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The elements that have made Ireland attractive for decades are still here. The big difference since 2007, however, is the
cost base. If you are building a pharma plant in Ireland today, it will cost 35 to 40 percent less than it did six years ago.
— Barry O'Leary, CEO, Industrial Development Agency (IDA) Ireland
Barry O’Leary, CEO, IDA Ireland
Barry O'Leary, head of the IDA, Ireland's inward investment agency, reels off a long list of investments into the country.
Lilly, he says, committed $420 million (€320 MM) to its second Irish biotech facility. Allergan announced a $250 million (€190
MM) investment in biologics in the west of Ireland. Amgen initiated a $200 million (€150 MM) expansion in Dublin. Mylan declared
plans to split $500 million (€385 MM) between production sites in Dublin and Galway. Abbott is making a $110 million (€85
MM) investment in small molecule, high potency production. Lilly, Merck, and Gilead established financial shared services
The 3 T’s: Positioning Ireland for FDI
O'Leary notes that these announcements came in the first six months of the 2012 fiscal year alone.
According to a report by the Irish Times, 2012 was Ireland's best year for foreign direct investment in more than a decade. It seems that Ireland—the country that
Prime Minister Enda Kenny promises will be the best small country to do business in by 2016—has become more attractive for
foreign direct investment (FDI) in the wake of an economic crisis that has ravaged its domestic economy.
Not only has the cost of doing business been reduced by 10-15 percent since the onset of the recession (Ernst & Young), but
Ireland has also adopted what Matt Smith, VP and head of the global pharma business for engineering giant CH2M Hill, calls
a "laser-clear" focus on the customer.
Richard Bruton TD, Minister for Jobs, Enterprise and Innovation
From what he has seen along his globetrotting route, Smith believes, "Ireland has never been more competitive around the world.
The Irish have a clear vision of who they are: their brand, their identity, and their fit in the value chain. I am confident
that any manager in the country will have roughly the same impression of what Ireland can offer their business; in other markets,
you will find that opinions differ on the country's positioning in the chain. Some of the emerging markets, in particular,
don't really know who they are yet—and if you are competing without a clear vision of your value, you will get beat by a country
like Ireland any day of the week."
Ireland has been a pharma industry darling since the 1960s, when a then-newly established IDA targeted the sector as a strategic
area for development. Today, the numbers are eye-catching. As reported by the IDA, nine out of the top ten—and 13 out of the
top 15—pharma companies in the world have substantial manufacturing operations in Ireland. The industry has invested over
$7 billion (€5.4 BN) in the market over the last decade. Ireland has become the largest net exporter of medicines in the world
and the eighth-largest producer in absolute terms, with pharmachem shipments worth €55.1 billion ($71.63 BN) (2011) accounting
for nearly half of Irish exports.
Paul Duffy, VP External Supply Operating Unit, Pfizer
As Colin Kavanagh, Partner and Head of Life Sciences at local law firm Arthur Cox, puts it, if a company is a player of scale
in this industry, then they have likely already invested in Ireland—"and if they haven't, they're thinking about it, or they
have a good reason not to." Many of those that have already invested are now diversifying their operations away from what
has classically been a pure manufacturing base to include more complex value-added activities like product and process development.
The concentration of FDI has also had a strong hand in the rise of a growing indigenous life science sector, often led by
Irish entrepreneurs who have either learned the ropes by working for a multinational, or built their businesses upon a foundation
of collaborating with multinationals from Ireland.
Matt Moran, Director, Pharmachemical Ireland
Yet as multinational investment in infrastructure reaches new heights and indigenous players ramp up overseas expansion, some
industry actors face a more uncertain scenario. On the local market, innovator sales operations have been challenged by recession-driven
austerity. A new price-cutting agreement has sent a clear message that the government will increasingly delink its approach
between courting investment from the industry and supporting an unsustainable drugs bill. For generics marketers, long-expected
regulations should open up new possibilities—but the full ramifications of prospective legislation are as yet unclear. According
to Anne Nolan, head of the local innovator group Irish Pharmaceutical Healthcare Association (IPHA), companies looking to
reach the 4.5 million-patient Irish market must contend with a health system that has changed as much in the last four-five
years as the UK's National Health Service (NHS) has changed in the last 40.