Ireland’s attractive taxation policy has seen it become a major pharmaceutical hub, with the latest merger between US giant Pfizer and Irish firm Allergan injecting yet more investment and skill into Dublin’s knowledge economy.
The merger will be the largest ever in the pharmaceutical sector, with Pfizer plc set to have its global operational headquarters in New York and its principal executive offices domiciled in Ireland to benefit from its lower tax rates. In a controversial process known as ‘inversion’, the move will see the Pfizer-Allergan combination tax rate slashed from the 25 per cent set in the US to 17-18 per cent.
Ireland’s active attempts to lure foreign direct investment, including its headline 12.5 per cent corporate tax rate, have attracted nine of the top 10 global pharmaceutical companies to set up operations in Ireland, as well as leading technology companies including Google, Facebook and Twitter. Tax benefits aside, the number of peer companies already present in Ireland and a young and educated workforce have helped make Dublin a hub for pharma and tech companies.
According to the Irish Pharmaceutical Healthcare Association, the pharmaceutical industry has invested more than €7bn in Ireland in the past decade.
Similar inversion examples in recent times include Endo, Perrigo, Horizon Pharma, Actavis, Alkermes, Jazz Pharmaceuticals, Covidien and Forest Laboratories all setting up an Irish presence. Endo International’s Blaine Davis, senior vice-president for corporate affairs, said: “We chose Ireland because a lot of pharma companies are based here, there is a big talent pool, and the skill set is very strong.”
The Pfizer/Allegan merger will create a new global pharmaceutical leader, paving the way for Pfizer’s expected split of the business into two parts, one for ‘innovative drugs’, with more than 100 combined mid-to-late stage programmes in development; and one with off-patent drugs. Pfizer’s innovative business will be enhanced by Allergan’s work in desirable therapeutic areas such as Aesthetics and Dermatology, Eye Care, Gastrointestinal, Neuroscience and Urology, while the combined company will benefit from enhanced R&D capabilities in both new molecular entities and product line extensions.
Ian Read, Chairman and Chief Executive Officer at Pfizer, said: “The proposed combination of Pfizer and Allergan will create a leading global pharmaceutical company with the strength to research, discover and deliver more medicines and therapies to more people around the world. Through this combination, Pfizer will have greater financial flexibility that will facilitate our continued discovery and development of new innovative medicines for patients, direct return of capital to shareholders, and continued investment in the United States, while also enabling our pursuit of business development opportunities on a more competitive footing within our industry.”
Brent Saunders, Chief Executive Officer at Dublin-headquartered Allergan, added: “This bold action is the next chapter in the successful transformation of Allergan allowing us to operate with greater resources at a much bigger scale. Joining forces with Pfizer matches our leading products in seven high growth therapeutic areas and our robust R&D pipeline with Pfizer’s leading innovative and established businesses, vast global footprint and strength in discovery and development research to create a new biopharma leader.”
Pfizer already has a presence in both Dublin and Cork, announcing in October that it was bringing 130 new manufacturing jobs to Ireland, bringing its total employee base in Ireland to more than 3,300 across R&D, manufacturing and commercial operations. Dr Paul Duffy, VP at Pfizer, said: “Pharmaceutical manufacturing in Ireland continues to perform well, contributing strongly to exports and economic growth, and providing good careers and jobs.”
(via Financial Times, Business Wire, Silicon Republic)