What were the objectives of your visit last November and what was the outcome of this trip?
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Brian Conroy
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India is a key market in IDA Ireland’s growth strategy. IDA Ireland opened an office in Mumbai in 2008 and now has five people working in Mumbai and Bangalore. From Q1 2014 IDA will post an Irish member of staff to head up the India team based in Mumbai.
IDA seeks to win quality investments from globalising Indian companies looking to access the European market. IDA concentrates on sectors with the highest potential for delivery and fit with Ireland’s value proposition. IDA has built relationships with the top players in the key sectors of technology, life sciences, financial services and engineering.
The Minister held one-on-one meetings with CEOs and senior executives from 12 major Indian companies including a financial services company, a conglomerate, two life sciences companies (pharmaceutical and medical device companies) and eight technology/Internet companies.
Some of India’s largest and best known companies have operations in Ireland such as HCL, Wipro, Wockhardt, Reliance, Ranbaxy, Crompton Greaves, Tata Consultancy Services and Firstsource. Total employment in Indian-owned companies operating in Ireland is just under 3000 people.
During the mission three Irish companies announced contracts and business growth worth over €15 million and two Indian companies announced plans to set up operations in Ireland and create 75 new jobs.
Among the announcements made during the trade mission were that Synowledge, an Indian company specialising in the provision of drug safety and regulatory affairs services for the pharma, biotech and medical device sectors, is to establish an international headquarters in Dublin with the creation of 35 new high quality jobs.
How does Ireland’s economy, in terms of GDP compared to the rest of Europe? What is the contribution of the pharma segment to the Irish economy vis a vis other sectors?
Irish GDP in 2013 grew at a faster rate than the EU and the same is expected in 2014. As per Eurostat, while Ireland’s GDP for 2013 was +0.3 per cent, the EU was zero and in 2014, Ireland’s was 1.7 per cent while the EU’s stood at 1.4 per cent. The pharma sector accounts for over one fourth of Irish exports.
What makes Ireland an attractive business destination for India Inc?
EU market for pharmaceuticals is going through an inflection point. Traditionally an innovator drug market, it is trying to transition into a generics market to bring down healthcare costs owing to recessionary pressures. An Indian company looking at marketing its branded generic drugs directly to its consumers in the EU region could take typically 12-14 weeks for the go-to-market strategy. This is because it involves the process of the drug leaving its manufacturing facility in India, shopping, getting the QA-QP approvals etc and then reaching the consumer marketplace. Furthermore, complexities in demand forecasting, managing inventory to fulfill the demand in the EU region are deepening further.
Unlike the US market, the EU market is heterogeneous – it is made up of 27 different pricing and regulatory structures. If one does not have a US FDA approval, getting an approval in each of the EU countries is a cumbersome procedure. Each country in the EU region has typical characteristics of operating the pharma industry. For e.g. Germany is a tender driven market whereas France and UK are innovator markets.
With such a background, it becomes absolutely essential for Indian pharma companies to have an on-ground EU presence in order to expand into the territory. With an on ground presence either in terms of sales and marketing or a small manufacturing base, one can achieve radical benefits in terms of expediting go-to-market strategy by 40 per cent, reducing costs of inventory stuck in pipeline etc.
Ireland has a long track record of being a pharma manufacturing hub. Nine of the top ten global and 25 of the top 50 global pharma companies have operations in Ireland – predominantly involved in development and manufacturing (D+M) including Pfizer, Merck, Lilly, Gilead, Novartis, Shire Allergan and Indian companies Reliance, Ranbaxy and Wockhardt.
Ireland’s pharma exports are the seventh largest in the world and is the largest net exporter of pharmaceuticals in the world. 25,300 people are employed in the Irish pharma and chemical sector, 46 per cent of which are third-level graduates and 25 per cent of all PhD researchers in Irish industry are employed in the sector.
What are the challenges faced by Indian companies who want to enter the EU region?
A new directive released by the EU on June 8, would have an impact on manufacturing, packaging and regulatory approvals for drugs/pharma product coming out of India. According to the directive, only authorised individuals or companies must be involved in the packaging of medicinal products. All authorised individuals or companies will have to comply with ‘good manufacturing and distribution practices’ and perform inspections at their manufacturing and distribution units. The directive also highlights the need to introduce an anti-tampering device so as to authenticate whether the outer packaging of the medication has been messed around with or not. All this would take a while to conduct a detailed analysis of the drug export to Europe.
However, Indian companies can combat all this by establishing a base in Ireland to access Europe for product sales, supply chain and logistics, IP management, financial HQ and revenue optimisation because of the efficient low corporation tax regime present in Ireland. Indian companies could plan and strategise their regulatory strategies for entering various European countries from Ireland. Ireland could be a base for small to medium plants of Indian companies that could carry out final formulation and finishing with custom packaging for Europe. The Irish manufacturing site could compliment other manufacturing sites in India and would also act as a de-risking strategy in terms of production capacities and supply, easing regulatory challenges and hurdles and cushion against any new EU policy and compliance measures that could come up in the future.
The EU pharmaceuticals market is worth $48 billion, $16 billion is generics. This presents huge opportunities for Indian players to use Ireland as a gateway to the global life sciences industry.
What are the specific benefits offered to Indian pharma companies by the Irish government/ agencies?
The main advantage available to life sciences companies is Ireland’s young, skilled, and educated workforce. Ireland has one of the youngest populations in Europe, with 36 per cent of the population under 25 years of age. Ireland’s unique population and age structure will continue for the next 15 years with a key focus on education and research.
Ireland has an exemplary record with the regulatory agencies. There are 33 FDA approved pharma/biopharma plants located in Ireland. Regulatory agencies work closely with companies to achieve trouble-free start-ups. Certification agencies in Ireland operate in accordance with the European and global standard procedures and no warning letters have been issued by the FDA to Irish plants.
Investing within Ireland benefits life science companies because investors get to partner with Ireland’s key research institutes, with $10.5 billion of research funding provided by the Irish Government. The key priority areas are therapeutics, manufacturing and process development. Ireland has set up its own R&D institute for bioprocessing. The location of investment in Ireland gives a whole set of benefits to companies locating there – the talent, the tax, the regulatory environment and the track record is there for attracting key players. In addition IDA Ireland can offer a range of incentives including employment grants, R&D grants, training grants and capital grants.
What are the advantages for Ireland if a country like India makes such investments?
The Irish Government aims to continually build on the pharma cluster which has grown in Ireland and extend it’s footprint in markets like India, Brazil, China etc. The industry in Ireland also seeks to learn from Indian pharma manufacturing companies who are world leaders in generic drugs manufacture. A synergy of knowledge will help strengthen the Irish pharma industry over time.
The government task it’s FDI attraction agency, IDA Ireland with attracting more than 130 new investments, secure €500 million worth of R&D investment and help create 13,000 new jobs each year. Indian companies setting up operations in Ireland to services the European market help the Irish government achieve it’s FDI targets and create jobs in the Irish economy which helps drive growth.
