Address by Mr. Michael Ahern T.D., Minister for Innovation Policy, at the Ernst and Young Pharmaceutical Forum

Royal College of Physicians, Kildare Street Wednesday 19^th September, 2007

Good morning Ladies and Gentlemen and thank you for the invitation to address the Ernst and Young Pharmaceutical forum here today.

Given that Ireland is a key global location for the Pharmaceutical industry let me begin with a few points as to the extent and importance of the Pharma industry in Ireland.

Foreign Direct Investment for the Pharmaceutical sector in Ireland is 40 years old with Squibb (now Bristol-Myers Squibb) being one of the first pharmaceutical companies to locate in Ireland in 1964. Ireland has secured major investments from nine of the top ten companies in the world, and twenty-eight of the top fifty companies.

Ireland is one of the world’s largest exporters of Pharmaceuticals - €33bn in 2006. The sector is the largest contributor of Corporation Tax - c. €900m in 2006.

Current employment for the sector is some 20,000. Indirect Employment is substantial – Construction, Engineering, Design, Maintenance etc. By way of example Wyeth has 1,300 direct employees in its Grangecastle facility, and in addition has 600 maintenance and central services permanent contract staff.

The Pharmaceutical cluster in Ireland is supported by a sophisticated infrastructure of serviced sites, public utilities as well as specialist support companies and services. Process Development has grown significantly in importance. IDA has supported investment in R&D of over €400m in the last two years.

Many of the pharmaceutical companies in Ireland have established multiple activities in Ireland. The sector has become increasingly integrated in recent years. Early investment in fine chemical plants producing bulk active materials has been followed by investment in finished product pharmaceuticals. Many plants are now engaged in product development for Irish and other plants. Reinvestment by leading companies is also continuing.

As we know, the Pharma Sector is where science meets industry most directly. The biomedical sector, especially biotechnology and pharmaceuticals, is unusual in two regards.

Firstly, I believe it is fair to say that R&D and innovation are valued more highly within the biomedical sector than almost any other industrial sector. This importance can be seen in the fact that health companies invest more of their income in innovation than the software, telecoms, chemicals and energy industries.

Secondly, the relationship between basic research, R&D and innovation is more direct in the biomedical sector than in virtually any other industrial sector.

In other words, innovation is more directly linked into the science base for the Biomedical sector, so that university research advances affect industrial innovation more significantly and more directly in this field than in other industrial sectors. The recognition of the central importance of R&D and innovation in the biomedical sector internationally can now be clearly seen here in Ireland too.

In Ireland we have made substantial progress in building a Knowledge Economy. R&D spending performed in the higher education sector rose to some €600 million in 2006. This is more than a threefold increase on ten years ago and means that Ireland now spends above the EU average on R&D in higher education as a percentage of GNP.

The business sector too is increasing the levels of R&D activity. In 2005 research and development spending performed by the business sector in Ireland rose to €1.33 billion and estimates for business R&D spending in 2006 stand at €1.56 billion. R&D spending in real terms in the business sector has nearly tripled in the last decade.

Within the multinational sector, investment in research & development in Ireland continues to increase. 54 R&D investment projects were supported by IDA Ireland in 2006 involving a total investment of almost €470m compared to €260m in 2005.

In biopharmaceuticals, Amgen, Eli Lilly, Schering Plough, Wyeth, Genzyme and Centocor have made Ireland the location of choice outside the US for development and manufacture of the newest drugs.

This year Wyeth Corporation announced an investment of a further €24 million in the creation of additional dedicated R&D and process development facilities at its Grange Castle Biopharmaceutical Campus in Dublin.

Also, GlaxoSmithKline announced earlier this year that it is to invest up to €250 million over five years in its production site at Currabinny, Co. Cork.

Ireland is now a global competitor for R&D investment from multinational companies and leading research institutions. We are seeing the results of a concerted effort in Government policy to build a substantial foundation of world-class science and technology in our academic institutions and, in particular, the encouragement of strong business and academic collaborations. This is enabling the build up of meaningful research and development capabilities of Irish based business, a step that is fundamental to Ireland’s future competitiveness and sustainable growth.

We have developed many successful linkages between business and academia.

The Alimentary Pharmabiotic Centre, based at University College Cork, is one example of successful partnering between higher education and industry. The APC team of scientists and clinicians spans multiple faculties within the university, and partners with Teagasc, our Irish agriculture and food development authority, and Alimentary Health in association with Procter & Gamble and GSK. This centre is one of seven Science Foundation Ireland Centres for Science, Engineering & Technology ( or CSETs ) which bring industry and academia together to strengthen R&D.

Other CSETs include the Biomedical Diagnostics Institute at Dublin City University and the Regenerative Medicine Institute at National University of Ireland Galway.

You will be aware that Ireland has developed a pre-approved fully permitted Biopharma campus with unparalleled flexibility. The campus, located in Galway, is a construction-ready site. It will save a minimum of one year in investment time and significantly remove risks to the project. With a high quality manufacturing environment, supported by a university city, and being able to avail of low corporation tax, this option proves exceptionally enticing for new strategic business investments.

Also, a dedicated research and training facility for the biotechnology industry has been established in Ireland. The facility will help to train researchers in the university sector and will provide sophisticated research facilities to relevant firms. The National Institute of Bioprocessing Research and Training is a joint project involving third-level colleges, IDA Ireland and private sector firms.

Ireland is developing this centre to address the training needs for this emerging industry, which is constrained globally by skills shortages and technology challenges.The successes and developments that I have outlined, give us confidence in Ireland’s future.

Ireland’s participation in the global economy is essential for Ireland’s future, and maintaining Ireland’s position as a destination for Foreign Direct Investment is an essential part of this.

Continuing to build upon Ireland’s science base, and encouraging R&D and innovation within indigenous companies in Ireland are also vitally important, as is continuing to increase the linkages between the various parts of our National Innovation System.

The Government is committed to placing Ireland firmly on the global map in terms of the excellence of our research and its application for the benefit of society. The pharmaceutical sector has and, I am sure will continue to, play a leading role in realising this vision.

Finally, let me wish you all a successful and productive day here today and best wishes to you all with your collective endeavours.

Thank you.

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