Lower costs lure Aussie drug company

Against the tide of New Zealand businesses heading across the Tasman, an Australian pharmaceuticals company is moving its manufacturing base to Manukau.

Australian Pharmaceuticals Industries (API) will close its Sydney plant in April and consolidate its manufacturing with its Manukau City-based subsidiary Healthcare Manufacturing Group (HMG).

The Australian Stock Exchange-listed company says the strength of the Auckland operation and slightly lower operating costs are behind the decision to move.

HMG chief executive Kim Campbell admitted other Australian manufacturers would probably be asking, "Why the hell would you do anything in New Zealand?"

But he said the cost of manufacturing pharmaceuticals in Manukau, particularly labour costs, were about 13 per cent lower than in Australia.

The company was also unable to justify the cost of upgrading or replace its aging plant in Kingsgrove, Sydney.

"Frankly the numbers just didn't stack up," Campbell said.

About 50 products will be made locally including a variety of over-the-counter medicines such as painkillers, cold and flu products, topical creams and some cosmetics.

Healthcare Manufacturing Group - formerly PSM Healthcare - provides private-label products to the API retail brands and to supermarkets and independent pharmacy chains.

Campbell said Sydney's loss would be Auckland's gain.

The closure is expected to boost total exports from the Auckland plant above $25 million annually.

It was likely 50 new jobs would be created in the factory, and up to six new technical roles, he said.

More than $1 million worth of laboratory equipment will be brought from Sydney, on top of substantial investment to improve the Manukau plant in the medium-term.

API's third manufacturing plant is also based in Manukau and specialises in cosmetics, particularly the Health Basics Aloe Vera brand.

API began as a chemists' co-operative in 1910 and listed on the ASX in 1997.

It now has 8000 employees and an annual turnover of A$3.8 billion.