Directors at Northumberland drug company Sterling Pharma Solutions say the company is now increasing sales and profitability after challenging trading last year saw it fall to a loss.
The Cramlington-based business, which was established 55 years ago, develops and manufactures active pharmaceutical ingredients for customers around the world from bases in the Ƶ, Ireland and the US. The company made significant investments two years ago, launching new facilities while also starting work on its Material Science Centre laboratory and its manufacturing capacity.
Accounts filed for the company, however, reveal a picture of post-Covid challenges, leading to revenues for the year ending March 2024 dropping from £130.4m to £115.5m, while operating profit fell from £30.2m to £6.2m. Overall profit in 2023 last year of £16.6m became a loss of £8.8m.
Despite the fall, investments continued across the company, including in its workforce, with employee numbers increasing from 645 to 663. The accounts also highlight how a significant investment was made in the year by Partners Group, part of GHO which is Sterling’s majority shareholder having first become involved with the firm since 2019, “bringing a wealth of healthcare expertise”.
The new investment was made to support Sterling’s growth trajectory in expanding production capacity across the Ƶ, Europe, and the US, adding complementary capabilities and pursuing further strategic acquisitions, to add to Newchem Technologies which it acquired a few months later, in October. It said that Newchem had since been renamed Sterling Newcastle Limited.
In a report within the accounts, CEO Kevin Cook, highlighted the addition of Newchem, saying: “This investment significantly increases our early-stage development capability, with the addition of 14 PhD chemists and a range of new customers to the Sterling network.”
Over all he said 2024 was a challenging year for the company, adding: “Post-Covid inventory reductions across the sector affected demand for services, also higher interest rates globally meant fewer biotechs bringing (or continuing with) molecules into clinical trial. These factors resulted in lower revenues compared to 2023, primarily due to two large customers re-phasing their demand.
“Investment during the year has mainly focussed on completion of earlier strategic investments and project-specific requirements.”
Those investments included two vacuum dryers and its anaerobic digestion project, in which both bioreactors now running and completing the final stages of commissioning. 2 agitated vacuum dryers; During the year the company worked on 53 launched products, nine products in Phase III development, and 33 products in Phase I or Phase II development, and five pre-clinical. £188m of new business was tendered in 2024.
Looking ahead, Mr Cook said: “Based upon the current order position, the significant sales potential of a number of new products currently under development at the company, and the large portfolio of new business opportunities being pursued, the directors are confident that the company will continue to increase sales and profitability. At the time of writing, the company’s FY25 order position is strong with more than 70% of budgeted activity already contracted.”
Following publication of the accounts, Mr Cook said: “The last financial year was a challenging one for our Cramlington facility due to difficult market dynamics. Global funding for pharmaceutical development has been limited over the last 18 months, this has resulted in some customers delaying development programmes.
"There are signs of recovery in the market and our Cramlington facility is well positioned to take advantage of this. The site at Cramlington is just one of our six facilities around the world; our diverse portfolio and geographies have ensured that the business as a whole continues to grow and develop in line with our business strategy.”
