by Cormac Spencer, Consultant and Director with Link Personnel Services
It’s a much-touted fact used by government agencies promoting the attractiveness of Ireland as a place to do business that 9 of the 10 largest pharmaceutical companies in the world have chosen to establish themselves here. This is a remarkable stat given that there was almost no pharmaceutical industry to speak of in Ireland up until the late 1960s. Since then Ireland has mounted a successful campaign to win foreign investment across the board and global pharma has not been immune to the persuasive nature of the pitch. Today over 120 overseas pharmaceutical companies have operations here. A sector which in 1973 employed less than 2000 people, now employs 24000 people directly and another 20000+ indirectly in businesses providing spin off services.
While jobs were being lost across the board from 2008 – 2012, pharma employment remained resilient. However there is a phenomenon that has been on the lips of industry analysts for the last number of years which might threaten jobs in the industry. The “Patent Cliff” refers to the ending of patent protection for a number of high profile “blockbuster drugs” (drugs earning over $1bn in revenue annually) as well as other medicines currently produced in part or in whole in this country. A cluster of these drugs worth $200bn in global annual sales are coming off patent in the years 2011 – 2016. This means that rival “generic” companies will have the right to produce the drugs, increasing competition and driving price down to a fraction of its original level. Whereas this is seen as good for consumers, who should see lower prices in their local pharmacy, it isn’t so clear what affect it will have on employment prospects. With such a drop in income for big Pharma in Ireland is there a danger that jobs will also go over the cliff?
The pharmaceutical industry only accounts for 5% of the working population, but it provides well paid jobs and is a potential source of future employment for science graduates. It also makes up a significant portion of our exports, affecting economic growth and corporation tax. The effect of the patent cliff has produced mixed signals so far. Whereas there have been some high profile announcements of plant closures in North and West Dublin recently, there have also been announcements of significant investment and job creation in the sector. In 2013 pharmaceutical production was down a hefty 9% on 2012, but yet employment remained stable. With signs not pointing in one direction let’s look at some facts which I would argue mean that despite the cliff, we don’t need to man the lifeboats just yet.
1. In what has been a difficult time for job prospects internationally and particularly in Ireland, employment in pharmaceuticals here has not taken a hit. Indeed there are many instances where I find a shortage of qualified candidates for jobs with my pharma clients. Jobs for technicians, quality controllers and operators are common.
2. Although the ending of a patent means that companies lose the right to exclusively produce drugs, many generics firms which will ramp up production after expiry are also based in Ireland. There are thousands of people employed in generics firms in Dublin alone.
3. Pharma firms are still investing here. Billions of Euro has been pledged for new projects this year alone. This will mean thousands of short term construction jobs and many long term skilled jobs. What’s more, research and development is leading to the approval of new drugs which will be patented and create opportunities for further employment with big pharma operators in Ireland.
The patent cliff has been common knowledge for a long time, and it seems that companies have been able to reorganize to mitigate most of its effects. This has meant employment in this highly skilled industry has been relatively stable. The weathering of the storm so far, coupled with continued investment in research and jobs mean that there should be opportunity not just for stability, but growth in employment into the future. Although the patent cliff is a reality, it doesn’t mean that the workers of today or tomorrow need to get their feet wet.
