Sigma-Aldrich Shifting Operations

To back the launch of its new integrated chiral chemistry offer, global lab chemical and life sciences company Sigma-Aldrich Corporation’s ( SIAL - Analyst Report ) custom manufacturing and services division “SAFC” is integrating its chiral chromatography screening and small scale purification operations and moving them to its Cambridge, UK, facility. Chromatography is a technique for separating mixtures.

Sigma-Aldrich noted that analytical equipment has been deployed at the Pharmorphix solid state research laboratories in Cambridge. They have been moved from the company’s Supelco Analytical subsidiary in Bellefonte, Pennsylvania, where the chiral screening services were carried out earlier. The Pharmorphix laboratories are expected to come on line in July 2012.

SAFC's chiral offernings include separations by Chiral Gas Chromatography (GC) and Liquid Chromatography (LC), commercial-scale Simulated Moving Bed (SMB) chromatography and large scale crystallization. Separation by chromatography is an essential step in the synthesis of chiral molecules.

The company’s Cambridge facility will emerge as the global base for SAFC's chiral offerings. The unification of SAFC’s operations will offer customers a single, dedicated point of contact from early-stage research and development phases through final production. The unit’s chiral chromatography method development squad will be headed by Paul Rodwell, an ex-Senior Principal Scientist with Pfizer Inc. ( PFE - Analyst Report ) .

Sigma-Aldrich, which had annual revenues of $2.5 billion in 2011, makes and distributes various biochemicals and organic chemicals that are used in scientific and genomic research, biotechnology, pharmaceutical development, diagnosis of diseases and chemical manufacturing. It is a leader in chiral offerings used in chemical synthesis, drug discovery and analytical assessment.

SAFC is focused on biochemical production and manufacturing of complex organic compounds. Sales from the unit climbed 9% in the most recent quarter. However, organically, SAFC revenues rose just 1%, partly impacted by weakness in the LED markets.

Sigma-Aldrich’s significant investments in sales, marketing and R&D initiatives are generating demand for its products. To boost growth, the company plans to increase its focus on marketing, business development and R&D, while continuing with its efforts to improve process and operations management. Moreover, Sigma Aldrich is seeking to take advantage of country-specific opportunities by expanding its presence in high-growth emerging markets.

However, the company’s Research Business would continue to face economic challenges due to uncertainties in the U.S. and Europe. Its research sales would languish because of funding uncertainties in the U.S. owing to budget constraints.

Our long-term Neutral recommendation on the stock is in agreement with a short-term Zacks #3 Rank (Hold).