Choosing China

“Alex Chen was one of my best team members,” says Robert Wenslow, recalling the time several years ago when he led a solid-state drug development group at Merck & Co. “He came to me one day and said he was going to leave the company, and he told me what he was going to do.” Chen planned to start a services firm offering materials research and solid-phase selection for late-stage drug development, tasks that Merck had begun to outsource.

“I tried to talk him out of leaving because he was a good employee,” Wenslow says. “But I realized there was a gap in the contract services field, and he had a good idea of how to fill it. I wanted to be part of it.”

And so he is. Wenslow is one of five Merck researchers who left to join Chen’s company, Crystal Pharmatech, which was formed in 2010 in Suzhou, China. As vice president of business development for the U.S. and Europe, Wenslow is one of only two employees in the U.S. The firm has about 50 staffers overall.

Crystal Pharmatech hopes to pioneer a full-service business model, going beyond the basic solid-form characterization of active pharmaceutical ingredients (APIs) that it claims is offered by most service firms in the field. The company has a vision of applying the data it gathers to a full range of late-stage drug development projects orchestrated by a high-tech contract research organization in China.

The executive team’s experience at Merck should help. “It takes a good eight to 10 years to understand how materials science and the data you take out apply to a real-life process,” Wenslow says. “You have to see a lot of projects and have a lot of experience. We have worked with 30 to 40 different API projects a year, not on every aspect but on the solid-state properties—the crystal form or amorphous characteristics.”

According to Chen, China is the ideal place to build on that expertise. He sees the country evolving away from low-cost manufacturing toward high-tech research. “For the last two years, more and more companies are moving their R&D to China,” he says. “Lots of people who worked in the U.S. and Europe for a few years are returning and bringing their expertise and hands-on experience.”

Crystal Pharmatech moved to bolster its technical services this year by forming collaborations with Exceleron, a Maryland-based specialist in bioavailability analysis; Particle Sciences, a Pennsylvania-based formulation services firm focused on drug delivery; and 3D BioOptima, a preclinical services contractor located next door in Suzhou. Last year the company hired Ann W. Newman, a chemist who runs her own consulting firm in Lafayette, Ind., as vice president of scientific development.

Wenslow, whose office is in Princeton, N.J., says the additional technical expertise in the U.S. supports his company’s team approach to working with customers. “We don’t have any labs in the U.S., but one of the great things about the company is that someone on the management team is reviewing all the data on the project,” he says. “It’s not like we take a project and hand it off to the C team.”

Recent contract wins illustrate a growing need for solid-state development services, Wenslow says. For example, the over-the-counter drug firm Perrigo recently signed with Crystal Pharmatech for services to support its new business in consumer health care OTC products.

“We have evolved as a company in the OTC sector, developing more complex generic products,” says Bruce D. Johnson, Perrigo’s vice president of R&D. “We haven’t done extensive solid-state characterization work—it hasn’t been required as it is now.” Although Perrigo has its own materials characterization group, “it does not have the luxury of staffing or capital to fund the extensive instrumentation needed for things like powder X-ray diffraction. So we were looking for a scientific partner.”

Johnson, who worked at Merck in the 1990s and recommended Crystal Pharma­tech, said he was concerned about working with a contractor on the other side of the world, “so we started them on a limited-scope project. But we were immediately impressed with the speed with which they could generate data and answer questions.”

Scynexis, a drug discovery and development services provider, also has signed with Crystal Pharmatech for support on a new process-optimization project. According to Russell Outcalt, director of integrated pharmaceutical solutions, Scynexis is testing the waters. “It’s a one-shot contract, defining a manufacturing route for an animal health client. We hired Crystal Pharmatech to find a crystalline form, either polymorph or salt. It could be an opportunity for them to do more business, depending on how the project goes and the interaction.”

Chen and Wenslow won’t say whether Crystal Pharmatech has any business with their ex-employer, Merck, citing confidentiality agreements. They claim, however, that their company has contracts with six major drug firms. Some of them, Chen says, constitute the kind of partnerships he seeks to establish. “Some of the collaborations have gone on for more than two years,” he says. “Once we form a relationship, the customer stays with us.”