Made in Ireland: Viagra and Botox, Claritin and Panadol

Given the opprobrium that greeted the news this week of Pfizer and Allergan’s $160 billion merger, you could be forgiven for thinking that Ireland serves only as a tax-efficient brass-plate location for the giants of the pharmaceutical world.

Yes, US companies are raising the ire of US politicians by seeking “inversions” that allow them to cut their tax bills by taking over companies in countries with lower tax rates – Ireland is among them – and then setting up their legal headquarters there.

Ireland’s merits for US multinationals – tax, tax and more tax? – is a story well told, and the pharma sector is no exception. Google, after all, may once have had its “double Irish”, but pharma companies also do well in Ireland, as shown by a recent rash of inversions, such as Medtronic’s acquisition of Covidien earlier this year, and other tax structures; in 2011, for example, the US company Abbott paid no tax on the €1 billion-plus profits of two Irish subsidiaries.

But pharma companies also have significant production facilities here. It’s a story that began back in the 1960s but has ramped up to such a scale in recent years that Irish-based drug companies now employ more than 25,000 people, often in rural areas: Abbott in Lurganboy, Co Donegal, Astellas in Killorglin, Co Kerry, and Charles River in Ballina, Co Mayo, to name but three.

The manufacture of pharmaceuticals contributed €3.5 billion in corporation tax between 2008 and 2012, or 17 per cent of the total, and the drug-manufacturing sector makes the highest contribution per employee, at €40,901 a year.

Fourteen of the top 15 global companies have Irish operations, including Johnson & Johnson, Novartis, Merck and Roche, and about 10 per cent of European production, worth €20 billion, takes place in Ireland, making it the fifth most significant location on the continent, behind Switzerland, the UK, Germany and Italy. And Ireland is the third-biggest exporter of pharmaceuticals in Europe and the seventh biggest in the world.

It’s also an industry that’s growing, because the upside of our increased longevity is increased demand for drug companies’ products. By 2018, for example, the global prescription-drug industry is expected to be worth more than $870 billion – and more than $1 trillion by 2020.

That’s good news for Ireland so long as the sector can keep churning out blockbuster drugs. Ireland has been at the heart of this; six of the top 10 drugs sold around the world are manufactured in Ireland. Pfizer, for example, is well known for the erectile-dysfunction drug Viagra, the active ingredient for which is produced in Cork. But its Cork site is actually a bigger manufacturer of Lipitor, making 20 times as many doses of its cholesterol-lowering medication as it does of Viagra.

And now that Lipitor – once the world’s bestselling drug – has come off patent, Pfizer’s rheumatology drug Enbrel, also made in Ireland, is likely its biggest product. With global sales of $9 billion in 2014, it was the fourth-biggest drug that year.

The other half of the “Pfallergan” equation is Allergan, which makes Botox, the botulinum toxin best known for its use in cosmetic surgery, on the outskirts of Westport, in Co Mayo.

There are other examples across the country. The second-bestselling drug in the world in 2014, Lantus, an injectable form of insulin, for diabetics, was made at Sanofi’s Waterford site; it had sales of $10 billion in 2014. If you need a heart stent it may be manufactured by Abbott Laboratories in Cootehill, in Co Sligo. If you have a headache you might take Panadol, made in Ireland by GlaxoSmithKline.

Novartis sold almost $5 billion worth of its leukaemia drug Glivec, which it makes in Ringaskiddy, in Co Cork, in 2014; not far away, in Kinsale, Eli Lilly makes the anti-psychotic drug Zyprexa.

And it’s not just production. Research is also carried out in Ireland. Novartis, for example, currently has 30 clinical trials and studies involving about 900 Irish patients in areas such as cardiology, dermatology, ophthalmology and oncology.