GSK

Scottish Enterprise worked with GSK Montrose in Angus to find the best avenue for company growth. The result put the company on the right path to becoming more lean and competitive.

The company

GSK Montrose started operating in 1952 and has a long history of manufacturing Active Pharmaceutical Ingredients (APIs) for use in drug manufacture.

After a period of uncertainty about ten years ago, the company is now forging ahead, producing 11 products – ten APIs and Hydroxy Acid, a medium for the biggest-selling drug GSK produces. The site has benefited from  two rounds of R&D funding from Scottish Enterprise. This has enabled it to reduce production costs and streamline processes to make it more competitive in the global market.

The challenge

GSK Montrose started manufacturing pharmaceutical products in 1952. It has grown over the years but its potential growth has been hampered by its high production costs and the lack of good research skills to make the company even more competitive.

The plant in Montrose makes high volumes of Active Pharmaceutical Ingredients (APIs) for use in some of GSK’s leading respiratory products such as Ventolin. The company has been working with Scottish Enterprise since 2009, looking for ways to grow its business and market share.

It found it could not compete globally, or even within GSK, because of high production costs and it was, therefore, losing out on new business. 

The solution

Gordon Clark is the Site Finance Leader at GSK Montrose. “We set up a funding framework with SE over three years so that we could fund new projects as and when they arose. We worked closely with our SE Account Manager, Julie Brady, to look at other ways to encourage further growth and she came up with the idea that the best way to achieve our objective of cutting production costs was to apply for R&D funding which would help us research what we could do to improve our production processes.”

"It’s not just a matter of going cap in hand to Scottish Enterprise and being given a pot of money,” Gordon explains.

“We had meetings with various SE experts in Dundee and Glasgow who helped us with the process. We really cannot fault the assistance that we got from Julie and others in Scottish Enterprise.” 

The impact 

R&D funding enabled GSK Montrose to research their current processes, bringing in chemists and other skilled scientists to look at how they could make changes. Could they improve the chemistry they were using or process the raw materials differently to get a cheaper per kilo cost for manufacturing? The research work not only gave them answers but it also improved the skills of the workforce and streamlined their processes.

“We wanted to develop as a secure supplier that is lean and competitive,” Gordon says.

“We wanted to be seen as a good choice within the GSK network and also within the global pharmaceutical manufacturing industry. And we wanted to be able to manufacture at a reasonable cost.”

By improving their processes for existing products, GSK Montrose has been able to significantly reduce the costs of manufacturing, which helps to give them a bigger share of the market. The R&D funding is also allowing them to take on new staff to develop and introduce further innovation in new processes and technologies which will also reduce costs.

This in turn will allow new operations, currently being developed through research elsewhere within the group to be brought to Montrose. The company is in a much stronger position to win new business at an earlier stage of development – and compete more strongly with other parts of GSK.

From making three APIs in 2006 the site is now producing ten, with another at the development stage. GSK has recently shown its growing confidence in its Montrose site by announcing a £50m investment of which £25m will enable the north-east plant to make aluminium adjuvants, hi-tech agents used in the manufacture of vaccines to help stimulate the body’s immune system.

It is the first time a UK GSK site will participate in the company’s vaccine manufacturing supply chain. This in turn will mean GSK Montrose creates further jobs by recruiting skilled staff with sterile experience.

Not only has GSK Montrose cut its current costs, it has also set up streamlined processes, opening the door for future business and further research. It now has even more reason to celebrate its 60th anniversary.

Julie Brady, SE Account Manager

This is an excellent example of how R&D funding can help a company to develop its processes and its staff to make it leaner and more competitive in its market. GSK is now of strategic importance not just to the pharmaceutical industry but to Scotland as well.

Gordon Clark, Site Finance Leader, GSK Montrose

We were keen to explore what SE could do for the Montrose site within the framework of potential funding.

Working mainly with Julie Brady and others, we could see that the best route came from the R&D grants and that linked with what we were trying to do as a business, which was to strive for a lower cost of goods for developing a product.