Novo Nordisk’s attempts to alleviate global shortages of the “wonder drug”, which it claims to be a weight-loss miracle, have led them to a businesspark on the outskirts Dublin.
Last year, the Danish group overtook LVMH (the French luxury goods conglomerate) as the most valuable company in Europe, thanks to its breakthrough success with the Wegovy jab. The company’s annual results released last week showed that it is struggling to meet the booming demand.
It is therefore looking to expand its capacity in Europe. The decision to choose the Republic of Ireland for a potential investment of approximately €2 billion has brought the attention to the appeal of Ireland as a location to manufacture drugs over Britain.
The Grange Castle Business Park, Clondalkin has acquired land for a 1.6-million-square-foot facility that will manufacture drugs for diabetes and obesity. The park, which is part of Dublin’s industrial cluster, already houses Pfizer from the United States and Takeda the Japanese company, who acquired Shire the British biopharmaceuticals firm, five years ago, for £45billion. The decision on Novo’s planning application will be made before the end this month. It could result in the facility becoming fully operational by 2026, and creating up to 1,100 jobs.
Novo is just the latest multinational pharma company that has invested significant amounts of foreign direct money in Ireland. It has transformed Ireland, which is one of Europe’s smallest countries by area, into a leading location for drug production, competing with Germany and Belgium, and directly employing over 45,000 people.
By 2020, Ireland will have ten times more biologics production sites than it did in 2003. The Irish Pharmaceutical Healthcare Association called it “a success story on a global scale”.
Novo Nordisk is building a production line in Denmark to help meet the booming demand for their weight loss drug. The company will be looking for a new factory in Dublin to help them meet this demand.
Dominic Carolan – a former CEO of Ireland’s National Institute for Bioprocessing Research and Training – says that Ireland’s attractive and consistent fiscal regime has driven the industry, which includes the introduction of 12.5% headline corporate tax during the 1990s.
Sir Pascal Soriot , head of AstraZeneca – Britain’s largest pharmaceuticals group – , blamed the “discouragement” tax rate for his company’s investment in a $360m manufacturing plant in Ireland. Soriot, 64 said, “You need a business environment which gives you good returns on investment and an incentive to do so.”
The report by the Medicines Manufacturing Industry Partnership warned that the British Government’s life sciences strategy — one of five “key” sectors — could fail if ministers did not stop the loss of manufacturing jobs, investment and exports. The report revealed that traditional medicine manufacturing capacity in Britain had declined significantly over the last 25 years and that global capital investment has fallen “dramatically”.
The report highlighted that the “vision” paper of the government on life sciences found that production volumes were down by 29% and over 7,000 jobs had been lost since 2009. It highlighted the government’s “vision” policy paper on life sciences, which found that production volumes were down by 29 per cent and more than 7,000 jobs had been lost since 2009.
Ireland is now the largest net exporter in Europe of pharmaceuticals and third largest global exporter. The life sciences sector is responsible for 39 percent of the country’s exports. Around 120 companies from abroad, including the ten biggest Big Pharma companies in the world, have manufacturing facilities in Ireland. Another cluster in Ireland is in Cork where companies like AbbVie and Eli Lilly operate.
In the last decade, Ireland has invested about €10billion in biopharmaceutical production facilities.
Confidentially speaking, the chief executive of Europe’s largest investment company said: “Over many years, companies have set up in that area for tax reasons, and today, from a perspective of life sciences, you have a really great ecosystem. There is a critical mass in terms of people, capability and know-how. This is a big plus. The other is, of course being a member of the EU. That does make a big difference. When you combine those two factors, it is very common for people to consider Ireland as a country that speaks English in the EU.
Mark Lawler is a professor at Queen’s University Belfast who specializes in digital health. He said Ireland has changed from being a country that was largely “agricultural and agriculture as its main export to primarily pharmaceuticals and digital”. It proved that “small countries can achieve big things”.
In the beginning, the Irish life sciences industry was mainly focused on producing active ingredients to be exported for refinement and final processing. But since the 1960s, it has grown to include the final product processing. Multinationals are now setting up research centers and working with academic institutions to develop joint research projects.
Hugo Fry (53), former UK and Ireland Head for Sanofi, a French multinational drug company that operates in Waterford said that “huge incentives” had been provided for manufacturing to take place in Ireland. This had allowed it to become “a centre of expertise”. Waterford, just outside Dublin is a hub of absolute expertise. “There are many reasons to do it in Ireland. But there are also experts who are ready and waiting.”
WuXi Biologics is a Chinese contract manufacturer that made a significant investment in Dundalk. In 2018, it was the first greenfield project for foreign direct investment from China. Pfizer has confirmed that it will invest over €1 billion into its Grange Castle production facilities by 2022.
Novo could invest at the same location. Recently, the Danish group agreed to pay €85million for a manufacturing plant in Athlone (central Ireland) from Alkermes.
A recent report by the European Federation of Pharmaceutical Industries and Associations concluded that once a cluster is established, its benefits “self-justify”. Charles River Associates’ report on factors affecting biopharma investment in Europe, compared to the United States and China, found that there are 90 pharma and a biopharma plant throughout Ireland. The cluster attracts other companies who want to access the local workforce, infrastructure and manufacturing support services.
Novo’s fourth-quarter results sent its shares soaring in Copenhagen last week. However, the company declined to comment about Ireland’s manufacturing sector compared to Britain. The company has also announced plans to expand its production in France and Denmark, and formed a partnership Catalent, a contract drug manufacturer from the United States. It has recently leased office space at King’s Cross Knowledge Quarter in London in order to create a digital innovation center.
The British government points out that Moderna, an American company, chose to establish a mRNA production centre at Oxfordshire.
Joe Edwards, Director of UK Competitiveness and Devolved Nations at the Association of the British Pharmaceutical Industry said that realizing the “tremendous” potential of the UK’s Life Sciences sector “was not just about discovering the vaccines and medicines of the future here.” We want to see companies manufacture their medicines in Britain, which will benefit NHS patients and support supply resilience. It will also create jobs, boost exports, and help the NHS.
“Global competition can be fierce. To attract companies to locate their manufacturing facilities in UK, we need a stable environment that is pro-investment and pro-innovation, along with a focus on areas where the UK excels, like advanced therapy medicine manufacturing, green manufacturing technology, etc.”
A spokesperson for the UK government stated: “The UK has been one of the most attractive locations for life sciences companies in the world to invest and innovate. Since 2022, our capital grant programme has generated over £380 millions in private investment and created and secured over 1,400 jobs in the UK.
“We have announced over £1 billion in measures to support growth, investment and innovation in UK Life Sciences, including £520 millions for life sciences manufacturing. We continue to invest heavily and record amounts in R&D.”