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Job Losses

Dáil Éireann Debate, Thursday - 7 June 2012

Thursday, 7 June 2012

Ceisteanna (9, 10)

Brian Stanley

Ceist:

8Deputy Brian Stanley asked the Minister for Jobs; Enterprise and Innovation if the reduction of €772 million on exports in medical and pharmaceutical products in the first three months of 2012 as compared to the same period in 2011 has resulted or may result in job losses in this sector. [27330/12]

Amharc ar fhreagra

Martin Ferris

Ceist:

41Deputy Martin Ferris asked the Minister for Jobs; Enterprise and Innovation if the reduction of more than €1billion on exports in medical and pharmaceutical products to the United States of America in the first three months of 2012 as compared to the same period in 2011 has resulted or may result in job losses in this sector. [27331/12]

Amharc ar fhreagra

Freagraí ó Béal (7 píosaí cainte)

I propose to take Questions Nos. 8 and 41 together.

The latest available data from the Central Statistics Office, CSO, indicates that exports of medical and pharmaceutical products to the United States in the first quarter of this year decreased by €1.1 billion and that total exports of these products decreased by €772 million when compared to the corresponding period in 2011. A substantial part of the decline was due to a high value product coming off patent.

The expiry of the patent on products manufactured by Pfizer unfortunately resulted in the announcement of the loss of 177 positions in Cork this week. My thoughts are with the workers and their families. I have spoken to the company about the situation. These two quality plants in Cork will still employ over 500 people and will be adapting to achieve operational excellence and deliver competitive manufacturing for the company. The company has also confirmed that Ireland remains a key strategic location for it. Factoring in this decision, Pfizer will still employ almost 4,000 people in Ireland across eight locations. In September 2011, the company announced a €145 million investment in its Grange Castle site to develop a new site to expand the Irish manufacturing process for an invasive pneumococcal vaccine.

IDA Ireland has been working for many years to minimise the threat to jobs posed by products coming off patent and has been seeking to diversify Ireland's pharmaceutical base. Its strategy has been to win leading company investment and to diversify the breadth of operations over multi-product sites, including associated services and development of new compounds. Ireland has been enormously successful in attracting eight of the major global players and the world's No. 1 biotechnology company to manufacture from Ireland. IDA Ireland has focused, in particular, on biopharmaceuticals, which represent the next wave of opportunity in the industry, and has been successful in attracting leading companies with the result that Ireland has a globally leading biopharmaceutical cluster in the next generation of pharmaceutical products.

Employment in IDA companies in the pharmaceutical and health care services sector increased by approximately 1,400 in 2011. In the first six months of 2012 alone, Ireland has won five major investments in the pharmaceutical and biopharmaceutical sectors with the capacity to create 1,175 new jobs. I have been assured by IDA Ireland that it will continue to seek to win new investments in the pharmaceutical industry and to win large scale investments in product development and capability to enable its existing client companies take on new product mandates.

Yesterday, as the Minister said, 177 jobs were lost at Pfizer in Cork. This is a significant blow to the employees and also to the Cork area and should act as a wake up call to the Government regarding the patents cliff, on the edge of which we are perched. A large proportion of the State's GDP comprises products that are coming off patent and this will threaten jobs, growth and our GDP and debt to GDP ratio. The Minister mentioned that five of the top 12 selling medicines in the world are produced in Ireland but it is estimated that more than €100 billion worth of sales of drugs will come off patent before 2015. Chemicals and medicines comprise 60% of merchandise exports. How many jobs could be lost if this were to come to pass? I commend the work done in bringing FDI to the State, especially in this sector. What level of patent replacement is being undertaken?

The IDA has recognised and anticipated this for many years. Part of the response was to shift into biopharmaceuticals, which is a growth area. There are horizon and sunset products in this sector and the trick for the IDA is to make sure we are at the horizon side. For example, Eli Lilly announced an investment of €330 million in a new facility at Kinsale, County Cork, creating 200 jobs. That is an exciting project and it will be particularly effective. Mylan, which will create 500 jobs in both Dublin and Galway is in the generics field. This is the first major generic drugs company to come to Ireland to establish a new niche within the pharmaceutical sector, which is robust and strong in the context of growth. Companies respond in different ways. A number have had products come off patent but have maintained their production and employment levels by introducing new product streams to replace them or by taking on new lines of production. Pfizer is determined to remain competitive in this area. It has a high quality plant and it is determined to remain competitive and support the employment it has but at a lower volume than previously. The challenge for the IDA - and it is what we have been doing - is to make sure we position ourselves to avail of the opportunities in the sector and that is borne out by the increasing employment numbers.

The chemical-medical sector is pivotal for the State but there is an overdependence on it. A total of 60% of our exports emanate from this sector. Putting all our eggs in one basket, as happened previously in the construction sector, is dangerous and could be catastrophic. I asked previously at joint committee meetings what targets the Government has for the creation of patents and the reply was that they are demand-led. However, it is important that the Government stimulates the development of patents not only in the FDI sector but also among domestic businesses. A large number of patents are developed through FDI and not enough is being done to develop and stimulate intellectual property and patents among Irish firms. What will the Government do to change this? Is the Minister confident the sunset products will be matched in future with sunrise products? Is he also confident the patents that are falling off the cliff will be matched at the very least by new patents and jobs will be maintained?

I am confident, although I acknowledge this has not been an easy year by any means. However, the evidence is that despite our difficulties, this sector, which employs 25,000 people, increased employment by 1,400 last year. We are, therefore, beating the trend about which the Deputy is worried. A total of 1,200 new job approvals have been announced so far this year. It is not true that we are over reliant on the pharmaceutical sector. It produces a high proportion of our exports but, as an employment creator, it is an important sector and it has become a strong cluster. We can attract new opportunities because we have the skills base. It is recognised that we have good people in this sector and, therefore, it is not true to suggest we are over reliant on it or that it is a bubble sector.

We are in terms of exports but not jobs.

I agree with the Deputy that more patents need to be generated. The Minister of State, Deputy Sherlock, and I have gone through the research prioritisation exercise and tomorrow he will launch the IP protocol to make it easier for small companies to access higher education research in order that it can be rolled out into commercial products. Enterprise Ireland backs technology clusters that bring together small indigenous companies as well as foreign companies to identify the opportunities for innovation. There is a great deal happening in the innovation space and, like the Deputy suggested, we want to sweat it to get more patents and commercial ideas out of the investment we make.

Question No. 9 answered with Question No. 7.

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