Alliance Boots today announces a new strategic approach for BCM, its contract manufacturing business, which includes a programme to improve the efficiency and overall performance of the factory in Nottingham. This programme is also designed to address a reduction in manufacturing volumes, which is the result of a fall in external market demand for contract manufacturing and an increase of regulatory compliance requirements.
The programme will refocus the business on activities where it has a sustained competitive advantage, including the Group’s leading beauty and skincare product brands. It will also include investment in new product technologies to enable greater flexibility and support for Boots product development, as well as building a stronger factory for the future. This will better position the business to seize growth opportunities generated by the further internationalisation of the Group’s product brands, including within the US market.
The programme will see the business exit certain unprofitable areas of third-party manufacturing. There will be a reduction of around 200 jobs over the next two years and every effort will be made to offer redeployment opportunities elsewhere in the Group.
The one-off cost of this reorganisation will be just over £30 million, of which £18 million is non-cash. This cost, which will be incurred in 2012/13, includes the write-off of fixed assets and inventory, and the reduction in roles within the Nottingham factory.
Alex Gourlay, Chief Executive, Health & Beauty Division, Alliance Boots, comments: “By modernising and improving the efficiency of our Nottingham factory, we strengthen its position for the future and make it more suited to support the increasing global footprint of our product brands. It is an important step in our continued efforts to keep contract manufacturing in the UK, despite the ongoing challenges that the industry faces.”
Notes to editors:
About Alliance Boots
Alliance Boots is a leading international, pharmacy-led health and beauty group delivering a range of products and services to customers. Working in close partnership with manufacturers and pharmacists, we are committed to improving health in the local communities we serve and helping our customers and patients to look and feel their best. Our focus is on growing our two core businesses: pharmacy-led health and beauty retailing and pharmaceutical wholesaling and distribution.
Alliance Boots has a presence in more than 25* countries and employs over 116,000* people. Alliance Boots has pharmacy-led health and beauty retail businesses in 11* countries and operates more than 3,330* health and beauty retail stores, of which just over 3,200* have a pharmacy. In addition, Alliance Boots has around 625* optical practices, of which around 185* operate on a franchise basis. Our pharmaceutical wholesale businesses supply medicines, other healthcare products and related services to more than 170,000* pharmacies, doctors, health centres and hospitals from over 370* distribution centres in 21* countries.
* Figures are approximations as at 31 March 2012 and include associates and joint ventures.
BCM, the contract manufacturing business of Alliance Boots, is one of the largest contract manufacturers in Western Europe operating a range of different technologies. BCM has operated as a standalone business since 2009. BCM manufactures consumer health and beauty products for internal supply and third party brands, and also produces special prescription medicines for individual use. In total, it manufactures more than 400* million units annually.
In addition to operations in Nottingham, in the UK, BCM has two other manufacturing facilities in Europe: BCM Cosmetique which is based in France and specialises in the manufacture of skincare and cosmetic brands; and BCM Kosmetik in Germany which produces colour cosmetics. BCM Specials manufactures sterile and non-sterile bespoke unlicensed medicines for patients in the UK, producing around 70,000* formulations.
* Figures are approximations as at 31 March 2012.
For further information, please contact:
Yves Romestan/Laura Vergani/Katie Johnson/Julie Longton, Alliance Boots. Tel: +44 (0) 207 980 8585
Katie Lang/Yim Wong, RLM Finsbury. Tel: +44 (0) 207 251 3801