In this article we aim to present a quick and easy to digest run-down of the main trends and developments in a highlighted sector of the process manufacturing industries in one of our covered regions. For more information on the areas we cover, click here.
Since our last industry update article covering the UK pharmaceutical market in mid-2015, the outlook has remained largely positive. We wrote about confidence seeming to return to the market and this looks set to continue into 2016, despite the threat of global economic uncertainty.
While there has been a minor slowdown in successful orders being placed, tendering levels in the UK have remained high due to the strong number of new project schemes that are being planned. Opportunities for suppliers exist and are expected to maintain into 2016, although with fewer projects coming to fruition the marketplace is expected to be even more competitive.
Engineering House Activity
The major players are all still busy, with PM Group, Jacobs and Bouygues UK undergoing significant activity in the pharmaceutical industry which will continue into 2016. As previously reported, smaller to medium size players such as Austin Company, Scitech, Boulting and newcomer Integrated Project Services are expected to do well in 2016.
Mergers & Acquisitions
Merger and acquisition activity remains very high on the agenda in the UK pharmaceutical industry. This carries with it some implications for projects involving the companies concerned. Often schemes are placed on-hold long term during and after merger proceedings, meaning access to up-to-date intelligence will be integral to decision making in 2016.
Examples of this activity are Teva’s acquisition of Actavis’s generics business & Pfizer merging with Allergan. The latter is expected to contribute to some uncertainty in the capex investment landscape as 2016 progresses.
What to watch out for in 2016? – Major Trends
Widespread global economic uncertainty at the start of 2016 has not left the UK pharmaceutical market unaffected. Many major producers, such as GSK, are freezing capex activity. At GSK alone some £2bn of planned investment may be reduced in scope to around £800m.
A major UK trend to monitor in 2016 is the continued capex investment in science parks, e.g. Manchester Science Parks, Northumbria Science Park, Discovery Park in Kent, Cambridge Science Park and Thornton Science Park. A concerted focus on research and development is also evidenced by certain schemes such as the Almac investment at the Charnwood Campus in Loughborough.
Overall the outlook is optimistic for the UK pharmaceutical market despite a challenging global picture. However, uncertainty related to this picture is delaying project timescales across the board. We are tracking and reporting many significant new schemes and expect this to continue in 2016, but expect more to be placed under review than in the previous year.
Examples of this would be GSK, Boots Contract Manufacturing, FujiFilm and Reckitt Benckiser where timescales have slipped due to market forces. These examples highlight that suppliers must keep their finger on the pulse in 2016 more than ever to keep ahead of rapid developments and changes in project timescales.
It is predicted that a dual approach at site and engineering house level will be key to securing the long term relationships necessary to win business in a highly competitive 2016 in the UK pharmaceutical industry.
Pharmaceutical Sector Project Bulletin Coverage – UK
At Protel, we are currently tracking 240 active pharmaceutical projects with a combined potential investment value of just over £4.62bn in the UK.
To gain information on specific projects or gain more insight into this sector, including all the contact details you need to start your sales process at the right time, get in touch.