Will Irish Eyes Keep Smiling?

Delegates from the international biopharma industry gathered just a stone’s throw away from Dublin Castle’s medieval Record Tower for the Biopharma Ambition conference in February. The biopharma industry is hugely important for Ireland’s economy, making up a remarkable 55 percent of Irish goods exports – €67.8 billion in 2017.

Delegates at the conference were told that each of the world’s top 10 biopharma companies have a presence in Ireland, and that the island was the sixth largest medicinal and pharmaceutical manufacturing hub in the world in 2017.

Nevertheless, Mary Dickens, President of the Irish Pharmaceutical Healthcare Association and Country Chair & General Manager of General Medicines at Sanofi Ireland, warned against complacency in her welcome address. “The wider environment is not without challenge,” she said, referring to a recent government commissioned study highlighting the vulnerability of Irish biopharma to a “hard Brexit,” as well as to the Trump administration’s recent tax cuts.

Writing for the Irish Examiner, John Whelan, consultant on Irish and international trade – who attended the conference – pointed out that some pharma manufacturers will “find it imperative” to shift plants from Ireland to the UK, given the €4.8 billion of pharmaceuticals that Ireland exports to the UK (1). However, Martin Shanahan, CEO of IDA Ireland, was more optimistic, saying that he’s seen a “huge amount of interest” in companies looking to invest in Ireland given potential post-Brexit regulatory challenges.

If divergent regulations lead to non-tariff barriers to trade between the UK and the EU (including Ireland), Ireland may look like an attractive proposition for pharma manufacturers looking to sell into the wider European market. The question is, would new investment compensate for the reduced access to the UK market? And is Ireland’s proposition still as attractive for biopharma companies given the changing international tax environment?

Tommy Fanning, Head of Biopharmaceuticals at the IDA, thinks so. “Brexit can yield opportunities for Irish life sciences,” he says “We’re already seeing some sub-supply services companies beginning to look at Ireland.” A number of supply chains are set up so that products are manufactured in Ireland but the final pack and QP release into the European market is done in the UK. “Now the large pharma companies are saying to their partners, ‘we need you to have a base in the EU.’ And given that Ireland has a large manufacturing base already, it makes sense logistically to put that in Ireland too,” he says. “Even the packagers are beginning to put jobs into Ireland – and we had not been talking to packagers for a number of years.”

On the subject of US tax cuts, Fanning thinks the jury is out. “Although the big companies in the US are saying they’re going to invest their extra cash in the US, they’ll also invest some of that cash in their international operations. So I think there’s two sides to that picture,” he says.

Fanning believes that the secret to Ireland’s success in the biopharma space isn’t just the attractive tax environment. The main factor, he says, is education. The second is the regulatory environment. “You often read about FDA and EMA warning letters for plants – the plants in Ireland do not get those,” he says. “This means companies are confident that their products will be manufactured and delivered on time.

“Everyone talks about tax in an Irish context, but it’s the icing on the cake. Unless you have the infrastructure, the skills, and the regulatory environment, no company will come.”