Country Report: Ireland - Pharmaceutical Executive


Country Report: Ireland

Pharmaceutical Executive


"I am confident that the health services and pharmaceutical industry will continue to work together in a spirit of partnership, to ensure that the needs of the patient are to the fore when decisions are being made regarding the pricing and supply of drugs." – James Reilly, Minister for Health

James Reilly TD, Minister for Health
"Over the last five years," says Fergal Egan, commercial director for IMS Health Ireland, "the Irish market has gone through an absolutely phenomenal flux. With the arrival of the recession in 2008, change has been dramatic. The health bill is the government's largest expenditure and an obvious area to target for austerity.

"Pharmaceutical exports are the biggest driver of Ireland's GDP—but nonetheless, officials have begun to increasingly decouple their policies toward pharmaceutical manufacturing, from their policies toward the local drugs spend."

Fergal Egan, Commercial Director, IMS Ireland
Welcome to the post-Celtic Tiger Irish market.

The innovator side

For innovators, perhaps the most impactful outcome of the recession has been a recent drug supply agreement with the state that, according to Servier Ireland General Manager Yann Mazeman, is the single largest cost-cutting deal, per-capita, the industry has ever concluded in Europe. In November of 2012, in an agreement that Mazeman says would be worth three or four billion euros on an Italian or French scale, IPHA member companies consented to deliver in excess of €400 million ($520 MM) in savings to the state over the next three years—on top of the approximately €300 million ($390 MM) IPHA reports delivering between 2006-2010, and the €200 million ($260 MM) delivered in 2011.

Yann Mazeman, General Manager, Servier Ireland
Takeda Ireland's GM Kieran Leahy calls the deal "short-term pain, long-term gain." Mazeman explains the pain: "The ramifications of this agreement are huge. Looking at our product portfolio at Servier Laboratories, the agreement means that 12 of our 18 products will suffer a price decrease between minus one and minus 52 percent. This will have direct consequences on our activities—including a very strong impact on our turnover in 2013.

"Furthermore, it is worth noting that the price cuts in Ireland will have a direct or indirect impact on markets worldwide. In fact, several countries use the 'country of manufacture' as a reference price for their own market. The Irish authorities need to bear this global domino effect in mind when taking decisions regarding the drug market locally."

Zimmermann, Managing Director, Bayer Ireland
Many Irish innovator operations have taken a significant loss in recent years, with the latest price reductions delivering yet another blow. Coupled with the genericization of a number of key products, the climate has led to redundancies, restructuring, and consolidation with other regional affiliates. Personnel recruitment in Ireland is stagnant; for some, investment in local initiatives such as patient support and public outreach has taken a more conservative turn. Meanwhile, the ripple effects of price changes in the Irish market are set to impact the operations of far larger affiliates overseas.

The longer-term consequences of the agreement,however, are more encouraging. The deal was, in part, a solution to a straightforward but critical problem: the state lacked funds to pay for new medicines. A number of companies reported a recent freeze on reimbursement for new products that lasted 6-9 months—even for products with EMEA approval that had proven cost-effective at the Health Technology Assessment (HTA) stage in Ireland.

Francis Lynch, General Manager, A. Menarini Ireland
That freeze has seemingly been lifted. With the savings accrued from the markdown on existing products, the Department of Health expects to allocate €210 million ($273 MM) to fund new drugs—ensuring that, at least for now, there is a clear mechanism for innovative medicines to reach reimbursement in Ireland. Managers report that the market has gained a healthy measure of stability.

Bayer Ireland MD Ralf Zimmermann points to an understanding between industry and state: "The government has acknowledged the critical importance of better access to new, cutting-edge drugs for patients, while the industry is acutely aware of the financial situation facing the government. I think both sides, throughout our negotiations, acknowledged each other's perspective, while striving to make a deal that could benefit patients and the health system."

Kieran Leahy, General Manager, Takeda Ireland
The level of constructive dialogue between the private and public sectors continues to demonstrate that Ireland is decidedly pro-business. Menarini's GM in Ireland and current president of IPHA Francis Lynch says that, ever since the first structured drug supply agreement was concluded in 1968, state and industry have preferred to "collaborate, rather than go to war."

And of course, in the end, companies with a great offer will endure even the most challenging external conditions. Zimmermann expects Bayer's strong pipeline to buffer his business from the vagaries of a market that IMS expects to decline by six percent this year. In fact, Zimmermann expects his affiliate to grow at six percent in 2013. He comments, "The Irish environment is difficult—but it is not uniquely difficult. Portugal, Greece, Spain, and Italy all face problems that are perhaps greater. Moreover, even in difficult times, if you have the right strategy, with the right products, there is a way forward!"


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