The term "fine chemicals" was in use as early as 1908. The emergence of the fine chemical industry as a distinct entity dates to the late 1970s, when the overwhelming success of the histamine H receptor antagonists Tagamet (cimetidine) and Zantac (ranitidine hydrochloride) created a strong demand for advanced organic chemicals used in their manufacture. As the in-house production capacities of the originators, the pharmaceutical companies Smith, Kline, & French and Glaxo, could not keep pace with the rapidly increasing requirements, both companies (now merged as GlaxoSmithKline) outsourced part of the manufacturing to chemical companies experienced in producing relatively sophisticated organic molecules. Lonza, Switzerland, which already had supplied an early intermediate, methyl acetoacetate, during drug development, soon became the main supplier of more and more advanced precursors. The signature of a first, simple supply contract is generally acknowledged as the historical document marking the beginning of the fine chemical industry.
In subsequent years, the business developed and Lonza was the first fine chemical company entering in a strategic partnership with SKF. In a similar way, Fine Organics, UK became the supplier of the thioethyl-N'-methyl-2-nitro-1,1-ethenediamine moiety of ranitidine, the second H2 receptor antagonist, marketed as Zantac by Glaxo. Other pharmaceutical and agrochemical companies gradually followed suit and started outsourcing the procurement of fine chemicals. An example in case is F.I.S., Italy, which partnered with Roche, Switzerland for custom manufacturing precursors of the benzodiazepine class of tranquilizers, such as Librium (chlordiazepoxide HCl) and Valium (diazepam).
The growing complexity and potency of new pharmaceuticals and agrochemicals requiring production in multipurpose, instead of dedicated plants and, more recently, the advent of biopharmaceuticals had a major impact on the demand for fine chemicals and the evolution of the fine chemical industry as a distinct entity. For many years, the life science industry continued considering captive production of the active ingredients of their drugs and agrochemicals as a core competency. Outsourcing was used only in exceptional cases, such as capacity shortfalls, processes requiring hazardous chemistry or new products, where uncertainties existed about the chance of a successful launch.