Swiss Kemiex and Atradius credit insurance launch unique commodity trading platform for the pharmaceutical and nutritional ingredients
The two firms aim to create a safe and convenient trading ecosystem for commoditised APIs, additives, vitamins and other ingredients for the human and animal health and nutrition industries.
“Every CEO and purchaser in these industries is facing the same challenges: the ability to identify reliable counterparties who deliver the right raw materials on time,” says Pau Franquet, CEO of Zurich-based Kemiex AG.
“Too often, they are experiencing operational losses and customer complaints as a result of contract breaches and lack of financial health, quality compliance or less-than-ideal business ethics.”
In an industry wherein more than three quarters of global demand in active ingredients is manufactured in India and China, it requires specialist knowledge and resources to manage the fragmented supplier base and supply chains.
Kemiex claims to provide a unique and safe solution that addresses some of the industry challenges by combining the use of new technologies and the expertise of Atradius credit insurance.
But, besides Kemiex, other players exist (or have existed) that offer matchmaking services or marketplaces for chemical substances. Providers such as Outchem, Avanscure, Vetsquare or Alibaba, to mention a few, all aim to help buyers to source raw materials or help sellers to find buyers for their products.
The number of incumbents betting on new technologies has risen significantly during the past 3 years and it remains to be seen how such traditional industries will react to new solutions. A recent ChemPoint survey has confirmed the increasing use of digital channels also for these industries.
“What Kemiex does is quite different in nature and breadth as we do not operate a specialised online shop or a supplier directory for specialty chemicals. We deliver a safe live merchant trading environment for commodity APIs, food and feed additives,” Mr Franquet insists.
“At Kemiex, you will instantly access many premium counterparties, hand-picked based on financial and quality criteria, and negotiate the best terms available in the global market. Sellers can even insure trades with Atradius directly on the platform.”
Pau Franquet, Kemiex
Certainly, some of the inspiration to launch a venture such as Kemiex comes from Mr Franquet’s experience in the electronic trading business of a global investment bank ... where he learned about trading commodities such as currencies and metals, as well as agricultural and petrochemical contracts.
His private relationships with people in the pharmaceutical and food industries in Switzerland and Spain made him and his best friend, Mr Saludes, finally develop this business opportunity. In 2017, the two cofounded the company and later successfully closed a financing round to realise their vision of an online commodity exchange for the pharmaceutical and nutrition industries.
It was also the time when Dr Rieks, an EU-qualified person to large pharma companies, and Mr Schmidinger, jumped on board as partners to complement the two ambitious cofounders. The team is also supported by seasoned advisers from renowned companies in the pharmaceutical and other sectors.
“One of my most rewarding situations was hearing from the CEO and management team of a large German trading house that they had tried to build something similar but halted development,” remembered Mr Franquet. “They were literally overwhelmed by the features and were the first ones to sign up to Kemiex and the digitalisation of trading.”
Kemiex recently highlighted in a research paper that not only does the solution make sense for typical spot market buyers, it also works for established strategic sourcing teams that want to optimise the sourcing of “B” or “C” products when efficiency matters most.
It can be also a great diversification tool to cope with tight market situations when existing suppliers may struggle to offer a product at the right price or offer it at all.
A centralised online exchange that aggregates supply and demand offers easy access to products globally, including players with different cost structures or available stocks built at lower acquisition prices.
Typical buyers at Kemiex are traders and manufacturers of finished products and premixtures in the pharma, veterinary, food and feed industries.
“Pharma buyers are sometimes sceptical that a digital solution can help them meet strict regulatory requirements, but we have a solution to most of the concerns,” Mr Franquet explains.
“For food and feed — but also veterinary industries — this is actually less of an issue. It's similar for cosmetics, or flavour and fragrance, for which we already have plans to expand our offer in the future.”
Kemiex's sellers are selected European ingredient manufacturers, as well as traders and distributors with vast experience of delivering compliant ingredients worldwide, including products from China and India.
The marketplace, unlike all others, will not be accessible to small and mid-sized manufacturers from these countries as Kemiex does not enter this area of expertise provided by renowned traders and distributors.
The platform covers the full trade process from creating a request for quote (RFQ), private negotiations, trade execution, document management and other value-add services such as reporting and pricing intelligence. Trading will be officially launched in September after the summer holidays.
“Some of the people we speak to do not want to be first movers,” he laughs, “but we're trying to convince more companies, every day, to make this a success for every member. CPhI Madrid in October will be also a key milestone as we host a joint booth with Atradius.”
Atradius, a leading global trade credit insurance, announced a strategic partnership with Kemiex earlier this year. It will provide credit risk insight and insuring trade between sellers and buyers.
For this purpose, a new credit insurance product for single transactions that is different to a traditional whole turnover policy has been developed. It is made available through the platform for a selected range of countries.
For Atradius, this partnership marks another successful effort to be a leader in innovation and digitalisation in the credit insurance industry. As the industry is evolving, Atradius is delivering on its ability to serve incumbent platform businesses and accessing new clients through new technologies.
Pau Franquet concludes: “Parts of the straightforward brokering will be digitalised earlier or later and will complement personal relationships, such as emails replaced the phone in the past."
"Although there are other great solutions trying to improve certain aspects of sourcing and distributing active and inactive ingredients, we are confident that Kemiex and Atradius credit insurance are offering the first holistic live trading platform that enables safe and convenient trade with reliable counterparties.”