Biopharma provides excellent opportunities for investment

Ireland has long been a centre of excellence and innovation for biopharma and chemicals companies, and with record export growth in 2020 it shows how strong the sector is – and how good a prospect for investment.

For many industries, 2020 was a year to forget – at best – due to the Covid-19 pandemic and any records set were negative ones. But the biopharmaceutical and chemicals sectors in Ireland managed to buck that trend, posting record export figures.

Exports worth €106 billion left Ireland last year – the first time the €100 billion barrier has been breached, according to figures from Central Statistics Ireland. This figure was 17% up on 2019, when exports were valued at €93 billion.

This was in partly because the sector remained fully operational throughout the pandemic, as BioPharmaChem Ireland [https://biopharmachemireland.ie] director, Matt Moran noted: “Companies have invested significant time and resources to ensure that their workforce remains safe and can ensure that the world stays supplied with essential medicines and other valuable chemical products.”

Indeed, the sector’s size and strength helped to lessen the detrimental impact of the pandemic on the Irish economy. In addition, it  will help in the country’s hoped for recovery in 2021 as the rollout of various approved Covid-19 vaccines means there could be a return to something like normal life in the second half of the year.

Biopharma and chemical sectors in Ireland

The biopharma and chemical sectors have enjoyed a boom in recent years, much like the biotech sector in Ireland. This has benefited from significant overseas investment and is now home to more than 300 businesses, from world leaders to start-ups. We covered the biotech sector in an early blog post – click here to read it.

Irish businesses are world leaders in these sectors today, and the biopharma and chemical sectors play a major part in the Irish economy and now contribute about 30% to Ireland’s GDP. Ireland is renowned for its pharma companies that manufacture Active Pharmaceutical Ingredient and dosage form. Indeed, Ireland is second only to the US for manufacturing biopharmaceuticals. It is no surprise then that all 10 of the top 10 pharma companies in the world have a facility in Ireland.

But there is also a thriving community of start-ups and high growth SMEs in Ireland – more than 100 are supported by Enterprise Ireland – with a strong culture of collaboration between businesses of all sizes.

The sectors employ some 30,000 people – more than half of whom have a university degree – and supports a similar number of indirect jobs, according to CEFIC. More than 60% of the products made in these sectors are exported.

In recent years, there has been heavy investment in facilities in the sector – about €10 billion – from some of the major players in the country, such as Eli Lilly, Pfizer and Regeneron.

There are clusters of biopharma and chemical businesses in Dublin and Cork, but there are other centres emerging such as Limerick, Waterford, Sligo and Galway.

Big investments

There is still plenty of investment in the sector too. For instance, in February, Takeda Ireland announced it was investing €36 million in its Grange Castle facility in Dublin to expand its cell therapy production facility – a first in the country.

The investment will create about 100 jobs in the next three years, according to Takeda. It will also help to make the Grange Castle plant an important supplier of a cell therapy treatment option to markets in Canada, the US and Europe.

Takeda’s investment in its Dublin facility follows funding of €20 million over the past two years into its plant in Bray to expand its production line to add oncology lines to the site’s portfolio. Manufacturing of these started in late 2020.

Another big player in the sector in Ireland to make a significant investment into facilities during the past 12 months was medical therapeutics company Gilead Sciences Inc. In July 2020, the company announced it was spending €7 million to open a new site in Dublin, which will create 140 jobs. A paediatric centre of excellence will also be established as part of this investment.

The new facility is expected to be operational by early 2022, and the recruitment process has already begun.

Gilead currently employs about 370 people in Ireland across sites in Dublin and Cork and exports products from the country to 90 markets worldwide.

M&A activity

Elsewhere, Irish biopharma companies are proving attractive acquisition targets for overseas companies. One of the most significant deals in the past 12 months came in October 2020 when US life sciences company Repligen Corporation spent $200 million to acquire Artesyn Solutions, a Waterford-based company that manufactures single-use solutions for biopharma processing. [www.siliconrepublic.com/companies/artesyn-acquisition-repligen-biotech-ireland]

The deal expands Repligen’s offering, while for Artesyn, after several years of strong growth, Repligen will help the company to scale again and grow internationally.

There are also deals being made within Ireland. In September 2020, MSD Ireland [www.msd-ireland.com] bought Takeda Dunboyne Biologics Ltd’s manufacturing facility from Takeda. The deal, for an undisclosed amount, saw the state-of-the-art facility in Dunboyne, Co Meath, renamed MSD Dunboyne Biologics and the 200 employees there transferred to MSD, which already had some 2,500 employees across its five existing sites in Ireland.

Takeda had decided to dispose of the facility after a strategic review following its acquisition of Shire, which concluded the facility wasn’t needed. For MSD, the Dunboyne site expands its manufacturing presence in Ireland and complements its existing work in medicine manufacturing.

Since then, MSD Ireland has announced that it plans to build a new facility on that site, as well as recruiting 100 people to work at the existing site in the next year.

Why come to Ireland?

There are many reasons to invest in an Irish biopharma and chemical business, or to set one up in the country.

For instance, Ireland has a favourable corporate tax rate of just 12.5% and there are R&D tax credits that can be applied for. The country is also part of the Euro, which is a stable currency and not prone to sudden or major fluctuations in value. The cost of living and of commercial property is also reasonable throughout the country, including the capital, Dublin.

Irish businesses also have a good reputation for regulatory compliance internationally. For example, Irish Health Products Regulatory Authority is highly regarded and is included under the Mutual Recognition Agreement. In addition, of the 90 biopharma plants in Ireland, 40 have been approved by the FDA in the US.

In addition, Ireland has one of the most educated populations in the world, and Irish universities have strong reputations for expertise and research in the fields of chemistry, biochemistry and pharmaceuticals. Universities also have a close relationship with the business community,

The National Institute for Bioprocessing Research and Training in Dublin, the Pharmaceutical Manufacturing Technology Centre, the Research Centre for Pharmaceuticals and Irish Manufacturing Research are also well placed to assist companies in the sector.

Another pull factor for Ireland is that the country is now the only native English-speaking nation in the EU, following the UK’s departure at the end of 2020. This makes it attractive for inward investors, especially from the UK, US and Canada. Perhaps more significantly, Ireland offers access to the single market and frictionless trade with the other 26 members of the bloc, which makes exporting to those countries much easier than for those outside of it. With markets demanding biopharma and chemical products across the world, this is significant, not just within the EU but also with countries that the bloc has trade deals with.

The number of recent investments in businesses in the sector, as well as capital investments in facilities by existing players shows that there is confidence in prospects for growth in the coming years.

The resilience of the sector during the pandemic also demonstrates that investing in biopharma or chemicals businesses can be a relatively safe option – although no investment is without risk, of course.

Getting advice

For those looking to set up a biopharma or chemicals business in Ireland, invest in or acquire an existing company, then it is crucial to get the right advice.

Those looking to invest or buy should seek out advisers with specialist knowledge of the sector in Ireland – including its history, leading players and local norms. Malone & Co Accountants https://www.maloneaccountants.ie/ can assist on all the relevant aspects from setting up a company to providing diligence services as part of an M&A deal or funding round in the sector. We can also provide in-depth information to ensure any deal achieves the value hoped for at the outset. Remember, while Ireland may share a land border with the UK, the regulatory regimes can be different, which can trip up unwary investors.