58 years ago Leo Laboratories set up a manufacturing operation in Dublin; unknown to them they would be the first ‘early adapters’ of Ireland's pharmaceutical industry. The industry started by being mostly involved in producing active ingredients and raw materials in bulk for export to other countries to be processed into the final products (pills, capsules, tablets). Over time it made more economic sense to finish production in Ireland.
Fast-forward to the present day and Ireland is home to 9 of the top 10 pharmaceutical companies in the world. Ireland is the eighth largest producer and the fifth largest exporter of pharmaceuticals globally; 120 pharmaceutical companies have bases in this country; and 33 pharma and biopharma plants are FDA approved.
The industry now contains over 160 foreign and national companies and directly employs approximately 25,000 people and it also indirectly employs a further 25,000. The Irish pharmaceutical sector has continued to grow year on year with commitments to incorporating the latest technology, state of the art equipment and strict quality control efforts.
A brief timeline of the Pharmaceutical industry in Ireland.
• 1959 – Leo Laboratories set up Ireland’s first manufacturing operation
• 1960’s – Manufacturing begins to grow in Ireland, with a focus on Active Pharmaceutical Ingredients (API)
• 1990’s – Shift towards high value secondary manufacturing OSD/Vaccines among others
• 2000’s – Ireland established as location of choice for biopharmaceutical operations with set up of the world’s largest bioprocessing facility by Wyeth in Grange Castle
• Today – Ireland is the world’s largest net exporter of pharmaceutical products. 50% of all of Ireland’s manufactured exports are pharmaceutical products.
Current issues and opportunities
The one thing we can be certain of in a time of Brexit, Trump is uncertainty.
Despite the challenges faced on several fronts, we believe that Brexit presents potential. For example, Ireland has already in the running to host the London-based European Medicines Agency (EMA) after Brexit. This is a huge move for all parties involved as the EMA is known as the body that oversees the medicine regulations across all of Europe. Competition is high with over 20 countries bidding to host the EMA after Brexit however Ireland may have an advantage with its high quality workforce and also because English is the working language of the EMA. This is very beneficial from an Irish perspective as it could help EMA hold on to most of its 900 staff compared to elsewhere in Europe. If the EMA moves to Irish shores it could help strengthen Irish interests in terms of future direction of policies and regulations.
It’s also important to note that the agency also requires IT, business and financial staff. As Dublin is steadily becoming the digital hub of Europe the availability of talent is here. Ireland could also benefit from an increase in EU research funds as the UK will not be eligible for such opportunities after Brexit. There is a good chance that Ireland can attract the best research talent in the UK.
Brexit will also result in a bigger barrier in attracting the best talent from overseas as they will require a work visa. This can have a major effect on the UK’s life science research and innovation as many of the EU’s most talented were attracted to the UK’s cutting edge science hub, which will now see reduced levels of funds and talent. From an Irish perspective, there is an opportunity to attract the talent to these shores by it’s booming life-sciences sector.
President Trump has recently signed two executive orders for a study into unfair trade practices and also for the collection of duties from countries selling products into the United States at low prices. Ireland is currently ranked as the country with the fifth highest trade surplus with the United States, with the country registering a $36 billion surplus with the US last year.
What this means is that Ireland sells a lot of its pharmaceutical manufacturing products to the US and in return Ireland does not purchase as much US goods resulting in a trade surplus of $36 billion.
The Trump administration is also planning to shake up the tax system in the US, with an aim to reduce the corporate tax rate from 35% to 15% in an effort to stimulate growth in the US economy. If enacted, this would significantly reduce the tax advantage for US companies to establish subsidiaries overseas. This could lead to a slow down of FDI into Ireland and potentially make it a less attractive place to do business.
Ireland still holds many investment incentives which are aimed at solidifying Ireland as a hub for innovation. These incentives include no tax paid on earnings from intellectual property which encourages huge R&D developments in Ireland. There is no stamp duty on intellectual property rights and there is also a R&D tax credit for organisations who are undertaking new or additional R&D initiatives in Ireland, helping with wages, overheads, plant/machinery and buildings.
On St Patrick's day, talks were held between Taoiseach Enda Kenny and President Trump during their bilateral meeting at the White House. Enda Kenny emphasised the two way nature of Irish-American trade in which he explains the high numbers of Irish companies in the US which employ thousands of Americans and also that Ireland possesses a huge trade surplus in services with the US which benefits America.
Even if President Trump decides to bring more of his manufacturing back to the states, these companies need an international base to help sell and distribute their products globally and to also gain access to top international talent which is essential to serve the global markets.