Sigma Aldrich makes chemicals and other supplies for research and Quality Labs everywhere. I'm a chemist. Lab supplies are pricey. If your company makes food or drugs (both inherently inelastic items), then you'll be regulated and audited regularly by the FDA. Failure to comply with the regulation set forth in chapter 21 of the Code of Federal Regulations will get you crushed. FDA is one scary regulatory body. Major Quality operations might not be a segment that generates revenue for a company, but you have to have one, and it had better be a tightly run operation. These labs are required by FDA and are therefore tethered to the Federal Government in a way. While tempting, the fellas in charge learn quickly that cutting costs and corners in the laboratory is not worth the risk. Firstly, if you're a drug company and you send a big lot of product that is chemically deficient due to some manufacturing flaw etc, you run the risk of losing a customer and developing a bad reputation in the business. Secondly, you'd be crazy to run the risk of getting fined and put on FDA's dung list. They will make your world less enjoyable for years.
Most importantly, I know something that most do not. FDA is tightening certain paramaters regarding a practice refered to as system suitability (simple definition: test injections of 2 different solutions containing known weights of active ingredients). Its basically a check that your analytical instrument (typically an HPLC) is working properly. currently the industry standard is 98-102%. They are going to close it to 99-101. Let me tell you...this will create tons of additional retesting in laboratories everywhere. If system suitability doesn't pass, you have to remake the two standards and reinject. If you run your samples and then discover that the suitability check falls outside of the acceptable range, the entire run must be repeated.
Also....I don't think people are really thrilled with the food/pet food/ drugs manufactured in China that turn up having styrafome and rat poison mixed in. As China and other developing economies ramp up manufacturing of food and drugs to export, they'll have no choice but to produce product that conforms to our regulatory specifications. We're a really big customer....plus their culture fosters the idea of taking pride in one's work. Once these regulatory agencies rise up in these developing nations, the need for all things laboratory (Solvents, Glassware, Various Chemicals, analytical devices, safety equipment etc) will rise big time.
Chemical companies that supply product to r & d and quality labs should be an incredible play over the next ten years. Some solvents and supplies are less easy to come by than others. Sigma and other companies should have a bit of pricing power that will help.
Chemical companies like this are currently the best idea I have in terms of "why the play".
Best of Luck
Schmidt
$43.58 (11/01/08)
