Special Report - North East PIC (part two)

Dec 11 2006 By The Journal

Aesica gets the chemistry right

Based in Cramlington, Northumberland, Aesica Pharmaceuticals is a trusted and well-established supplier of active pharmaceutical ingredients (APIs) and custom synthesis solutions to the global pharmaceutical and biotechnology industries.

Aesica's customers include top-10 pharmaceutical companies, leading generics manufacturers and new emerging companies across the major pharmaceutical markets - Japan, Europe and North America. About 95% of the company's products are exported out of the UK.

Aesica's headquarters are located on a 90-acre site and have their own technical development capability and a kilo lab for early-phase development.

The manufacturing facilities comprise five computer-controlled multi-product plants working to cGMP standards, manufacturing in campaigns from 50kg to 100mt. Since the management buyout in September, 2004 from global chemical company BASF, Aesica has delivered both sales and profit growth.

Aesica recently announced its acquisition of the new manufacturing facility at Ponders End, UK, from Merck Sharp & Dohme Limited (MSD), the UK subsidiary of Merck & Co, Inc (Merck) of New Jersey, USA.

In addition to acquiring the site, Aesica has also entered into an agreement to supply intermediates and active ingredients to Merck over a number of years, with a potential revenue stream of £77.5m up to £155m.

The Ponders End site is a hi-tech manufacturing facility in Enfield, North London. It has potent compound and bulk manufacturing facilities producing a number of MSD's products. The plant has a capacity to produce 300 tons of products per year.

Under the agreement, 74 employees working at the site will transfer from MSD to Aesica.

Aesica is also involved in renewable energy projects and hopes to install wind turbines in order to generate its own electricity and cut its £407,000-a-year electricity bill by 40%.

Adam Sims, finance director for Aesica, said: "Caring for the environment and the wellbeing of future generations is at the heart of company policy and decision-making.

"The company has committed itself to a sustainable development strategy, with one key target being a reduction in carbon emissions. Wind turbines provide the most feasible option for establishing an effective renewable energy source on our site and will also reduce energy costs, helping the company maintain its competitive market position and ensuring the long-term success of the Cramlington site."

Aesica's ambitious plan received objection from Newcastle Airport, saying the structures would interfere with the airport's radar systems. However, Blyth Valley councillors are to seek advice from air traffic control experts and examine national guidance on the risks posed by turbines near airports in the hope of resolving the issue favourably for Aesica.

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Put the flags out for NPIL

Fluttering on their towering poles above the gatehouse, the flags of Britain, India and Northumberland go well together. This ethnic combination impresses, also, inside the main buildings housing one of the main global operations of NPIL Pharma - turning out nine million pills and tablets a day for more than 100 countries of the world from Morpeth in Northumberland.

NPIL - a name maybe still unfamiliar? Even some senior staff there arched an eyebrow on learning five months ago that this was to be their new company, taking over the plant and employees alike from US multinational Pfizer.

Now, though, all 440 employees know the Morpeth business of NPIL Pharmaceuticals (UK) Ltd - to give its full name - is the fast growing UK operation for Nicholas Piramal India Limited (NPIL).

The latter is the flagship for the $500m Piramal Enterprises, one of India's largest diversified business groups. NPIL is also India's fourth largest pharma healthcare firm - a leader especially in cardio-vascular, arthritic and female health treatments.

Michael Fernandez, executive director of custom manufacturing at Mumbai, was full of praise for the Morpeth business and workforce during his latest visit. He declares: "Besides being now our biggest UK operation, it is one of our top three globally in volume and value. I am impressed. We have something even better than expected."

He explained: "With excellent facilities and skilled and dedicated staff, it fits well into our profile. Pharmaceuticals are very global, and Morpeth has a big part to play in spreading NPIL's expertise far beyond India.

"Though we had been anxious to grow in Britain, it made no sense for us to develop greenfield. What NPIL got instead was a proven centre in lovely surroundings with this staff already eager to show their capability."

There was some suspense beforehand, though. Pfizer put the plant up for sale in January 2005, acknowledging it as one of its largest high-quality, integrated facilities globally. But 17 months passed before the workforce in limbo learned their jobs had been safeguarded.

Yet a mere handful left in that time, says site manager Aidan Walker: "That shows the tremendous loyalty, the team spirit and the confidence in abilities being recognised."

The staff commitment is remarkable. Average length of service is more than 14 years, and that includes Aidan.

NPIL is delighted too at having got the site's fixed assets and property on a liability and cash-free basis, and with it strategic entry to the global sourcing network of Pfizer Inc - a potential for NPIL of $350m-plus.

This comes with a supply agreement until November 2011, and was a significant first step in safeguarding jobs. Pfizer meanwhile still benefits from the pharma expertise there.

Around 97% of the work there, mostly in two eight-hour shifts, continues to be done for Pfizer. And there is an equal amount of available capacity for new initiatives, which Aidan says the company is pursuing now, hopefully to create even more jobs.

While NPIL does not do frontline research, such as costs the biggest global pharma groups billions, it does support research, and this brings a double dose of possibilities.

In the UK NPIL makes chemical intermediates, active pharmaceutical ingredients, and finished dosage products in the form of tablets and capsules. The majority of the tablets and capsules are then packaged into market specific presentations and shipped to markets all over the world.

Michael Fernandez suggests (and sector analysts concur): "With healthcare advancing ever more widely worldwide, and people living longer but maybe needing additional treatments, further benefits are likely for contract manufacturing.

"They will bring us opportunities, both in bulk actives and intermediates markets. There will be attractive price points too for both patent and off-patent drugs for the regulated markets of Europe, the USA and Japan."

Existing products already get diversified approaches. Compositions may vary according to the climate, health regulations and other considerations in different markets. Also, while most pills go out in blister packs, labelling and instructions will often have to differ in language - and even a brand name may change from one market to another.

The heavily investing parent Nicholas Piramal India has become one of the world's Top 10 pharmas outsourcing its manufacturing in just three years.

Best known products from Morpeth include Aldactone, a cardio-vascular treatment, and Arthrotec, a pain-killer for arthritics.

Aidan Walker says: "Our transition here from a cost centre to a business has been smooth. It gives great satisfaction to have more control over our destiny, and greater freedom to speak about things that affect us."

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Quality is important

The site on the B6524 Belsay road blends well with its rural surroundings. Its low lying buildings, unlike a lot of other commercial architecture of the late 1960s, stands the test of time both in appearance and durability.

Michael Fernandez says NPIL was alerted to the opportunity both by Pfizer, with whom it already had several years' relationship, and by investment bankers.

In job terms it means ongoing and perhaps even more opportunity for school leavers and graduates in a part of the region where higher skilled work is at a premium.

It also opens doors to scientific professionals with experience who are working elsewhere but want to return to the region where they were brought up or graduated. Aidan Walker says: "We get applications like that regularly, whether a post has been advertised or not. Quality of life is a big pull."

The workforce now comprises about 175 people directly involved in the manufacture and testing of product, with the remainder in support activities including quality, engineering and logistics.

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The biggest and the best

Though 500 major Indian firms are now active in the UK, NPIL stands out as the first major pharma group to outsource assets in the UK.

Morpeth is its third and biggest buy here. It bought activities at Rhodia in Bristol in 2004, then acquired Avecia in Huddersfield and Grangemouth in Scotland, where it employs 190, the latter site having almost doubled its staffing to 40.

It also has operations in the USA and Canada. Piramal Enterprises to which it belongs is led by Ajay Piramal, ranked 32nd among Indian's richest business people by Fortune magazine.

The pharma group began with an acquisition in 1988, and has developed through acquisitions and alliances ever since, with names that include Roche,

Boehringer Mannheim, Hoechst, Aventis, Boots - and of course, Pfizer.

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Pioneering work makes Teesside a world leader

The New Year will bring with it the arrival of a pioneering biochemical centre of excellence on Teesside. Scientists have already started work in new state-of-the-art laboratories as part of the project, which aims to find more cost effective and environmentally friendly ways of making chemicals, pharmaceuticals and bio-energy.

The opening of the development laboratories, at the Centre for Process Innovation at Wilton, is the first stage in an ambitious £7m plan to bring competitive and sustainable technology to the UK's chemicals industry.

By early 2007, a larger scale production facility will also come on-line, completing the planned scale up and demonstration capability in fermentation and enzyme technology, together with a range of downstream process technology.

Together these facilities will form the National Industrial Biotechnology Facility (NIBF), which is being built following investment by the regional development agency One NorthEast and The Northern Way programme - collaboration by One NorthEast, North-West Development Agency and Yorkshire Forward.

The new facilities will involve more natural, cleaner and greener ways of making chemicals.

Companies large and small will be able to test, trial and prove new products and processes at the centre before taking them to the market and out into industry.

At present the vast majority of chemicals and pharmaceuticals are produced by methods which use synthetic chemicals with multiple stages, which can waste precious time and energy and potentially cause detriment to the environment.

Instead, CPI's NIBF will allow a degree of reinvention by employing cleaner, greener methods and manufacturing routes via the use of enzymes - nature's catalysts.

Revolutionary new enzymes produced by one of CPI's partners, the Manchester-based Centre of Excellence in Boicatalysis, Biotransformations and Biocatalytic Manufacturing (CoE Bio3) will be used at the Wilton site to bring biotechnological theory to life.

The NIBF team is not only working with universities in the UK, but with 23 partners across Europe.

Chris Dowle, CPI's director of Advanced Processing, said: "It's great to see our new facilities taking shape.

"The final pieces of the processing plant are now going in. Once commissioned, the site will be fully up and running."

He added: "We can now get on with helping others to deliver advancements in this vital field. We aim to place the UK at the forefront of new developments.

"This technology is much more environmentally friendly than traditional chemical manufacturing and embraces sustainable manufacturing for the future.

"The Tees Valley has a huge stake in chemical and pharmaceutical manufacturing, together with a growing presence in bioenergy, and therefore has the most to gain from being at the forefront of innovation, in new processes and biotechnology."

For many companies, developing new products in this field is simply not possible. Research and development is costly, as is funding the equipment to undertake such work.

The NIBF team at Wilton will provide both people and processes to take ideas off the drawing board and out into industry.

It expects to work with companies across the UK and further afield, offering its facilities to a global audience.

The first high-calibre staff have already been recruited - development technologists Rosalind Scott, Peter Carney and Philip Brockbank all have experience in the fermentation technology required to produce the necessary enzymes - and led by Operations Manager Dr Jerry Cooper.

"All the major think tanks are already predicting a big step change in industry towards biotechnology," added Dr Dowle.

"We've already seen the importance of it, which is why it's so important that this facility is being developed here on Teesside."

He added: "The North-East has a very strong chemical industry. But new biotechnology will bring changes.

"So it's vital this region embraces the new technology right from the start."

Biotechnology processes typically take place at lower temperatures and lower pressures saving energy and the burden on fossil fuels.

The new facility will be vital to the British chemical industry - securing jobs, environmental benefits and international acclaim.

As well as working with companies both large and small, it could lead to firms setting up home in the Tees Valley to be close to the NIBF's specialist support.

And it doesn't stop there.

The centre also aims to push boundaries further, working in the field of marine biotechnology.

"There are underwater micro-organisms that have never been seen before, but the potential of which is huge," added Dr Dowle.

"This is an area which is really taking off, where really exciting things are happening."

It's forecast that in the next 10 years, new sustainable and renewable processes involving enzymes will be developed and applied to the production of 20% of all chemicals and pharmaceuticals.

"This area has huge potential and the Tees Valley is at the very forefront of this new technology," added Dr Dowle.