Warning for Ireland as EU falls behind on pharma R&D

Ireland cannot be complacent about future pharmaceutical investment in an environment where the European Union is falling behind both the United States and Asia in drug research and development activity, according to an industry report.

It says that while the US was spending around $2 billion (€2bn) more than Europe on research and development back in 2001, the gap had widened to almost $25 billion by 2020. The report by Charles River Associates for the drug industry lobby – the European Federation of Pharmaceutical Industries and Associations – refers to Europe as the EU, Britain and Switzerland.

Europe, it says, accounted for just 31 per cent of investments in research and development in 2020, down from 41 per cent in 2001. And it is notable, the authors say, that the choice of greenfield regional research hubs in Europe by non-European companies is focused primarily on markets such as Switzerland and the UK.

The report also notes that Europe is falling behind in clinical trials activity, particularly for next generation cell and gene therapies.

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It recommends the EU concentrate investment in locations of innovation rather than just trying to spread the money equally across member states; a focus on cell and gene therapies; and earlier access to patients.

Within Europe the report is broadly positive on Ireland, but Ireland’s industry lobby – the Irish Pharmaceutical Healthcare Association (Ipha) – said the State must not be complacent about Ireland’s prospects for attracting future investments “with significant global competitive pressure making the outlook uncertain”.

“Ireland has significant challenges to overcome, especially in giving patients faster access to new medicines and attracting the next wave of investments in areas like advanced therapeutical medicinal products [which include cell and gene therapies],” said Oliver O’Connor, the chief executive of Ipha and a member of the steering group for the Charles River study. “We have ground to make up in data and digitalisation, and in plugging our clusters of higher education institutions into research networks in Europe and beyond.”

The report does highlight Ireland as an example of where the combination of tax rates, labour skill, regulation and quality infrastructure have encouraged the development of clusters of pharma companies. “In Ireland, despite being one of the smallest countries in the EU by geographic area, all of the world’s top 10 pharmaceutical companies have operations, and there are 90 pharmaceutical and biopharmaceutical plants throughout the country,” the report says. “This is attributed to consistent low corporate taxation, low labour costs and high workforce skills.”

It says the benefits of a cluster become self-justifying, including “the existing stock of skilled staff and the established infrastructure, such as availability of manufacturing support service firms”. It also finds that companies are more likely to expand production at sites that are located in a cluster.

And it cites Ireland as an example of the “gravitational pull effect” when “clusters’ attractive conditions remain stable over time”, noting that Ireland was home to only two biologics manufacturing sites in 2003 but by 2020 this had increased to 20.

The State, it added, was now attracting investment from Chinese-based companies “due to the quality, stability and reliability of the business environment”.