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Growing the contribution of the North East pharmaceuticals sector

In conversation with Martin Inskip of First for Pharma

As the UK Government is framing its new Industrial Strategy and is working through the issues involved in leaving the European Union, First for Pharma (FFP) and the Centre for Process Innovation (CPI), supported by the North East LEP, have worked together on a new report which aims to profile the North East pharmaceutical sector and identify how its economic contribution can be enhanced in the region.

The North East sector was identified as one of the key opportunity areas in the refreshed North East SEP published in March 2017 and was profiled in Sir John Bell’s report to Government in preparation for the planned sector deal.

The new report on the North East’s pharmaceutical sector is based on both analysis of published data and a series of interviews with 12 of the main manufacturing companies in the region, who employ 3500 people between them.

The findings demonstrate the economic importance of the sector nationally and regionally. The report highlights:

• A well-established and diverse sector with different business models, technology ranges and scales of production with an international reputation for business resilience and regulatory reliability.

• A unique profile in UK terms including a number of contract development and contract manufacturers, key supply chain companies and large multinational drug developers. Together, the region’s manufacturers have full capability to develop drug manufacturing processes for clinical development and commercial supply of tableted medicines.

• International ownership including investments from the United States, Japan and India, as well as from the UK.

• A GVA contribution to the UK estimated to be between £0.73 billion and £1.28 billion annually, with an average of 86% of their products being exported with 64% of exports going to the United States.

• For the region, the sector employs between 4,300 and 5,300 people and contributes £450-£790 million to the region’s Gross Value Added (GVA). Including indirect and induced effects, the North East pharmaceutical manufacturing industry supports between 18,800 and 23,500 jobs across the UK and adds £0.73-£1.28 billion to the UK economy.

• Almost 2000 jobs are in high value research or manufacturing roles with the largest cohort aged between 31 and 50 (49%). The quality and stability of the employees in the local labour force is one of the North East’s competitive advantages and the size and sector stability means there are opportunities to build careers in the region. The sector is growing and expecting to recruit additional jobs to its current manufacturing and research workforce this financial year (2017-2018).

The research highlights a number of opportunities and challenges, including strengthening the profile, performance and contribution of the sector through innovation investment and skills, and stimulating more employment in the region through investment and through the supply chain and logistics. It also highlights the importance of a good outcome to the Brexit discussions, where the regulatory regime is seen as crucial and regulatory disruption seen as a significant threat.

The report identifies the following recommendations:

• Supply chain strategy: Development of a supply chain and logistics strategy: work should be undertaken to understand opportunities to strengthen the supply chain in the region and identify opportunities for improving the logistics support, including taking advantage of the North East’s growing digital capabilities.

 Innovation: work to foster the following innovation capabilities in the North East should include ultra-high potency manufacturing; the application of continuous manufacturing for drug manufacturers and smart pharmaceutical delivery including packaging, sensing and new formulations as well as process developments including application of digital, robotic and low carbon technologies.

• Skills: the sector should work with the North East LEP to develop a clearer analysis of the current skills gaps, potential future needs and inform the content of these initiatives.

• Regulatory Environment: The continuing importance of the regulatory environment should be promoted and concerns about the impact of the vote to leave the European Union should be communicated during the current period of consultation on the negotiations.

• Co-ordination: Co-ordination within the sector and with other parts of North East industry should be enhanced to take these recommendations forward regionally and nationally.

Download or read a copy of the full report here.