Address by Minister Michael Ahern TD, Minister for Trade and Commerce to the 2005 Pharmaceutical Manufacturing Workshop

In the Burlington Hotel, Dublin

On 28 September 2005 at 8am .

Good morning ladies and gentlemen. I am delighted to be here to address this, the 2005 Pharmaceutical Manufacturing Workshop. I would like to congratulate all concerned in organising the conference. Conferences such as this play an important part in the promotion of the pharma/bio pharmaceutical sector here in Ireland, a sector which has experienced significant growth in recent years and is becoming increasingly important to the Irish economy.

The Pharma Sector is a major direct contributor to the Irish economy. The Sector was the largest contributor of corporation tax in 2003, at €1.1bn. The high value added and knowledge intensive nature of the industry is also reflected in the level of exports in the Sector which now account for around 40% of total manufacturing exports from Ireland. The Sector employs almost 17,000 highly skilled people directly and provides very high quality employment – approximately 50% of those employed directly in the Sector are third level graduates. Indirect employment, particularly in the construction industry is also very significant. In the Wyeth Biopharma project alone, 2,500 people from the building sector were employed at its peak. The Pharma industry has a major benefit for engineering / project design companies.

It is indeed an exciting time to be in the Pharmaceutical Sector in Ireland as it continues to grow steadily. Those involved in the Sector need to be very much aware of trends and developments in their business to ensure the continued growth and expansion of the Sector. I wish to assure you all that this Government continues to be committed to the expansion of the Sector and to maintaining the right environment for businesses seeking to establish new facilities or to expand on existing investments. The Sector is one of the key Sectors that we have identified to grow in Ireland and we will seek to provide the best business environment to support that policy.

Many of the projects that Ireland has attracted are now becoming strategic global supply plants. Ireland has attracted thirteen of the top fifteen pharmaceutical companies in the world and twenty five of the top fifty. It is significant that almost all of the companies located in Ireland have been involved in continuing re-investment. These include: Pfizer, Abbott, Johnson & Johnson, Wyeth, Schering-Plough, BMS, Merck Sharpe & Dohme, Glaxo Smith Kline and Takeda.

While it is true that much of the benefits to the Irish economy derive from mobile international investment, the indigenous bio and pharma sector, at its core, contains almost 80 trading companies employing almost 2,000 people. The sector’s exports have grown by €13m annually over 1999-2004 and are projected to grow annually by a similar amount over 2005/07. In addition, there are dozens of indigenous companies employing several hundred people who sell into the pharma market as one of several vertical markets, as well as a couple of hundred people who are self-employed or involved in pharma distribution.

Global transformation has brought fresh opportunities in the kinds of functions being added by multinational companies. Ireland has become a European operations hub across a range of sectors and activities. Factors contributing to this transformation include Ireland’s beneficial corporate tax rate. A rate of 12.5% applies to all corporate trading profits. It is our firm intention, as a Government, to maintain this taxation philosophy in order to assist our businesses to remain as competitive as possible.

Ireland has one of the best education systems in the world according to the 2004 independent Institute for Management Development World Competitiveness Report, and ranks higher than the USA, France, UK, Germany, Netherlands, Belgium and many others. We have one of the few growing populations in the EU with 34% of the population projected to be under 25 by the year 2020, compared to an EU average of 25%. Our favourable trading environment has resulted in a world-recognised reputation in key growth areas, not just in Pharmaceuticals and Medical Technologies but also in the Information and Communications Technologies, International Traded Services, International Financial Services and e-Business sectors.

To continue to compete successfully, companies need to develop their Research and Development capabilities and create strong intellectual property in their core business. This focus impacts on key areas relating to productivity and innovation. We know that in the absence of a dynamic and progressive approach to R&D, our advancing economy and our strong pharmaceutical and biopharma sector could be threatened. The relationship between R&D and employment growth is an obvious one. This Government has placed research and development at the very heart of Ireland’s economic strategy. We committed to a five-fold increase in investment in research over the current National Development Plan, including significant strategic investment through both Science Foundation Ireland and the Programme for Research in Third Level Institutions as well as through the Industrial Development Agencies.

Progress in genomics, proteomics, bioinformatics, and structural biology will create major research and economic opportunities over the next two decades. Success mapping the human genome, for example, promises to offer possibilities to diagnose and treat disease and illness as never before. Strategic research advantages in Biotechnology will bring the State highly important long-term benefits.

SFI continues to pursue its overall strategic objective that Ireland will achieve an international reputation for the excellence of its research and be at the forefront in creating and using new knowledge for economic and social progress. SFI is investing in academic researchers and research teams who are most likely to generate new knowledge, leading-edge technologies, and competitive enterprises in the fields of Biotechnology and Information Communications Technology.

At the end of August 2005, SFI had awarded over €464 million to more than 600 projects to support in excess of 1,000 outstanding researchers and their teams in creating the knowledge and driving the discoveries to underpin future competitiveness in key industries such as bio and pharmaceuticals.

Such public and enterprise sector commitment is necessary if we are to meet the challenges and targets set out in the National R&D Action Plan which calls for R&D investment to rise to 2.5% of GNP by 2010. Becoming a truly knowledge and innovation driven society requires a holistic approach.

We need a synergy of effort to deliver maximum results and optimise our returns on what is substantial investment in this area. The Taoiseach has put in place a Cabinet Committee on Science, Technology and Innovation, chaired by my colleague, Mr Micheál Martin, Minister for Enterprise, Trade and Employment. That Committee has been directing work on a Strategic Implementation Plan to address the ambitious R&D targets which I have mentioned. This Plan will provide us with the information we need to move rapidly to secure Ireland’s position in the increasingly competitive global market, where R&D capacity and reputation are key determinants in attracting and retaining investment and consequent quality employment.

I would like to turn now to the issue of regulation. There are a range of challenges, as well as opportunities facing the industry today, not least of which is regulation. Pharmaceutical companies in Ireland, regardless of their size or origin, must stay abreast of international developments if they are to sell successfully around the world.

Conferences such as this one, and the regulatory affairs seminar series supported by Enterprise Ireland’s Biotechnology Directorate, earlier this year, provide a marvellous opportunity for interested parties to come together to share knowledge and experience. This is indeed a time of significant developments for the industry. The completion of the European Review of pharmaceutical legislation, leading to the adoption of the new legislative package last year, is the most significant European initiative in the regulatory field in the last decade.

The reform package had, as its aims:

• Increasing and accelerating the availability of products
• Better access to information for patients
• Promoting the competitiveness of the European pharmaceutical industry in a global context
• Rationalising and simplifying the regulatory process and strengthening surveillance.

The agreed legislative package was broadly welcomed by all of the stakeholders in this area and I am certain that its implementation will provide many benefits for patients, healthcare systems, Governments, and the pharmaceutical industry.

Another recent development in the European regulatory field has been the publication of the proposed Regulation on paediatric medicines and which is currently under discussion in Brussels.

It has long been accepted that there is a need for specific measures to ensure that children and adolescents receive the maximum benefit from medicinal products, most of which are developed solely for use by adults, and I am sure that everyone here has welcomed this initiative.

In general the proposal, which consists of both incentives and obligations, appears to be very finely balanced and is likely to stimulate greater efforts by the industry with regard to the development of medicinal products for children.

Against this backdrop, the timing of this conference is fortuitous in that it will provide an opportunity to exchange information and share experiences. The pharmaceutical industry is, by necessity, one of the most heavily regulated industries in the world and events such as this are essential to enable the key stakeholders to keep abreast of new developments. In this regard, I am delighted to see so many key players in the pharmaceutical industry present here today.

In this country, the Irish Medicines Board plays a key role in the protection of human and animal health by virtue of its position as the regulator of human and veterinary medicinal products, and I note that several speakers from the Board will address you during the conference.

I hope you find the conference useful and informative and I would like to wish you all an enjoyable few days and a successful conference.

Thank you.

ENDS/TC 175