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Chemical and Pharmaceutical Sector Profile

Introduction
The chemical and pharmaceutical sector is described as “heart of the UK economy” 1, representing 12% of manufacture and adding £20 million
annually to the UK balance of trade annually. It is a £60 billion industry providing around 600,000 jobs, with 20% higher employee costs than other
manufacturing sectors. The UK is the sixth largest chemical and pharmaceutical producer by output2, with the majority of the industry located in the
North East of England. This region accounts for 58% of the petrochemical output and 35% of the pharmaceutical business output 3. The Teesside
petrochemical cluster, for example, has the largest manufacturing capacity of any integrated chemicals complex in the UK.
The economic slowdown and global financial uncertainty has especially hit the chemical sector3. In Europe, the
chemical sector is made up of 4,300 chemical companies, of which 15 control 98% of chemical production4. In
2009, the UK demand for chemical products hit a five year low, resulting in chemical companies having to make
cut backs or close facilities. The sector reported an optimistic outlook in 2010 when the market suggested a rise
in activities and recovery of specific closed facilities. Key players within the sector have reported successful
margins after working together to shape business operations3.

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The pharmaceutical industry on the other hand, is one of UK‟s leading sectors bringing in a trade surplus of
around £4 billion5. In 2007, over 72,000 were employed directly by the industry with a further 250,000 indirectly6.
This sector remains the second largest exporter in North East England and even though exports fell by 18% in
the fourth quarter of 2010, the sector‟s total value in the North East is £2.18bn7. In contrast with the chemical
sector, “the pharmaceutical sector is doing well and remaining positive despite the challenges facing business”3.
This suggests that the pharmaceutical sector is performing at a comparatively higher level than the chemical
sector. However, the recession has affected industry as a whole and reduced the workforce by 10%, with output
levels that are not expected to return to pre-recession levels until at least 20121.

Activities in the UK
The greatest activity increase in recent years came from significant expansion of Aesica Pharmaceutical and GlaxoSmithKline (GSK). Aesica
Pharmaceutical has emerged as a new major organisation in the UK pharmaceutical industry. Aesica have expanded significantly over the last few
years to become a leading supplier of pharmaceutical products3&9. Services offered include development and manufacturing, formulation
development and formulated products manufacturing services10. GlaxoSmithKline (GSK) has also seen a significant increase in activity in 20092010 due to the rapid increase in demand for flu vaccines and new investments in its micro biological capabilities 3. In April 2011, they announced
that they intend to transfer 1.5 million tonnes11 of bio-manufacturing from India back to the Angus plant in the UK, due to the efficiency of the plant12.
The „Science 2 Business Initiative‟ is a joint venture between CPI and NEPIC3. It aims to attract global expertise from consumer sectors to explore
new opportunities and expand the business of companies within the sector. This scheme is managed by Teeside University with a number of set
key objectives including engaging small to medium enterprises (SMEs) and encouraging innovation by providing a range of global business
opportunities and access to funding, research and technology13.
Key players within the Chemical and Pharmaceutical sector have been affected by recent economic conditions 14. For example, in 2011 Pfizer
announced that it would close its UK based research centre in Kent as part of the company‟s global re-organisation. Over the next two years, 2,400
people will lose their jobs, raising concerns “that the UK is losing highly-skilled jobs”14.

ECI Related Activities
Engineering construction is involved in the design, project management, construction, installation, testing, commissioning,
decommissioning/dismantling and maintenance of chemical and pharmaceutical plants. The UK ECI workforce in the chemical and pharmaceutical
industry in 2010 was around 11,600.
The £370 million Wilton based LDP plant is the largest of its kind in the world15. Owned by SABIC, the plant began operation at the end of 2009
producing 400,000 tonnes per annum of low density polyethylene. The material produced by the plant is used primarily in packaging applications in
the European market15.
A major Redhall Engineering Solutions contract was cancelled by Vivergo Fuels due to the project being behind schedule 16. The scope of the
contract covered mechanical and piping work at the Saltend chemical plant and had been scheduled to be completed in February. Since March
2011, 431 workers were waiting to be transferred to another contracting employer17.
Author: ECITB BIA Team

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Chemical & Pharmaceutical Sector Profile_Issue 3

E & C – Engineering & Construction.500 staff. Polyethylene £6. As part of a £500 million investment 4 possible sites Pharmaceuticals £300 NB GlaxoSmithKline plan by GLAXO. D – Decommissioning/Dismantling. The new facility will cost around £300 million and will create 1. A new chemistry laboratory is being built to support demand. PM – Project Management Author: ECITB BIA Team Central London Medical Research and Innovation Page 2 Late 2011 Late 2012 2015 - - - - Chemical & Pharmaceutical Sector Profile_Issue 3 .000 tonnes of chemical products every year. 26 5 month contract for the design and Pharmaceuticals £380k Watersmead NB TSL Projects COSi UK LTD construct a new "World's Best Business Park. 24.2020 5.591 8% 4% Forecast 2010 Forecast 2011 Forecast (2008 baseline) (2010 baseline) 0% -4% Required Manpower at 2020 9. and 300 more 26 Plant million UK in construction. R&M & GlaxoSmithKline production at the facility. O&M – Operations & Maintenance. NB – New Build. European chemical companies including those in the UK will also see an increase in competition in the future18. 23 £100m manufacturing plant on Chemicals from £100 Teesside NB 2011 Solvert Limited Teesside which can supply renewable Waste million raw materials to local industry.084 -24% *0%: Status Quo as at 2010 The ECITB predicts that the ECI manpower levels required by 2022 will be 21% less than at 2010. *R&M – Repair & Maintenance.000 jobs.7 Lotte Chemicals Teesside NB creating 55 direct jobs. 12 biopharmaceutical factory is to be built Castle.ECI Future Forecast Future ECI Manpower Levels 16% % Share at 2010 16% Manpower at 2010 12% 11. New build of a polyethylene plant. UK biopharmaceutical manufacturing facility: adding a new fermentation suite.110 2010 2012 2014 2016 2018 2020 2010 Forecast Survey 2011 Forecast Survey -8% -12% Project % Share at 2020 10% Number to Recruit 2010 . Southampton Chemical Plant The chemical plant produces 850. A larger million 25 Teesdale NB manufacturing area is being created so Stiefel products can be produced at the site. Montrose at one of four possible locations. specifically in the bulk and commodity chemical sector. R5 Pharmaceuticals was recently Pharmaceuticals Spring R5 NB acquired by Aesica Pharmaceuticals 21 2011 Pharmaceuticals and is set to double in size this year. a new including Barnard million 22. The centre will be a million O'Raurke 2010 world class faciltiy for medical research with 1. new purification suites. Development to improve and increase Pharmaceuticals £19 2011 Barnard Castle. the average and lower forecast does not support this view. Activity Contractors Est Value R&M - - Start Date End Date 1995 Life of plant 2015 A £600 million medical research and £600 NB Laing Novinnovation centre. Future/Current ECI Related Projects and Contractors Client Exxon Mobil 19 20 Site Type Type Detail Fawley. Practise" Research & Development Littlehampton facility within their existing site in Littlehampton. 21. new process development laboratories and a new GMP warehouse. It has the potential to create 80 direct jobs and up to 200 support jobs. Lonza is to invest £16 million to further Pharmaceuticals £16 2011 Lonza (Swiss Slough NB develop the flexibility and capability of 22 million group) its Slough. However. The ECITB upper forecast supports the view within the chemical and pharmaceutical industry is that manpower levels will not return to pre-recession levels until 20121.158 11% -16% -20% 3. this will shift the global chemical industry towards the East. As emerging companies in the Middle East and Asia expand.102 9.

org.teesdalemercury. http://www. NEPIC.ccsassociation. ABPI. cia.com/glaxosmithkline-plc-longsk-moving-bio-plant/69812239 12.uk/videoplay?docid=-7348687830857176606# 5. UK chemical and pharmaceutical manufacturing. Article.chemicals-technology.com/projects/huntsman/ 16.uk/News/Angus/article/12764/glaxosmithkline-news-hailed-as-once-in-a-lifetime-opportunity-for-montrose.org.aspx 19.co.. http://www.co. BBC News. http://www.org.gov. Information. Project. BBAA. Project. Article. Emoney Daily.org. Chemical Industries Association. The Courier. 22/03/11.bbc.co.com/blog/news/laing-orourke-wins-600m-medical-research-contract 21. http://www. http://www.uk/teesdalenews/story.emoneydaily. Project.theengineer.uk/statistics/intro.aesica-pharma.uk/news/ambitious-plan-create-chemicals-waste 24.exxonmobil. Article. Saltend Chemical plant workers face „uncertain future‟.google. NEPIC industry review 2009 4. Element energy. http://www. One North East.co.co.php?id=24439 18. http://www.uk/news/uk-england-humber12745331 17. 13/04/11.co.uk/page/news/article. Chemical Conference.uk/art.thecourier. A global industry. Socialist Worker Online.ukti. http://www. 11/04/11. Press Article. Article.socialistworker.teesdalemercury. 29/03/11. The future of the European Chemical Industry. Article.uk/about-aesica/about 10. Teesdale Mercury. Project.ac.tees. Project. http://tslprojects.+brochureSP.html 25.uk/news/business-12688170 15. ABPI. TSL.abpi. Teeside University.co.pdf 2. Artical.asp?sect=1 6. http://www. http://www. KPMG.bbc.uk/news/further-expansion-for-aesica-as-r5-pharmaceuticals-doubles-in-size/ 22.uk/teesdale-news/story. Article. Chemicals Technology. http://www. GLAXO undergoes £19 million expansion.html 9. North East exports continue to grow.guyanassociates. GLAXO.org. 21/12/10.pdf 3.com/case-studies. http://www.asp 7. Facts & statistics from the pharmaceutical industry. Aesica Pharmaceutical.co. ExxonMobil./Chemicals%20-%20UK%20advantage. 5/04/11.uk/s2b/ 14. BBC News. 1/02/2011.uk/download/.kpmg.aspx 20.co.References: Chemical & Pharmaceutical Sector Footnotes 1. Saltend: solidarity can win. http://www. http://www. http://video.html 13. Project.. http://www. http://www. http://www. Facts & statistics from the pharmaceutical industry. Article. Article. Process industry cluster. ukti.co. www. Pfizer to close UK research site. Project. Guy Associates. GlaxoSmithKline news hailed as “once in a life time opportunity” for Montrose. http://www. Developing a CCS network in the Tees Valley Region.uk/statistics/section. Lonza to expand UK manufacturing site.uk/aboutCia_dowload.abpi.cfm?articleId=4803 8.3249. Science 2 Business Hub. http://www. 11/03/11.. http://www.uk/docs/2011/EE%20ONE%20North%20East%20CCS%20Final%20Report%20V6.aesica-pharma. Article.php Author: ECITB BIA Team Page 3 Chemical & Pharmaceutical Sector Profile_Issue 3 .php?.uk/about-us/ 11. Report.aesica-pharma.3249. GSK Moving Bio Plant. http://www. Aesica Pharmaceutical. News Article.co.article 23.. The Engineer.co.com/BE/en/IssuesAndInsights/ArticlesPublications/Pages/Future-of-the-European-Chemical-Industry.html 26. 15/03/11.bbaa.onenortheast.com/UK-English/about_what_chemicals_fawley. Aesica Dynamic Chemistry. About Aesica. UK Chemicals Report.uk/channels/process-engineering/lonzato-expand-uk-manufacturing-site/1008055.