Rising from the ashes

The roll call of European chemical and pharmaceutical plant closures in recent years is as long as it is depressing. Many of these sites are demolished and sold for redevelopment, but a few are rising phoenix-like from the ashes of the disused plants.

One of the best UK examples is BioCity Nottingham, a bioscience park which emerged from the Pennyfoot site previously occupied by BASF subsidiary Knoll Pharmaceuticals.

BioCity Nottingham opened in 2003, following BASF’s decision in 2000 to cut back much of its Nottingham activities. The Pennyfoot site is near the city centre and was originally a Boots R&D facility. It is now home to around 75 companies employing approximately 600 people. 

Most, although not all, are directly involved in biotechnology and healthcare businesses. They are a mixture of new start-ups, university spin-outs and established SMEs (small and medium enterprises). These companies have been attracted to BioCity by access to laboratory and office space at competitive costs plus the availability, in many cases, of start-up grants.

BioCity Nottingham is now hoping to replicate its success in Scotland. In January, together with Roslin Biocentre, it acquired the former Merck & Co pharmaceutical R&D site in Newhouse. Merck & Co announced the plant’s closure, with the loss of about 250 jobs, in July 2010. Newhouse - first established as a pharmaceutical R&D facility in 1948 - was where some of the UK’s first female contraceptive pills were developed when the site was operated by Organon.

Merck & Co effectively gave the site to BioCity Nottingham and Roslin BioCentre having failed to find a buyer following its decision to shut the plant. Closure of Newhouse was part of a massive rationalisation plan in the wake of Merck & Co’s ?30 billion acquisition of rival Schering-Plough.

To be operated by a new joint venture, called BioCity Scotland, the 23 acre Newhouse facility has more than 12,000m² of purpose-built, pharma-quality laboratories and office space. In announcing the deal, BioCity Scotland chairman Louis Nisbet pointFed out that the site was just a short drive from Scotland’s two largest cities, Glasgow and Edinburgh, and ideally situated to attract the cream of life science talent. ’The prospects are boundless,’ he said.

Long term, BioCity Scotland has ambitions to become the UK’s largest bioscience park, according to Glenn Crocker, BioCity Nottingham chief executive. ’If the UK’s life science sector is to flourish we must create the best support and funding infrastructure where this can happen. Our plan is to create the UK’s largest bioscience business incubator at BioCity Scotland,’ he said when the venture was launched. 

Another established success story is the Heath Business and Technical Park in Runcorn, a former ICI chemical facility. Site Operations Group (SOG, formally a division of ICI) brought the 50 acre site in 2000, after ICI announced it was to close up shop there. It is now home to 150 scientific and non-scientific firms, employing approximately 1500 people - more than in ICI’s heyday. 

Green shoots 

In February 2011, drug giant Pfizer announced it would be closing its Sandwich, UK, site - where the iconic erectile dysfunction drug Viagra (sildenafil) was developed - within two years, putting 2400 R&D staff at risk of redundancy. Manufacturing at the plant stopped in 2007. 

Plans to close the site - the UK’s biggest research laboratory - led to calls by Britain’s biggest union, Unite, and the prime minister, David Cameron, for Pfizer to explore options to maintain some activities and employment. These appeals have been partially successful, the company has subsequently agreed that about 650 jobs will be retained, some 300 more than originally expected. Pfizer has also relocated around 250 staff to other sites, reducing total expected redundancies to about 1500. 

While the future remains cloudy for those facing redundancy, green shoots of recovery are starting to emerge at Sandwich. Last August the site was awarded enterprise zone status, meaning tax breaks and easier planning processes for companies setting up business there. The Research Network (TRN), which aims to improve the outsourcing process, was the first new company to call the site home. TRN was established in September 2011 by seven former Pfizer employees. ’In a way, you could see it as outsourcing the outsourcing,’ TRN’s chief executive Andrew McElroy told Chemistry World at the time of the company’s launch. 

It is hoped that this will be the first of many new businesses to establish themselves on the site. To further entice them, financial support - in the form of start-up grants up to ?20,000 - are available for new companies emerging from Pfizer.  

In January, Pfizer announced it was in detailed discussions with a consortium called London and Metropolitan, as the preferred bidder to own and manage the Sandwich site now coined Discovery Park. This is being viewed as a positive step towards securing a viable future for the park. 

Feeling inspired 

Similar science and business park aspirations have been voiced for the Sanofi site in Dagenham. Sanofi announced plans two years ago that it would close the approximately 108 acre manufacturing site by the end of 2013. Production of the cancer drugs Taxotere (docetaxel) and Eloxatin (oxaliplatin) will be moved to Frankfurt in Germany, while some smaller products, including the iron deficiency anaemia treatment Ferriecit (sodium ferric gluconate), will go to Italy. 

Sanofi employs just over 450 people at Dagenham and has been taking a very active role in developing a strategy for alternative uses for the site. SOG has been commissioned to oversee the strategy, and the plans are modelled on SOG’s redevelopment of the ex-ICI Runcorn site. 

David Harley, group manager for economic development with Barking and Dagenham Council, confirmed an outline planning application was submitted in December 2011 as part of the regeneration strategy. 

Harley said a decision on the planning application was expected to be made in March. It is hoped that up to about 300 new jobs might be created through redevelopment of Sanofi’s laboratories, offices and other facilities at Dagenham. ’It would be criminal if the excellent laboratory facilities got cleared,’ he says. ’We’re looking at over 500 possible new jobs if proposals for a hotel and supermarket on the wider site are included,’ he adds.  

The whole picture 

Not every chemical plant facing closure has such a happy ending, of course, and dismantling the less fortunate ones for resale for non-scientific purposes is a technically difficult operation. 

Engineering consultants RVA, based in Harrogate, UK, are specialists in large scale, high hazard and complex decommissioning, decontamination, dismantling and demolition projects. Richard Vann, RVA managing director, says that about 90% of redundant chemical plants in the UK and the rest of Europe are sold for scrap. ’Putting a [cutting] torch through it is usually the easiest and most cost-effective option,’ he explains. 

Vann added that parts of plants are sometimes sold separately. But the large quantity of second-hand kit currently available plus the booming value of scrap metal means that the differential between parts and commodity prices are often insufficient to justify the extra cost and time involved in careful disassembly and cleaning. 

The equipment from pharmaceutical production plants and laboratories - with their often highly sophisticated measuring, blending, processing and testing facilities - has a much higher chance of finding a second-hand buyer than standard chemical plant equipment. 

Equipnet Auctions which specialises in the sale of surplus manufacturing assets, has handled many pharmaceutical plant equipment disposals for a client list that includes most of the industry’s major companies including Bayer, Eli Lilly, DuPont and Novartis. It has reported an increase in volumes of surplus equipment sold through its online auction facility since the 2008 credit crunch and general economic downturn. 

There are also hybrid situations - where some facilities are reused, while the rest of the site is decommissioned. RVA is currently handling the closure of BASF’s polymer production facilities in Kaipiainen, Finland. While most of the production equipment was dismantled, some facilities on the site are being acquired by a new company to use for chemicals storage and distribution. 

For the unlucky sites that are not ’saved’, once the equipment has been removed there remains the difficult question of what to do with the land the site once sat on. The attraction of former industrial sites for resale depends heavily on the availability of planning permission for redevelopment. Many chemical and, to a much lesser degree, pharmaceutical sites are not in ideal locations for housing or office development. In addition, local authorities are often reluctant to rezone the land for housing while some prospect remains that the property can be resold or redeveloped for industrial use at a later date. 

In February, pharma giant AstraZeneca annouced it would be ceasing R&D activity at its site in S?dert?lje, Sweden, and closing its R&D site in Montreal, Canada. And in the current economic climate the prospect of further chemical and pharmaceutical plant closures is a real possibility. Fingers crossed that the AstraZeneca sites - and any others that close the shutters - follow in the footsteps of these phoenix-like examples and find a way to keep their highly skilled personnel employed. 

Neil Sinclair is a business writer based in London, UK