Fall in Irish pharmaceutical exports hits trade surplus

The value of Irish exports on a seasonally adjusted basis fell 5 per cent in November while the value of imports increased 3 per cent, resulting in the lowest trade surplus in more than five years.

Seasonally adjusted exports fell €327 million to €7 billion, while imports rose €132 million to €4.472 billion, indicating a rise in demand for goods among Irish consumers.

This resulted in a 15 per cent decrease in the seasonally adjusted trade surplus to €2.538 billion, the lowest since August 2008.

The value of exports in the month fell 7 per cent, or €607 million, compared with November 2012. The main driver was a 25 per cent drop in exports of medical and pharmaceuticals as the expiry of patents on certain products continued to have an effect.

Exports of organic chemicals also fell by a significant 8 per cent year on year.

The cumulative surplus for the first 11 months of the year was €35.12 billion, €5.35 billion below the total surplus of €40.48 billion in the same period in 2012.

The trade figures were much weaker than expected, according to Merrion Stockbrokers economist Alan McQuaid.

“Weak global demand has hit Irish exports in the past couple of years, particularly on the merchandise goods side,” he said.

"But there are signs now that the world economy, including the key markets of the United States, Eurozone and UK, is starting to recover, which augurs well for Irish exports in the coming months. This should to some degree help offset the negative drag from the patents expiry issue on certain pharmaceutical products."

The pharmaceutical sector accounts for around a quarter of all Irish exports and half of merchandise exports. Department of Finance research has shown Ireland will continue to feel the negative impact of the patent cliff for some time to come, though the magnitude is unlikely to be as great as was felt in 2012.

Merrion Stockbrokers predicts the total merchandise trade surplus for 2013 will be €37 billion, down from €47.5 billion in 2012, while the volume of goods and services exports will be around 0.5 per cent lower.

“On the basis of stronger global demand in 2014, we are looking for a recovery in export performance, with a volume increase this year of 3 per cent,” Mr McQuaid said.