North East Cluster
The longstanding and globally successful pharmaceutical manufacturing cluster anchored in the North East is thriving and is primed for further growth.
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Background
The extraordinary growth of the Cluster’s activities and workforce over the last five years are strong proof that global challenges are being successfully addressed, from Alnwick in the north of the region to Teesside in the south.
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Profile and Importance of the North East Pharmaceutical Manufacturing Cluster
Growing its Contribution 2017-2023
North East Cluster
The North East of England has a long and strong heritage of pharmaceutical manufacturing, capability and expertise.
Significant facilities were established in the 1960s and 1970s by UK and American owned parent companies in response to the sector growth in innovative medicines and the favourable environment in the UK for manufacturing and marketing of pharmaceutical products.
The facilities were active in making Active Pharmaceutical Ingredients (APIs) and in formulation and packaging, primarily for UK markets. This established the North East as one of three major areas for pharmaceuticals manufacturing in UK together with the Home Counties and the North West of England.
These facilities grew in capability and performance and were able to adapt to the needs of global customers as the first of several phases of globalisation, expansion and then consolidation took place in the pharmaceutical industry with added manufacturing capacity in tax advantageous countries and emerging markets.
The continuing evolution of the market and the development of blockbuster products enabled these facilities to hone their performance in terms of quality cost and reliability of supply. They contributed powerfully to UK economy, adding significantly to the UK’s balance of payments and enhancing the UK’s reputation in regulatory compliance and manufacturing process development, where it operates consistently at a very competitive global level.
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There are 13 pharmaceutical manufacturers in the North East of England Cluster with a diverse range of business models, ownership arrangements and relationship structures with the regional and UK economy.
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Internationally Owned Sites
Seven pharmaceutical manufacturing sites in the North East are internationally owned.
Owners include individual investors, private equity, US, Japanese, Chinese and Indian companies.
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GVA Contribution
The North East pharmaceutical manufacturing Cluster employs more than 5,600 people within the region. The Cluster companies included in this report contribute at a minimum £1.52 billion to the UK’s Gross Value Added (GVA). This is coupled with a total salaries bill in excess of £250 million.
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Product Export
Pharmaceutical manufacturing sites in the sector export an average of 80% of their products with 39% of exports going to the United States.
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GVA per worker
GVA per worker is over £200,000, well above the average of £48,000 for the region. The growth in GVA of the regional pharmaceutical sector companies from 2016 to 2021 is the highest in the UK outside London at 89% in real terms.
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Pharmaceutical Sector GVA
The pharmaceutical sector GVA for the North East is 17.9% of the total manufacturing GVA for the region and 2.7% of the region’s total GVA; this is a higher proportion than for any other UK region.
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Value Chain Contribution
The Cluster’s value chain contribution is typically 30-fold, rising to 50-fold for products aimed at less-prevalent diseases in high value markets.
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Capital Assets Investment
Cluster companies have invested over £850m in capital assets since
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Workforce Growth
The sector workforce has grown by 51% over the last six years and continues to grow. It is expecting to recruit a significant number of additional jobs to its current manufacturing and research workforce this financial year (2023-2024).
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Sector Employment
The Cluster employs over 5500 people in the region with a total salaries bill in excess of £250 million.
