UK Pharmaceuticals Struggling to Recover Full Health

The UK pharmaceutical industry appears to be unable to restore itself to the sort of rude health it enjoyed before the recession, when it was a growth powerhouse among manufacturing industries.

Despite high profile M&A and take-over bids with the sector, it has remained poorly and has not been helped by exponential scandals surrounding bribery in places in China, and tax avoidance just about everywhere.

Drug making was once the strongest industry in the UK: it grew by 4.4% on average annually between 1991 and 2009, according to figures released by the Office of National Statistics, which measured its gross value added (GVA), or output relative to the whole of the UK's GDP.

However, between 2009 and 2013, the manufacturing of pharmaceutical products fell by over a quarter, with the worst of this coming in 2011 when this sector experienced a sharp decline of 13.5%.

Since the recession food and drink manufacturing has become the UK's leading industry.

The ONS noted that drugs companies made £13.3bn last year and accounted for 0.8% of GVA. This was still more than three times the size of textile, clothing & footwear industry, for instance.

Pharma productivity, based on output per hour, experienced a strong, steady growth up until the third quarter of 2009 when it was 116.0, over triple the 36.8 it experienced in Q3 of 1998.

However, thanks to reductions in the amount of hours worked within the industry, this figure dropped to slightly above half its peak figure at just 60.1 in 2013.

"At first, the major contributor to this fall was negative GVA growth. However, in the three most recent quarters, rising hours worked have been the more prominent contributor," said the report from the ONS.

The Association of the British Pharmaceutical Industry (ABPI) has a contrastingly positive prognosis.

"The pharmaceutical industry contributes more to the UK economy than would be possible if other industrial sectors used the same resources. In other words, the people and capital employed in the pharmaceutical industry earn more income for the UK than if they were in any other sector of the economy," it said.