Feature article – A hidden gem

The CDMO operation was not the main attraction when Arxada was formed but has turned out to be one of the most promising. Andrew Warmington met Olivier Lambrechts, president of the NCE business

When a company is newly formed, it can take time for the owners and managers to work out exactly what they have – and which part will be the most valuable. Arxada is a case in point.

Describing itself as “a global science-based specialty chemicals business creating innovative chemistry and solutions,” Arxada is headquartered in Switzerland and employs about 3,400 people at 24 production sites and 14 R&D centres across the world. It is made up of two businesses:

* Microbial Control Solutions (MCS), which, as the name suggests, makes biocides and preservatives for a wide range of applications; and

* Nutrition, Care & Environmental (NCE)

Olivier Lambrechts was originally brought in as Chief Transformation Manager in September 2021 and became interim president of the NCE business in May 2023. His commitment to the role lead to his permanent appointment that September. This was the same month when Sanjeev Rastogi was appointed CEO.

Speaking with SCM at Chemspec Europe at Düsseldorf in June, Lambrechts explained that NCE is largely made up of the legacy Lonza Specialty Ingredients business at Visp, a name by which many people still refer to it. The division has four main activities:

* CDMO services, comprising chemicals at Visp, Switzerland as well as fermentation at Kourim, Czech Republic

* Composite Materials, which makes cyanate esters and curing agents for transportation, electronic and industrial applications in Visp

* Performance Intermediates, based on its integrated verbund activity at Visp

* A long-standing partnership with DSM-Firmenich, mainly in Vitamin B3 and acetylene/MBI

“When Bain Capital and Cinven acquired Lonza Specialty Ingredients, the whole rationale was around MCS,” Lambrechts said. “The due diligence process concluded that the CDMO business had a low attraction and was largely mature, even declining.”

However, a strategic review carried out at the beginning of 2024, backed up by a strong performance in 2023, customer enquiries and confirmed projects, proved that there was considerable interest in the CDMO business, particularly in the chemical CDMO out of Visp. This, said Lambrechts, was because it was “a different shape to other CDMO players”.

Two ongoing megatrends have made this possible. The first is geopolitical instability, in the form of trade and actual wars, plus associated supply chain disruptions, notably in the Red Sea. The second is the drive towards sustainability and low-carbon solutions in the global industrial economy.

The Visp site is a fully integrated chemical site with a fully fletched infrastructure and is vertically integrated into chemical building blocks via an acetylene generating unit. It converts LPG to ethylene and acetylene and acetic acids into ketenes and diketenes, among many other things. It is also integrated into hydrogen cyanides, which is rare in the industry.

“From a supply chain view, our ability to produce both the chemical building blocks and carry out CDMO synthesis in our 22 multi-purpose plants at the same site, means that we are a lot more flexible and reliable,” Lambrechts said. In addition, the site uses green energy, from hydropower, and feedstock from biofuels that can be allocated to the manufacture of individual products when calculating Scope I and II emissions.

“This is a compelling value proposition that customers really like,” he added. “They are doing quite a few big development projects with us and are also significantly investing in Visp.” Moreover, the proposition is extremely difficult for others to reproduce: the site has a significant replacement value.

As a result of all this interest, Arxada expects notable growth over the next years, after the ramp-up period and additional customer co-funded capital investments in 2025. Lambrechts sees this as a model of how the embattled European chemical industry can flourish, turning geopolitical challenges into strengths. “Quite a lot of core chemical synthesis has moved out, so let’s cherish what we still have and use it to the fullest,” he concludes.

Contact

Tanja Schaffer

Global Head of BL CDMO

Arxada

[email protected]

www.arxada.com