Ireland remains a magnet for international firms investing in life sciences

Ireland remains a magnet for international firms investing in life sciences

By: Damien
03 Nov, 2021
Ireland is a global leader in life sciences and with constant innovation in the sector there are plenty of opportunities for investments and acquisitions. Ireland’s life sciences sector hit the headlines in September when pharmaceutical giant AstraZeneca announced its plans to invest $360 million in a new manufacturing facility in the country, creating 100 highly skilled jobs, including scientists and engineers.

AstraZeneca’s new plant will be in the Alexion Campus in College Park, Dublin. The company plans for it to be the next-generation active pharmaceutical ingredient commercialisation and manufacturing facility for small molecules. [www.idaireland.com/newsroom/ida-ireland-welcome-statement-–-astrazeneca-to-inv]

This will be AstraZeneca’s first manufacturing facility in Ireland, although the company has had commercial operations in the country for some years. The move came just weeks after it signed off its $39 billion acquisition of Alexion – its biggest ever takeover – and the new facility will be built on a site operated by Alexion.

Tánaiste and Minister for Enterprise, Trade & Employment, Leo Varakdar TD, welcomed the move: “Ireland is a world hub for life sciences. We’ve worked hard to create a welcoming environment for companies seeking to invest here and we are so happy that AstraZeneca has chosen Dublin to locate its new manufacturing facility.”

IDA Ireland CEO Martin Shanahan added: “It will be a considerable addition to the well-established life sciences ecosystem here. Competition for foreign direct investment is more intense than ever and all investment is hard won. This investment… will be of substantial benefit to the local economy.”

Pascal Soriot, AstraZeneca’s chief executive officer, said: “I am delighted that we are bringing this very significant investment to Dublin which… will create highly skilled jobs, nurture the country’s dynamic life sciences sector and allow for the development of high value-added medicines.”

This was not the only investment by a life sciences company in Ireland recently. Earlier in October, Edwards Lifesciences Corporation opened its new manufacturing centre in Castletroy, Limerick City, and announced its intention to increase its workforce to 850 employees in the coming years – 250 more jobs than were initially planned when work commenced on the centre in 2019.

The new centre will focus on manufacturing innovative therapies and life-saving medical technologies including transcatheter therapies to repair or replace damaged heart valves, which will help patients to live longer and healthier lives.

Edwards Lifesciences already employs 250 people in the region, having had a base at a facility in the Shannon Freezone since 2018.

“Our announcement illustrates the continued growth of our company globally and demonstrates our confidence to the Mid-West of Ireland,” said Michael A. Mussallem, chairman and chief executive officer of Edwards Lifesciences. “By expanding our presence in the area, we aim to create a hub for Europe and bring us closer to the patients in the region who will receive these life-saving therapies.”

Varadkar also welcomed the news of the additional employees here. “It’s an enormous vote of confidence in the Mid-West region and the talent, skills and experience on offer here,” he said.

Since it first started to develop in the 1960s, the life sciences sector in Ireland has grown to become a world leader. Most of the largest companies involved in the industry having a base in the country, and exports are now worth more than €45 billion annually, according to Enterprise Ireland. [www.enterprise-ireland.com/en/Start-a-Business-in-Ireland/Startups-from-Outside-Ireland/Key-Sectors-and-Companies-in-Ireland/Medical-Devices-sector-profile.html]

Acquisitions

The sector is home to hundreds of companies, from global giants to start-ups staffed by a couple of people. There is also a well-developed ecosystem around the sector of companies providing related services, and some of these are piquing the interest of acquirers. In June, SL Controls, which provides equipment systems integration and system support to pharmaceutical and medical device companies, was acquired by Danish company NNIT Life Sciences for an initial €12.7 million.

SL Controls, which employs about 100 people in offices in Galway, Sligo, Limerick, Dublin and Florida in the US, will initially be an independent brand in the NNIT group, before eventually being fully integrated into the company.

The rationale for the acquisition is that, with SL Controls, alongside NNIT’s existing production IT solutions unit, Excellis Health Solutions, NNIT can offer customers IT services to support the entire pharmaceutical supply chain. NNIT notes that pharmaceutical production is one of the fastest growing areas of life sciences, with annual growth running at about 14%.

SL Controls’ CEO, Keith Moran, said: “Joining forces with NNIT will further enhance our service offering to meet our customers’ global requirements for fully integrated solutions across the operational and information technology layers. In the ever-evolving, fast-paced life sciences sector, digital transformation is critical in meeting our customers’ global supply demands for life-enhancing pharmaceutical and medical device products. Today, joining the NNIT Group will allow us to continue our journey to further grow globally and to provide enhanced services to our customers.”

Investing in Irish life sciences companies

There are many reasons to invest in or acquire Irish life sciences businesses or establish a new company in the country.

For example, development organisations such as the Industrial Development Authority, Enterprise Ireland and IDA Ireland work hard to attract companies and investment to Ireland and assist them once they have decided to come to Ireland.

The government is also supportive of the sector and provides various incentives for business such as capital allowances for intellectual property and building facilities and tax credit for companies undertaking research and development activities. There are also certain capital allowances available for investing in new facilities.

Another advantage of establishing a life sciences company in Ireland is the number of skilled employees available. The sector employs more than 50,000 people already, and every year there are new graduates entering the labour market with relevant qualifications from universities across the country.

Irish life science businesses also have close relationships with many universities, where companies and academia work on new technologies and commercialising them.

In addition, Ireland is part of the EU and is part of the single market, which means it has unrestricted access to the 26 other countries that comprise the union. It is also the only country in the trading bloc that has English as a first language – since the departure of the UK at the end of 2020 – which is valued by countries such as the UK, US and Canada.

Brexit means that Ireland is becoming attractive to overseas investors wanting access to the EU, as well as UK companies already trading in Europe but not wanting to deal with the extra paperwork and costs that are now incurred as they are no longer part of the EU.

Future prospects

But it isn’t just the Brexit factor that means the future is rosy for the Irish life sciences sector. As the deals mentioned above demonstrate, there is plenty of investment activity in the sector. Big companies are showing their faith in Ireland and there is no indication this will slow any time soon.

Technology in the sector is advancing apace, with digitisation helping to transform the sector. As a result, investing early in innovative companies could provide significant returns in the medium- to long-term – although, of course, investing in early-stage companies is always fraught with risk and no technology is guaranteed to be a success or even make it to market.

But it does mean that there are plenty of acquisition and investment opportunities in the Irish life sciences sector today and going forward. Most of the life sciences businesses are small to medium-sized enterprises that are developing innovative technologies and may well require outside investment or seek a strategic acquisition to be able to commercialise the products they have developed.

Advice

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.
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