Businessweek

American Pacific Corporation manufactures fine chemicals and specialty chemicals in the United States. Segments The company’s segments include Fine Chemicals; Specialty Chemicals; and Other Businesses. FINE CHEMICALS SEGMENT This segment is operated through its wholly-owned subsidiaries Ampac Fine Chemicals LLC and AMPAC Fine Chemicals Texas, LLC (collectively AFC). AFC is a custom manufacturer of active pharmaceutical ingredients (APIs) and registered intermediates for customers in the pharmaceutical industry. The pharmaceutical ingredients the company manufactures are used by its customers in drugs with indications in three primary areas: anti-viral, oncology, and central nervous system. AFC’s customers include pharmaceutical and biotechnology companies, as well as emerging pharmaceutical companies. Most of the products AFC sells are proprietary to the company’s customers and used in existing drugs that are the U.S. Food and Drug Administration (the FDA) approved and commercially available. The company operates in compliance with the FDA’s current Good Manufacturing Practices and the requirements of certain other regulatory agencies, such as the European Union’s European Medicines Agency and Japan’s Pharmaceuticals and Medical Devices Agency. Customers and Markets The company’s customers include both multi-national pharmaceutical companies, as well as emerging and development-stage pharmaceutical companies. AFC maintains multi-year manufacturing agreements with various large pharmaceutical and biopharmaceutical companies for annual supply of products. In 2010, AFC and Gilead Sciences, Inc. (Gilead) entered into a new three-year manufacturing supply agreement for a chemical compound referred to as Tenofovir DF, the API in the drug VIREAD and one of the APIs in the drugs TRUVADA, ATRIPLA, COMPLERA, and STRIBILD. Under the terms of the agreement, Gilead is obligated to purchase minimum quantities of bulk Tenofovir DF from AFC through 2013, subject to certain terms within the agreement. Competition High Containment: The company’s competitors include SAFC; Helsinn; Cambrex Corp.; and OmniChem. Energetic and Specialty Processes: The company’s competitors include Group Novasep SAS; OmniChem; and Orgomol. Simulated Moving Bed: The company’s competitors include Group Novasep SAS; SAFC; and Diacel Chemical Industries, Ltd. SPECIALTY CHEMICALS SEGMENT This segment engages in the production of perchlorates, which include various grades of ammonium perchlorate (AP), sodium perchlorate and potassium perchlorate. In addition, it produces and sells sodium azide, a chemical primarily used in pharmaceutical manufacturing, and Halotron, a series of clean fire extinguishing agents used in fire extinguishing products ranging from portable fire extinguishers to total flooding systems. Perchlorate Products The company supplies rocket-grade AP for use in space and defense programs. AP is a key component of solid propellant rockets, booster motors and missiles that are utilized in U.S. Department of Defense (DOD) tactical and strategic missile programs, as well as various space programs, such as the Delta and Atlas families of commercial space launch vehicles and space exploration programs for the National Aeronautics and Space Administration (NASA). AP is the predominant oxidizing agent for solid propellant rockets, booster motors and missiles used in national defense, space exploration and commercial satellite transportation programs. The company supplies AP for use in various defense programs, including the Army’s Guided Multiple Launch Rocket System program and the Navy’s Standard Missile and D5 Fleet Ballistic Missile programs. The company’s principal space customers are Alliant Techsystems, Inc. (ATK) for the Space Launch System (SLS) and the Delta family of commercial rockets, and Aerojet General Corporation (Aerojet) for the Atlas family of commercial rockets. SLS is developing the Heavy Launch Vehicle. The company also produces and sells various other grades of AP and different types and grades of sodium and potassium perchlorates (collectively other perchlorates). Other perchlor