suppliers, with typical prices of €8-9/kg.
Norman had contacts with a manufacturer in India that could supply the basic raw material for the solution and worked with them to supply this need. Before long, they had got to 75 tonnes production and the profits gave them enough to survive on until their companies were up and running.
Even before the end of March, Roberts had considerable interest in the new model. Many people wanted to work with him as the word got out about what he was planning, but he was unable to do so at first. In the meantime, he took on some agency work for some emerging companies with whom his contacts dated back to his time at Ubichem.
One is with Vinyl, a Hungarian producer with a chlorine filling station and sodium hypochlorite facility. Despite the name, Vinyl is active in many products, including chlor-alkali chain products, mercury, plastics. plasticisers, water treatment chemicals, pulp and newsprint paper, active ingredients and intermediates for both pharmaceuticals and pesticides, building additives, solvents and general speciality chemicals.
Roberts visited the managing director Ferenc Bajsuz, who was interested in making him an agent in the UK, and found that he wanted to get into fine chemicals. They sat down together to look at what it was good at and how it could extend this capability into this market; the result will be an as yet unnamed fine chemical that will be launched into the market later this year.
“There are a lot of very good Hungarian contract manufacturers, but they tend to get overlooked in the rush to China and India,” Roberts says. “Part of Vinyl’s offer could be contract manufacturing for a range of chemistries that use local sources in areas like hydrazine, carbon disulphide and other types of dirty chemistry that big companies are reluctant to do.”
When working with companies like Vinyl, Roberts always looks at other approaches to max out on what they are doing. This can lead to some interesting digressions, in the case of Vinyl into the use of thermochromic and photochromic dyes in end-product security, such as in passports and other documents, with another firm into tritium radiolabelling.
Roberts and Norman are now working with another Hungarian company called LuminoChem on ways of tagging APIs to this end. This agency, says Norman, was secured via a contact in the security industry and has gained them access to all of the major players in the field, allowing them along the way to demonstrate their ability to work with blue chip companies.
Another key agency is with a Brazilian company called Microbiologica, which has long traded with Ubichem. Managing director Jaime Rabi is a noted scientist who has been involved in the production of several antivirus nucleosides including AZT. Microbiologica is a GMP-certified company that exports its APIs to Europe on a regular basis.
In addition, the company has developed a number of specialised cosmetic and cosmeceutical products, notably those based on cytokinin technology such as kinetin and zeatin for anti-ageing products, and makes them under GMP conditions.
To support growing demand, an Indian firm called Garuda is retrofitting a multi-purpose GMP facility in India. Roberts and Norman are integrated into the process, notably via logistical support to ensure that volumes from 500 kg to 5 tonnes, or even up to 50 tonnes, can be shipped around the world.
A third agency is with Italian firm Actim, managed by Tiziano Maggi, who has many years of experience in marketing generic APIs and finding sources of supply for strategic intermediates. Maggi is also heavily involved in optical disc technology, which nicely complements what Roberts and Norman are doing in Hungary.
They have already been able to supply key materials like 2,2,2-tetramethyl piperidine (TERP) to some major Italian API companies. Others are now asking them for help with their sourcing of unusual materials.
More generally, APIs form an area of wider interest. Many companies in the pharmaceutical and biotechnology areas are seeing their pipelines drying up, which is leading them to reinvestigate candidates that had failed in the past for one reason or another and tweak them to change their properties subtly and give them new efficacy.
“This requires a lot of technical work,” notes Roberts. “In addition to my knowledge of GMP manufacture and FDA-approved facilities, I can draw on the support of a very good process R&D company and many individuals with skills in manufacturing analogues and impurity characterisation, as well as generally helping with the submission of new data.”
An agent’s traditional way of keeping his nose to the ground for opportunities also comes into it. For example, Norman says, they heard on the grapevine that there were major production problems with a particular, very expensive dyestuff made by a single European firm. He found a unique GMP manufacturer of the dye substance that no-one else had been able to find and the company is now buying it in from Roberts.
The overriding aim for Roberts during the anticipated years of weak economic growth, is to establish the company and make the industry aware that there is a role for people like him in these economic circumstances. He would also like to see trading to evolve to offer real market intelligence; in a way, he adds, it would be a regression to the old days of traders who really knew everything about their markets and fulfilled real market needs.
Both men admit that it was daunting, to say the least, to set out on this path. The model requires a total knowledge of what you are doing and confidence in it and both say the experience has made them aware how little they actually knew. Nonetheless, they believe that they have chosen the right way forward and are already surprised by how much interest this has generated.
“This has rekindled my enthusiasm for the industry and I am enjoying my work more than at any time in the past ten to 15 years,” Roberts says. “My father set up Ubichem back in the late ‘70s because he wanted to have a more enjoyable time at work than he was getting as sales director at Koch Lite. I would be happy to be anywhere near as successful as he has been.”
For more information, please contact:
Roberts Chemicals Ltd.
10 Northumberland Close
Tel: +44 1344 481691
Niche Materials Ltd.
8 Haynes Avenue
Tel: +44 1202 671066