Transfomer - It was one of the biggest headlines of 2011  - Ashland Closes ISP Acquisition For $3.2 Billion.
When the Kentucky-based specialty chemicals company wrapped up the deal for International Specialty Products, it was also a tunring point. Since the acquisition and integration of ISP, Ashland bas been able to beef up its innovation and R&D capabilities. Brandi Schuster spoke to JEff Wolff, Ashlands group VP of Pharmaceutical and Nutrition Specialties, about the transformation.

CHEManager Europe: It's been two years since Ashland integrated ISP into the Ashland Aqualon Functional Ingredients commercial unit, creating Ashland Specialty Ingredients. Have the expectations been met so far?

Jeff Wolff: The 2011 acquisition of ISP truly transformed Ashland into a global specialty chemical company. With the addition of ISP's leading markets and personal care and pharma, we were able to double the size of Ashland Specialty Ingredients. We also tripled our research and development scientists and significantly have increased our number of patents. We actually increased our ability to penetrate the marketplace from an innovation perspective. Today, ASI represents around 35% of the $8 billion in annual sales for Ashland; it is absolutely a very important part of Ashland today, and it was a very good acquisition.

Tripling the number of R&D scientists must have really had an impact on the company's R&D clout. What can you tell us about new innovations coming out of Ashland?

Jeff Wolff: Innovation is really the lifeblood of our business, and our customers expect us to make products and technologies that will help them gain a competitive advantage in the marketplace. This is one of the reasons we have double our investment in R&D spending.

Specifically, we have made some significant investments in the emerging markets, such as in India and China. We have put labs in place to support growth in these areas, specifically around the technology part of our business. About 70% of our current R&D projects involve working with customers on a collaborative basis; this helps create value.

What regions are most interesting for Ashland in terms of pharma, both short and long term?

Jeff Wolff: There are attractive growth opportunities in almost all the regions of the world, both short and long term. We've obviously seen tremendous opportunity in Asia; we've seen continuous growth there recently, and we expect that to continue, particularly in line with the increasing prevalence of diseases and healthcare spending. Europe remains an important market for us, as does North America. Our new lab in Düsseldorf provides high-level technical support to Ashland's European pharmaceutical and nutraceutical customers. In addition to the lab in Germany, we also have pharmaceutical technology centers in Buenos Aires, Argentina; São Paulo, Brazil; Shanghai, China; Hyderabad, India; Istanbul, Turkey; and Mexico City, Mexico; and we will be opening a center of excellence in Wilmington, Delaware in the U.S. next summer.

If you look at places like China or India, it is difficult for companies to get a foot in the door sometimes. Do you have a specific strategy for those emerging markets in Asia?

Jeff Wolff: It's important for us to grow in these regions. We have also made people and lab investments. Ashland is clearly looking at the emerging regions and examining what the right approach is, be it people, lab investments or even acquisitions.

What are currently the main challenges facing Ashland in the pharma market and what does your company do to overcome them?

Jeff Wolff: One of the main challenges in the pharma market is the issue of solubility in APIs and how bio-available it is inside the body. We are currently in the process of developing some new products in this area to address the needs of today's formulators. When an active is being developed, our customers need to make sure that it is also soluble in the body, and Ashland has unique technology in this area, which puts us in a good position to help.

Additionally, we operate global manufacturing plants under the GMP standards, and our customers depend on high-quality products.

Can you tell me a little bit more about what your strategy is for entering new markets? How much of a role do joint ventures play versus acquisitions?

Jeff Wolff: We are always looking for opportunities to grow our business. We closely examine both new and existing markets and look for chances to expand our base. When we have a new market of interest, we spend a lot of time to determine the best route of entry. This could include organic investments in personnel or assets to enable entry. It could also include an inorganic approach such as acquisitions, joint ventures, strategic alliances, etc.  A host of factors come in to determining the preferred approach, and we try to be as flexible as possible to insure long-term success.   

What about nutraceuticals? How important are those for your business?

Jeff Wolff: This is one of the growing areas of our pharma business. There are something like 1,800 nutraceutical companies out there right now, and while our focus is not necessarily to go after everyone, there are clearly targeted companies that are important for us. This is going to be a very large industry by 2018, to the tune of hundreds of billions of dollars, and we see an opportunity for us to participate in it from a global perspective.