The new facility, which officially opens today, will create 20 full-time jobs and for the first time on the Cork site it will manufacture product for its consumer division., reports this mornings Examiner.
Since the company set up in Cork in 1975 it has been a dedicated manufacturing site for pharmaceutical products. However, this division has come under huge pressure because of the ‘patent cliff’ which has seen a number of GSK products come off patent.
“The effects of coming off patent can be quite dramatic. The sales of that product can reduce by 75% in the following three months and manufacturing volumes drop by a similar amount,” said Mr Whyte.
In 2008 employment peaked at the Currabinny plant at 600. However, there was a period of “painful restructuring” over the following three years, which saw the headcount fall to 340 and a scalpel taken to the cost base.
But without this restructuring and the sacrifices made by the employees, the site would not have been able to compete for the latest investment, he said.
“We had to make changes. The employees came on board which enabled us to lower our cost base and become very competitive. Without this we would not have been able to bid for this product,” said Mr Whyte.
The new manufacturing facility will produce Gantrez, which is used in GSK’s dental fixative product, Poligrip.
Poligrip is then manufactured at the firm’s Dungarvan plant which employs 700 people.
Over the past year, the headcount in Cork has risen to 380 and it will increase again over the course of next year, although not by “anything dramatic,” said Mr Whyte.
Consumer products do not face the challenge of looming patent cliffs. In the case of Poligrip, its global sales have been increasing by between 8%-12% each year, which is a very positive development for Currabinny, he adds.
Over the next 12 months, the production mix will move from being exclusively pharma based to an 80:20 split between pharma and consumer.
Over a five-year period, Mr Whyte believes this split could change to 60:40 in favour of pharma products.
Mr Whyte said the economic backdrop was a challenge in fighting to save the Cork plant, particularly all the media speculation that the Government would be forced to concede the 12.5% corporate tax rate in return for a bailout. “But… the plant has been there since 1975 and it has an excellent reputation. The head office view of the site was that it was highly regarded.”
Senior IDA and government officials were also key in reassuring GSK headquarters about any concerns over the corporate tax rate. Source: The Irish Examiner