October 28, 2019 PAP-Q3-19-CL-028
SK is a successful South Korean conglomerate known for its leadership in oil and gas, telecommunications, information technology and other industries. This position has been achieved through organic growth and acquisition under the guidance of SK holdings. The company entered the pharmaceutical contract manufacturing business in the 1990s with the establishment of SK biotek, and that business has grown into a global CDMO that now operates under the consolidated SK pharmteco umbrella.
SK biotek initially expanded organically to include two sites in South Korea, focusing on its continuous processing and engineering capabilities. In 2017, SK biotek acquired the Bristol-Myers Squibb commercial launch facility located in Swords, Ireland, which was rechristened as SK biotek Ireland.
Meanwhile, in the 1980s in Sacramento, California, defense company Aerojet was developing specialty capabilities in energetic chemistry and engineering for the production of rocket fuels. The company later developed a side business by leveraging its expertise in engineering and chemistry to begin production of cancer drugs for the National Cancer Institute, Walter Reed Medical Center and others. When the aerospace business declined in the 1990s, Aerojet began to grow its fine chemicals business branded as Aerojet Fine Chemicals, which was divested to American Pacific Corporation (AMPAC) in 2005 and rebranded as AMPAC Fine Chemicals.
The AMPAC Fine Chemicals business grew rapidly, and in 2014, it was acquired by the large private equity firm H.I.G. Capital. This led to significant investment in infrastructure and capabilities, allowing the company to further strengthen its position in the CDMO industry. In 2018, AMPAC Fine Chemicals management sought a strategic investor to drive further growth. SK was identified as an ideal strategic growth partner.
SK biotek and AMPAC Fine Chemicals had developed a good relationship over the previous two decades, and the two companies shared expertise as pioneers in applying continuous manufacturing to the pharmaceutical industry. In addition, SK was looking to add CDMO capabilities in the United States. The deal between SK and AMPAC Fine Chemicals closed in September 2018.
One year later, SK established SK pharmteco, which will serve as the parent company for AMPAC Fine Chemicals, SK biotek Korea and SK biotek Ireland. The new company has six production plants, one analytical testing facility and a vast array of enabling technologies. The move not only allows SK to streamline the corporate structure, maximize synergies and efficiency, but also forms a strong foundation upon which we will grow our global CDMO business.
Each of the three companies coming together to form SK pharmteco has its own established culture, identity and reputation in the marketplace. SK pharmteco implemented a strategy wherein each entity will retain its name, culture, processes, and structure. By retaining the individual company names, we avoid the need to update existing filings, a time-consuming and costly process for our customers. Maintaining existing company structures and employees also means that customers will be able to work with familiar people and continue to build on existing relationships.
Synergies will be achieved by implementing best practices across the enterprise. We will be able to leverage our global footprint to provide increased value to our customers. This can be achieved by producing registered starting materials and advanced intermediates at a lower cost in our plants in South Korea and supplied to the U.S. and European facilities for API manufacturing. Additionally, tax benefits may be achieved by performing final manufacturing steps at SK biotek Ireland.
Overall, this approach will enable SK pharmteco to capitalize on the true value of each company and its people. At the same time, customers from all organizations are provided with access to new ideas, technologies, opportunities and global capacity.
A commitment to Safety and Quality is what has made SK biotek Ireland, SK biotek Korea and AMPAC Fine Chemicals successful. All three companies have an excellent track record of compliance and transparency with regulatory agencies.
AMPAC Fine Chemicals has opened its manufacturing facility as a training ground for FDA auditors. Initially, a dozen auditors were brought to the Rancho Cordova facility for training; for the most recent visit in 2019, 40 auditors (including national experts) were involved. In this manner, we are sharing our experience in cGMP manufacturing with the agency.
With the foundation of safety and quality, the first step is to identify the strengths and weaknesses of each company. To do so, we have formed expert teams that comprise representatives from each site, who are typically the heads of business segments. For instance, the research and development (R&D) team consists of the heads of R&D for SK biotek Ireland, SK biotek Korea and AMPAC Fine Chemicals and is led by an experienced executive.
In addition to R&D, committees are focused on Safety, Health and Environmental; Supply Chain & Logistics; Quality; Operational Excellence; and Project Management. Each committee is actively comparing systems, practices and procedures to identify strengths from each site that can be leveraged by the others, as well as any weaknesses at each site that can be improved.
A key benefit for SK pharmteco is the fact that the three founding companies share many technologies while also providing complementary capabilities.
All three companies produce high-quality products. SK biotek focuses on registered starting materials, key building blocks, and advanced intermediates. AMPAC Fine Chemicals specializes in advanced intermediates and APIs. SK biotek Ireland also produces APIs and provides a tax advantaged manufacturing location. As a result, SK pharmteco supports the entire supply chain, from registered starting materials to final API.
On the technology side, both SK biotek Korea and AMPAC Fine Chemicals have developed expertise in different aspects of continuous processing, in part the result of each company having emerged from a larger organization with extensive experience in manufacturing. One of AMPAC’s particular areas of expertise is Simulated Moving Bed (SMB) chromatography — a technology used for the cGMP purification of complex molecules and separation of chiral materials. Presently, AMPAC Fine Chemicals is the only U.S. CDMO offering this capability at commercial scale.
Other areas of expertise include energetic chemistries, production of highly potent APIs and intermediates, particle engineering, continuous manufacturing (low temperature, hydrogenations, high pressure, etc.) and controlled substance manufacturing.
With the three companies working together, customers of SK pharmteco can have their registered starting material produced cost-effectively in Korea, purified and then converted to an advanced intermediate in the United States, and then transformed into the API in Ireland to leverage tax benefits.
We also have flexibility as regards available capacity. SK pharmteco currently has a total of more than 1,000 m3 of cGMP capacity, a number that will be continually expanding. With six different manufacturing sites located in the United States, Europe and Asia, we can accommodate a range of customer needs regarding quantity, timing and location.
To support our consolidated offering, we have integrated the marketing and business development teams into a single group that is part of SK pharmteco. By taking this approach, we are able to show potential customers the true value proposition that we offer. As such, business development will be a global enterprise, while execution will take place on the local level.
Each of the three companies coming together under SK pharmteco has unique and specialized expertise and, going forward, SK pharmteco will remain a specialized CDMO.
We will be creating Centers of Excellence in the technology areas where we have extremely deep knowledge and capabilities. These areas — which notably include continuous processing — offer tremendous opportunities for enhancing our ability to be a comprehensive technology solutions provider. We will — through acquisitions and organic growth, develop and acquire additional technology platforms to overcome complex manufacturing challenges. Ultimately, the SK pharmteco name will be widely recognized to stand for safety, quality, reliability and engineered chemical solutions.
SK is focused on the happiness of its employees, neighbors, customers and shareholders — our main mission is to be a company that truly cares.
Happy employees reward the company with dedication, superior performance and a commitment to safety and quality. Happy neighbors welcome the company into the community. Happy customers bring repeat business and help the company grow and happy shareholders continue to invest, fueling even more growth.
By focusing on happiness, we have established a business that runs efficiently, grows rapidly and helps get life-changing and lifesaving medicines to patients quickly.
This belief is reflected in the SK logo, which is a butterfly that represents the “wings of happiness.” At SK pharmteco, we are living this philosophy. We believe that the happiness of all stakeholders will lead to maximum success, and, by focusing on creating happiness, we will become a highly valued CDMO partner recognized by pharmaceutical and biopharmaceutical companies around the world.
Dr. Malik serves as the CEO of SK pharmteco, a U.S.-based CDMO with global headquarters in Sacramento, CA and operations in Korea, Ireland and the United States. Pharmteco is the recent combination of SK biotek Korea, SK biotek Ireland and AMPAC Fine Chemicals. Prior to the establishment of SK pharmteco, Dr. Malik served as the President and CEO of AMPAC Fine Chemicals. Dr. Malik holds a doctorate degree in organic chemistry from the University of California at San Diego, a Master’s degree in organic chemistry from San Diego State University and a Bachelor’s degree in chemistry and physics from St. Xavier’s College in India.
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