"Global Leader" Sigma-Aldrich Corporation: Creating Differentiation Through Innovation
By Laurie Burstein
When you turn on your TV, put on perfume,
purchase a piece of art, or get vaccinated, chances are that some of the products used to make these conveniences possible were developed or
provided by St. Louis-based Sigma-Aldrich.
A broad range of products is offered by the
St. Louis-based life science company and they span a wide range of applications—from simple flavoring ingredients for food technology development to complex biochemicals used to decode genes or edit the DNA in living cells. Sigma sells its products to researchers in a broad market from academic institutions to large pharmaceutical companies in over 160 countries. On average, the company receives 15,000 orders per day from customers all over the world and consistently ships out over 95 percent of these orders the same day. The company offers 110,000 different chemicals and manufactures over 46,000 of these materials themselves at one of their
14 production sites located around the world. Sigma-Aldrich has nearly 8,000 employees that go to work each day in 38 countries.
The company is well-known for providing products to support lifesaving research and to manufacture key pharmaceuticals, vaccines and other materials used in high technology applications, such as semiconductors and chips. And despite tough economic times, Sigma-Aldrich has consistently grown and remained profitable since its 1951 founding in St. Louis. As an industry leader in life science and high technology research, Sigma has stayed ahead of the curve with a combination of diversified products, expansion into key global markets, and by providing the scientific reagents that enable breakthroughs in life science research. Its contract manufacturing business unit, SAFC, is considered a top 10 fine chemicals company.
“Applications of our products help people live longer and provide comfort and convenience,” says Dr. Jai Nagarkatti, president and CEO. “We are in the business of providing products that enable research to improve the quality of life.”
Sigma Yesterday and Today
The company began its history as two separate entities—Sigma Chemical Company located in St. Louis, Mo., was
known for its biochemical products and
Aldrich Chemical Company of Milwaukee, Wis., whose specialization was organic chemistry. Sigma’s origin has a connection with St. Louis’ Washington University through the well-known research work of Tom and Gerty Cori. The husband and wife team was awarded the Nobel Prize for medicine in 1947.
In 1975, the two companies merged as Sigma-Aldrich Corporation to form one public company headquartered in St. Louis. Fast forwarding to 2007 when the company crossed the $2 billion mark in sales to today with sales and profits remaining strong.
“Every year has set a record in terms of sales and profits,” says
Dr. Nagarkatti, a 32-year veteran with the company. “This means that each year we have invested more money in the company and in the local region to continue to grow our business.”
Dr. Nagarkatti began his career with the company in 1976 as a development chemist in the Milwaukee, Wis. office. In 1987, he became president of the Aldrich Chemical Company, a position he held until 2000 when he transferred to St. Louis to lead the company’s Fine Chemicals Division. He was named president of the Scientific Research Division, the company’s largest business unit in 2003, and was promoted to president and COO in 2004. In 2006, he was named CEO.
Even in these uncertain economic times, how has Sigma-Aldrich managed to grow? Dr. Nagarkatti acknowledges that while this is one of the more severe downturns he has experienced, Sigma-Aldrich remains solid.
“We have seen economic downturns in the past, and though we have not grown as quickly during these times, we have always grown. I believe the key to this success is the way in which we are diversified in terms of customer base, products and the markets we serve,” Dr. Nagarkatti explains.
Of Sigma’s one million customers, no single contact accounts for more than two percent of Sigma’s total revenues. Of the 110,000 products offered by the company, no individual product accounts for more than one percent in sales.
Sigma’s customers are also diverse with about one-third pharmaceutical companies, one-third researchers and universities from all over the world, and the other third from industrial institutions.
The majority of today’s pharmaceutical companies use Sigma’s raw materials to develop new products or produce a variety of pharmaceuticals to diagnose and treat diseases.
“There is hardly a pharmaceutical drug on the market today that hasn’t been developed with or doesn’t include one of our products. Many of the key ingredients in both generic drugs as well as exclusive drugs are supplied by Sigma-Aldrich.“
On the non-pharmaceutical side of the business, Sigma produces chemicals used to create the vivid colors found in high-definition flat panel TV screens or to produce LED lighting, for example.
The company also works with agriculture companies like Monsanto. To explain Sigma’s role with ag companies,
Dr. Nagarkatti says that while Sigma does not grow the crop or develop the seeds, their products enable research which allow companies to develop seeds that produce more bushels per acre.
“The common element that binds all of this together is the breadth of knowledge our company has in science and chemistry,”
Dr. Nagarkatti says.
Sigma-Aldrich Fun Facts
Not far from Sigma-Aldrich’s downtown headquarters is the DeKalb production plant just
east of Broadway (near the Anheuser-Busch Brewery). At this plant, the company does
some little known, but rather interesting, extractive chemistry work. Here’s a sampling:
DeKalb grinds 20-30 tons of horseradish per year to extract an enzyme called peroxidase.
The horseradish is bought from local area farmers and the enzyme is used in molecular biology applications.
DeKalb grinds sweet potatoes for products beta Amylase and Acid Phosphatase.
Sigma also produces other interesting enzymes.
The company is the only manufacturer of an obscure enzyme used to diagnose hereditary galactosemia,
a life-threatening metabolic disease that affects approximately one in 40,000 newborn babies.
The disease is easily treated if diagnosed, but is often fatal if left untreated.
In 2005, the Memorial Sloan Kettering Cancer Center (MSKCC) contacted Sigma-Aldrich regarding an enzyme
the company had discontinued. The enzyme was needed to analyze levels of a chemotherapy drug in cancer
patients, allowing oncologists to more finely tune dosages. Sigma quickly developed a new, recombinant version
of the human enzyme produced in bacteria (E. coli). Since that time, MSKCC has used the enzyme to monitor and
fine tune drug dosages for cancer patients, improving their quality of life by minimizing the drug’s toxicity and
maximizing its efficacy.
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St. Louis Connection
Of Sigma’s 8,000 member global workforce, 1,900 are based in the St. Louis headquarters near downtown, and many of those employees hold advanced degrees in chemistry.
Dr. Nagarkatti says, “One of reasons we like to be in St. Louis is that there is no shortage of talent from the top universities located in our city.”
He cites the central location as a plus, along with being in the heart of the BioBelt with access to established customers like Monsanto, Solae, the Danforth Plant Science Center and the Missouri Botanical Garden, as well as start-up companies at the Center for Emerging Technologies.
Many Sigma employees take an active role in local groups and organizations such as the Saint Louis Science Center and collaborate on research projects with local universities. The company worked with local and state government to develop a large R&D center on its campus located on a former brownfield site located west of the Wachovia campus.
At Sigma’s production plant in St. Louis, the world’s largest biological buffers supply is produced. Bio-buffers are a group of products that go into almost every bio-chemical commercial and research product.
On the charitable giving front, last year the company donated approximately $8 million in products and cash through both the Sigma-Aldrich Corporation and the Sigma-Aldrich Foundation. Employees and the company are involved in the United Way, Saint Louis Zoo, Saint Louis Symphony, Race for the Cure, and many others.
On a personal note, Dr. Nagarkatti says he found the community to be very welcoming when he relocated here in 2002. He especially enjoys the thriving international community in St. Louis and all of the cultural institutions.
Stem Cell Research
and Global Footprint
President Obama’s recent executive order repealing restrictions on embryonic stem cell research will positively impact Sigma’s business in this area. The company offers more than 1,000 products to support new research efforts in regenerative medicine.
Sigma’s Research Biotech business unit, one of the fastest growing in the company, is developing innovative new stem cell research and products through various collaborative projects. One very exciting product is the zinc finger nuclease which enables scientists to manipulate the DNA in living cells. This manipulation provides researchers with improved insight into causes and treatments of diseases.
On the international front, Sigma’s global operations are a significant part of the company’s profits with 65 percent of revenues coming from outside of the U.S. In 2008, the company established a presence in Vietnam and continued to target growth in Brazil, China and India. In the last three years, revenues have grown by 20 percent in these three regions.
Sigma is engaged in these countries not just to supply products, but to get more involved in research specific for each country’s needs. Plans call for continued expansion into these target countries.
Balancing Priorities
and Future Outlook
As a member of the company for almost 33 years, with the last three as CEO, the 62-year-old Dr. Nagarkatti has seen the company go through many different stages and knows what makes the business tick. His biggest challenges today, not unlike any CEO, are balancing the needs of three key stakeholders: employees, customers and shareholders.
One of the ways he and the company is able to balance those needs is through communication. “My style is collaborative and I try to engage all the different parties. Frequent communication is a big part of that.”
One example is the short video messages he sends to all 8,000 employees on a regular basis to keep them informed of the company’s activities. Dr. Nagarkatti also sees face-to-face contact with all three stakeholders as important. He travels once a quarter with the sales force to visit sites, staff, investors and customers throughout the world. His next trip will be to Japan and China.
“The best part of my job is to see our team grow, develop and evolve while contributing to growth of the company. My biggest accomplishment is being able to motivate our team to take us to the next level. “
He continues, “In these difficult times, we have had to make some tough decisions in terms of how to use the company’s resources, although we have never had a layoff,” Dr. Nagarkatti is happy to point out. “We control our destiny and are very optimistic about our future,” he adds.
Dr. Nagarkatti has two stories that standout on how his company has made a difference. During the first Gulf War, Sigma was a supplier of a critical component of an antidote for nerve gas that helped save soldiers’ lives.
He also will never forget a letter he received from the father of a young girl who was diagnosed with a rare form of cancer. The letter thanked the company for making a product that was used in an experimental drug that reversed his daughter’s illness.
“Our products touch millions of lives. These stories bring home the point of who we are and what we do.“
Q&A with Dr. Jai Nagarkatti - Sigma-Aldrich Corporation
Q: Sigma-Aldrich recently launched an on-line portal to promote the company’s products for stem cell research. Please describe.
A: The portal concept provides an easy and convenient method for scientists to locate information and to purchase the products they need to conduct their stem cell research. This site provides convenient, single-point access to our comprehensive catalog of materials. A landing page on the Sigma-Aldrich website links to products and technical information needed.
Q: When was it launched and how does it work?
A: We began this exercise early in 2008, and officially launched the portals in January 2009. Researchers sign on to our website and can go directly to the stem cell portal for information about products.
Q: It is correct that
the company has more than 1,000
products to support all stages of stem cell research?
A: In 2008, we identified an estimated 1,100 products that have applications in stem cell research. Out of the 1,100 products we have approximately 500 products that have very specific stem cell applications (ex. antibodies against stem cell proteins). During 2009, we expect to increase our product listing by more than 300 new products. All of the above mentioned products are on-line via our www.sigma-aldrich.com/stembio website.
Q: Describe your operations in
China. What kind of work do
you do there?
A: Over the past three years, Sigma-Aldrich has rapidly expanded our presence in China by establishing a Wholly Foreign Owned Enterprise (WFOE); acquiring a primary distributor in China, Beijing Superior; and investing in distribution infrastructure to directly supply our products to customers in the region.
Today, Sigma-Aldrich has over 100 employees in China located primarily in Shanghai with satellite sales offices in Beijing, Guangzhou, Chengdu, Wuhan, Xi’an and Shenyang. To support the growing market and to leverage the region to strengthen the global supply chain, Sigma-Aldrich is further investing in China by expanding distribution capacity in Shanghai and developing packaging and analytical infrastructure in Wuxi.
Q: What are the three most important things you want people to know about the company?
1: Sigma-Aldrich’s products enable research, which enhances the quality of life around the globe. Our products touch millions of lives indirectly by supporting research and manufacturing in a broad range of applications, which include finding cures for debilitating diseases, increasing crop yields and developing advanced materials for a multitude of applications.
2: Sigma-Aldrich is a Fortune 1000 global company headquartered in St. Louis with a demonstrated track record of delivering sustainable profitable growth. This track record has enabled the company to continue to make investments every year since inception to support future growth, which in turn contributes to the economic growth of the communities in which we operate.
3: The growth and success of Sigma-Aldrich continues to create opportunities to fulfill career aspirations of our employees as we enable customers’ success and build shareholder value.
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