Having done my tour of duty in chemical sales and having travelled over a good bit of the northern hemisphere buying & selling, I’ve picked up a few insights into the B2B and “retail” chemical business.   Everyone has the major chemical catalogs on their desk. You know, the thick tomes from Aldrich, Spectrum, TCI, Matrix, Strem, GFS, Gelest, Fisher, etc.  There is considerable overlap in content, though some specialize in their chosen niches. While Aldrich makes no bones about total world domination, others are pleased just to dominate certain cul de sacs of chemistry. 

SAF is clearly the colossus of international catalog companies.  The Aldrich wing was started by Alfred Bader, now a retired art collector. To hear him tell it, Bader was frustrated by the limited availability of reagent chemicals and spotty service (by Eastman Chemical, if I am not mistaken).   Anyway, Bader was the right character at the right time.  He had a single-minded drive to give chemists what they needed and make a few bucks doing so. The slogan “Chemists Helping Chemists” was a the result of a sincere calling.  Bader visited university chemistry departments and asked professors what they needed.  Over time the Aldrich catalog collection grew and so did the company. Eventually, Bader was quietly forced out of the organization.  Founders can become “problematic” evidently.

Today SAF offers a vast collection of products and makes a sizeable fraction of what they offer.  Most professors don’t know it, but interesting materials from the lab might be saleable to a catalog company. If a prof has developed a new reagent or some useful fragment or pharmacophore, for instance, it might be worth contacting a catalog company to see if they want to stock it. You never know until you ask.

But we business types know that dealing with professors can be sticky, so Herr Doktor Professor, don’t get too high handed or greedy!  Academics are often missing the merchant gene and as a result badly price their wares.  The typical mistake is to over-estimate the demand and hike the price up to the astronomical numbers that you see in the catalogs. 

Here are the problems. Catalog companies do not pay the prices that you see in the catalogs. Buying material for inventory is equivalent to putting a stack of money on the shelf.  They have to pay lots of money up front before the first purchase order for your wonder product is faxed in. They have to pay for those damned fat catalogs, the inventory, salaries, the facility, regulatory compliance, certification, labeling, packaging, the time value of money, taxes, and they have to make a profit for the shareholders. So if the catalog price of something is $10 per gram, figure that they’re likely to keep their costs to $2 to $3 per gram for it, tops.  Obviously, this is subject to variation due the type of material or special negotiated deals.  But a 3x to 5x markup is not uncommon and is necessary to stay in business.

Then, after you ship the product to the catalog house and they put it into the collection, it might not sell.  It could be a dog.  The rule of thumb is that 20 % of your inventory will do 80 % of the business.  So, one of the ways to grow is to increase the number of products. Their interest in your product may be of a statistical nature rather than a firm belief in it’s viability.

I’ve heard many people go off about high catalog prices. I don’t like to pay the high prices either. But it is the cost of convenience.  If you need some obscure material, chances are that you can order it and have it in a few days. That is worth something and the catalog companies know it.  Hell, I’d do the same thing.

The 2006 ACS meeting in SF was interesting. In a much earlier post I lamented the recent trend of boring ORGN section meetings. That was definitely not the case this time around.  Of course, there was the usual assortment of faculty rockstars with their fawning groupies (OK, I’ve done that too). A lot of interesting insights into obscure stuff.  But I have to say that there was more buzz in the air in the ORGN talks.  My favorite profspiels included Toste, Doyle, Knochel, and Trost.

This time I noted a distinct lack of talks on room temperature ionic liquids (RTIL’s). After far too much breathless ballyhoo, the worker bees in this “area” seem to have hunkered down a bit.  Do I sound cynical? I have actually developed a manufacturing process for a commercial RTIL species. I can say that the economics of RTIL manufacture and certain kinds of applications of these expensive solvents can be awful.  At least awful in direct comparison to solvents like THF, toluene, ether, etc. If you’re using an RTIL, say, in a two-phase catalytic extraction process, then the comparison is faulty and the RTIL may be quite efficient to use.  However, if you need batch reactor volumes, i.e., 50 to 1000 gallons, then the batch process costs may require scientific notation.

Even pharma companies with deep pockets extending to the MOHO layer will worry about these economics.  In order to justify an $50-$250/kg solvent (!!), there has to be some whiz-bang process improvent to justify such costs.  In batch processing, RTIL’s are prone to the concentration of ionic species or water from the previous run. The practical consequence of this is that the RTIL may be a different material from one run to the next. It may or may not be an issue. But you’ll have to investigate and qualify it. You may have to polish the solvent (!!!) after each run to qualify the subsequent use of the RTIL. How green can that be?  

I cannot speak from the perspective of a pharma industry chemist. But I can speak as someone who makes specialty products for the pharma business. From bitter experience I can testify that the last thing you want to be is the supplier of the most expensive reagent in the customers process.  It is like a rock in their shoe. They’ll squirm and fitch around until they find a cheaper supplier or engineer a way around the offending reagent. Hell, I’d do the same thing in a heartbeat. Nothing wrong with that. But it is this sort of raw cost pressure that makes the commercial viability of RTIL’s difficult. 

The disposal of bulk RTIL’s may be expensive too.  Since as a group they are resistant to incineration, the natural question is- How do we safely and ethically dispose of bulk RTIL’s?  I’m sure that someone out there in the blogosphere has a comment on this.

<END RANT>