Monday, January 30, 2012

AMRI: A self-assessment by CEO Thomas D'Ambra

From this week's issue of Chemical and Engineering News, the annual custom chemical manufacturing article (by Ann Thayer), with a section on everyone's favorite chemistry outsourcing firm (and former mass employer of organic chemists), Albany Molecular:
More recently, AMRI made cutbacks in response to changing customer needs and the economic environment. “This means investing in areas that are doing well and refocusing areas that have experienced decreasing demand,” D’Ambra says. Among its steps, AMRI is ceasing all internal R&D programs, except for generic drugs, and trimming its U.S. contract drug discovery staff. 
“During the last couple of years, we have seen steep declines in demand for U.S. discovery offerings, with concomitant growth to AMRI’s Asian locations,” he explains. “As we are cutting back our U.S. assets, we are continuing to invest in the growth of our Singaporean and Indian facilities and capabilities.” The company also may restructure its European contract research operations, including ­possibly closing its site in Hungary. 
On the manufacturing side of its business, AMRI’s U.S. API plant had a record year in 2011. “Many projects we have been involved with during the last several years are going commercial or are approaching the filing stage,” D’Ambra says. This progress has compensated for slower movement in earlier stage projects, he adds, where customers have taken longer to make decisions, leaving the company with a record backlog of outstanding bids. 
Despite the delays, D’Ambra is optimistic about the future and foresees a strong year in 2012. Although 2011 was a year of significant disruption for big pharma customers and financially tough for many small and start-up companies, the trend could be positive for outsourcing, he explains. “The tough environment will force some companies to operate more virtually than they might have wanted to in the past.”
I'm sure that there was a section about how badly Dr. D'Ambra felt about the fact that there were "steep declines" in demand for US contract researchers -- it just didn't make the editor's cut. Sigh.

(Incidentally, do Thomas D'Ambra and John Lechleiter give the lie to the thought that "we just need to get a chemist into management instead of those mean MBAs" stereotype?)


  1. Any idea what AMRI charges customers for "U.S. contract drug discovery" as opposed to its efforts in its "Asian locations"?

    Do they sell these as different services? For example, would a AMRI salesperson say "for $10,000/month we'll give you 5 US made compounds or 25 compounds made in Asia"?

    1. It's probably on an FTE basis, not compound. I'd imagine that the chemists who will be working for AMRI at the Lilly site will be quite a bit more expensive than their Asian counterparts. Lilly seems to be willing to pay a bit of a premium in order to keep its IP closer to home.

      Personally, I think that's probably one of the smarter things I've seen when it comes to using a CRO for medicinal chemistry.

  2. "It's probably on an FTE basis, not compound"

    Likely correct. But does this mean AMRI offers US for $X/month and Asian FTEs for $Y/month? I'd be curious to know what X and Y are.

    "I think that's probably one of the smarter things I've seen when it comes to using a CRO for medicinal chemistry."

    Maybe. Seems to me to amount to hiring temps which, I think, is a pretty common practice. It would be interesting to see what the actual savings to LLY are, and if the 'in-sourced' workers are as productive as LLY chemists overall. How to measure productvity, of course, may be tougher to measure.

    1. Dunno, but I'd be curious what X/Y is. It used to be 6, I wonder if it's different now.

    2. I received a promotional letter from a CRO that has FTE's based both here (CA) and in China. The difference between two in terms of cost was 4X. I believe I forwarded that to CJ at one point in an off-line discussion.

      Productivity is a tough metric, and there are many ways of looking at it. Sheer numbers of reactions or compounds put in a bottle? That's somewhat biased towards the CRO because their workers typically don't have the meetings/training/seminars/evaluation crap that a typical US worker has eroding their time. They are also not tasked with being creative in terms of coming up with new ideas, analyzing data and the like. It's basically here's a set of compounds, go make them. I'd bet most of the time the bench scientists at a CRO don't even know what therapeutic area the compounds they are working on belong to.

    3. Having interviewed a couple of chemists from CRO in India I can say that, the chemists definitely do not know the therapeutic area they working on. The client provides the structures of the compounds desired and a route sometimes. The route is changed only if it does not work or the chemicals needed are too expensive. I however, would not say that the chemists are not creative and they do analyze the data. An average MS chemist probably makes only $ 8000-10,000/year and is willing to work 9 hours a day 6 days a week.

  3. "there are many ways of looking at it"

    In the short, meaningful, term yes. In the long term it's simply a measure of revenue generated. LLY should know how well this experiment has worked in 10 to 15 years.

    Outsourcing isn't new, and there must be data in big pharmas on revenue generated by outsourced projects (ARRY, ARQL, DPII) from the mid to late 90s. Someone knows the answer.

    1. Lilly has been in the contract medicinal chemistry game longer than most, since the late 90s. The fact that they are still doing it, and doing lots of it, pretty much tells you what they've concluded.

      For better or worse, they are going opposite of the Pfizer's of the world and going all-in on their research spending as a way to get them out of their hole. Doing CRO work is a way of allowing them (and everyone) to theoretically do more of it for the same cash. What the industry is losing in potential IP losses and in-house knowledge, as well as training their future competition is what we'll really know in the next 10-15 years.


looks like Blogger doesn't work with anonymous comments from Chrome browsers at the moment - works in Microsoft Edge, or from Chrome with a Blogger account - sorry! CJ 3/21/20