Prime location

Since the 1960s Ireland has become a thriving centre for pharmaceutical production in Europe. Manufacturing Chemist looks at some of the features that make this such an attractive location for big pharma

In the late 1950s Ireland's economy depended mainly on agricultural products and there was no pharmachem sector to speak of. The Government of the time took a far-sighted decision to invest in knowledge-based industries to bring Ireland into the 20th century.Sectors such as chemicals, pharmaceuticals and electronics were encouraged to invest in Ireland through a combination of grant and tax incentives. The country also invested significant amounts in education to ensure that people would be available to work in these new high tech companies.

In the 1960s the Industrial Development Agency (IDA) targeted a number of companies, most of which were located in the US. Bristol-Myers Squibb (then Squibb-Linson) and Pfizer Pharmaceuticals were among the first companies to invest in Ireland, joining Danish-based Leo Laboratories, which had been in the country since the 1950s. There then followed a veritable flood of new investments: Eli Lilly, Schering-Plough, Merck Sharp and Dohme, SmithKline-Beecham and Jannsen Pharmaceuticals to name but a few, all established facilities in Ireland.

Well-defined clusters of pharmaceutical manufacturers have developed in Cork, Dublin and in the mid-west of the country, driven by access to ports and airports and proximity to population bases and universities. It is likely that these clusters will remain centres for future development of the sector.

This wave of new investment allowed Ireland to develop critical mass in the sector, and this in turn led to further investment. Sixteen of the top 20 global pharmaceutical industries now operate out of the country, and almost half of the top 25 drugs in the world are manufactured there.

The relentless increase in the value of this sector to the economy is shown in the most recent figures published by the Irish Central Statistics Office. In 2002 the pharmachem sector exported products worth more than €39bn, representing some 42% of the national total (Table 1).

The steady and continual growth is reflected in the employment trends (Table 2). Growth in the sector is set to increase driven by new greenfield investment and expansion of existing plants. A summary of some of the recent new investments is set out in Table 3.

cutting edge

Ireland remains a location of choice for the manufacture of pharmaceutical and chemical products. It is accepted that much of the new investment will depend on biotechnology, with disciplines such as molecular biology, bioinformatics and proteomics combining with chemistry to deliver novel therapeutics. Cutting edge products attract new investment and will enable Ireland to maintain the momentum that has driven this sector to date.

The decision by Wyeth Biopharma to construct what will become the largest biomanufacturing plant in the world has sent a positive message out to the world that Ireland is still on the pharmaceutical map and is ready and willing to embrace the new wave of biotechnology. US-based biotechnology company Genzyme is presently constructing a pharmaceutical company in Waterford, hence maintaining this wave of new investment.

expansion plans

Meanwhile the existing core of companies have maintained investment and many have significant plans to add capacity and upgrade their facilities. Bristol-Myers Squibb is constructing a new chemical synthesis plant at Cruiserath in Dublin. Recently Japanese company Takeda announced the construction of a pharmaceuticals ingredient plant in Dublin, adding to the pharmaceutical finished products plant that it currently operates in Bray, Co. Wicklow. Pfizer Pharmaceuticals is nearing completion of a series of major investment projects in Cork where the company has expanded its synthesis capacity and constructed a drug products facility.

According to Matt Moran, director of the Irish Pharmaceutical and Chemical Manufacturers Federation (IPCMF), the overall future for the sector remains bright. Nevertheless, this is a global sector operating out of an open economy, which is vulnerable to the vicissitudes of international economic fluctuations. It is key, therefore, that the sector maintains competitive advantage especially against locations that also compete for pharmachem investment such as Singapore or Puerto Rico.

It is important that the country retains a low rate of corporation tax - the Irish Government has already agreed a national rate of 12.5% until at least 2025 with the European Commission - and also that it maintains and enhances its skills base. The Government has prioritised investment in r&d, announcing that it would invest close to €2bn between 2000 and 2006. This resulted in the establishment of Science Foundation Ireland with a budget of €700m available for investment in research in life sciences and ICT.

r&d tax credits

Traditionally the sector has been dominated by manufacturing. IPCMF, in collaboration with Government and agencies such as IDA Ireland (Industrial Development Authority), is encouraging companies to invest in product and process development. To encourage companies to pursue such a strategy an r&d tax credit scheme was announced by the Irish Minister of Finance in his 2004 budget.

There are early signs that the strategy may be starting to pay off, with GlaxoSmithKline (Cork) announcing that it will invest more than €7m, with the support of IDA Ireland, to establish a new r&d laboratory at its API facility in Currabinny, Co Cork. Meanwhile Bristol-Myers Squibb, Wyeth BioPharma and Schering-Plough continue to expand their process development operations.

However, the fall-off in the study of science at second level continues to be a worry for the industry. The IPCMF has appointed an education officer whose sole role will be the promotion of careers in the sector to schools and those groups that support education and careers guidance.

In summary the future remains bright for the pharmachem sector. It will continue to grow at a steady pace and greenfield investments will mainly come from the biotech sector. Nevertheless it is likely that core players in the sector will continue to add chemical synthesis and pharmaceutical manufacturing capacity.