Pharma firm sheds UK jobs and moves part of operation to EU as Brexit looms
PUBLISHED: 13:51 26 February 2019 | UPDATED: 13:51 26 February 2019
A multinational pharmaceuticals firm is shedding 24 jobs at its Suffolk manufacturing site as a direct result of Brexit.
Sanofi’s site head Jim Moretta said the company, which employs 300 staff at the £1.7bn turnover site, has been preparing for a hard Brexit scenario since the 2016 European Union (EU) referendum, and decided a secondary part of its operations needed to be transferred to the EU.
About half of its ‘label and pack’ business for rare disease medicines, destined for the European Union or follow-on markets, will be transferred to operations in Ireland and France. A much reduced ‘rest of the world’ element will remain on site. That part of the business is worth around $600m (£454m), but after Brexit, the element remaining in the UK will be worth about $100m (£76m). Around 12 jobs have already been cut with the rest due to disappear over the next two years.
“It’s a big drop,” said Mr Moretta. “We have already lost some of the quality control people and other jobs. We have got to reduce some of our essential functions on site because obviously we are going to be a smaller business.”
The transfer, which will be staged, is a result of the complexities involved in operating within the pharmaceuticals sector, he explained. “Those discussions can’t be revisited now,” he said. Ironically, the plant is currently engaged in upping production to provide ‘bridging stock’ to prevent problems with supply.
“In the UK we are planning for a ‘no deal’ and have done that essentially for two years,” he said.
“Because you are dealing with patient supply, you can’t take a risk, even though a deal could still be struck.”
The company decided it was necessary to put measures in place at its only manufacturing site in the UK because of the many potential layers of safeguarding bureaucracy and regulatory approval headaches involved in a hard Brexit.
“Obviously it’s really disappointing, having built up the label and pack business over many years. It’s extremely disappointing we are losing that business and obviously very disappointing to the people on site,” said Mr Moretta. “In the pharma industry in particular, because regulatory approval takes so long, what has put us off is the doubt over Brexit and it still continues to be the case – it’s still going to be extremely complex for one to two years.”
While there were different Brexit scenarios, from the beginning, the business felt it had to take a precautionary approach and plan for a hard Brexit, he said, as drugs needed to be tested and results then required a ‘Qualified Person Release’.
“Once we fall out of the EU, the UK certification and checking is no longer recognised and has to be done in the EU and that’s the hammer blow.”
In that scenario, they were left with two choices: carry on doing the testing only for it to have to be re-done, or move locations, he said.
Three years ago, that part of the business was producing 2m vials a year, but that will shrink to around 350k vials.
There will be added problems, but the main part of the business, which is producing a kidney disease medicine, Sevelamer, will remain on site. The process requires ‘great expertise’ and was highly specialist, he said. Once Brexit happens, however, the drugs will need to get on a ‘White List’ to allow them to be exported into the EU. “We believe that will be done in a matter of weeks – that’s certainly what we are hoping for.”
The loss of part of the business will put a bigger cost burdens on other parts of the operation, he said.
In order to compensate for the loss, the company is trying to bring other economic activity to the site, but building up that part of the business will take time, he explained. It is developing a secondary operations business, bringing new products up to manufacturing scale for third parties, with the added possibility of taking on manufacturing functions as a result.
“That’s quite exciting but takes an enormous amount of effort, time and money to build up,” he said. “We are ordered the kit and just need to get over the final line.”
It is also seeing whether it could benefit from the government’s Exceptional Growth Fund. “We are trying to grow and we are trying to decline at the same time in different parts of the business,” said Mr Moretta. “That’s simply too much for a business to bear without pain.”