Chief is positive despite job cuts

Apr 4 2008 Evening Gazette

AS THE countdown begins towards the April 7 deadline for redundancies at drugs firm Lundbeck’s plant on Seal Sands, a leading pharmaceuticals chief said Teesside was well placed to capitalise on the industry’s powerful regional manufacturing capability.

Last month, nebusiness revealed that the Danish-based company was seeking a buyer for its £40m UK site, plunging the future of its 65 staff into doubt.

But Stan Higgins, chief executive of the North East Process Industry Cluster (NEPIC), said other North-east manufacturers would be looking to boost production, despite research that suggests UK drugs companies are looking to scale down their output.

According to the CBI and the Association of British Pharmaceuticals Industry (ABPI), 42% of pharmaceutical companies nationally believe their output will drop, suggesting the sector has lost confidence in the UK as a place to do business.

But Mr Higgins said: “The North-east has a very strong capability in pharmaceuticals, particularly on the manufacturing side. Pharmaceuticals exports have grown by 45% to £1.7bn, which is a significant proportion of the region’s overall £9.5bn export market.

“Finding ways of boosting the performance of manufacturers will provide opportunities for smaller companies in the pharmaceuticals supply chain.”

NEPIC is working with One NorthEast to find ways of keeping the industry competitive, as spiraling energy costs continue to squeeze margins on production.

Mr Higgins continued: “One way is to build renewable energy hubs with wind farms to allow local manufacturers to reduce their usage of traditional energy.”

He described the state of the pharmaceuticals industry at the moment as “reasonably healthy,” even though the current climate has forced Lundbeck to consolidate its manufacturing processes.

The Danish company is selling the Teesside site to switch manufacture of one of its pharmaceutical ingredients, Escitalopram, to factories in Italy and Denmark.

Lundbeck confirmed it had notified the Seal Sands employees that they are at risk of redundancy and is conducting a formal consultation process with employee representatives.

The site could close if a buyer is not found.