Why biotech is booming in Ireland
The biotech sector in Ireland was booming even before the recent large overseas investments in the sector – and this is set to continue after Brexit as companies look to establish businesses in the country to take advantage of easy access to the EU market.
In 2021, the IDA Ireland Dundalk Science and Technology Park is going to be home to a record-breaker. Chinese biologics business WuXi Biologics is investing €325 million and is currently building a 48,000sq ft manufacturing plant – the biggest single-use biologics plant in the world – in Dundalk. This is set to create 400 highly skilled jobs by 2025.
The plant is WuXi Biologics’ first outside of its native China – it has facilities in Wuxi, Shanghai and Suzhou. It is set to be at the cutting edge of biologics and will manufacture drugs 24 hours a day, with the ability to quickly switch what it is producing depending on the demands of customers.
WuXi Biologics’ investment is all the more significant as it is the leader in the Chinese biologics sector and is quoted on the Hong Kong Stock Exchange – to get a company of this size to come to Ireland is a major coup.
Moreover, it shows how Ireland is becoming a global destination for biotech companies. To date, most of the foreign direct investment in biotech in Ireland has come from other European countries and the UK, but as WuXi Biologics and SK Biotech – the first Korean pharma company to come to Ireland – show, this is starting to change.
WuXi Biologics’ investment is also indicative of how the biotech sector in Ireland is booming. For instance, The National Institute for Bioprocessing Research and Training (NIBRT) [www.nibrt.ie/] report that biotech and biopharma businesses have pumped $10 billion into Irish plants in the past 10 years. These include:
- Biopharmaceutical company BMS’ new $900 million facility in Dublin, which will produce immune-oncology products
- MSD building a plant to produce Keytruda, an immunotherapy to help certain types of cancer
- Japanese biopharma company Takeda building a plant for its rare disease portfolio in Bray – which has recently been extended.
The Irish biotech boom goes back to the ‘Celtic Tiger’ period around the turn of the millennium. Manufacturing businesses were seeking places to base their operations that brought a mix of value – in terms of corporate taxes, rent and such like – skilled workforce and ease of exporting. Ireland had all of these – including being part of the European Union – and so numerous businesses flocked to the Emerald Isle. While the country struggled during the global downturn of 2007-8, biotech has been one of the strongest performing sectors ever since, as the Irish economy has rebounded strongly and been dubbed the ‘Celtic Phoenix’.
And as the WuXi Biologics investment shows, the sector isn’t just centred on Dublin, but around the country.
Indeed, there are now more than 300 biotech businesses based across Ireland, up from about 50 at the turn of the millennium. These range from the biggest biotech and pharma companies – of the 25 biggest in the world, only one doesn’t have a base in Ireland – to start-ups.
Many of those start-ups spin out of projects that begin life in Ireland’s universities and colleges, several of which have thriving biotech departments.
In all, about 11,000 people in Ireland are now employed by companies involved in biotech, with some 3,000 working for Johnson & Johnson, and this figure is growing year-on-year.
What is biotech?
Biotech – a portmanteau of biology and technology – is the study of how plants and organisms work in order to advance new technology and treatments. For example, a lot of biotech research is currently focused on genetics and cellular research. The aim of this is to understand how cells work and this could then be applied to finding vaccines or cures for infectious diseases or long-term conditions. It can also help to make medicines more effective and reduce the number or severity of side effects.
But it isn’t just about healthcare; biotech is also prevalent in agriculture – think of genetically modified crops that are more resistant to disease or produce greater amounts of food – and also in fuels, with the development of biofuels that have less CO2 and are renewable, as opposed to fossil fuels.
There were several crucial factors in the decision of WuXi Biologics to make its base in Ireland – and why other major biotech companies have decided the country is the right place for them to set up their European operations.
When the investment was announced, Dr Ge Li, chiar of WuXi Biologics, praised Ireland’s competitiveness for investment and thanked local agencies for their support in bringing them to Ireland.
One of the key players in this was IDA Ireland, a semi-state body, which seeks to encourage foreign direct investment in Ireland, especially from biotech firms. According to IDA Ireland, the agency is responsible for some $10 billion of biotech-related investment in the contry in recent years.
There are plenty of other reasons why biotech businesses are looking to locate in Ireland. These include:
- Access to a young, highly skilled and flexible workforce – Irish universities have a host of STEM courses
- Several Irish universities have thriving biotech departments, and several companies have set up research projects with them
- Favourable tax regime – corporation tax is just 12.5%
- For qualifying medical research and development there is a 25% tax credit
- Reasonable commercial property and rent prices
- Reasonable cost of living – even in the capital Dublin, prices of goods and services remain at reasonable levels.
Furthermore, the growth of the Irish biotech sector looks set to continue in the coming years, especially when the UK’s withdrawal from the EU completes at the start of 2021.
The UK’s withdrawal from the EU will make doing business with the EU more difficult for UK-based companies. For instance, anything biotech or biopharma related will have to be checked at the EU border, which could lead to delays in shipping. In addition, issues such as batch testing may have to take place at an EU member site.
If the UK exits the EU without agreeing a deal – at the time of writing nothing had been agreed, despite end of the withdrawal period being less than a month away – then tariffs could also be imposed on exports to the EU.
All this presents opportunities to Ireland’s biotech sector. For instance, overseas biotech firms looking for direct access to the EU pharmaceutical market – said to be worth €260 billion – may well look to establish operations in Ireland to do this. Here are some of the advantages:
- Ireland is the only native English-speaking nation in the EU
- Potential access to EU research and development grants
- Unrestricted access to the other 26 member countries of the EU
- Access to other nations around the world that the EU has trade deals with
- The Euro is a stable currency so there are unlikely to be major fluctuations in its value, which can affect exports.
This, allied with the expertise already in the country and favourable conditions mentioned above, means that there are more reasons than ever for biotech businesses to set up in Ireland.
Nevertheless, for companies looking to up a biotech business in Ireland, or opening an office, it is advisable to get legal advice from local experts.
The rules around biotech vary between jurisdictions. For instance, Ireland has strict rules on using stem cells for research, and, while it isn’t banned, it is something of a grey area and can hamper firms in some areas of biotech.Factors such as this need to be thought through when deciding on a setting up a base in the country.
In addition, businesses relocating from the UK need to be aware that while Ireland may be close geographically, it has significant differences in the way business is done, which can trip up unwary investors.
However, there are a wealth of legal firms in Ireland that have experience of biotech and corporate regulations and can give incoming businesses or start-ups all the advice they need to give their business the best chance of success.