Annual accounts for the Northumberland pharma firm highlight a number of challenges
Directors at Northumberland drug business Sterling Pharma Solutions say 2026 is poised to be a year of recovery, following a difficult year which saw its losses widen and sales fall.
The company, based in Cramlington, develops and manufactures active pharmaceutical ingredients for customers around the world from sites in the UK, Ireland and the US. Accounts for the year ended March 2025 show Sterling Pharma, which was established 57 years ago, faced a number of challenges. A report signed off by the board details a difficult trading year, impacted by a drop in volumes from two main customers.
The bottom line of the company was also affected by a review of its intercompany receivables, resulting in an exceptional impairment of £25m. Turnover tumbled 28% from £108.9m to £78.1m and operating loss widened from £372,000 to £50.4m, which included the exceptional administrative expenses of £25m relating to the impairment review.
Employee numbers fell slightly, from 654 to 644 in the period, and the accounts show that a cost-cutting exercise is due to be put in place next year.
The directors’ report said: “FY25 was a difficult year for the company, with revenue falling by 28% compared to FY24. This was driven by loss of volume on two key accounts, one related to the impact of client inventory build in previous years and the other due to a significant market downturn because of a competitive entrant.
“The time lag to replace this business was lengthened by a soft market during 2024, however the external outlook has now begun to improve.”
The company said it was “slow to address costs”, resulting in the significant operating loss for the year, but it added that “a cost reduction plan was developed for implementation in the first quarter of FY26”.
Despite the loss in revenue and profits, the firm said investment in research and development activity continued “at a high level”, to focus on developing processes ready for commercialisation while also exploring the application of new technologies.
The report added: “Management sees 2026 as a recovery year. Based upon the current order position, the significant sales potential of several new products under development and improving traction on new business wins in FY25, the directors are confident that the business can improve sales and profitability in FY26 and beyond.”
The accounts also highlight how all employees, including apprentices, can develop their careers at the Sterling Academy, which saw 58 employees take qualifications during the financial year, and 64 were promoted within the business.
Following the year end, in October, Kevin Cook retired having served as CEO since 2013. Karl Rotthier was appointed as CEO, taking up the position from October 21.
Chris Brinsmead, chair of the Sterling board, added: “We are delighted to welcome Karl to Sterling Pharma Solutions. He has leadership experience working in fast-growing businesses that have expanded internationally and has a strong track record of driving commercial effectiveness and operational excellence.
“Our investors, GHO and Partners Group, would like to extend their gratitude to Kevin Cook for his dedication, vision, and leadership over his years at Sterling. He leaves behind a business that has greatly transformed from a single site in the UK to a multi-site global leader, having developed a culture of quality focused, customer-centric delivery, and a shared sense of purpose that will continue to shape Sterling’s future.”
