PharmaIRELAND2010 A D V E R T I S I N G F E AT U R E
Ireland today is home to 8 of the top 10 pharmaceutical companies in the world who employ 20,000 people in 100 facilities. There are a further 44,000 employed in the wider life sciences sector. Six of the top ten global blockbuster drugs, that is, drugs achieving sales over $1bn per annum, are currently manufactured in Ireland. PHARMACEUTICAL exports amounted to over €34bn in 2008 with the sector contributing €1bn in corporation tax. When we consider that Ireland is now the number one location outside the US for significant development and manufacturing in biologics, it is clear that the pharmaceutical sector is one of the success stories of modern Ireland. The Government recognises the significant contribution that the pharmaceutical, and other high value added sectors that invest in R&D, make to the Irish economy. Over the past decade we have trebled the level of investment in R&D, providing enterprise support for R&D, investing in human capital, physical infrastructure and the commercialisation of research. This investment has contributed significantly to an increase in foreign direct investment (FDI), the competitiveness of indigenous enterprise and to the creation
and application of new knowledge and technologies. It is no exaggeration to say that, in a relatively short period, we have seen a transformational change in Ireland’s scientific landscape. The Government is committed to the transition to the smart economy. For us, building a smart economy is about the development and application of human capital - the knowledge, skills and creativity of people - and our ability and effectiveness in translating ideas into valuable processes, products and services. In July last the Government re-affirmed its commitment to R&D with the announcement of its planned capital expenditure investments programme for the period to 2016 which will see a further significant investments in science, technology and innovation programmes to create new, highquality jobs.
Still, we are aware of the challenges that must be addressed. We need to translate our investments into sustainable jobs and economic growth. Competition from overseas locations has never been stronger so we must use innovation as an instrument to enhance our competitiveness. I am confident, however, that the tremendous success we have enjoyed in the pharmaceutical sector will continue into the future and be replicated in other sectors as we continue to implement our strategy to develop Ireland as a leading knowledge economy.
Conor Lenihan, T.D. Minister for Science, Technology & Innovation
Leading the country to recovery When the recovery arrives it will be export led, says John Mulligan, and that is why the pharma sector is so vital
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EARLY 30 years ago, Ireland was in the grip of recession. Thousands were emigrating, and the country was struggling to emerge from economic crisis. Then, as now, encouraging growth in exports by multinationals was seen to be a key plank of efforts to turn the economy around. In 1983, Ireland’s chemical industry – which comprises pharmaceuticals, bulk chemicals and healthcare goods – accounted for 20pc of all industrial exports from these shores. Just over a dozen years earlier, the figure had barely made an impact on overall export figures. Today, it’s the chemical and pharmaceutical sector again that is being relied upon as one of the engines of export growth that could help the economy tip back into recovery, difficult as that is going to be. Last year, Ireland’s chemical, pharmaceutical and healthcare industry accounted for over half of the country’s €83.5bn in exports. The Central Statistics Office noted that within the overall chemicals category, exports of medical and pharmaceutical products had jumped from €9bn in 2001 to almost €19.6bn in 2009. In the first seven months of 2010, overall exports rose 1pc to €51.4bn, boosted by a 12pc increase in exports of pharmaceutical and medical products. Getting to this stage hasn’t been an easy ride either. Ireland has consistently faced stiff competition from locations such as Switzerland and Puerto Rico for investment. While generous grants and tax breaks were the initial catalysts nearly 40 years ago for the nascent industry in Ireland, since then, those drivers have broadened somewhat. While the initial focus was purely on manufacturing, pharmaceutical firms have been encouraged to increasingly locate sought-after research activities in Ireland. Admittedly though, all is not rosy for the pharmaceutical industry in Ireland, despite its continuing growth in exports.
Jobs market tightens but industry still needs good graduates Employment prospects for graduates may look bleak, but there are still opportunities in the pharmaceutical industry for those with good qualifications and the right attitude, writes Kim Bielenberg?
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Some companies are facing so-called ‘patent cliffs’, with major blockbuster drugs that which for years have provided the bulk of their revenues now facing the prospect of competition from generic alternatives. Pfizer’s Lipitor cholesterollowering treatment is one of the drugs facing a dramatic fall in sales. The active ingredient for the product is made in Cork and in 2008 Lipitor accounted for more than 20pc, of $11.4bn of Pfizer’s sales. The patent on the drug expires this year. Indeed, drugs with an estimated $90bn in annual sales are coming off patent over the next three years, including major products made by companies such as SanofiAventis, Eli Lilly, Johnson & Johnson and Novartis. Some companies now have excess capacity, which has resulted in jobs being shed. Last month, Schering-Plough (part of Merck & Co) said it was seeking 160 redundancies at its plant in Cork in order to improve efficiencies. Earlier this month, GlaxoSmithKline said it will axe 121 jobs from its workforce of 460 at its plant at Currabinny in Cork Harbour, saying the cuts were necessary for the facility to maintain its competitiveness. Earlier this year, Pfizer
said it would cut up to 800 jobs in Ireland as part of a group-wide cull of 6,000 positions following its acquisition of Wyeth as it integrated the worldwide operations of the two companies. Despite the jobs losses, the pharmaceutical and biotechnology industry here is far from being in decline. IDA chief executive Barry O’Leary recently said that redundancies in the pharma sector had to be “contextualised” in terms of what was happening from a global perspective to the industry. He maintained that Ireland hadn’t been as badly hit as other countries and pointed to the fact that the country was positioned to benefit from what he said was “strong global growth” in the sector. It’s a given that as the country licks its wounds from its ill-judged love affair with property, that the pharmaceutical and biotechnology industry will remain one of the key drivers of real economic growth. But there is little room for complacency either. Addressing the Lemass International Forum last month, Paul Duffy, vice president of operations with Pfizer Ireland, warned that manufacturing needed to be treated as a core element of the government’s ‘smart economy’ drive.
“Stand alone manufacturing can easily move across borders, but when manufacturing is the base around which we build product development, marketing, distribution and supply chain services becomes more embedded into the Irish economy and more important to the global corporation,” he told the conference. “Excellent research is being conducted in universities and hospitals and we should focus on commercialising the potential output of this research,” he added. “Stronger linkages between the research community and the manufacturing base would benefit both and ultimately build Ireland's reputation for innovation.” Lionel Alexander, the president of the American Chamber of Commerce in Ireland, and vice president of Hewlett-Packard Manufacturing, also stressed the need for Ireland to continually reinvent its offering. “If Ireland isn't a compelling location for companies to conduct their manufacturing, these products will be produced elsewhere and the benefits that accrue in terms of employment, the contribution to Ireland's tax take and the development of innovation will be lost".
HERE are currently 24,500 people employed in the Irish pharmaceutical industry in roles ranging from manufacturing and marketing, to research and patient education. Over half of those working in the industry are graduates who have completed degree courses in science, chemistry, microbiology, biotechnology or genetics. According to the website pharmacareersireland.com, graduate starting salaries typically range from €18,000€30,000, but rise rapidly with experience. Middle management salaries typically range from €50,000 to €90,000. Figures from the Central Statistics Office show that workers in the sector earn almost 30pc more than the national average wage. Ronan Collins, Communications Officer with the Irish Pharmaceutical Healthcare Association, says that the industry is going through a challenging period where there is likely to be more competition for jobs. However, there are still areas of the industry where certain skills are in strong demand. “There is a new focus on research & development,” Collins explains. “Employers are looking for graduates with PhDs in scientific subjects. Typically these would be in areas such as biochemistry and biomedicine.’’ According to Collins, there is also a strong demand for jobs related to regulatory affairs, as the pharmaceutical industry is one of the most regulated sectors in the country. Specialists in this area are required to ensure that companies are compliant at every stage. “In the journey to developing and delivering a medicine,” Collins explains, “a whole number of skills and professions are involved along the way, including chemists, pharmacists, researchers, doctors, engineers, lawyers, marketers and machine operators.’’ There are currently openings in the sector for graduates with qualifications in electrical, chemical and mechanical engineering but, Collins notes, pharmaceutical companies are not just looking for graduates
with good qualifications, they also need graduates with good soft skills. “In this industry we need people who can communi-
cate effectively, whether it be networking at a conference or making a presentation.’’? Graduate employment has been affected by the reces-
sion. Multi-nationals continue to consolidate as patents reach their expiry dates, and this has hit recruitment. “Employment has fallen, but good people will always be able to get jobs,’’ says Brian Christensen, recruitment consultant with Life Science Recruitment. Christensen also says that the PhD graduates who are most in demand are those who have research experience that is relevant to the industry. “Graduates should go to great lengths to set themselves apart and get experience in whatever way they can,’’ Christensen concludes. “Whether it setting up your own profile on Linked-In (the networking web site) or meeting people in the industry, graduates should be proactive and get themselves noticed.’’
A D V E R T I S I N G F E AT U R E
PharmaIRELAND2010
Campus Ireland As a global test bed, Ireland can lead the way in developing and marketing a high performing healthcare system, writes Nuala Ryan
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ith an unparalleled reputation for making pharmaceuticals, Ireland is recognised globally as being one of the most high quality locations for pharmacy in the world. Going forward, we need to build on this reputation and work towards creating a global test bed that will secure the future of the life sciences in Ireland. The pharma industry is arguably the primary innovator around new medicines and Ireland is ahead of most other locations globally in
terms of where the industry is going with biotechnology. The challenge now is to look at what key services can be wrapped around the sector. As the second largest exporter of medical devices in Europe, the goal now must be to take these smart devices, match them with smart drugs and do that all here in ‘Campus Ireland’. We need companies to look at Ireland as the one-stop shop for all these solutions. The industry is moving towards a partnership based on working with patients and the healthcare professionals. This move is hugely important – when you start to consolidate all
that data and bring it back in through bioinformatics, suddenly you have the ability to manage your health system. And the country that can develop a high performing healthcare care system can market those competencies to the world. “We have the capability to do this because of our ICT base,” says Dave Shanahan, Global Head of Life Sciences, IDA. “With our biopharma base and regulatory capabilities, there is no reason why Ireland couldn’t lead the way and that’s what we are working towards.” So is Campus Ireland possible? In terms of developing new products, the Irish
pharma industry has proven competency in manufacturing small volumes and big volumes meaning it can make for the clinic and for the world. There are very good frameworks in place from Government, be they under incentives, corporation tax rates, R&D tax credits and, in the National Institute for Bioprocessing Research and Training (NIBRT), you have a pool of highly-skilled people that would be a very strong attractant for companies locating their operations here. For such a small country, Ireland is home to a large number of major players.
Now the challenge is to find national solutions like NIBRT for our medical device industry and for convergence, which brings ICT into play. Whether it is the electronic patient record or advanced imaging, the key is to use the companies that have already invested here and those that we can attract in the future to originate these solutions with the HSE. Ireland is a logical place for these developments to happen. The jigsaw pieces are on the table – the challenge is in putting the pieces of the puzzle together. But Ireland can lead the way.
Dave Shanahan Global Head of Life Sciences, IDA
Beware of fake drugs … Rat poison, boric acid and lead paint; three ingredients you wouldn’t expect or want in your medicine, yet they could be there if you buy your daily dose online, writes Tina Leonard.
ACCORDING to Ronan Collins, Communications Manager of the Irish Pharmaceutical Healthcare Association (IPHA), “a frightening 62pc of medicines purchased on the internet were fake or substandard according to a 2008 report.” Not only can these medicines contain harmful ingredients but they are often produced by people without the appropriate qualifi-
cations and can include too much, too little, or none of the active ingredients they should. Despite that risk, research commissioned by Pfizer published earlier this year, found that one in five Irish people admitted to buying prescription medicine from illicit sources. The main reason cited was the desire to save money, followed by the fact that buying online is quick and convenient. In fact, consumers everywhere are buying in their droves with a seven-fold increase in purchases in the EU over a twoyear period with no sign of a slow down. But a spokesperson for the Irish Medicines Board (IMB) says that you do not know what the product actually contains. “Even if they contain the active ingredient that is listed on the package, often they are made in premises that are not suitable or hygienic for producing any product for human consumption. There may be microbial contamination or the ingredients may be in the incorrect quantities thus creating risk to health.” Last month the IMB together with the Gardaí and the Customs Service detained over a quarter of a million counterfeit medicines in Ireland in an operation called Pangea III. The confiscated tablets largely related to erectile dysfunction pills, weight loss,
antibiotics, hormones and steroid products, anti-depressants, pain killers, cardiac medication, anti-cholesterol, stimulants/amphetamines, cancer medication and insulin. So what did these counterfeit products contain? According to the IMB, three types of sexual enhancement product; Virmax Plus, Virmax and Viger, contained not just one active substance but two. This means the manufacturer did not have enough active substances to continue production and simply added a different active substance regardless of the effects that this could have on the person consuming it. The substance ‘Sibutramine’ is banned in the EU due to health risk concerns, but that hasn’t stopped it appearing in medicine sold online. Sibutramine was found in Botanical, LiDa, Lipro and Slim as well as herbal Payouji tea, Pai You Guo Slim Capsules and Leisure 18 Slimming Coffee, all slimming products promoted as “herbal” or food products. It is very easy to buy any of these drugs from Internet pharmacy websites and, aside from our health, there is also the startling cost to the Irish economy. The ‘Cracking Counterfeit Europe’ research published this year puts a figure of €10.5bn on the European-wide black market for medicine. In Ireland the counterfeit medicine market is worth €86 million. It is money that is leaving our economy and all for dodgy tablets and suspicious capsules.
Research the key to pharma future The pharmaceutical industry is one of the great success stories of the Irish economy supporting almost 50,000 jobs and contributing almost half of our total exports. However, with the global pharmaceutical sector consolidating, the industry faces new challenges going forward, writes Simon O’Donovan
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n an era of seemingly unremitting doom and gloom the pharmaceutical industry is one of the few bright spots in the embattled Irish economy. Last year gross exports of pharmaceuticals and other chemicals from this country were worth €47bn, more than half of our total exports in 2009. The single biggest contributor to chemical and pharmaceutical exports was medical and pharmaceutical products, which were worth €19.5bn, closely followed by exports of organic chemicals, which were worth €18.2bn. The combined total of €37.7bn represented 45pc of total Irish exports in 2009. These exports mean that the industry is the single biggest contributor of corporation profits tax to the exchequer, paying an estimated €3bn in corporation profits tax and other taxes every year. Pharmaceuticals are also a major source of employment with just under 25,000 people, half of whom are third-level graduates, directly employed in the industry, which supports a further 25,000 jobs in supplier companies. When it comes to attracting foreign pharmaceutical to locate in this country, Ireland has consistently punched above its weight. In 2008, an estimated two out of every five pharmaceutical jobs created in Europe were in Ireland. At present, 120 overseas pharmaceutical companies have Irish plants with 13 of the top 15 global pharma-
ceutical companies having Irish-based operations. A major feature of the global pharmaceutical industry over the past decade has been the pace of consolidation as the major players either merge with one another or take over smaller companies in the sector. In the ten years to the end of 2009 there were over 1,300 mergers and acquisitions recorded in the pharmaceutical industry worldwide with a combined value of almost $700bn. These deals included Pfizer’s $56bn acquisition of Pharmacia in 2002 and its $68n purchase of Wyeth in 2009. With virtually all of the major pharmaceutical companies having Irish plants this wave of mergers and acquisitions has inevitably had a knock-on effect for this country as the enlarged companies move to eliminate duplicated facilities and sell off non-core operations. And the bad news is that there are almost certainly more plant closures and job
losses to come. As the cost of developing new blockbuster drugs becomes ever more expensive, the pharmaceutical companies are finding it increasingly difficult to maintain the flow of new, branded drugs coming on to the market. Protected by patents, these new drugs earn the pharmaceutical companies extremely high margins, which in turn funds the research & development needed to create the next generation of new blockbuster drugs. Unfortunately for the pharmaceutical companies, there are clear signs that the research-driven business model, which has sustained them for over a century, is now breaking down. With the pipeline of new drugs drying up, they are in the unenviable position of seeing their blockbuster drugs come off patent with very little to replace them. Further adding to the industry’s woes is that with health budgets under pressure from ageing populations
in virtually every country, governments are insisting that doctors prescribe generics where a cheaper alternative is available. In May of this year the Irish Department of Health published proposals that would oblige retail pharmacists to inform consumers of the availability of a cheaper, generic option if their doctor had prescribed them a more expensive, branded drug. The Department also plans to introduce “reference pricing” under which it would only pay the cost of the cheaper, generic drug. If the patient insisted on purchasing the more expensive, branded drug, then he or she would have to pay the difference themselves. While both the retail pharmacists and the Irish Pharmaceutical Healthcare Association (IPHA), which represents the pharmaceutical companies, have expressed their reservations about the Department of Health’s proposals for reference pricing and generic sub-
stitution, the likelihood must be that these proposals, or something very like them, will eventually be implemented. These developments represent a major challenge for the Irish pharmaceutical industry. If Ireland is to retain the operations already based here and attract new ones then it must move from being purely a manufacturing base to also become a research centre. Earlier this year the Irish Clinical Research Infrastructure Network, which represents all of Ireland’s medical schools, published its Clinical Research Roadmap, which outlines the steps this country needs to take to develop a sustainable national system to support clinical research. This would embed overseas pharmaceutical companies far more deeply in the Irish economy and help create an environment in which more indigenous pharmaceutical companies can develop. “Ireland has a unique opportunity to position itself as a hub for clinical research. Bringing early stage clinical trials to Ireland would also help ensure prompt access for Irish patients to innovative medicines once the medicine has been approved, thanks to the familiarisation of consultants at a very early stage of the testing of medicines, while at the same time help process of embedding the sector in the Irish economy at an ever-higher level of sophistication and value,” according to IPHA chief executive Anne Nolan.
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PharmaIRELAND2010 Realise your full potential at Dublin Institute of Technology IN the current climate, it is important to choose a lasting career path and the pharmaceutical sector, a valuable main state to our economy, remains a viable option By undertaking a pharmaceutical course at DIT students will emerge equipped to enter the industry and be useful employees within the pharmaceutical sector. The BSc in Manufacture of Medicinal Products aims to provide graduates with scientific and analytical skills in addition to a practical problem solving ability. The programme was delivered in a flexible manner over Fridays and Saturdays to facilitate those with other commitments. Of the 26 students who took the course this year, 20 came through the Labour Market Activation scheme funded by the Higher Education Authority (or HEA), with the remainder already working in the industry and so a support network between the two groups was established. The programme has also proven very useful for those working within the industry as they can re-establish the scientific basis of what they do and assess the professional opportunities available. Meanwhile, the postgraduate diploma/MSc in Pharmaceutical and Chemical Process Technology was designed for those who have a degree in the area and wish to improve their skill set. The course is delivered through lectures, practical work, case studies and tutorials. Students also take a module in entrepreneurship, which will assist them if they wish to set up their own business in the future. For more information visit chemistry.dit.ie
Ken Hardy Head of R&D tax credit, KPMG
Take a Closer Look at R&D tax credits WHILST the tax treatment of research & development isn’t always seen as a headline benefit in the manner of corporation tax or labour costs, it is a key aspect of investment decision-making by both multinationals and indigenous businesses. The R&D tax credit was first introduced in 2004 and was raised from 20pc to 25pc in 2008. It allows any company carrying out R&D activities a 25pc credit to the extent that the expenditure incurred is incremental to expenditure carried out in the base year of 2003. So what are the economic and business benefits of a progressive R&D tax credit regime? According to Ken Hardy who heads KPMG’s R&D tax credit team, “for Ireland, R&D has the potential to be a catalyst in helping deliver highly skilled jobs in an economy where too often the words ‘smart economy’ have become over used.” In terms of assessing business attitudes to the tax treatment of the R&D credits regime, KPMG has again commissioned market research to assess the issues. The findings of their annual survey will be launched as part of Dublin’s Innovation Week at The Conrad Hotel on Friday November 12. Take a Closer Look 2010/11 assesses the role of the R&D tax credit regime in encouraging economic activity, its impact on investment decisions and how well the current scheme works. Conducted by RedC research, it looks at the attitudes and opinions of a broad spread of business in Ireland. The research findings are sure to be of interest to those in both the pharmaceuticals and broader business sectors, as well as those in government, policy makers, academics and all those with an interest in Ireland’s future economic development. To register to attend the launch, email innovation@kpmg.ie or visit www.kpmg.ie.
A strong focus on research and development indicates a bright future for the pharmaceutical industry WITH the expiry of patents on a number of blockbuster drugs the global pharmaceutical, biopharmaceutical and chemical industries face a challenging decade ahead This sector is hugely important to the Irish economy with products exported in 2009 valued at €47 billion. Therefore it is paramount that the industry is well prepared for the challenging time ahead and ready to absorb the effects of the first of these major patent expiries, that of Pfizer’s cholesterol reducing product Lipitor in late 2011. Once a blockbuster comes off patent, revenues fall sharply, by up to 80%, as cheaper versions flood the sector. In fact, many commentators predict as much as a €100 billion drop in revenues over the next five years. The pharmaceutical industry’s initial response to market pressures has been to combine operations. Pfizer- Wyeth and Merck-Schering Plough have consolidated in an attempt to enhance their product and research portfolios. In March of this year, PharmaChemical Ireland published a major strategy outlining how the industry in Ireland will meet these challenges. The document, Innovation and Excellence, proposes that the industry in Ireland becomes a recognised centre for innovation and development in the sector. Central to the strategy is the growth of development activities within the sector, anchoring manufacturing along the so-called development + manufacturing (D+M) model and positioning Irish sites to be the sites of choice for new product launch bringing them more centre stage in global supply chains. Therefore it is vital that the industry collaborates actively with the research community in order to build this type of capability both on site and in the research infrastructure. Expiry of patents on blockbuster drugs manufactured in Ireland is not the only hurdle the industry faces. A rising cost base, competition from Asia and other locations and the further consolidation of supply- chains are prevalent factors that will erode the country’s manufacturing base unless action is taken. Research, development and innovation will drive the industry forward. Companies need to embrace the concepts of manufacturing and supply-chain excellence, as well as those of onsite innovation, such as process and product development. Ultimately, If Irish sites achieve this goal and the country can become global centre of excellence for development and manufacturing, they will be well positioned to participate meaningfully in discovery-related activities. Also, opportunities for indigenous companies in areas such as high-end synthesis, biotechnology, contract research, specialist centres and contract manufacturing will inevitably emerge, producing a much more embedded, integrated and sustainable sector.
Mags Hyland graduated from the BSc in Manufacture of Medicinal Products this year and hasn’t looked back For Mags Hyland, becoming redundant gave her the push she needed to get back into education and take on a course she had long dreamed of. “It was a big undertaking. I didn’t realise what I was taking on at the time. I had hated school but the way the course was delivered made it such a positive experience.” Now back in employment and working in the pharmaceutical industry Mags has high hopes for the future. “I’m considering doing an honours degree and further down the line I’m going to do a Masters.”
It will be companies that can sustain their focus on innovation who will be the winners in the life sciences industry, says Marguerite Larkin, head of life sciences at Deloitte THE life sciences industry in Ireland has weathered the storm of recession quite well. However, the drive to cut costs, reduced corporate cash earnings combined with a lack of liquidity in the capital and debt markets is impacting on the level of investment in R&D and innovation – the pulse of the life science industry. Irish subsidiaries of large multinationals are facing increasing competition from within their own organisations for financial resources to fund projects, and the threat of emerging markets is forcing them to cut costs and work more efficiently in order to compete. Irish indigenous and mid market companies are also suffering from undercapitalisation issues and should focus on collaboration with both similar companies within the industry and larger players as joint ventures,
Marguerite Larkin Head of Life Sciences, Deloitte
alliances and outsourced R&D agreements become more prevalent in order to fund new product research. Many of the institutional and venture capital funds are looking for projects and products that can provide an early return on investment. One big positive continues to be Ireland’s tax regime as a number of improvements to support R&D and innovation have been implemented.