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Why Ireland Depends on Big Pharma
Why Ireland Depends on Big Pharma
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Субтитры (151)
0:00
Viagra, Botox, Mounjaro. These drugs have
0:04
taken the world by storm and they're all manufactured in the same place. Ireland.
0:09
In little more than half a century, Ireland has scaled from an industrial newcomer to
0:13
a global powerhouse. Now the world's third largest exporter of pharmaceutical products.
0:18
The pharmaceutical industry has really had a
0:20
massive impact on the Irish economy. It has attracted a lot of big multinational
0:26
pharmaceutical companies and it's visible really all over Ireland.
0:30
Between 1958 and 2010, the country welcomed more than 50 new pharmaceutical manufacturing
0:36
facilities. Industry pioneers such as Pfizer, Bristol Myers Squibb and Rowa Pharmaceuticals
0:41
led the way, paving the way for Ireland to become home to nine of the world's top
0:46
10 pharmaceutical companies. But this growth has been a double-edged sword.
0:50
While Ireland has reaped the benefits of high value employment and huge tax receipts,
0:55
the pharma industry's sheer scale has skewed the nation's headline GDP.
1:00
In fact, Irish GDP is so heavily inflated by multinationals that the government now uses
1:05
Modified Gross National Income, or GNI, as a more accurate pulse of the domestic economy.
1:11
But even by this more grounded metric, the sector's dominance is staggering.
1:14
In 2019, pharmaceutical exports accounted for roughly a quarter
1:18
of Ireland's GNI. Just 6 years later, that figure climbed to more than 40%,
1:23
highlighting a deepening economic dependence on a single industry.
1:28
Our growth has been driven largely by foreign direct investment. The risk
1:33
then for us is whether foreign direct investment will continue to flow into
1:38
Ireland at the rate that it has over the last 50 years.
1:41
So, how did Ireland's economy become so dependent on big pharma? And what risks lie ahead?
1:55
Before the 60s, Ireland's whole economy was quite protectionist. It had very high tariffs,
2:00
sometimes up to 50% for some imports, and it was a lot of focus on import substitution,
2:06
which led Irish industries to not be very competitive.
2:09
At the time, Ireland was a very grim place with
2:13
very high unemployment and massive outward migration.
2:16
The way that Ireland had approached trade wasn't really working for the
2:21
Irish economy and something needed to change.
2:24
One early turning point came in 1956 when Ireland introduced export profits tax relief or EPTR.
2:30
It offered up to 100% tax exemption on profits from exported goods,
2:35
attracting manufacturers to set up in the country. At the same time,
2:38
Ireland began dismantling tariffs and expanding the role of its investment agency,
2:42
the Industrial Development Authority, or IDA, sparking a wave of foreign investment.
2:47
The pharmaceutical industry was a natural focus for the IDA from the start. Pharmaceutical
2:53
products, especially the branded drugs, are high value products and they have high
2:58
value-to-volume ratios, which means that they are less sensitive to transportation costs.
3:03
There was also a growing demand for medicines around the world at this time,
3:07
as national health systems wanted to buy more medicines, and as soon as one actor,
3:12
one company established themselves in Ireland, that had a snowball effect.
3:16
In its quest for foreign investment, the IDA focused heavily on US and UK
3:20
corporations. Beyond tax incentives, Ireland positioned itself as a gateway to Europe,
3:25
an English-speaking base inside the European market. American company Bristol Myers Squibb
3:30
was one of the first movers and became a showcase example used by the IDA to attract more investors.
3:36
In 2017, the firm sold one of its manufacturing facilities to SK Biotech,
3:41
part of South Korea's SK Group.
3:43
This manufacturing site has actually been here since 1964. We are a contract
3:48
development and manufacturing organization. So, we don't own the IP, the intellectual property,
3:53
of any of those products. That all belongs to our customers. We're specialized in small molecule
3:58
API. So active pharmaceutical ingredient. The APIs we manufacture are for a range diabetes,
4:04
cardiovascular and we have a large range also on history of manufacturer of anti-cancer products.
4:10
Taking advantage of its position, Ireland was able to build a supply chain serving international
4:15
markets. In the process, manufacturers had to meet strict regulatory standards, including
4:20
approvals from agencies like the US Food and Drug Administration and the European Medicine's Agency.
4:26
And as exports rose, so did the footprint of the pharmaceutical industry in the country.
4:31
It has attracted a lot of big multinational pharmaceutical companies and it's visible
4:37
really all over Ireland but there are regional hubs like County Cork and Dublin where the
4:42
ecosystem around the pharmaceutical industry is really well built out.
4:46
What you got were self-supporting clusters of these firms. So in different parts of
4:53
the country, you have medical device companies or computer companies or
4:57
high-tech companies or pharmaceutical companies.
5:00
According to the Central Statistics Office, Ireland's pharmaceutical sector employed
5:05
75,000 workers in basic pharma products and preparations in 2025, a 15% rise since 2023.
5:14
The industry also creates a lot of jobs both at these manufacturing plants,
5:18
at research and development centers, but there's also a
5:22
whole set of other sectors that supply the pharmaceutical sector.
5:26
Multinationals brought physical capital with them, new plant and equipment. They brought
5:30
advanced technology and around those businesses then clusters formed and we have seen for example
5:36
people who had worked for the multinationals leave set up their own small businesses.
5:42
Another draw for pharmaceutical companies in Ireland was its highly educated workforce.
5:46
Ireland also focused a lot on transforming its educational system. This included opening up new
5:52
community colleges, even new universities. They raised the school leaving age to 15. They focused
5:59
more on technologies overall in their education rather than more traditional education systems.
6:05
Access to a talented workforce is critical for any business. Making pharmaceuticals is
6:11
not an easy thing and you really, really want the right people with the right expertise.
6:15
In the 1980s, the Irish government introduced a 10% preferential tax rate for manufacturing,
6:21
later extending it to financial services. It's also around this time that companies
6:25
like Apple began using tax structures that would later be known as the "Double Irish".
6:31
Under this arrangement, multinationals could set up two companies, one based in Ireland,
6:35
handling manufacturing and sales, and another holding valuable intellectual property,
6:40
often managed from a low tax jurisdiction.
6:43
The Irish operating company would then pay large royalties to the IP entity, reducing its taxable
6:48
profits in Ireland and allowing companies to significantly lower their overall tax bills.
6:54
Over time, Ireland moved away from EPTR and toward a standard corporate tax rate of 12.5%.
7:00
That is largely because they're trying to comply
7:04
with EU rules and not being seen as a tax haven by other countries.
7:08
Despite that, Ireland remained attractive for tax planning. In the 2000s and early 2010s,
7:13
companies used corporate inversions, merging with smaller Irish companies
7:17
to relocate their headquarters to Ireland, where corporate taxes were still lower than
7:22
in the US and other major economies, helping reduce their global tax bills.
7:26
And when Ireland phased out the Double Irish in
7:29
2015 for new entrants, that triggered a massive intellectual property transfer.
7:34
Companies like Allergan, Pfizer, and Eli Lilly moved valuable IP into Ireland,
7:39
benefiting from generous tax deductions on patents, trademarks, and other intangible assets.
7:44
This IP transfer led to what is called leprechaun economics. And
7:49
that's a term that was coined by the economist Paul Krugman to describe a
7:53
very high-end artificial rise in Irish GDP in 2015 when the GDP rose by 26%.
8:03
Between 2014 and 2021, the value of intangible assets in Ireland surged from around $386
8:11
billion dollars to nearly $1 trillion dollars. Over a similar period, Ireland's corporate tax
8:16
receipts more than quadrupled from €6.9 billion in 2015 to €32.9 billion in 2025.
8:24
Ireland is quite dependent on the pharmaceutical industry. Last year in 2025,
8:30
over 50% of the country's total exports were medicines and pharmaceutical products.
8:35
It's very significant for the government tax revenues because the people who work
8:41
in the industry tend to be highly skilled and well-paid so they pay a lot of income
8:45
tax and then the companies themselves are highly profitable so they pay a lot of corporation tax.
8:52
One of the potential challenges for Ireland is like pharmaceutical companies,
8:58
they need to navigate the so-called patent cliff. Every 10 years or so there's some big blockbuster
9:04
drug that loses its exclusivity rights which means that it faces generic competition by
9:10
others and that typically results in a quite sharp drop in revenue for the original manufacturer.
9:16
And for Ireland, it actually shows up in the national accounts, and in 2013, which was
9:21
the time of the last patent cliff, GDP actually dropped quite significantly in one of those years.
9:26
In 2026, the Irish Fiscal Advisory Council warned about Ireland's reliance on tax receipts
9:32
from just three multinational companies, two in tech and one in pharmaceuticals.
9:36
In 2024, those firms accounted for around 46% of Ireland's corporation tax revenue.
9:43
This beautiful island of,
9:44
it's Ireland of 5 million people has got the entire US pharmaceutical industry.
9:54
Foreign direct investment has been the engine of growth for the Irish economy since the,
9:58
essentially since the 1950s and 1960s for more than 50 years.
10:02
Most of it comes from the United States there's a very different
10:05
global environment now and one that may not be so conducive to global capital flows.
10:12
The Irish government actually warned that as much as 75,000
10:15
jobs could be lost if the US implemented tariffs on the pharmaceutical industry.
10:19
It may be that over coming decades we see a slowing of foreign direct investment
10:23
given what's going on in the geopolitics of the world, and in that case, Ireland
10:28
will rely more on homegrown businesses to create jobs and to create growth.
10:33
We're in active negotiations and discussions with customers around a regionalization strategy.
10:38
It's really indicative of having a strategy to the uncertainty. The tariff in itself is
10:44
indicative of uncertainty. So companies are really starting to say, "Okay, well,
10:48
how can we regionalize our supply chain?"
10:50
Despite calls for supply chain reshoring, major pharma companies continue to invest in Ireland.
10:56
Ireland is still attractive today for pharmaceutical companies. We
10:59
can see that companies are still investing in Ireland.
11:02
Novo Nordisk just earlier 2026 said that they would expand in Ireland.
11:08
For now, as you know, we are making the pill in US for US market and it's the
11:14
only actually right now end to end GLP-1 product that is made in US.
11:19
The Irish expansion is focusing on the international organization. So,
11:24
we're able to also replicate what we have done in US for the rest of the world.
11:30
So when the GLP-1 weight loss drugs hit the market a few years ago, Novo Nordisk,
11:35
they were actually not able to meet the demand for these drugs and that really hit Novo Nordisk
11:41
quite hard because it allowed a whole other sector called the compounding pharmaceutical
11:46
sector to start producing cheaper copycat versions of Novo Nordisk's best-selling drug
11:52
Ozempic and Wegovy just because these drugs were in shortage. So it really
11:56
shows how important it is for pharmaceutical companies to meet demand for their products.
12:01
Many times now we have to attract in from outside Ireland as well. Certainly one challenge for the
12:06
industry here in Ireland is continuing to have that workforce available to us.
12:10
The competition globally for talent and skill is intensifying. Policy makers around the world are
12:16
making moves to try to attack talent in science and in technology and in business development.
12:22
There are some indigenous Irish businesses that these are world beating companies, but
12:27
we just don't have enough of them, and we need a pipeline of them. So, the key I think for Ireland
12:32
would be to have a worldclass entrepreneurial ecosystem and startups that scale quickly.
Why Ireland Depends on Big Pharma - Video học tiếng Anh
