Pharma is a massive success story in Ireland, beginning in the 1960’s with the manufacture of small molecules, it is now a serious employer with over 30,000 direct jobs and more than 30,000 indirect jobs in the sector. The biopharma industry provides investment, innovation, supports communities and gives the country a leadership role on a global stage. About 12 years ago, serious foreign investment started coming in, and to date the IDA has pulled in over €10 billion in investment to the biopharma space. The IDA has been hugely successful over the last decade and initiated NIBRT with 3rd level institutions (UCD, TCD, DCU, Sligo IT). Furthermore, NIBRT supports the industry by providing training to over 4,500 professionals annually.
There are a number of key life science and technology areas that will be driving the biopharma market in Ireland over the coming years:
- Advanced Therapy Medicinal Products (ATMPs)
- Cell, Gene and Vaccine Therapies (CVGTs)
- Digitalization of Manufacturing of the above therapies
These areas are currently attracting significant investment and have been pinned by government, government bodies, investors and pharma/manufacturing companies as key areas of growth.
Ireland is a global pharmaceutical hub and is a base for 24 of the largest pharma and biotech players internationally, an indication of its capabilities and dedication to the sector. Over 30,000 professionals are directly employed in the biopharma sector, with more than 30,000 indirect jobs also supporting the industry. Ireland is highly committed to the pharma sector and is the 7th largest exporter of medicinal products globally. The market provides over €80 billion in exports annually (53% of total exports) to the country.
Ireland has a well skilled platform of professionals in the biopharma industry, with high levels of expertise and is highly resourced to meet the pharma needs of the future. Companies with bases in the country are committed to this thriving sector and see it as a sustainable economic driver of the economy. Stakeholders in the arena are constantly thinking ahead on how to future proof the industry and continue to give Ireland a competitive advantage.
Going forward the global trend is the emergence of advanced therapy medicinal products (ATMPs), cell and gene therapy (CGTs) and novel vaccines, and Ireland needs to build its reputation as a dedicated and quality manufacturer of these therapies in order to maintain its competitiveness. There also has been a steady investment in the area over the last number of years. The IDA has pulled in €10 billion in investment over the last 12 years, and about €2 billion is invested in biopharma R&D by IDA client companies every year.
A corporation tax of 12.5% has attracted many of the largest players in the pharma industry to Ireland since the 1960’s. Originally manufacturing small molecules, the country is now delivering more complex therapies such as monoclonal antibodies, biologics and vaccines.
One of Ireland’s major strengths is its research and development and academic capacity. It has significant third level clinical and scientific expertise with over 12,000 people with PhD’s in science, maths, computing or engineering and manufacturing according to the Central Statistics Office. This ability to generate highly qualified professionals is a significant factor in attracting foreign direct investment (FDI). Indigenous investment and support is also key to the Irish pharma success story, and stakeholders such as the IDA, NIBRT, SFI, HRB, Enterprise Ireland and others constantly fund the sector. The Irish Government is also fundamental in supporting the pharma industry and has pioneered Project Ireland 2040 which will further support academic research by funding €9.4 billion into R&D. Given the critical contribution that pharma exports play to the Irish economy, which was 32% of GDP in 2019, indigenous agencies and Government bodies see the huge benefit investing in new manufacturing technologies and therapies will have in the future.
What companies are Irelands current major players?
The Irish Biopharma market is supported by major players such as AbbVie, Abbott, AstraZeneca, Alexion, Allergen, Bayer, Eli Lilly, Gilead, Janssen, Sanofi, MSD, Pfizer, Teva, WuXi and many more. Indigenous Irish companies include Alimentary Health, ICON, Chanelle, Innopharma Technology, TopChem amongst others.
Allergan initially opened a base in Ireland 40 years ago, and has thus far invested over €750 million. The company has such a significant impact on Ireland, that in 2018 it contributed €76 million in exchequer revenues. In 2020 the company announced that its Biologics 2 facility had opened in Westport with the investment of €160 million and 63 more jobs to the already 1,300 established. According to the company the manufacturing facility will produce its flagship products and has been equipped with technology to facilitate next generation biologics production. Furthermore, the company is committed to advancing its R&D, discovery and development programs in the Westport plant and has associated microbiology and cell-based labs to facilitate this. To date Allergan has produced over 100 million vials of its FDA approved botulinum toxin product, BOTOX, in Westport.
A major indication that Ireland’s ability to deliver high quality cell products is Takeda’s €36 million investment into its Grange Castle plant in 2021. This facility will create over 100 jobs to 2024 and will manufacture stem cell products for the European, US and Canadian markets. The use of digital technologies was key in Takeda’s decision to invest as is the facilities ability to manufacture cell therapy.
Janssen has continuously committed to the Irish market, and in 2019 opened its biomanufacturing site in Ringaskiddy, Cork where it initially opened a base in 2005 with an initial investment of €400 million and further investment of €300 million. Furthermore, in September 2021, the company applied for further planning permission to increase its facility by over 27,000 square feet. This would enable the company to employ about 180 more professionals in an investment of over €150 million.
As J&J is one of Ireland’s major exporters, the investment in this plant was a serious boost to the biopharma space. The facility in Cork manufactures three therapies including active pharmaceutical ingredients (API) and monoclonal antibodies for rheumatoid arthritis and plaque psoriasis. It will also expand its ability to produce biologics for cancer. The plant encompasses a BioCork 2 platform which has a fed batch production facility with four 5KL bioreactors to manufacture biologics. Furthermore, the facility has the capability to increase its output with the addition of four 15K bioreactors.
Gilead is expanding its biopharma operations in Dublin over the coming years and in 2019 announced another €7 million investment for the creation of 140 jobs. The company has already invested over €225 million with more than 370 full time employees. The Carrigtwohill plant in Cork manufactures 22 products including HIV and HCV oral tablets. It has a distribution centre in Dublin which exports to over 90 countries. The new facility that will open in Dublin will support the launch of oncology agents such as Sacituzumab Govitecan, Magrolimab and other pipeline assets.
MSD is one of the main biopharma companies in Ireland that is committed to the sector and is thriving. It has six sites, and four of these have biopharma focused facilities, in Dunboyne, Carlow, Swords and Brinny (Cork). Overall, the company has 2,700 employees in the country and has increased its investment significantly.
Irish BioPharma Market Revenue
Our analysis of official CSO statistics indicates that the total Irish exports of medical/pharmaceutical products, organic and inorganic chemicals in 2020 totalled just over €93 billion, up from €79.8 billion the previous year. Overall, this was an 11.6% CAGR increase from 2016 figures of €54 billion. Interestingly, in the first six months of 2021, this totaled €45.2 billion, and therefore is on track with 2020’s export figure. Between 2016 and 2020, the growth of medical/pharmaceutical product exports grew at a CAGR of 15.5% from €30.17 billion to €62.07 billion in 2020. This shows significant demand for more advanced therapies in the market and is an indication of Ireland’s commitment and ability to fulfill unmet needs. The growth of organic chemicals however was below market averages at 5.67% and hit €31.17 billion in 2020, up from €23.6 billion in 2016. While generating significant export revenue, it is apparent that the space is dominated by medical/pharma products and going forward this trend will continue.
Looking at the distribution of pharma exports, figures indicate that the majority of chemical related products were purchased within the EU27 in 2020, with 44.7% share. This trend has remained largely stable over the past five years, with 42% share in 2016. As supply chain accessibility and security of supply was an issue with non-EU countries during the COVID-19 crisis, European policy makers may decide to purchase more primary products within the geographic going forward, and so there is an opportunity for Ireland to increase its market share within EU27. One company who has already taken this step is Bio-Techne, which announced a new Dublin distribution centre for its life science reagents and proteomic analytical tools for the European market. This supports Ireland’s ability to attract biopharma facilities as European distribution centers going forward.
Penetration into the US market however, has been significant over the last five years, with 28.6% share in 2016 growing to 37.9% in 2020. UK market penetration has waned slightly, from 6% in 2016 to 3.9% in 2020, and exports to China have remained stable at just over 1%.
Expenditure on BioPharma Research & Development in Ireland
According to official CSO statistics, the business expenditure on R&D was €3.39 billion in 2020, up from €3.26 billion the previous year. Over the past four years, R&D expenditure in Ireland has increased by 17.5%, an indication that the country is funnelling interest into cutting edge technologies and manufacturing for the future. According to the CSO, current expenditure demands the lions share of total and is composed of labour and other short-term costs such as raw materials. In 2020, for example current expenditure accounted for €2.5 billion, and capital expenditure, or long term assets, accounted for €0.85 billion. Within R&D expenditure, labour is the highest cost (51.9% in 2019), followed by ‘current costs’ (31% in 2019), which is made up of overheads, consumables, equipment and supplies. With regards to investment in software and digital costs, in 2019 36.9% of capital costs were allocated for this area, which totalled €0.205 billion.
The majority of R&D expenditure in Ireland is spent by large businesses with over 250 employees, and in 2019 they accounted for 66% share (€2.15 billion) of the total. The majority of R&D investment placed in the country was into foreign-owned companies, with €2.4 billion in 2020, compared to €0.98 billion by Irish-owned companies. Manufacturing R&D accounted for 39% of investment, compared to 61% into the services sector. Interestingly, the majority of R&D expenditure (71%) in the services sector is spent on labor, according to the CSO survey, compared to 49% in manufacturing.
Market Trends & Challenges
According to the IDA, the life science and technology sector was one of the most robust in 2020, and its resilience significantly contributed to Irelands exports and concomitantly GDP, which was higher than most other advanced nations last year. The demand for healthcare products also increased employment in the sector. The IDA’s strategy going forward is focused on winning international investment to the life science and technology arena, and is fully outlined in its ‘Driving Recovery and Sustainable Growth 2021-2024’ report. It acknowledges that the life science industry will be driven by key technology and medical areas such as:
- Personalized medicine
- Advanced Therapy Medicinal Products (ATMPs)
- Cell, gene and vaccine therapies (CGVT)
- Advanced and additive manufacturing
- Digitization of manufacturing
Importantly, the IDA is highly focused on developing Irelands ability to manufacture CGVTs, as there is high growth potential in this area. Manufacturing of these products is highly complex, and so development and regulation of facilities to secure Ireland’s position as a global CGVT manufacturing hub will take significant investment and dedication. In order to support cell, gene and vaccine therapy research and training which will be facilitated through NIBRT, €20.9 million will be provided by the IDA to 2026.
Future of Manufacture in Ireland
Next-generation manufacturing is also a key area of growth identified by the IDA. Investment into the National Advanced Manufacturing Centre in Limerick is supported not only by the IDA but also by the Government’s Industry 4.0 (2020-2025) strategy. The AMC is a discrete digital factory and a national showcase for advanced manufacturing techniques to help companies trial and accelerate their adoption of digitally-enabled processes. The AMC is set to open in 2022 and will be a center of digital excellence to enable companies to trial, adopt and scale-up cutting edge manufacturing technologies. It will also be an epicenter of up-skilling professionals in the area, and therefore maintaining Ireland’s competitiveness in the global manufacturing arena. It is estimated that the AMC will cost €29.6 million, spread over five years and to date the IDA has already committed €12.4 million of this.
Industry 4.0 is set to further boost the biopharma sector in Ireland and will blend connectivity, intelligence and flexible automation into the manufacture of high-quality biologics for the European and global markets. The technologies that will drive advanced digital manufacturing include advanced robotics, augmented and virtual reality (AR/VR) along with support from cloud computing and big data analytics.
Strengths and Opportunities of BioPharma in Ireland
- Ireland is a low-tax business environment as it has a 12.5% corporate tax rate
- The IDA proactively seeks foreign direct investment in Ireland and has a very successful track record
- The Research, Development and Innovation (RDI) tax credit has been increased to 25%
- Significant pharma manufacturing platform in the country built from the 1960’s
- Good reputation internationally for producing high quality products
- Regulatory authority works in tandem with European Medicines Board, FDA and other regulatory bodies in Japan and Asia
- High level of skilled workers from engineers to scientists to clinicians
- Good infrastructure to support pharma industry in communities throughout the Island
- Advanced manufacturing and robotics to propel the production of advanced therapies
- Production of advanced medicinal products
- Production of cell, gene and novel vaccine products
- Become a local supply chain producer of materials for Europe
- Develop clinical trials to further support advanced therapies in Irish population
How is Ireland Positioned for Future BioPharma Growth?
Currently, the biopharma industry exports over €80 billion annually, which is over 50% of Ireland’s total export revenue. The Biopharma industry has been instrumental in keeping the economy going over the COVID-19 crisis and has stayed operational during the pandemic. When the pharmaceutical industry was in its infancy in Ireland, the manufacture of small molecules played a dominant role. Now however, the space has evolved to the manufacture of large molecules, biologics and biotech products. As the country is well positioned in the European and manufacturing arena, there is a huge opportunity to exploit the advanced therapeutics space going forward. In order to sustain Ireland’s dominant manufacturing role, production of these products needs to be maintained in the future to supply the significant unmet need by patients globally.
Ireland’s economy critically depends on the pharma sector, and in order to maintain its position globally, it needs to stay on the cutting edge of technology. The future of the pharma industry is in the production of advanced therapeutics, which includes cell and gene therapy (CGTs), advanced therapy medicinal products (ATMPs), novel vaccines, immune-oncology products, tissue engineered medical products (TEMPs) and regenerative medicine products and stem cells. Now is the time to invest in the manufacture of these advanced therapies in Ireland, as their affiliated markets pose significant opportunities for growth. It is also imperative that up-skilling of professionals to work in this area occurs. Stakeholders in the industry have identified that there are opportunities in the advanced therapy space for indigenous companies to grow, not only in manufacturing but also in specialist services and R&D.
What Opportunities Emerged During COVID-19?
The Irish BioPharma industry stayed operational during the COVID-19 crisis, however it was noted that supply chain difficulties emerged. This occurred globally, not only in Ireland and Europe, due to a dependence of critical components such as APIs that were produced in countries that closed their borders or reduced manufacturing capabilities. Therefore, the pharma model going forward will re-assess at the supply chain and manufacturers within Europe, rather than further afield such as China or India. Given that Ireland is a dominant player in the export of manufactured products and is a leading manufacturing hub globally, it is in a positive position to supply the European market with critical products going forward. This is a significant opportunity for not only existing companies, but also for new companies. Ireland has been very successful in the small molecule space, and its knowledge base and reputation can be built upon, maintained and exploited going forward to supply the European market. European policy makers are now acutely aware that supply chains are vital, and it is critical to access all parts of the chain. Historically, cost of base components was a key consideration in the supply chain, however, accessibility and security of supply are essential in order to maintain the flow of end products.
Is Irish BioPharma Competitive?
Given the Irish success story over the last number of decades and foreign direct investments, the current BioPharma market is certainly competitive within the global space. However, the country needs to stay ahead of the curve in order to continually attract FDI and indigenous funding. Key stakeholders are well aware of keeping this competitive edge and so have identified specific areas in advanced therapeutics, digitization of manufacturing, immersive tech and artificial intelligence that need to be exploited in the near future. The role of technology will play a more important part in Irelands competitiveness over time, and Pharma 4.0, or the digitization of manufacturing is a significant way forward in the sector. The digitization of the supply chain, and block chain artificial intelligence will also give the country a competitive edge, however it is essential that the skill-gap that is currently in place is closed. In order to upskill professionals in these tech areas, stakeholders such as NIBRT and BioPharmaChem Skill Net are providing training.
One of the main advantages of the Irish BioPharma industry in attracting foreign companies and investment, is the low corporation tax. This needs to be defended going forward as base erosion and profit shifting (BEPS) strategies may lead to increased tax in the region. Furthermore, the cost of goods needs to maintain a competitive scale compared to other European countries.
What Talent Needs to be Developed in Ireland to Stay Ahead of the Curve?
At present, Irelands professional skills in Biopharma is highly effective, with superb third level support and ongoing courses from players such as NIBRT. Going forward, in order to support the development and manufacture of advanced therapeutics in the country, a number of key manufacturing and research skill areas need to be addressed including:
- Cell and gene therapy
- Advanced therapeutics
- Stem cells and regenerative medicine
- Novel vaccines
- Robotics and digital technology
- Data analytics
- Artificial intelligence, virtual reality and augmented reality
- Digital data and automation engineering
- Automation for Biopharma
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