No big fall in Ireland’s production of drugs and medical technology

US efforts to tackle the coronavirus crisis will not lead to a sharp decline in the amount of medical technology and drugs produced in Ireland, local industry sources say.

Fears for the life sciences sector, one of the most important in the Irish economy, arose when US president Donald Trump said on Tuesday that his administration was looking at ways of bringing production of pharmaceuticals and medical devices back to the US.

He was speaking at a White House press conference on the US government's efforts to tackle the growing impact of Covid-19 in the US. "We have to be able to take care of our country," the president said.

Ireland is a major exporter of pharmaceutical and medical supply goods to the US. It exported $53 billion (€48.2bn) worth of pharmaceuticals last year, 31 per cent of Ireland’s total exports. Most of this went to the US. However, it accounts for only a small share of the total US life sciences market.

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Sources in the industry said there was no chance of any sudden relocation of Irish plants manufacturing key drugs or medical devices to the US. They point to the highly regulated nature of pharma and medtech manufacturing. Switching product from one plant to another can take between three and five years, and building a new plant from scratch involves a five- to 10-year process.

“It’s not easy to shift production,” said one pharma company executive. “These sites are all slightly different and very specific. It takes time to find or train people with the necessary talent and skills. It’s not just a case of building a plant in Nevada or wherever.”

There are also significant regulatory hurdles for any change or new investment in manufacturing.

And there is little spare capacity in any case either in the US or in Europe. Industry executives say that most large pharmaceutical companies have moved from a model where they had several sites producing individual products to locating all production of a drug to a single site as they battled to cut manufacturing costs during a wave of patent expiries in recent years.

Logistics

While the logistics make any short-term undermining of the Irish life sciences sector to tackle the coronavirus outbreak unlikely, the US president has been vocal about a longer-term campaign to encourage medtech and pharma companies – many of which are US-headquartered – to relocate more of their facilities to their home market.

That process is seen as a threat to Ireland’s prospects in future investment decisions. The decision by the US president to equalise tax treatment is seen as a key move in that process.

However, although Ireland was name-checked in the president's address it is understood that there is greater concern in the US at its lack of control of the generics market. A large majority of generics supplied to the US market now come from India and China, and both markets have been beset by quality control and supply issues.