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.

The pharmaceutical industry on the other hand, is one of UKs 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 sectors 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 business3.
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 companys global re-organisation. Over the next two years, 2,400
people will lose their jobs, raising concerns that the UK is losing highly-skilled jobs14.

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

ECI Future
Forecast Future ECI Manpower Levels
16%

% Share at 2010

16%

Manpower at 2010

12%

11,591

8%
4%

Forecast

2010 Forecast

2011 Forecast

(2008 baseline)

(2010 baseline)

0%
-4%

Required
Manpower at 2020

9,102

9,110

2010

2012

2014

2016

2018

2020

2010 Forecast Survey

2011 Forecast Survey

-8%

-12%

Project % Share at
2020

10%

Number to Recruit
2010 - 2020

5,158

11%

-16%
-20%

3,084

-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. 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. However, the average
and lower forecast does not support this view. European chemical companies including those in the UK will also see an increase in competition in
the future18. As emerging companies in the Middle East and Asia expand, this will shift the global chemical industry towards the East, specifically in
the bulk and commodity chemical sector.

Future/Current ECI Related Projects and Contractors

Client
Exxon Mobil

19

20

Site

Type

Type Detail

Fawley,
Southampton

Chemical Plant

The chemical plant produces 850,000

tonnes of chemical products every
year.

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. The centre will be a
million
O'Raurke
2010
world class faciltiy for medical
research with 1,500 staff.
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 chemistry laboratory is being
built to support demand.
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, UK biopharmaceutical
manufacturing facility: adding a new
fermentation suite, new purification
suites, new process development
laboratories and a new GMP
warehouse.
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. It has
the potential to create 80 direct jobs
and up to 200 support jobs.
24,
Development to improve and increase
Pharmaceuticals
19
2011
Barnard Castle,
R&M &
GlaxoSmithKline
production at the facility. A larger
million
25
Teesdale
NB
manufacturing area is being created
so Stiefel products can be produced at
the site.
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,
Practise" Research & Development
Littlehampton
facility within their existing site in
Littlehampton.
21,
As part of a 500 million investment
4
possible
sites
Pharmaceuticals
300
NB
GlaxoSmithKline
plan by GLAXO, a new
including Barnard
million
22, 12
biopharmaceutical factory is to be built
Castle, Montrose
at one of four possible locations. The
new facility will cost around 300
million and will create 1,000 jobs.
New build of a polyethylene plant,
Polyethylene
6.7
Lotte Chemicals
Teesside
NB
creating 55 direct jobs, and 300 more
26
Plant
million
UK
in construction.
*R&M Repair & Maintenance, O&M Operations & Maintenance, E & C Engineering & Construction, D Decommissioning/Dismantling, NB New Build, PM Project Management

Author: ECITB BIA Team

Central London

Medical
Research and
Innovation

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Late
2011

Late
2012

2015

Chemical & Pharmaceutical Sector Profile_Issue 3

References: Chemical & Pharmaceutical Sector

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

Author: ECITB BIA Team

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Chemical & Pharmaceutical Sector Profile_Issue 3