are more easily coped with. complicated business processes. flexibility and responsiveness are in jeopardy. customer complaints, for instance, are difficult to resolve in a straightforward manner. a heterogeneous portfolio of small companies, accumulated over time through m&a activities. the key functions, such as production, r&d, and m&s, are located on different sites, often in different countries. a cohabitation with other units. a comprehensive list of about 1400 fine chemical companies (including traders) can be found in the "event catalogue" of the cphi exhibition. the second tier consists of several dozens of midsized companies with sales in the range of $100–$250 million per year. their portfolios comprise both custom manufacturing and api-for-generics. they include both independents and subsidiaries of major companies. a number of these companies are privately owned and have grown mainly by reinvesting the profits. examples are bachem, switzerland; dishman, india; f.i.s. and poli industria chimica, italy; hikal, india, and hovione, portugal. customers prefer to do business with mid-sized companies, because communications are easier —they typically deal directly with the decision maker— and they can better leverage their purchasing power. the third tier includes thousands of small independents with sales below $100 million per year. most of them are located in asia. they often specialize in niche technologies. the minimum economical size of a fine chemical company depends on the availability of infrastructure. if a company is located in an industrial park, where analytical services; utilities, safety, health, and environmental (she) services, and warehousing are readily available, there is practically no lower limit. new fine chemical plants have come on-stream mostly in far east countries over the past few years. their annual turnover rate rarely exceeds $25 million. all big and medium-size fine chemical companies have cgmp-compliant plants that are suitable for the production of pharmaceutical fine chemicals. with the exception of biopharmaceuticals, which are manufactured by only a few selected fine chemical companies, (see section 3.2.2), the technology toolboxes of all these companies are similar. this means that they can carry out practically all types of chemical reactions. they differentiate on the basis of the breadth and quality of the service offering. contract research organizations contract research organizations (cros) provide services to the life science industries along product development. there are more than 2000 cros operating worldwide, representing revenues of more than $20 billion. one distinguishes between "product" and "patient" cros. whereas the production sites of cmos are multipurpose plants, allowing for the production of tens to hundreds of tons of fine chemicals, the work places of patient cros are the test persons (volunteers) for the clinical trials and those of the product cros are the laboratory benches. major customers for cro services are the large global pharmaceutical companies. half a dozen companies (pfizer, glaxosmithkline, sanofi-aventis, astrazeneca, johnson & johnson, and merck & co.) alone absorb about one third of all cro spending. as for cmos also for cros, biotech start-up companies with their dichotomy between ambitious drug development programs and limited resources are the second most promising prospects. product cros (chemical cros) are providing primarily sample preparation, process research and development services. an overlap between the latter and cmos exists with regard to pilot plants (100 kg quantities), which are part of the arsenal of both types of enterprise. there are more 100 product cros. most of them are privately held and have revenues of $10–$20 million per year or less, adding up to a total business in the range of $1.5-$2 billion. their tasks are described in chapter 5, examples of are: in north america: alphora; delmar; naeja, all canada. amri; aptuit; cambridge major; chembridge; innocentive; irix pharmaceuticals, pharmeco, all usa. in europe; carbogen-amcis, switzerland; chemcomm, germany; chemdiv, russia; clauson-kaas, denmark; enamine ltd, ukraine; girindus, germany; nerviano medical sciences, italy; recipharm, sweden; serichim, italy; solvias, switzerland, netherlands. in asia: bioduro, medicilon, pharmaron; wuxi apptec, all china; acoris; aptuit laurus; biocon / syngene; chembiotek; chempartner; procitius, all india; nard institute, riken, both japan. the business of cros is usually done through a "pay for service" arrangement. contrary to manufacturing companies, invoicing of cros is not based on unit product price, but on full-time equivalents (ftes), that is, the cost of a scientist working one year on a given customer assignment. companies offering both contract research and manufacturing services (crams) combine the activities of cros and cmos. their history is either a forward integration of a cro, which adds industrial scale capabilities or backwards integration of a cmo. as there are only limited synergies (e.g. > 90% of the projects end at the sample preparation stage). it is questionable, though, whether one-stop shops really fulfil a need. actually, the large fine chemical companies consider the preparation of samples more as marketing tool (and expense ...) rather than a profit contributor. the offerings of patient cros (clinical cros) comprise more than 30 tasks addressing the clinical part of pharmaceutical development at the interface between drugs, physicians, hospitals, and patients, such as the clinical development and selection of lead new drug compounds. as clinical trials represent the largest expense in pharmaceutical research, the market for patient cros is larger than for their product counterparts. thus, the sales of the top tier firms, charles river laboratories, covance, parexel, ppd, quintiles transnational, all usa, and tcg lifescience, india; are in the $1–$2 billion range, whereas the largest product cros have revenues of a few 100 million dollars. research and development the overall emphasis of fine chemical r&d is more on development than on research. the main tasks are (1) designing, respectively duplicating and adapting in case of custom manufacture, and developing laboratory procedures for new products or processes; (2) transferring the processes from the laboratory via pilot plant to the industrial scale (the scale up factor from a 10g sample to a 1-ton batch is 100,000); and (3) to optimize existing processes. at all times during this course of action it has to be ensured that the four critical constraints, namely, economics, timing, safety, ecology and sustainability are observed . r&d expenditures in the fine chemical industry are higher than in the commodities industry. they represent around 5–10% versus 2–5% of sales. on the business side, product innovation must proceed at a more rapid pace, because life cycles of fine chemicals are shorter than those of commodities. therefore, there is an ongoing need for substitution of obsolete products. on the technical side, the higher complexity of the products and the more stringent regulatory requirements absorb more resources. many economic and technical parameters have been proposed to enable a meaningful assessment of single projects and project portfolios. examples are attractiveness, strategic fit, innovation, gross/net present value, expected profits, r&d expenditures, development stage, probability of success, technology fit, potential conflicts with other activities of the company and realization time. most of these parameters cannot be determined quantitatively, at least during the early phases of a project. the best way to take advantage of a project portfolio is to develop and use it in an iterative way. by comparing the entries at regular intervals, for instance, every 3 months, the directions that the projects take can be visualized. if a negative trend persists with one particular project, the project should be put on the watch list. objectives r&d has to manage the following functions in order to deliver the requested services: literature and patent research. provisions have to be made for a periodic examination of all acquired research results to safeguard intellectual property rights (ipr) and to determine whether patent applications are indicated. patent research is particularly important for evaluation of the feasibility of taking up r&d for new apis-for-generics. process research has to design new synthetic routes and sequences. two approaches are feasible. for simple molecules, the "bottom-up" approach is the method of choice. the researcher converts a commercially available starting material and sequentially adds more reagents until the target molecule is synthesized. for more complex molecules, a "top-down" approach, also known as retro synthesis, or de-construction, is chosen. key fragments of the target molecule are first identified, then synthesized individually, and finally combined to form the desired molecule through convergent synthesis. process development focuses on the design of new, efficient, stable, safe, and scalable synthetic routes to a target fine chemical. it represents an essential link between process research and commercial production. the resulting "base process" description provides the necessary data for the determination of preliminary raw material and product specifications, the manufacture of semi commercial quantities in the pilot plant, the assessment of the ecological impact, the regulatory submissions and technology transfer to manufacture at industrial scale, and an estimate of the manufacturing costs in an industrial-scale plant. if the base process is provided by the customer as part of the technology transfer, process, research has to optimize it so that it can be transferred to the bench-scale laboratory or pilot plant. furthermore, it has to be adapted to the specific characteristics of available production trains. bench-scale laboratory, kg-lab and pilot plant development. depending on the volume requirements, three different types of equipment are used for process research, development and optimization, namely bench-scale laboratories for gram to 100 gram, kilo-labs for kg to 10 kg and pilot plants for 100 kg to ton quantities. particularities of laboratory processes that have to be eliminated include the use of large numbers of unit operations, dilute reaction mixtures, vast quantities of solvents for extraction, evaporation to dryness, drying of solutions with hygroscopic salts. although modern reaction calorimeters consent to foresee the effects of these different conditions to a certain extent, a direct transfer of a process from the laboratory to the industrial scale is not recommended, because of the inherent safety, environmental, and economic risks. in development, the viability of the process on a semi commercial scale has to be demonstrated. trial quantities of the new fine chemical have to be manufactured for market development, clinical tests, and other requirements. the necessary data have to be generated to enable the engineering department to plan the modifications of the industrial-scale plant and in order to calculate production costs for the expected large-volume requirements. both equipment and plant layout of the pilot plant reflect those of an industrial multipurpose plant, except for the size of reaction vessels (bench-scale laboratory ~10–60 liters; pilot plant ~100–2500 liters) and the degree of process automation. before the process is ready for transfer to the industrial-scale plant, the following activities have to be completed: adaptation of the laboratory process to the constraints of a pilot plant, hazard and operability (hazop) analysis, execution of demonstration batches. the main differences between laboratory synthesis and industrial scale production are shown in table 4. table 4: laboratory synthesis vs. industrial scale process task laboratory synthesis industrial scale process operatorlaboratory chemistchemical engineer economyyieldthroughput (kg/m3/hour) unitsg, ml, mol; min. hourskg, ton, hours, shift equipmentglass flaskstainless steel, glass lined process controlmanualautomatic critical pathreaction timeheating / cooling liquid handlingpouringpumping liquid / solid sep.filtrationcentrifugation in case of cgmp fine chemicals also a process validation is required. it consists of the three elements process design, process qualification and continued process verification. process optimization. once a new chemical process has been introduced successfully on an industrial scale, process optimization is called upon to improve the economics. as a rule of thumb it should be attempted to reduce the costs of goods sold (cogs) by 10-20%, every time the yearly production quantity has doubled. the task extends from fine tuning the currently used synthetic method all the way to the search for an entirely different second generation process. specific provisions are the increase of overall yield, the reduction of the number of steps, raw material cost, solvent, catalyst, enzyme consumption, environmental impact. project management there are two main sources of new research projects, namely ideas originating from the researchers themselves ("supply push") and those coming from customers ("demand pull"). ideas for new processes typically originate from researchers, ideas for new products from customers, respectively customer contacts. particularly in custom manufacturing, "demand pull" prevails industrial reality. the "new product committee" is the body of choice for evaluating new and monitoring ongoing research activities. it has the assignment to evaluate all new product ideas. it decides whether a new product idea should be taken up in research, reassesses a project at regular intervals and, last but not least decides also about the abandonment of