Market History 1980-2000

Cyclodextrins: Concept to Market-- History of an Industry:
It is intuitive in the development of new chemical raw materials that the limiting factor in the rate of commercialization of those raw materials is commercial availability. It is only when commercial quantities are made available that reasonable unit costs can be plugged into economic feasibility studies for new product (containing the new raw materials) development projects. Up until that first commercial batch, the projected costs of a new product containing that raw material are usually perceived to be so high that no amount of benefit derived from its use could induce the decision makers to approve the project.

For chemicals that will eventually be consumed by, or used in or on living organisms, early research into safety aspects must be blemish free; i.e. any report in any animal of any toxicity will prevent further consideration of commercialization.

The final hurdle to commercialization is obtaining a favorable regulatory opinion in each country where products containing the new chemical will be sold; obtaining favorable opinions in those countries with the largest consumer and financial markets now becomes the rate limiting step to full commercialization.

Cyclodextrin’s are unusual chemicals in that they are not drugs themselves, but cause drugs to become much more efficacious, thereby creating a combination that must be studied carefully before allowing its general use.

Cyclodextrin’s are classified as excipients and by definition are not considered active ingredients; but they make the active ingredients much more “active”. U.S. Food and Drug laws address active ingredients and not excipients; therefore there is very little, if any, guidance about how to get Cyclodextrin’s “approved” for general use. Historically, excipients were collated on a list – usually referred to as the GRAS (generally recognized as safe) list; if the excipient appeared on that list, it was accepted that it could be used. Often the USP (U.S. Pharmacopoeial Convention) would create monographs that described what the minimum quality characteristics were. These monographs were attempts to standardize the excipients used so that the end user could be confident that products containing these USP “approved” ingredients were “Safe” (meaning standardized)

Cyclodextrin’s were the first “new” excipients since 1950. There were no rules for getting an excipient “approved” for human use. Since they weren’t drugs, the usual drug approval process couldn’t be justified because Cyclodextrin’s could not be patented and therefore could not possibly pay back the cost of getting approval. Also, Cyclodextrin’s did not qualify for the process because they were not active ingredients producing a medical effect of their own. What to do? What to do? That question slowed the development of Cyclodextrin containing products in the US for 25 years.

The Japanese treated Cyclodextrin’s as natural materials derived from natural sources and therefore, “safe”. So, as early as the late 1970’s, there were many Cyclodextrin containing products on the Japanese consumer market. Since these early mixtures of Cyclodextrin’s were conveniently obtained by straight forward treatments of existing starch processing methods, there was no incentive to further process these mixtures into pure substances.

Since the Japanese market place is intentionally isolated from other global markets, hardly any of these Cyclodextrin containing products appeared in other countries of the world.

In the early 1980’s, a major pharmaceutical manufacturer in Hungary – Chinoin - was persuaded to begin pilot plant production of the natural Cyclodextrin’s. Within a few years, the small Cyclodextrin laboratory in Chinoin had begun to file patents and to create commercial applications of Cyclodextrin’s. However, Hungary was still controlled by Russia and exporting such technology and products outside the communist bloc was forbidden. Such restrictive policies were not conducive to rapid expansion of Cyclodextrin technology. Even so, Cyclodextrin containing products appeared in Western Europe via Eastern European countries. Chinoin was providing the first non-Japanese source of purified natural Cyclodextrin’s. The stage was set for worldwide evaluation and use of Cyclodextrin’s.

Soon, a German company, Wacker Chemie, became aware of the potential for Cyclodextrin’s and started up a pilot plant production facility under the supervision of its research arm, Consortium Fur Elektrochemische Industrie. Hungarian Chinoin worked closely with Wacker’s consortium and soon another commercial source of Cyclodextrin’s was available.

By the late 80’s two more sources of natural Cyclodextrin’s were recognized, Roquette Freres in France and American Maize Products in the US. Roquette was readily able to divert some of the production of glucose from starch to the production of Cyclodextrin’s from that same starch source. American-Maize in the US had clearly been working on Cyclodextrin production prior to the 1980’s, because it completed the first US Cyclodextrin production facility in 1989.

As a result of the isolationist policies of the Japanese, the suppression by the communists, and the secrecy of the Americans, the commercial availability of Cyclodextrin’s took 20 years to happen, rather than the usual 5–7 years for a product so promising of benefits.

It is interesting to note here that the earliest, non-Japanese manufacturers of Cyclodextrin’s undertook the production of Cyclodextrin’s even though they had no other starch based businesses. Both Chinoin and Wacker had to figure out how to use the 70% of the starch that didn’t become Cyclodextrin’s. Chinoin tried to turn it into ethanol. Wacker, in the typical German mindset felt they could make the production process so efficient that they could use up all the starch making Cyclodextrin’s.

Now that the “Cyclodextrin was out of the bag”, the Japanese manufacturers began to put into play their considerable knowledge of Cyclodextrin’s and began to purify the mixtures into their components of alpha, beta, and gamma and even to begin developing natural branched derivatives. While substantial quantities of purified natural Cyclodextrin’s were now available in Japan from Nihon Shokuhin Kako, Ensuiko, Riken, Toyo, and Sanraku, they were still hard to get outside Japan because of the cultural barriers and the pervasive isolationist marketing mentality.

American-Maize in the US was still trying to keep its developments with Cyclodextrin’s close to the chest until it could tie up its big development partners with long term supply contracts.

Wacker’s Consortium was still struggling with the economics of producing commercial quantities and therefore was in no position to sell these materials.

“Cyclodextrin’s, Cyclodextrin’s everywhere, but not a drop to easily buy.”

It took the emergence of two small product development companies to break the log-jam and prevent the passing of another 20 years before Cyclodextrin’s would make their mark in commercial products. The companies were small so their role was necessarily catalytic. Cyclolab in Hungary sprang from a dying Chinoin and CTD Inc. in Florida sprung from a disinterested Pharmatec.

Once the repressive shackles of communism were removed from Hungary, Cyclolab rose up in the finest Western Entrepreneurial style from a privatized Chinoin. Cyclolab disseminated technology throughout a unified Europe. Dr. Joszef Szejtli and his 14 crusaders created applications, identified suppliers of Cyclodextrin’s and promoted research on Cyclodextrin’s in European companies (large and small) and in Universities. Technology was their sword; 50 years of an absence of free marketing made them hesitant to undertake any kind of promotional or PR strategy that could have speeded up their efforts to commercialize Cyclodextrin applications.

In the US, the marketing mecca of the world, Cyclodextrin Technologies Development, Inc. (CTD) emerged full grown from the womb of a disappearing Pharmatec. Still very small, CTD began establishing strong working relationships with manufacturers, corporations, and researchers. Soon it was able to get new product development using Cyclodextrin’s started in large and small US companies. CTD made it possible for companies to obtain Cyclodextrin’s and the best technical information from Japan, Hungary, Germany, France, and the US. Now these clients didn’t have to deal with the hassles of getting supplies and information from across the world. (If they had had to, they wouldn’t have).

However, CTD’s greatest contribution to the advancement of Cyclodextrin applications was to get products containing a Cyclodextrin into the US market place. CTD gave its products names, Garlessence®, Trappsol®, Aquaplex®; it showed off its products in major trade shows and national print media advertisements; it designed T-shirts promoting the biennial Cyclodextrin Symposium.

Not everyone was pleased with all this exposure. American-Maize and Janssen Pharmaceuticals were trying to secure contracts before the general availability of material and technology was known.

What about American-Maize in the US? It had the first plant making Cyclodextrin’s in the US; it certainly had much more financial muscle than CTD, but followed Molecusol® and Trappsol® into the marketplace with its Cavitron®. It was clear from American-Maize’s one-armed approach to marketing that it wasn’t looking to open the information gates soon.

CTD also provided important industry opening functions by clarifying as much as possible, controversies about patents and regulatory rulings involving Cyclodextrin’s. Many a potential Cyclodextrin project was scuttled by the misinformation disseminated about patent rights and regulatory situations by many companies with self-serving interests.

In the early 90’s, new companies tried to become basic manufacturers of Cyclodextrin’s. NSK always had Celdex® and Roquette named its Cyclodextrin, Kleptose®. Rhone-Poulenc, after merging with Rorer, tried its hand at manufacturing Cyclodextrin’s by licensing NSK’s technology. Rhodocap™ was the short-lived result. Also at this time, Orsan, a French company, and Mercian (formerly Sanraku from Japan) formed a joint venture called Ringdex to manufacture Cyclodextrin’s. This venture also faltered.

Before we describe the current situation regarding manufacturers of Cyclodextrin’s, questions about the major US starch producers future roles in the Cyclodextrin industry should be addressed.

Corn Products Co. are owners of the earliest (1959) patents dealing with Cyclodextrin’s. For reasons lost to history they did not choose to pursue this product. In 1995 when American-Maize Products Co. was being pursued by Eridania Beghin Sey (EBS), a giant French agricultural company, CPC offered $500 MM for Maize, only to lose out to the $430 MM offer by EBS and a sweetheart deal with Maize’s chairman of the board. One has to believe that CPC is keeping a close eye on the Cyclodextrin business and could make another offer for the Cyclodextrin business at Cerestar USA.

Both National Starch and A. E. Staley should be looking to get into the Cyclodextrin business. In 1989 CTD made a presentation to Staley in Decatur, IL to provide them with input that they would use to evaluate the possibility of their manufacturing Cyclodextrin’s. National Starch certainly has the financial muscle to quickly take a position in the Cyclodextrin manufacturing arena, but to date have kept a low profile. Archer-Daniel Midlands has to be kept in mind as well.

A review of the major manufacturers of Cyclodextrin’s in 1999 presents a picture of companies that have had to wait too long to recover their investments in Cyclodextrin technology development.

Cerestar, USA is the only US company to have an operational Cyclodextrin manufacturing plant in the US before 1999. It is now 10 years old. In 1995 American-Maize Products Co. was purchased by the French company, Eridania Beghin Sey. It is clear at this point that Procter and Gamble Co., 3M Company, and Rohm & Haas are major customers and purchase large quantities of BCyclodextrin from Cerestar. Procter and Gamble Co. use Cyclodextrin’s in Bounce® and Febreze®. Given the extensive Cyclodextrin patent filings by Procter and Gamble starting in 1996, it is a certainty that a steady stream of other products utilizing Cyclodextrin’s will be launched over the next 2 – 3 years by that company.

Cerestar has little incentive to provide customer/technical service to University and institutional researchers. They are concentrating on bulk product deliveries of BCyclodextrin and providing hydroxypropyl beta Cyclodextrin (HPBCyclodextrin) to Janssen Pharmaceutical; Cerestar is probably not ready at this time to embrace the production of chemically modified Cyclodextrin’s for the general pharmaceutical industry.

Wacker Chemie has jumped into the Cyclodextrin Industry with both feet. The Cyclodextrin venture has broken away from the research status at the Consortium in Munich into its own business venture called Wacker Biochem USA under the direction of Dr. Gerhard Schmid. With a pilot plant in Burghausen, Germany and a new Cyclodextrin production facility slated for opening in 1999 in Iowa, Wacker promises to be a major force in the supply of Cyclodextrin’s. Wacker will emphasize its Gamma Cyclodextrin (GCyclodextrin) utilizing its proprietary technology for producing GCyclodextrin. Wacker is also making available chemically modified Cyclodextrin’s – HPBCyclodextrin and methyl BCyclodextrin (MeBCyclodextrin); HPBCyclodextrin and MeBCyclodextrin will probably continue to be manufactured at Burghausen.

Since Roquette Freres’ relationship with Janssen Pharmaceutical for exclusive supply of HPBCyclodextrin in Europe in the late 80’s and early 90’s expired, Roquette has not been heard from much in Cyclodextrin supply circles. Their plant in Le Strem, France certainly has adequate capacity to make Roquette a major player, but it is not clear what Roquette gave up in the late 80’s to be Janssen’s European Partner. In 1998 Roquette said it could supply metric tonnes of BCyclodextrin; however their sales office in Iowa was quite slow to respond to an order placed by CTD. Roquette closed their sales and marketing office in Indiana in the mid 90’s bringing most of the staff back to France. It is interesting and may only be coincidental that Eridania and Roquette are both from France. Could those two companies join forces?

With privatization of Chinoin in the early 90’s, the new French owner, Sanofi, has allowed the Cyclodextrin lab to split off, but retains a 30% share that it apparently intends to hold onto. Chinoin no longer manufactures Cyclodextrin’s.

Mitsubishi and Ensuiko are the major Cyclodextrin forces in Japan now. NSK was recently (1998) absorbed by Mitsubishi. Mitsubishi supplies both natural and chemically modified Cyclodextrin’s. The demand for their Celdex mixtures is so high in Japan that they have none for export; restrictions exist on export sales of natural and chemically modified Cyclodextrin’s from Japan. One such restriction is that these materials cannot be used in cosmetics.

Citing a flat sugar market, Ensuiko Sugar Refining Co., LTD split off the Cyclodextrin manufacturing portion in June of 1997. The new company is called BioResearch Corporation of Yokohama (BICO) and is directed by Dr. Hitoshi Hashimoto. BICO has natural and some chemically modified Cyclodextrin’s available for sale. However, they are currently promoting most heavily the branched chain Cyclodextrin’s – especially the maltosyl derivatives.