• for the chemical and pharmaceutical industry

The chemical industry is present in Switzerland for over 150 years. From the beginning, a small domestic market and the lack of chemical raw materials induced a focus on the production and world-wide marketing of specialised chemicals with high added value. Despite all changes which took place during the course of the years, this basic orientation has continued to be the key to success for the Swiss chemical and pharmaceutical industry, which today emphasises heavily life-science products as well as high-value specialty chemicals.

Economic success is never secured for ever; the industry has always had to face the challenges of the day. Currently, we are experiencing enormous changes in the world economy. The unexpectedly rapid opening up of many Eastern European and South East Asian markets, as well as the unstoppable technological revolution in biotechnology, in genetic engineering, in information technology and telecommunications are creating a new international economic environment.

The companies operating in our industry face a continuous need to adapt to this changing environment. Existing manufacturing locations world-wide are being re-evaluated to assess competitive advantages; new corporate objectives and restructuring are inevitable to successfully operate under intensified international competition. For a long time, the strength of the Swiss chemical and pharmaceutical industry has been innovation and the ability to quickly respond to changes in the domestic as well as in the foreign environment.

A merely defensive corporate strategy geared exclusively towards greater efficiency - rationalisation and cost reduction - would not go far enough. In our sector, each cost-cutting strategy must be supplemented and extended by a strong element of innovation. The capability for innovation is and remains our most important key for future economic success. Innovation today, however, is not limited to products and production methods, it also includes administrative processes and organisational structures. Translation of ideas into fully developed products and services has to be better, faster and more cost-effective. This means that innovation no longer depends solely on the scientific skills of a few top scientists, but is increasingly determined by the professionalism of the entire workforce.

An important aspect of modern management in the chemical and pharmaceutical industry is the trend towards highly competitive companies focusing on their core competencies. Such companies control all elements of the total value chain - from the raw material to the final product - without however, owning all the elements of the chain. By co-ordinating the collaboration of many autonomous firms, large virtual enterprises arise. Each contributing node in the value chain concentrates on developing its specific strength in this network of firms. The division of labour intensifies in line with the comparative advantages of the individual companies. While the core companies restrict their activities to innovation and co-ordination and shrink their workforce size accordingly, their periphery of business partners, suppliers, traders, laboratories, etc. grows through outsourcing. The emerging niches enable a considerable number of smaller, medium-sized enterprises to operate as specialised sub-contractors and service providers, both at home and abroad.

• for Switzerland

The changing international economic environment also presents a great challenge to individual countries. In a world where all production factors, with the exception of labour, have become mobile, Switzerland must create internationally outstanding conditions for the economy in order to protect the welfare of its citizens. Countries too, have to follow the dual strategy of 'cutting costs - promoting innovative capability'. scienceindustries therefore expressly welcomes the program of economic renewal launched in Switzerland a few years ago. It hopes that this revitalisation will boost competition and exert a favourable influence on price and cost levels in Switzerland, which are excessively high compared to international standards.

At the same time, capabilities of Swiss companies for innovation must be strengthened through setting appropriate basic conditions. To achieve this, the legislation should not delay or prevent advances into new areas of knowledge and technology and their industrial development in Switzerland. Rather, the government has to contribute towards a climate of openness to innovation. Genetic engineering will play a vital role for the future of our industry. It is a modern key technology that is essential in all scientific fields of the chemical industry, from research to manufacturing. The industry is in need of reliable legal guidelines to allow the application of this technology in Switzerland. Academia and industry have to increase their efforts to convince the population of the benefits of genetic engineering in daily life. Distrust can only be allayed through open information; acceptance only gained through honesty.

Finally, an up-to-date Swiss government must also ensure that its institutional relations to the world economy, that is to its major trade partners, are on a basis that meets the new economic challenges. This includes, first of all, a commitment to actively contribute to the deepening and strengthening of the multilateral trade system of the World Trade Organisation (WTO). It also includes the establishment of our relationship with the European Union on the basis of the current realities and developments.

Chemistry is the science of molecules, their properties, their composition, their synthesis and transformation. The discipline of chemistry is grouped into different areas, such as inorganic chemistry, organic chemistry, biochemistry, pharmaceutical chemistry, agrochemistry and food chemistry.

Scientific findings form the basis for the activities of the chemical industry. The activities are mainly centred around the chemical transformation of diverse base materials into substances with new chemical, physical and biological properties. The chemical industry can roughly be seen as two general categories: base and specialty chemistry, the latter including the pharmaceutical industry. Base chemistry uses primarily petroleum, but also minerals and metals as starting materials to produce fairly basic chemicals in large quantities. The specialty chemistry manufactures a wide variety of high-grade, high-value products for application in different areas.

The Swiss chemical and pharmaceutical industry operates nearly exclusively in the field of specialties. Today 90 % of the Swiss chemical industry's overall product portfolio are specialties; a remarkable portion compared to international average. Producing more than 30'000 products, it is exceptionally differentiated. The global annual demand for some of these specialties often is below a few metric tons and even lower.

The following major product groups can be distinguished in terms of areas of application:

• Pharmaceuticals and diagnostics
• Fine chemicals
• Vitamins
• Flavours and fragrances
• Crop protection agents
• Specialty chemicals for industrial-technical purposes
• Pigments, paints and lacquers.

This strategy of concentration on specialties is the Swiss chemical and pharmaceutical industry's key to success. With their high-grade specialised products Swiss companies have established a world-wide presence, and often a market leadership.

Research and development for new products and processes are the lifeblood of the Swiss chemical and pharmaceutical industry. Using scientific findings and methodologies, our companies continuously develop new products and processes which satisfy existing and future requirements of customers. The necessary, significant investment into research can only be made if the companies can rely on future returns. Research expenditures are funded by the profits made from the sale of today's products.

The most important ingredients for this innovation process are the scientific and technological know-how and the skills of the workforce. Their work is decisive for the success of a research or development project. Additionally, the company has to provide the necessary research infrastructure and to create an open, creative atmosphere with a management style inkeeping with the times. However given all these factors, scientific success can be neither planned nor guaranteed. While the risk of failure can be reduced by adequate research management, investments in research nevertheless carry a high risk compared to capital expenditures in physical assets.

The Swiss chemical and pharmaceutical industry has an outspoken international orientation, clearly demonstrated by the geographical breakdown of its sales. Europe and America each share about 40 % of the sales, while Asia takes in 23 %, leaving Switzerland with a very small domestic market.

World-wide marketing is an essential part of the strategy of specialties, which is based on the manufacturing and sale of innovative high-value products. Swiss companies have been present on the international markets for decades, not only the big multinational corporations, but also many small and medium-sized enterprises which pursue their successful niche strategies.

With a share of about 5% of the world export of chemical and pharmaceutical products, Switzerland is number 8 among the biggest export nations.

This leading position is astonishing, as Switzerland is number 95 in terms of inhabitants and number 147 in terms of its area extension. Measured on its gross domestic product index however, Switzerland takes the position of number 33.

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(1) one column text first World-wide turnover of the "top ten" Swiss chemical and pharmaceutical companies (2) one column image(s) first Total 2011: 149.2 bn CHF The Swiss chemical and pharmaceutical industry is a producer of specialties, emphasising 'life science' products. left

The breakdown of the turnover along product groups, clearly demonstrates the orientation of the industry towards specialties. About three quarters of the products are life-science products, defined as products impacting on the metabolic processes of living organisms. This group includes in particular pharmaceuticals, vitamins and fine chemicals, as well as crop protection agents and animal health preparations.

• Pharmaceuticals: prescription and over-the-counter drugs (patented or generic) as well as their ingredients to be used in formulations.
• Diagnostics: health care products which support the physician to get additional information for curing a disease.
• Vitamins, flavours and fragrances: products not ready for consumption, but rather ingredients in the form of 'bulk products' to be used in the manufacturing of pharmaceuticals, foodstuffs, animal feed as well as cosmetics and perfumes.
• Crop protection agents: herbicides, fungicides and insecticides including their active ingredients. Primarily used in agriculture.
• Specialty and fine chemicals: numerous highly specialised products providing specific effects, often manufactured in relatively small quantities and in response to specific needs of individual customers. Professional advice to customers is usually of considerable importance with these products.

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The Swiss chemical and pharmaceutical industry shows a rapid and significant development into high-value specialties. In particular the pharmaceuticals have gained importance: their share of the total export of the industry has increased since 1980 from 40 % to 81 %.

From 1980 to 2011 exports of pharmaceuticals, vitamies and diagnostics have risen from 100 % to over 1600 %. In the other specialties aeras the growth has been more moderate with increases from 130 % to 400 %. (Beginning with 1988 pharmaceutical and crop protection intermediates are also included in the export figures, reducing the share of organic products).

The continuing focus of the companies towards their core competencies has changed the chemical and pharmaceutical industry in Switzerland with a lasting effect. The continuation of the strategy towards specialties not only geared the companies towards high-value products; it also induced an ongoing regrouping and restructuring of the companies and the industry as a whole. Out of diversified companies with a broad product offering arose a set of focused companies, active in very different markets with different products. This development is illustrated by showing as an example the restructuring which occurred in the chemical and pharmaceutical companies in Basle.

At the same time a new branch of companies has emerged in the past years: the biotechnology companies, existing beneath the branches of chemical and pharmaceutical companies. Biotechnology and genetic engineering is used as a basic technology in different areas of the industry. Besides the use of the technology in research and manufacturing a number of companies established themselves as pure biotech enterprises. Following a report of Ernst & Young (2003), the number of such companies active in Switzerland has tripled from 70 to 210 in the period from 1998 to 2003. These young companies - founded as start-ups by researchers out of the industry or universities - in the meantime employ approximately 11'000 people and create a turnover of 4.3 bn CHF. These companies constitute an economic factor of growing importance.

Scientific innovation is the basis for the Swiss chemical and pharmaceutical industry's economic success. According to an investigation of the Federal Office of Statistics, the industry invested in the year 2000 about 8.1 bn CHF, or more than 35 million CHF per working day towards innovation.

New results from scientific research have to be transformed by the companies into marketable products. This requires a wide range of entrepreneurial skills. For example, project oriented and interdisciplinary collaboration has to be ensured across existing structures, both inside and outside the company. Furthermore, work processes have to be aligned, manufacturing capacities created or new sales channels have to be found. An early and quick impact on the market is of growing importance. The success of a chemical or pharmaceutical company depends not only on the scientific level of individual top scientists; increasingly it is dependent on the professionalism of the entire workforce.

Nevertheless, scientific and technological progress remains the most important basis for the economic success of our industry, as the following examples illustrate:

Example 1: Diagnosis and treatment of AIDS

As early as the mid 1980's, the basic idea for a completely new AIDS drug was born in the Basle research centre of Roche. The objective was to block the HIV proteinase, a specific enzyme of the virus, as this enzyme cuts individual proteins from a filament to build new viruses. Roche researchers succeeded in producing the (not directly infectious) HIV proteinase by means of genetic engineering, in quantities that enabled the start of the search for suitable proteinase inhibitors in extensive laboratory tests.

In 1989, Roche chemists identified an extremely selective active substance in Ro 31-8959 or Saquinavir. At the end of 1995 INVIRASE was registered by Roche as the world's first drug in the new class of HIV proteinase inhibitors, and it was subsequently introduced in various markets.

Almost simultaneously, the PCR technology - a type of fast-copying process for genes or gene sequences on the basis of molecular biology - has been acquired and developed to full maturity by Roche. This technology has revolutionised the diagnostics of AIDS. With the highly sensitive HIV Amplicor test, the AIDS virus can be detected shortly after infection directly via the genes, at a time when an indirect immunological proof is not yet possible or does not provide sufficient evidence. Above all it is now possible to also measure the quantity of viruses in the blood using the PCR test in the HIV Amplicor monitor kit. As a result, each patient can now be offered an optimal individual therapy with a specificity that was considered impossible, even a few years ago.

Resistance against existing drugs arises as a consequence of virus mutations, calling for new drugs with new mechanisms.

As a first representant of such a new generation of drugs since 7 years Fuzeon has been approved by FDA in the US in March 2003. Fuzeon has been developed by Roche in collaboration with the US company Trimeris. Contrary to all currently known drugs Fuzeon is hindering the virus from entry into the human immune cells: this stops the reproduction of the virus which affects the immune system reaction of HIV infected persons.

Fuzeon is a significant step forward in the fight against HIV infection and AIDS. Besides the medicinal progress, Fuzeon is an important progress in the synthesis of peptides. The modern manufacturing process has been successfully implemented at the Roche site of Boulder, Colorado.

With these innovations in diagnosis and therapy the currently used combination treatment has changed the disease symptoms fundamentally: the deadly AIDS syndrome has been converted to a chronic infectious disease with a long survival period, providing satisfying quality of life for the patients.

Example 2: L-Carnitin - the "energy vitamin"

When the Americans began to investigate the nutrients essential to the diet of astronauts it turned out that, in addition to the 13 known vitamins, L-Carnitine is one of these vital nutrients. L-Carnitine, which is related to the vitamins of the B group, is essential for burning fatty acids and supports optimum performance under conditions of physical and mental stress. In addition, L-Carnitine has been used as a supplement to children's food and nutrient additives for sportsmen for more than 2 decades. Recently a number of "functional food" preparations containing L-Carnitine have become available. Pharmaceutical applications have also been developed: drink ampoules for the heart and the immune system, infusions for intravenous treatment of heart and circulation problems, tablets for the oral treatment of hereditary or induced L-Carnitine deficiency.

Since Lonza 's market entry in 1983, the company has had a decisive influence in building up and shaping the L-Carnitine market. Lonza's success is based on innovations in product forms, production processes as well as in the development and patenting of new applications.

The hygroscopic (water-absorbing) properties of pure L-Carnitine complicated its handling and formulation (tablets, capsules, solid dosage forms). This problem, as well as that of the fishy smell associated with pure L-Carnitine, were solved to the full satisfaction of customers by the development of the two patented products L-Carnitine L-tartrate and L-Carnitine magnesium citrate.

The biotransformation from a natural precursor, a novel, patented technology which guarantees extremely high purity (0.0% D-Carnitine), is an additional success factor. The process causes lower environmental pollution since it produces less waste and does not require solvents for the separation of L-Carnitine from D-Carnitine.

With L-Carnitine Lonza has opened up a number of new markets and has patented various applications including several in the area of animal nutrition (feeding of sows to increase the litter rate, improving health of the hearts of domestic animals and feeding of hens to reduce levels of stress induced death).

Example 3: Femara® - fewer relapses in breast cancer cases

Through the aromatase blocker Femara (Letrozol) Novartis is demonstrating its commitment to helping women suffering from breast cancer. This commitment is necessary, for although great advances in the treatment of breast cancer have been made over the last few decades, a third of women affected still suffer a relapse in the first 15 years after diagnosis. Over half of these relapses occurs 5 years after initial diagnosis, whereby distant metastases in particular are to be feared. One of the goals of breast cancer treatment therefore is to continuously reduce the risk of relapse.

Sex hormones such as oestrogen stimulate cell growth in certain organs and tumours. In the case of hormone sensitive breast cancer, tumour growth and metastasis formation can be stopped or at least retarded by suppressing the hormone effect (anti-hormone treatment). In post-menopausal women oestrogen is no longer formed in the ovaries but rather in other tissues and organs. It is here that the enzyme aromatase is required. By blocking aromatase Letrozol prevents hormone production right from the start.

The enzyme aromatase was discovered in the mid-70's, the aromatase blocker Letrozol at the end of the 80's. In the laboratory Letrozol was about ten times more potent and a hundred times more selective than the previously used substance. After all the clinical development stages had been successfully passed Letrozol was initially introduced to the market in Great Britain in 1996 under the trade name Femara (advanced breast cancer). Since then Femara has demonstrated its superiority in all stages of breast cancer over the respective established standard drugs (megestrol acetate, aminoglutethimide, tamoxifen). In July 2004 Switzerland became the first country in Europe to approve Femara as the only drug for the extended adjuvant treatment (after 5 years tamoxifen therapy) in early stage breast cancer. In the meantime Femara has been approved in more than 75 countries, to some extent even for post-operative treatment of early stage breast cancer. In Switzerland this indication is, at present, still in the process of registration.

Example 4: Omalizumab – a breakthrough in the treatment of allergic asthma

A broad-based Novartis programme to research the therapeutic potential of monoclonal antibodies led to cooperation with Genentech Inc. and Tanox in the field of anti-IgE. The goal was to develop a drug which directly influenced one of the basic causes of asthma, namely the allergic cascade facilitated by IgE.

IgE, a naturally occurring antibody, is produced in large quantities in people suffering from asthma, when they have been sensitised by an allergen, e.g. faeces of house dust mites or scurf of domestic animals and subsequently re-exposed thereto. These antibodies then bind to mast cell receptors, leading to the release of inflammatory mediators like histamine which in turn cause, among others, well-known asthma symptoms – wheezing, tightness of the chest and shortness of breath - by contracting the smooth muscle system in the respiratory tract.

Several asthma drugs, such as the Beta-2 agonists, treat the asthma symptoms directly by relaxing the constricted smooth muscle system of the respiratory tract. Others, such as the inhaled corticosteroids (ICS), attack the basis of the complaint, namely the inflammation in the respiratory tract. ICS are, however, only effective when taken regularly. Poor discipline in patients receiving ICS is a big problem and can lead to a recurrence of asthma attacks.

Omalizumab removes any free IgE from the serum and thus prevents it binding to the mast cells ; consequently the release of inflammatory substances is stopped and the appearance of asthma symptoms prevented. Clinical studies have shown that Omalizumab can prevent asthma attacks and reduce the number of Beta-2 spray applications necessary to control the asthma symptoms. A further important advantage: the reduction in the dose of ICS is highly significant because ICS can cause, especially in children, undesirable side effects such as growth disorders.

In Switzerland Omalizumab is at present in the process of being registered and, once approved, is to be marketed under the trade name Xolair®.