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Ireland Reaps the Benefits of Pharmaceutical Rationalisations

In recent years the pharmaceutical industry worldwide has experienced large scale rationalisation following major mergers and acquisitions. Ireland - already a prime location for overseas pharmaceutical industry - has reaped benefits from these changes. Between 1990 and 1998, 65 major pharmaceutical investments were initiated in Ireland totalling over $3 billion. Of these 47 were expansions of already in Ireland and the rest were greenfield projects.
"The pharmaceutical industry is continuing to do very well here and all the companies are please with the performance of their Irish operations," says John Lloyd of IDA Ireland's pharmaceutical, chemical and healthcare division. "Companies are willing to deepen and expand their involvement here are and in IDA Ireland we are working closely with them to assist with expansions, the establishment of shared services, new projects from other divisions within the parent organisations, more local R&D and anything else to strengthen the company's commitment to this country."

In all there are 73 overseas pharmaceutical companies in Ireland including 18 of the world's top twenty corporations. Since the first investment in the late sixties there has never been a closure of a manufacturing company in this industry. While 20 pharmaceutical operations in Ireland have been involved in mergers or take-overs in recent years, in every case the Irish operation has been designed as 'strategic', thanks to the winning combination of modern plant, high profitability, skilled workforce and good management.

The overseas pharmaceutical sector in Ireland began with the US companies establishing bulk pharmaceutical plants in the 1960s and '70s to supply finishing operations elsewhere in Europe. The first arrival was Squibb followed by Pfizer, Merck, Syntex, Lilly, SmithKline and Schering-Plough. Sandoz (now Novartis) cam later, in 1989, when planning permission for expansion was proving difficult in built-up Basle. (Sandoz later moved its entire peptide operation from Basle to here in 1994). In more recent years, finished product pharmaceutical companies have been the main source of new projects including SKB, Phone-Poulenc, Rorer, Organon, Servier, Fort Dodge, Nycomed and the huge Wyeth Medica operation in Newbridge. Warner-Lambert is currently investing over $300 million in a 300,000 sq ft tabletting plant.

The pharmaceutical companies supported by IDA Ireland today include 28 bulk active ingredient producers along with 13 producing generic pharmaceuticals and 32 producing proprietary finished pharmaceuticals. Between them they employ 11,000 people directly and exported over 410 billion in 1998 - about 16% of total Irish exports and enough to make Ireland the 10th largest exporter of pharmaceuticals a fine chemicals in the world.

"In terms of the continuing development of the industry in Ireland we view R&D as an essential area of growth for existing and new companies," says John Lloyd. "As it is, the industry in Ireland employs a high number of graduates in production - an average of 35 per cent overall with some companies higher than 50 per cent. We're very much at the high-value, knowledge-based end of the business so R&D represents a natural area of lateral growth."

Some excellent original process development work is being done in plants producing bulk active ingredients such as Bristol-Myers Squibb, Schering-Plough, Merck, Pfizer and Roche. By the end of 1998 about 400 people were employed in this kind of research compared to 200 at the end of 1996. In addition, Elan Corporation has 40 people employed on specialist research into delivery systems for therapeutic peptide and protein molecules, at Trinity College Dublin. Biotechnology research is well established in centres of excellence for diagnostics and genetic and cell cultures run by BioResearch Ireland in several Irish universities.

"There's a new interest in Ireland as a base for research, driven by several commercial considerations," says John Lloyd. "Generous funding is available for research projects under the Government's Research Technology and Innovation Initiative supported by the European regional Development Fund. Within the industry itself it has been found that products can be brought more quickly to market if pilot production for clinical trials has been carried out at the designated production sites. Another point is that if an Irish plant owns the intellectual property rights (through R&D ) there are additional tax advantages on the transfer of profits from that plant."

New R&D grants are being introduced by IDA Ireland to encourage overseas companies to invest more in this area. "The quality of Irish researchers and graduates is excellent and the national infrastructure is improving all the time with much research being carried out in hospitals and universities, quite often with sponsorship from multinational companies that have plants in Ireland."

Rationalisations are still taking place throughout the industry internationally. Ireland, with its guaranteed low tax regime and the comfort of an established and highly profitable industry, more that ever offers the most competitive environment both for greenfield development and expansions. These days, European and Asian companies such as Organon, Nycomed and Fujisawa are producing finished pharmaceuticals here from their US markets (Irish plants have a good record in obtaining FDA approvals), while Ireland is still the prime location for US finishing plants for the European market.

In biopharmaceuticals also Ireland has some outstanding examples, most notably Schering-Plough's vertically integrated operation at Brinny in Cork. This is the third largest biopharmaceutical plant in the world and products - from fermentation of recombinant DNA to finished, packaged product - all of the corporation's Interferon product which has annual sales of over $500 million.

The overseas pharmaceutical industry in Ireland is very profitable. In 1997, aggregate profits were over $3 billion on sales of $9 billion, providing positive benefits to the community in secure, well-paid and continuously rising employment. Enormous industry linkage in services doubles this economic impact and adds wealth to the country as a whole. The exponential growth of the industry has resulted in substantial expertise in the design and construction of process plant to exacting standards.

"At 30 years of age the pharmaceutical industry in Ireland has gathered a momentum that will see it continue to grow and develop here," says John Lloyd. " For greenfield projects, IDA Ireland is continuing to develop sites with advance planning approval for the industry and new planning legislation is very helpful in this regard. Within existing operations we support the Irish management to actively bid for mobile projects within their corporations and to develop their corporate profile so as to make the Irish operation indispensable to the parent.

"In the same way we intend that Ireland itself should be indispensable to the pharmaceutical industry."

For more information visit the IDA Ireland website.

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