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Chemical and Pharmaceutical

The products and services of the chemical and pharmaceutical industry can be found in every area of our lives – from vital medicines, foods and clothing, through housing and transport, to communications and leisure activities.

The industry is generally energy intensive and it often requires input of considerable heat and pressure to produce useful substances. In addition, the industry uses oil and gas as raw materials to manufacture products and not just for energy. To put this into perspective, it is estimated that UK chemical and pharmaceutical companies spent over £4bn on energy and oil related raw materials in 2008.

However, the industry underpins many society’s needs and is a significant provider of jobs and creator of wealth for the UK and the chemical industry is currently the UK’s largest manufacturing sector exporter.

Drivers for change in the sector include:

• Climate Change – The EU is targeting a 20% reduction on 1990 greenhouse gas emission levels by 2020. It is important that legislation does not incentivise the displacement of manufacturing activity to countries which are not CO2 constrained.
• The chemical industry is energy intensive and therefore companies have to be energy efficient to compete. Therefore, a secure supply of competitively priced energy is one of the most important factors for a UK chemical and pharma manufacturing base.
• The cost of shipping commodities is low compared to the price and there has been a shift of production of low-cost commodities to the Far East. This comparative cost advantage will spread to increasingly more sophisticated chemical products, eroding the market for UK and EU chemicals.
• Managing health, safety and risk. Lack of management of major hazard risks have been highlighted by the incidents at Buncefield and Texas City.
• Product innovation and customer-specific solutions are vital for success in the specialty chemicals sector.
• Meeting the challenges of reduced demand for some chemical and pharmaceutical products due to the economic slowdown.