Pharma stable despite geopolitical turmoil

Ireland’s pharmaceutical sector has grown and developed over the years and now employs around 26,000 people directly and another 25,000 indirectly. Geopolitical turmoil and economic headwinds notwithstanding, the industry is a resolutely stable one, having proven much less vulnerable to choppy waters over the years than others.

“It’s a bit like an oil tanker – it moves slowly and it makes decisions which are long-term,” says Matt Moran, director of BioPharmaChem Ireland, which represents and supports a broad and diverse mix of members from the Irish biopharmaceutical sector. “It’s pretty unlikely we will see any major shifts in terms of that stability.”

Stability is not stagnation, however, and charting the evolution of the pharmaceutical industry in Ireland clearly illustrates a steady upwards trajectory. Elaine Daly, global head of business consulting at Grant Thornton Ireland, explains that the pharmaceutical industry in Ireland first began growing in the 1950s and 1960s with the first multinational pharmaceutical investments by LEO Pharma, Novartis, Bristol Myers Squibb (BMS) and GlaxoSmithKline (GSK).

“The industry presence initially consisted of manufacturing operations for small molecule drug products and drug substances. Large-scale drug substance manufacturing facilities followed in the subsequent decades, which quickly proved their capabilities across more complex operations and hence enabling the industry to evolve its process re-engineering and formulation development capabilities,” says Daly.

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Shortly after the development of biotechnology manufacturing, the first biotech investments in Ireland were made in the 1990s and 2000s, which saw companies like Schering Plough (since acquired by MSD) and Wyeth (now Pfizer) establish the first biotech facilities in Ireland. “Supported by agencies such as the IDA and Enterprise Ireland, foreign direct investment has continued to develop the Irish pharmaceutical industry, culminating in a thriving sector.”

Indeed, the emergence of biopharmaceuticals, which are medicinal products produced from biological cells, has significantly influenced the Irish life sciences sector in the past two decades. In 2003, there were two biologics manufacturing sites in Ireland, but by 2020 this number had risen to 20. Daly cites Pfizer’s recently announced-planned investment of €1.2 billion to expand its biomanufacturing facility at Grange Castle in Dublin as an example of ongoing confidence in Ireland as a base for biopharmaceuticals. “This brings Pfizer’s total investment in its Irish operations since 1969 to over €8 billion, providing evidence and confidence that the sector is still very keen to invest here,” she says.

Moran agrees that Ireland’s pharmaceutical sector has seen an evolution from an industry mainly dominated by active pharmaceutical ingredients (API) facilities – which are essentially chemical or small manufacturing plants which manufacture the active ingredient of a medicine – to a fully integrated sector that includes medicinal product manufacture, biotech or biologic manufacture of both drug substance and finished product, plus global business services and, in recent times, advanced therapeutics including cell and gene therapies.

“This means there is still significant investment in the sector,” he adds. “There is still a lot of capital going into the ground as part of new investments or in existing facilities which are upgrading and expanding.”

In just the last 12 months Ireland has seen a total of over €3 billion of investments announced by major pharmaceutical companies in Ireland, Daly says. “Undoubtedly these major investments reflect the strong pull factors of pursuing life science operations in Ireland compared to other locations.”

Gilead is just one of the companies keen to invest in Ireland as it expands. David Cadogan, vice-president, manufacturing operations with Gilead Sciences, notes that the company has successfully operated in Ireland for over 20 years. “Since the establishment of our first Irish location in 1999, we have invested over €250 million in Ireland. We currently have four sites in Ireland employing over 500 full-time employees making our Irish operation our second largest in Europe.”

In July 2020, Gilead announced plans to invest approximately €7 million in the company’s Irish operations, opening a new base in Dublin and creating 140 jobs, while Gilead’s recently-established Global Paediatric Drug Development Centre of Excellence at Dublin’s North Dock will focus on developing new paediatric formulations of its portfolio of medicines. Its Cork location will also see an investment of €47 million as the organisation shores up its manufacturing capability.

“Ireland has been a welcoming place for biopharma companies generally and Gilead specifically,” says Cadogan. “That is why we have consistently decided to make further investments to grow our footprint here and recruit more talented people to our team. Gilead’s operations in Ireland have been at the forefront of advancing life-changing and life-saving technologies, and we will continue to adapt and innovate as the broader life medicines’ sector evolves.”

The pharma sector’s robustness is not in question. What can be speculated upon is whether Ireland will meet the global challenges facing the industry to retain its reputation as an attractive location to invest and expand in.

One of those hurdles is ensuring there are simply enough people to work in the industry, Moran says. “It’s a challenge we will meet but it’s an ongoing challenge and that’s a global challenge.”

And while he is confident of the stability of the sector into the medium term, in the longer term he says Ireland will need to address fundamental changes in the industry such as digitisation head on. “There is a move across the sector to embrace Industry 5.0 – this is Industry 4.0 viewed through a human centric lens that also prioritises sustainability. Ireland will need to be at the forefront of that.”

Witnessing the evolution of advanced therapeutics and cell and gene therapies will be interesting, adds Moran. “That’s the next wave for the industry and is where a lot of clinical research is taking place. We need to look towards expanding our footprint and that’s where advanced therapeutics come in. We need to be enhancing what we do in the clinical research space, which is somewhat underdeveloped at the moment.”

Unlike medtech, Ireland’s pharma sector is heavily reliant on foreign direct investment and there is significantly less SME activity in the space. Moran sees a golden opportunity for Irish indigenous companies when it comes to biopharmaceuticals, although he acknowledges it is a difficult industry for entrepreneurship; “the barriers to entry are quite high”.

“It would be nice to have the cluster rounded out some more with some indigenous activity as it is very much dominated by multinationals, albeit very successfully so.”

BioPharmaChem Ireland would like to see an Office of Life Sciences established that would prioritise the entire life sciences sector. “We have teamed up with the Irish Medtech Association to include health technologies in the brief,” Moran says. “Our focus is on two fronts – retaining the installed base which is where the employment and the value is, and embracing Industry 5.0 to ensure it stays competitive and goes digital. Ireland is competing internationally so we need to be best in class.”

According to Joanelle O’Cleirigh, partner, Arthur Cox, a critical factor in ensuring the success of the life sciences and pharma sector is ensuring that we have robust and effective regulation. “This is vital for public health and for the sector as a whole. The key regulator, the Health Products Regulatory Authority (HPRA), has an excellent reputation as an effective regulator and played a pivotal role during the pandemic.”

Part of that regulatory role involves enforcement. HPRA saw an increase in enforcement cases last year, says O’Cleirigh, particularly with illegal medicines; up to 10,596 from 8,000 the previous year. The authority also reported shutting down a total of 461 websites last year. “Technology has changed this landscape and the use of the Internet has meant that the promotion and sale of illegal medical products from unregulated websites is a persistent problem.”