A Resurgence in Irish Pharma

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After a number of years of difficulty post-2008 and the euro-debt crisis, Ireland’s pharma manufacturing industry and economy in general is now firmly on the up.

The local Irish pharma market is still under some pressure following years of austerity which saw the average price of a reimbursable medicine cut from a high in 2009 back nearly 50% to the same level as in 2001. The EU has interfered recently, apparently citing outdated information when claiming Ireland spends too much on pharmaceuticals. Taken together, all together the local market is worth approximately EUR 2 billion with 80% of the market reimbursed, and market access similar to European norms, and somewhat lower than average generics penetration. However, under a very recent agreement between the MOH and pharma association, market access requirements are being tightened, requiring stronger proof of cost effectiveness and more scrutiny regarding global budgetary impact, and a spending cap being placed on the current market; however, it seems “extra funds” will be made available for high priced innovative drugs that are currently in the pipeline, indicating many innovators will likely achieve satisfactory commercial performance in the coming years.

IRELAND Ireland’s real footprint in the global pharmaceutical world is via the country’s manufacturing base, as despite having a population of only 4.6 million people, Ireland is one of the largest, most concentrated, and most capable pharmaceutical production hubs in the world. With EUR 39 billion in pharmaceutical production in 2015, up 25% from the year before, Ireland ranks 7th amongst countries by value of pharmaceutical production, after Switzerland and ahead of Italy. Upstream of finished pharmaceutical products Ireland has a strong organic chemical sector that exports another EUR 15 billion, and the country is also home to Europe’s second largest MedTech manufacturing hub, exporting EUR 8.5 billion in 2014. With such a variety of life science related manufacturing taking place in Ireland, significant tertiary industries have developed to support the major multinational manufacturers, along with a deep base of expertise in manufacturing that now extends to R&D excellence in areas tied to manufacturing, if not basic science and drug discovery.

Ireland’s robust pharma manufacturing base has been built over the last three decades largely thanks to Ireland’s highly competitive, clear and transparent tax regime which features a headline corporate tax rate of 12.5%. This important financial incentive has been well supported by other initiatives intended to help promote the growth of Ireland’s knowledge economy, with a national network of technical training institutes developed in the 1970s, and higher-level education made free in the 1990s. Thus Ireland has always worked to ensure skilled labor is available to prospective investors, and as such has been highly successful in attracting FDI for many years.

Since the early 2000s, Ireland has made a concerted effort to offer skilled labor and supports specifically for biopharmaceutical manufacturers. As such, a significant portion of pharmaceutical investments in Ireland have been in biopharmaceuticals, and the scale of these investments is massive. Today, there are over 131 active pharma capex projects in Ireland with an investment potential of EUR 3.5 billion over the next three years. All of the headline examples are in biologics; a EUR 900m facility being built by BMS, EUR 650 from American biotech Regeneron, USD 400m from Shire, and another 35m going into Lilly’s Kinsale biotech facility to develop innovative “continuous manufacturing tech.”

Author: Alexander Ackerman

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