A Northumberland pharmaceutical firm has posted widening losses in the year before it was acquired by a Chinese life sciences giant.
Cramlington-based Pharmaron – formerly known as Aesica – focuses on the manufacture and sale of active pharmaceutical ingredients, but said its market continues to be affected by the pandemic, increased competition and increasing production costs. The firm, which employs around 148 people, has published accounts for 2021, showing a drop in revenue and widening losses, with revenues falling from £15.5m to £11.2m, while pre-tax profit tumbled from £7.6m to £1.3m. Operating losses also widened from £3.3m to £13.1m.
In 2019 the company reported an incident which led to the temporary shutdown of activities for some time. While no one was hurt in the incident, at the time the firm said it was expected to wipe £5m off its parent firm’s profits. The new accounts show that the company has now received £4.5m in compensation following an insurance claim over the incident.
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The company, founded 19 years ago, has been changed ownership three times in its history, with a £230m sale to Consort Medical in 2014 later being topped in 2019 when Consort was itself acquired by Recipharm in 2019 for around £505m. Last January the Cramlington site was sold off by Recipharm to Chinese pharma giant Pharmaron, which is led by billionaire Lou Boliang, for an undisclosed sum.
In a report within the accounts, the company said the acquisition proved to be a good strategic fit for both companies, and that changes were set to be made at the Cramlington facility.
The report said: “Pharmaron acquired the site at Cramlington for its large scale, API Manufacturing capability and the strategic fit with the business growth and development plans for Pharmaron. The long-term strategic business plan for the site is to move from semi-continuous and long-term production projects across a few products for a limited number of clients to multiple contracts for development and manufacturing for a wider group of clients. This will involve reconfiguration of both operations and infrastructure and over a period of time. The Business Development Team will work closely with the site to maximise the potential revenue streams available.”
Following the year end, the company said it lost its biggest customer, but that it would have its parent firm’s support going forward as it looks to future developments.
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It said: “In June 20222 the company’s largest customer served notice on the company that it was going to cease trading with the company. This trade was operated under a series of contracts, negotiations with the customer are ongoing to settle the terms of the cessation. This represents a non-adjusting post balance sheet event, at the date of approval of the financial statements the directors are unable to quantify any potential impacts on the assets and liabilities on the balance sheet at 31 December 2021.”
Looking ahead, bosses said they are monitoring other pressures, adding: “The global pressures on the economy caused by the developing situation in Ukraine are impacting on the cost of operating the Cramlington site with increases in raw material costs and energy costs. The company continues to work with current suppliers and seeking alternative supply where necessary to ensure consistent supply of materials at the best prices possible. The situation continues to be reviewed.”
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