How much is the Ireland pharma market worth? What are the topmost domestic companies? What are the major therapeutic areas? How much of the revenues come from exports? What are the topmost nations the country exports to?
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Barry Heavey
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Ireland exports over €50 billion in pharmaceuticals in almost all therapeutic areas, from oncology, cardiovascular, neuroscience, autoimmunity to anti-infectives. Major export destinations include the US, EU and Japan. Nine of the top ten companies have strategic manufacturing operations in Ireland with a total replacement value of the investment exceeding €40 billion. Over €7 billion has been invested in the last ten years, primarily in new Biotech manufacturing facilities.
How much FDI does the country attract currently? Has this increased over the past few years? How much does the pharma sector contribute to the GDP of the country? How has the M&A scene been in the life sciences sector? Do you see scope for consolidation?
Ireland has been extremely successful in attracting FDI in the pharma sector with several companies such as J&J, Merck & Co (MSD) and Pfizer having multiple sites in Ireland. The sector contributes close to 30 per cent of total exports and makes a very significant contribution to GDP through net exports, payroll and capital investment.
M&A in the pharma industry has had an impact in recent years, in particular with Pfizer’s acquisition of Wyeth and Merck & Co.’s acquisition of Schering Plough. This resulted in a number of manufacturing sites being divested by the merged entities. To date, however, these divested sites have helped in attracting new companies to Ireland with Biomarin and Amgen acquiring biopharma and sterile manufacturing sites respectively from Pfizer. There are currently three additional pharma sites being divested in Ireland and IDA is working with the companies to identify potential buyers for these sites. The pharma chemical sector contributed an estimated 12 per cent to Irish GVA in 2012. GVA (Gross value added) is conceptually similar to GDP but examines production on a sectoral level rather than final expenditure type. Gross value added excludes product taxes and subsidies, although these are largely irrelevant for the pharma-chem sector.
By how much has the life sciences or pharma sector been growing? What have been the drivers of growth?
The life science sector has seen some counter currents in recent years. Three factors have had a negative impact on growth in the sector: the expiration of patents on blockbusters such as Lipitor, M&A activity in the sector and the failure of high profile candidate drugs to make it through the pipeline. However, other factors have had a positive impact on growth: the continued success in biopharma drug approval, increased rates of drug approvals in speciality pharma and so called “nichebusters” in areas such as oncology.
How big is the biopharma manufacturing sector in Ireland? By how much has it been growing? What are the growth drivers? What pioneering activities are currently underway under your leadership at the National Institute for Bioprocess Research and Training to further this?
There are currently 17 biopharma manufacturing sites in production or under construction in Ireland. This has been a dramatic increase from only one dedicated biopharmaceutical site 10 years ago. This represents an investment of close to €7 billion in facilities in the last 10 years. Employment in biotech manufacturing has grown during that period from less than 500 to more than 6,000. In response to the forecasted growth in Biotech, IDA invested €60 million in the creation of NIBRT, a bioprocessing facility which provides “real world” training to current and prospective employees at all levels in the biopharma industry.
The expiry of patents in the pharma sector could pose a risk to Ireland’s economic progress. Your comments.
Ireland has been impacted by the expiry of patents throughout the 50 year history of the industry, but the sector has always bounced back with new investment in new technology. The last three years have seen a number of overlapping patent expirations for blockbusters like Lipitor and Zyprexa and these have had an impact on the sector with Pfizer looking to divest drug substance and drug product sites. However, the risk has been mitigated by parallel investment in new biopharma manufacturing facilities and in manufacturing capability for complex products such as high potency compounds and drug-device combinations. While the loss of exclusivity on some drugs may have a near term impact on export growth, these new investments will underpin export growth in future as these sites reach full productivity.
In a dynamic climate that pharma and life sciences industry today represents, with new regulatory guidelines, pricing pressures, IP laws, what do you see as a survival tactic for companies worldwide?
I believe that companies need to develop a balanced approach across multiple aspects of the business to deal with the new realities. This can be seen in many big pharma companies developing strategies to compete with generics companies, especially in areas such as biosimilars. Similarly, big generics companies like Teva are starting to acquire companies with patented products and pipeline candidates. Big barriers to entry remain in areas such as biosimilars and companies like Samsung biologics have recognised this and made extremely large investments to try to overcome this.
Companies need to manage their cost base as austerity bites into healthcare budgets globally but focusing only on cost reduction can create risks in terms of pipeline productivity and manufacturing compliance in a highly regulated industry. Focus on development of mass market blockbusters has been proven to be lucrative when successful but also highly risky, driving many companies to pursue so called “nichebusters” which may achieve approval with lower clinical development risk. Biopharma are seen as a big growth area but this must be balanced with the fact that many recently approved nichebuster drugs are small molecules.
Focus on the drug substance must be balanced with opportunities for innovation in the drug product in areas such as formulation and novel delivery devices, especially for biologics. Focus on geographic markets needs to be balanced, the US, Europe and Japan remain highly attractive despite the regulatory and pricing challenges due to the population demographics of aging and chronic disease, while it is clear that companies need to further develop strategies for entering growth markets like India, China, ASEAN, Brazil, etc.
IDA believes Ireland is a great location for companies to execute this balanced approach – the country has an exceptionally strong regulatory track record which mitigates risk for companies and has combined this with a strong focus on managing costs/increasing competitiveness and productivity. Ireland has a track record in drug substance and drug product manufacturing in small molecule and biopharma, in drug device combinations, in proprietary and generic drugs and in blockbusters, as well as nichebuster products. Sites in Ireland have a successful history in supplying a diverse set of markets