The level of construction output in
the pharmaceutical sector has grown strongly in recent years, with a focus of
developments on high-value laboratories and cleanrooms. The market is currently buoyant and showing double digit
growth, with a further 13% growth anticipated for 2016. The UK is one of the
largest pharmaceutical markets in the world, and the sector makes a greater
contribution to the UK economy than any other industrial sector.
Though there has been some
scaling-back of R&D budgets in the UK in recent years - due to issues such
as slowing R&D pipelines, dwindling R&D and healthcare budgets, rising
costs, impending ‘patent cliffs’, increased regulatory controls and increased
pricing pressures - pharmaceutical manufacturing investment activity in the UK
has been slowly increasing over the last couple of years. It appears confidence
is strong in the market and this looks set to continue into 2016-17, despite
the ongoing threat of global economic uncertainty and the more recent threat of
the UK’s exit from the EU.
Although the volume of work has
increased, tender opportunities are becoming increasingly competitive resulting
in tighter margins and, despite renewed activity, many UK pharmaceutical
producers are not significantly increasing levels of capital expenditure.
However, the Government has announced a forward pipeline of over £1.9bn worth of
capital projects in the pharmaceutical and biotechnology sectors between now
and 2020. In addition to these confirmed capital projects, significant expansion
plans have been announced by some of the leading pharmaceutical companies,
which should be of interest to construction companies and their supply chains
operating in the pharmaceutical sector. A major trend in 2016 has also been a continued
capital investment in science parks and university innovation campuses, with a
focus on R&D, and enterprise zones.
In terms of construction costs,
pharmaceutical R&D and manufacturing facilities are among the most energy
intensive and expensive of buildings and are also highly regulated in terms of
design and function. 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.
Increasing specialisation within the
pharmaceutical industry has brought about varied opportunities for construction
engineers and contractors to design and develop R&D facilities,
pharmaceutical production processes, and assembly of drug delivery
devices/systems, construction and maintenance of highly specialised production
facilities, associated service/support facilities and continuous improvement of
process operations.
The industry is expected to continue
to show modest growth over the next few years, reflecting the positive factors
and trends in the growing UK pharmaceutical industry, but also the economic
uncertainty created by the UK’s vote to leave the EU, which will constrain
growth somewhat. Forecasts are for annual growth of between 4-6% from 2018
onwards.
Keith Taylor, Director of AMA
Research said: “So far, the larger
pharmaceuticals firms appear to have been largely unscathed by the UK vote to
leave the EU – with a significant proportion of the sales of the major
pharmaceutical companies generated overseas and a weaker pound likely to result
in a significant rise in profits. However, Brexit has the potential to create
significant issues for the UK life sciences industry as it may affect the
regulation of medicines, EU clinical trials regulations, EU funding for
research and access to R&D facilities, access to the single market and
R&D workforce, and intellectual property.”
The ‘Pharmaceutical
& Biotechnology Construction Sector Report – UK 2016-2020 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.
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