Sigma-Aldrich Beefs Up Continuous Flow Capabilities

Zacks Equity Research
May 21, 2014

Sigma-Aldrich’s (SIAL) SAFC Commercial division has enhanced its continuous flow capabilities with the installation of a new commercial-scale continuous flow reactor at its plant in Sheboygan, WI. The reactor will produce as much as 150 kg of products a day.

The new reactor, which is currently online, has been complemented by a smaller pilot-scale continuous flow reactor (with capacity to produce up to 30 kg of products daily), which is being fabricated at the Milwaukee, WI, plant to conduct process optimization studies. These reactors are supported by a host of research reactors based in the U.S. and EU that offer support to customers from research to commercialization.

With these reactors, SAFC Commercial will be able to develop or scale up flow reactions for customers, thus eliminating the need to install in-house flow capacity. This will allow customers to save a significant amount of money, space and time while minimizing the amount of chemicals and solvents employed in reactions.

Revenues from SAFC Commercial, Sigma-Aldrich’s custom manufacturing services business unit, went up 3% to $159 million in first-quarter 2014. Sales rose in the low single-digits organically in life science products business while life science services saw a double-digit rise on gains in biopharma services. However, SAFC Hitech sales declined in the low single-digits on pricing pressure.

Sigma-Aldrich’s significant investments in sales, marketing and R&D initiatives are generating demand for its products. The company is seeking to take advantage of country-specific opportunities by expanding its presence in high-growth emerging markets. It is actively expanding its foothold in the Asia-Pacific region, especially in the fast-growing emerging markets of India and China.

However, Sigma-Aldrich’s research business, especially with large pharmaceutical companies, is expected to continue to face challenges due to weak academic spending in the U.S. and Europe. Uncertainty surrounding academic funding (in particular in the U.S.) is expected to sustain through first-half 2014.

Sigma-Aldrich is a Zacks Rank #3 (Hold) stock.

Other companies in the specialty chemicals space with favorable Zacks Rank include International Flavors & Fragrances Inc. (IFF), Sensient Technologies Corporation (SXT) and Zep, Inc. (ZEP) with all holding a Zacks Rank #2 (Buy).

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