Supplement: Celtic Legends

The neolithic stone circle at Drombeg, County Cork

© Joe Gough

By some accounts, 1998 was a year when everything changed in Irish bioscience. With the country's economy soaring, a group of experts told the government that massive investments in research infrastructure were urgently needed to avoid throwing away the success of the 'Celtic Tiger' years.

Those years, from 1996 to 2000, had been marked by soaring incomes and low unemployment. The experts, representing industry, government, and universities, had been gathered by the Irish Council for Science Technology and Innovation to identify how the country could capitalize on those gains in terms of its science and technology policy.

Crucially, this 'Foresight Exercise' then gained the backing of Irish industry. "We rolled the dice," says Cormac Kilty, who founded a biotech firm called Biotrin in 1992, "and we could afford to roll the dice because of the Celtic Tiger. I have always said, a rich country should be able to invest in the arts and the sciences, and finally we got to the sciences."

That exercise was perhaps the tipping point that prodded Ireland to begin assembling the pieces of what has since become an impressive life science framework. It led first to the establishment of a funding body to provide research infrastructure, dubbed the Program for Research and Technology in Third Level Institutions. It also resulted in the launching of Science Foundation Ireland, an agency to facilitate the work of top local researchers and new talent from overseas.

Within two years, the government had provided Science Foundation Ireland with €646 million ($1 billion US). It was a colossal amount of money - unprecedented in Irish science.

Soon, those funds had begun to flow from government coffers into the life sciences. Since then, the country has adopted a twin-track model, with the two government agencies working closely together to identify needs. It has proven a successful and streamlined approach to the massive job of building a life science infrastructure, upon which an entire industry could grow.

And it has grown. Between July 2006 and June 2007, Ireland attracted 25% of the foreign direct investment in the European Union in the life sciences. That obliterated all EU rivals, including vastly bigger nations, such as France, Germany and the United Kingdom.

Matt Moran, director of the Irish BioIndustry Association, says the industry has become a vital part of the economy. "The life sciences sector is worth over €40 billion to the Irish economy and accounts for nearly half of its exports," he says. "Ireland is a true global hub for life sciences."

Growing Up in the '60s

Back in the 1960s, things were very different. The Irish life science sector was in its infancy, struggling to emerge after the Irish government decided to shift the economy away from a traditional reliance on agriculture.

The government's strategy targeted pharmaceuticals as one of a number of sectors they would develop that didn't require large amounts of raw materials. By 1964, Squibb Linson (later Bristol-Myers Squibb) had established a manufacturing plant at Swords, North Dublin, followed by Pfizer, whose citric acid plant at Ringaskiddy, Cork, began operations in 1969.

Things continued to change throughout the 1970s as the Industrial Development Authority - the state agency responsible for encouraging foreign investment - attracted a raft of major international pharmaceutical and chemical companies to Ireland. Some of the many big names that arrived during this decade included Penn Chemicals (now GlaxoSmithKline), Wyeth Biopharma, Janssen Pharmaceuticals, Merck and Co., Eli Lilly and Company, Schering-Plough, and Sandoz, mostly clustered around the County Cork region. Employment in the life sciences grew to 4,750 in 1979, from virtually nothing a decade before.

"That built up the critical mass for the industry, mainly in manufacturing, initially in active pharmaceutical ingredients," says Moran. "You have a flood of companies coming in over that period." Observers regarded this as the first golden age of Irish life science.

Meanwhile, the first Irish biotechnology company, Biocon Biopharmaceuticals Ltd., had been set up in 1967. For decades, however, the indigenous sector suffered from a severe shortage of funding.

"National funding was very poor," recalls Jim Ryan, former director of Ireland's National Biotechnology Program. "In 1997 or '98 there was an EU study on the spending in each country on R&D, and our entire spending on biotech R&D - and that was really scraping every pocket we could find - was about £IR10 million [€12.7 million], and getting on for half of that was coming from [EU] Framework funding. That's only ten years ago."

In 2006, by comparison, the government allocated €829 million ($1.3 billion US) to research and development, according to figures from Forfás, the state agency responsible for advising the government on science.

Supporting Indigenous Biotech

"In the 1980s, there was no sense that a small Irish company could 'take on the world' in the pharmaceutical business," remembers John Lynch, CEO of Merrion Pharmaceuticals. "The best and brightest were going abroad, and there was no obvious local route ... to get businesses started."

Biotechnology was identified as a key area for development in 1983 by a now defunct state body, the National Board for Science and Technology. Then a few years later in 1987, a new government formed by Fianna Fáil (the Republican Party) put together a National Program for Biotechnology that in turn gave birth to BioResearch Ireland, a body whose task was to transfer technologies or useful services in the university system into the marketplace.

BioResearch Ireland encouraged the development of the first generation of Irish biotechnology companies, including Alimentary Health, Arqtech Laboratories, and Citi Analysts, primarily by helping them to find funding.

"The government focus on development of the sector, backed up with investment in research and supports for indigenous industry, has created a much better innovation environment," says Lynch. "As this is a very international business, the ability to attract internationally experienced talent is crucial and has also improved. Lastly, the ability to raise the necessary finances has improved."

Since the 1980s, Irish biotechnology companies have continued to emerge from the country's seven universities and 14 Institutes of Technology. These days, every center of higher education, including universities and Institutes of Technology, has a "bio-incubator" on campus. Funds to stimulate this process come from Enterprise Ireland, a state agency.

Elan, perhaps Ireland's highest-profile life sciences firm, has also helped spawn new enterprises after many people who left the company following its near-collapse in 2002 set up their own companies, including: Bioclin, a bio-analysis firm; Azur Pharma, a company seeking to acquire and commercialize drug therapies; and Pharmaplaz, which does contract manufacturing and produces nutraceuticals.

Harvesting Natural Resources

Ireland possesses some natural advantages that help attract continued foreign investment in the life sciences, including the tight cultural ties it holds with the United States, and its position as an English-speaking nation within the EU.

The United States has been the source of more foreign companies in Ireland than has any other nation, with 470 companies providing 95,515 jobs. Germany comes second with 122 companies and 10,782 jobs, while the United Kingdom is third with 111 companies and 7,356 jobs.

In addition, Ireland is a politically stable, open economy, which is seen to be responsive to the demands of a fast-moving life science sector. It also doesn't hurt that it has the lowest corporation tax in Europe at 12.5%, and a young, skilled, well-educated workforce with relevant technical and business skills. Is it any wonder, observers ask, that almost 1,000 foreign companies have decided to locate in Ireland?

Take for example the biggest single biotech operation in Ireland - Wyeth's facility at Grange Castle in west Dublin. The company invested €1.8 billion ($2.8 billion US) in this 111,000-m² plant, and now employs more than 1,300 people. Peter O'Brien, the company's communications director, outlines several reasons the company made this enormous investment: "One is tax, obviously the corporation tax rate," he says. Secondly, and "the main reason we came here, is that we needed to find 1300 people with the appropriate skills ... we were able to attract very bright staff here."

"I think the climate here is the another reason, it is very pro-business. As an example, we got our planning permission to operate within six weeks. There was [also] a strong focus at the time on research in biotechnology through the establishment of Science Foundation Ireland ... and the last reason, this was our fourth plant in Ireland. We had three others over the last 34 years; we had good experience in Ireland."

In a country of just four million people, there are now 170 life science companies employing 35,000 people. In 2007, exports of pharmaceuticals and chemicals from Ireland were worth €43.5 billion ($67.5 billion US), a figure representing 49% of all Irish exports.

Trouble Ahead?

Things seem to be going well for Irish life sciences, particularly considering how far things have come since the 1960s. Ireland may become vulnerable, however, on one of the pillars of its success, the 12.5% corporate tax rate. Pressure is building within the European Union, notably from France, to harmonize the corporate tax rate across the Union. Such a move would hurt Ireland, as its corporate tax rates are far lower than other EU nations. Ireland is fighting hard to retain its existing regime, and, for the moment, it appears to be winning the battle.

The Industrial Development Authority (IDA) whose job it is to attract companies into Ireland and keep them there, will face a more difficult job of promoting Ireland if the tax structure changes. IDA officials are not panicking, though, and appear confident that the Irish government will resist tax changes.

"Irish government officials are participating in the discussion at the technical group (at EU level) relating to a common, consolidated tax base," says Michael Stapleton, vice president for life sciences at the IDA. "There are no proposals tabled (on tax changes), and we are confident that if proposals based on these discussions were promulgated, that all member states would see that such proposals would be bad for Europe and would not meet the stated aim of simplifying tax administration across Europe."

Although a highly skilled workforce is in place, and with 1,000 PhDs expected to graduate in 2008 (double the number 10 years ago), the country still needs many more so-called fourth-level researchers - that is, people with postgraduate qualifications. In terms of funding, the country could also be doing better. It has some way to go to increase its expenditure on science and technology up to its target of 3% of GDP.

"The increases in funding are increasing more rapidly than any other country at the moment," says Frank Gannon, director general of Science Foundation Ireland, "but it's against a lower base." Ireland was spending 1.4% of gross domestic product on research in 2005, Gannon says. "By the time the current plan is finished in 2013 we will be at 2.5%. If that is there, we will probably have moved above the European average."

Despite this uncertainty, there is still plenty of positive news. Several major life science players, including Wyeth, Genzyme, Merck, GlaxoSmithKline, and Enfer, have recently announced plans to add new jobs in 2008 to the already large biosciences workforce. Although the medical devices and biotechnology areas reported a slight downturn in 2007, this was primarily due to the closure of the low-tech manufacturing operations. The Irish government is more interested in high-value, high-tech jobs.

Meanwhile, the Industrial Development Authority is working hard to embed foreign life science companies more securely in the Irish economy by encouraging them to do more research and development.

Building On Relationships

Perhaps Ireland's famed hospitality also will contribute to its future success, locals say. As a small country with networking opportunities second to none, access to decision makers at all levels of government and industry is quick and easy.

"People meet, and meet and meet and meet," says Gannon. "The networking that happens in Ireland is really special. The networking is akin to the highly concentrated activity that goes on in Silicon Valley, or wherever," he says.

Moran adds that life science firms have ready access to decision makers in Ireland, so any issues that arise can be dealt with efficiently. "Things get done very, very quickly in this country. We have a very pro-business government, very good relationships between government and industry, and a very quick decision time. We can get to a government minister, we can get to senior civil servants, and we have good working relationships with them and that's very important."

Finally, perception is perhaps most important. Ireland's reputation as an economic dynamo resonates globally, and visiting foreign delegates come to Ireland to find out how it became so successful. Ireland's reputation, which has been built up over the last decade, is a definite advantage.

"The phenomenon of the Celtic Tiger economy, coupled with the decades-long positive experience of international pharmaceutical medical device companies in Ireland, has reinforced Ireland's attractiveness as a foreign direct investment location," says Michael Stapleton, vice president for life sciences at Industrial Development Agency Ireland. "Cambridge, UK, and Cambridge, Massachusetts, are places where major companies move into to do high-end research. We want to get ourselves onto that other list as well, and that is our ambition."

See timeline, Growing in the Irish Life Sciences