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Reuters English News Service
Ireland Takes On World In Biotech Sweepstakes
By Michael Roddy
March 14, 2003
DUBLIN, March 14 (Reuters) - On the grounds of a ruined castle in the Dublin suburbs, U.S.-based Wyeth Pharmaceuticals (WYE.N) is building a mammoth plant something like a brewery, but it won't be turning out Guinness.
The $1.5 billion project, the single biggest investment in Wyeth's history, uses 12,500-to-15,000 litre bioreactors - similar to brewing vats - to grow proteins for its rheumatoid arthritis drug Enbrel, much in demand in the U.S. and Europe.
When the plant is fully operational in 2005, it will employ 1,300 people and turn out 12 million to 14 million vials of freeze-dried Enbrel powder a year, plant officials say.
"It is the largest integrated biopharmaceutical investment in the world, and when we say integrated, we have both drug production and drug product finishing in the same facility," Reg Shaw, plant managing director, told Reuters in an interview.
Landing the project was a coup for Ireland, which beat Singapore and Puerto Rico, its main rivals for the lucrative business of manufacturing drugs outside the home bases of the big multinational pharmaceutical firms.
Ireland hopes it is a sign of things to come as it vies for a bigger share of the growing biopharmaceutical business. Using biological products, such drugs often are more costly and complicated to produce than chemical drugs, but also tend to yield higher profits.
For Ireland, so far, so good. From less than 100 million euros of pharmaceuticals exported from Ireland in 1973, the business has soared to 26 billion euros in 2001, the country's second biggest export behind IT.
A KEY COUNTRY FOR PHARMACEUTICAL MAKING
Enbrel should add hundreds of millions more, but Ireland's stable is already full of stars. Among its exports are the main ingredient for Viagra, Pfizer's (PFE.N) impotence drug, and Botox, Allergan's (AGN.N) treatment to banish wrinkles.
"We would be one of the key countries in the world as regards exports of pharmaceutical products if you disregard the home base" of the manufacturers, said Barry O'Leary, a senior vice president of the Investment and Development Agency (IDA).
From having almost no indigenous pharmaceutical industry 30 years ago, Ireland now boasts 80 pharmaceutical companies, including nine of the world's top 10, employing 16,000 people.
It did it with tax incentives, one of the lowest corporate tax rates in Europe, a skilled, English-speaking work force and by creating special industrial zones, initially located around the southern city of Cork, catering to pharmaceuticals.
Firms like British-based Amersham (AHM.L), a medical imaging company which set up with 40 workers near Cork in the early 1990s now employs 400 there, with everything it needs at hand.
"Within a five minute drive of here we've probably got five or six companies that we would use for stainless steel fabrication work," said Paschal McCarthy, managing director.
"It's the same idea as Silicon Valley - cultures grow up around it and the culture of skills was critical to us."
PHARMACEUTICALS NO ECONOMIC PANACEA
Some critics say pharmaceuticals do not contribute nearly as much to the Irish economy as the numbers would suggest.
"The bulk of the transactions that these companies engage in would be intra-company transactions between themselves...so they really can charge anything they like and then the profitability appears to be enormous," said Robbie Kelleher, head of research for Davy Stockbrokers in Dublin.
He said that if the official figures were taken at face value, it would mean that each person employed in the sector contributed two million euros per year to the economy.
"If you believe the numbers it's got to be one of the most profitable little segments of industry in the world," he said.
But given that Ireland was an economic backwater when it joined the EU in 1974 and is now an economic success, officials maintain the contribution of pharmaceuticals to the economy is huge even if the tax receipts are not as big as they might be.
"There are actually 16,000 people working every day in the industry in highly paid jobs...and it feeds into other employment opportunities and services," said the IDA's O'Leary.
The government is hoping it can do the same with biotech, which demands a higher level of skills, as well as a higher level of infrastructure, than traditional pharmaceuticals.
Two years ago Science Foundation Ireland was established and empowered to disburse almost 700 million euros in grants to help research and development in Ireland. The amount is miniscule compared to the $27 billion at the disposal of the U.S. National Institutes of Health, but it's a big step up from the past.
"We're going to have people who've been doing research so there'll be a larger work force of people who are skilled which will make it more attractive for multinationals," said John Fuller Atkins, a molecular biologist and SFI's pharmaceutical research director.
At the same time, the IDA's O'Leary said the agency is buying up land, installing the high level of power and water supply needed for biotech, and then selling the sites on.
He said the IDA also works closely with educational institutions to be sure they are providing "the skill base needed for the industry, because biotech has a much higher level of graduate employment in it than traditional pharmaceuticals".
But when all is said and done, he thinks companies like Wyeth, in Ireland since the 1970s, will stay because they are already here, and their presence will bring more.
"I think the salesmanship comes from the constant reinvestment by the companies that have located here," he said. "The most significant factor is the type of expansions by the companies that are already here."