Pharmaceutical Construction sector sees slowdown in growth

UK is the 9th largest pharmaceutical market in the world, and the sector makes a greater contribution to the UK economy than any other industrial sector – and also generates an annual trade surplus of almost £3bn.

The industry is particularly important in terms of its R&D contribution and the pharmaceutical sector alone accounts for more UK-based business R&D than any other manufacturing sector – around £4.2bn is spent on pharmaceutical R&D in the UK, almost 25% of the total industrial R&D spend.

The top 10 global pharmaceutical companies account for around £24bn or almost half of total UK sector turnover. Many of the top global pharmaceutical companies have a considerable manufacturing and research presence in the UK, with 12 out of the top 20 global pharmaceutical companies accounting for a total of 55 UK sites.

Known as ‘The Golden Triangle’ the centres of London, Cambridge, Oxford and Stevenage house the UK’s largest biomedical cluster in the UK. Clusters of pharmaceutical companies are also found in areas close to universities. The North West, in particular, is home to ‘Big Pharma’, with several global pharmaceutical companies operating a facility in the region.

Capital expenditure by pharmaceutical companies in the UK has been in decline, with R&D capital expenditure falling from £496m in 2002 to just £137m in 2012, and manufacturing capital expenditure declining from a peak of nearly £1bn in 2001 to just £422m in 2012.

However, the Government has announced a forward pipeline of over £200m worth of capital projects in the pharmaceutical and biotechnology sectors between now and 2018. In addition to these confirmed capital projects, a number of expansion plans have been announced by leading pharmaceutical companies, which are reviewed in AMA’s report and should be of interest to construction companies and their supply chains operating in the pharmaceutical sector and to suppliers of laboratory and allied products. Increasing specialisation within the pharmaceutical industry has also brought about varied opportunities for construction engineers and contractors, and also broadening into other niche construction sectors in advanced manufacturing, food processing etc.

“Current design and construction trends are moving away from ‘bespoke’ buildings to flexible and mobile laboratories and cleanrooms requiring less time to design and build, and incorporating modern methods of construction. The demand for mobile or modular cleanrooms is increasing driven by industry cutbacks which have forced many pharmaceutical companies to rethink their business and manufacturing operations” said Andrew Hartley, Director of AMA Research.

The ‘Pharmaceutical and Biotechnology Construction Sector Report – UK 2014-2018 Analysis’ report is published by AMA Research, a leading provider of market research and consultancy services within the construction and home improvement markets. The report is available now and can be ordered online at www.amaresearch.co.uk or by calling 01242 235724.