After a few anxious months, there was a collective sigh of relief at the confirmation earlier this year that US tariffs on pharma imports from the EU would be limited to 15 per cent. Economic commentators had been unanimous in their assessment that Ireland stood to lose more than most if the tariff had been significantly higher.
The fact is, Ireland’s pharmaceutical sector is the envy of many, benefiting from substantial foreign direct investment (FDI) over several decades and a favourable regulatory environment. Recent years have seen continued expansion, with multinational companies such as Pfizer, MSD, and Eli Lilly establishing or enlarging manufacturing facilities and increasing R&D activities here, enhancing Ireland’s position as a key player in the global pharma landscape.
The sector is seen as a linchpin of the economy for no small reason – it accounts for about 2.5 per cent of overall employment, while exports of medical and pharmaceutical products approached €100 billion last year, making Ireland the world’s third-largest exporter of pharmaceuticals.
Yet the sector is experiencing significant trade challenges this year with tariffs and other regulatory and policy uncertainty, agrees Sean Sheridan, tax partner at KPMG. “In the face of strong headwinds, Ireland’s pharma sector has shown resilience in the short term,” he says. “The landscape has changed and Ireland’s pharma sector, and Government policy in this area, needs to be agile to respond, to make sure we remain competitive on the global stage.”
READ MORE
The sector’s success is deeply intertwined with US investment, says Carol Eager, partner in William Fry’s corporate/M&A department. “This reflects the broader transatlantic relationship that has underpinned Ireland’s economic transformation over the past five decades,” she explains. Yet it has also left it vulnerable to US trade policy changes.
Eager notes that while Ireland’s highly educated and skilled workforce remains a key draw for global pharma investment, increasing competition for specialised talent, particularly in advanced R&D and manufacturing, poses a challenge. “Addressing these emerging skills gaps will be essential to sustaining growth and innovation.”
And while multinational investment has been the backbone of Ireland’s pharma sector, fostering domestic R&D and scaling home-grown life-sciences companies will serve to further strengthen Ireland’s innovation base. Indigenous firms, Eager says, contribute significantly to employment and exports but their scale and innovation capacity remain limited compared to global players. “Targeted supports, such as increased funding for research, incentives for university-industry collaboration, and streamlined access to clinical trial infrastructure can help these companies grow and compete internationally.”
Sheridan’s colleague, KPMG’s R&D incentives practice lead Damien Flanagan, adds that to sustain its attractiveness as a pharma manufacturing hub, Ireland must prioritise innovation, workforce development and a robust regulatory environment. Collaborating with educational institutions to enhance skills training and fostering strong partnerships within the industry will be essential, while maintaining competitive tax policies, such as the R&D tax credit which has recently been increased to 35 per cent, and investing in infrastructure will further support growth.
“The R&D Compass, which will set out some areas of future potential enhancement to the R&D tax credit regime, will hopefully provide further assurances to the multinational community that Ireland remains an attractive location for investment,” Flanagan says.
While recent US policy shifts have introduced significant uncertainty, Sheridan believes the robust track record of Ireland’s pharma sector means our position as a “trusted and strategic partner” remains strong. “The depth of investment, infrastructure and talent here makes relocation a complex and unlikely short-term move,” he says.
Rather, remaining agile and vigilant is key to protecting and enhancing Ireland’s position in the medium and long term. “With expected increasing global demand for medicines, devices and healthcare into the future, there will be plenty of opportunity where the Irish life-science sector continues to invest in innovation and the infrastructure to deliver,” Sheridan notes.
“Ireland’s embedded infrastructure, skilled workforce and strong regulatory track record continue to offer multinationals a stable and strategic base within the EU,” says Eager.
Ireland’s pharmaceutical sector has demonstrated remarkable resilience and adaptability, and remains a cornerstone of the global life sciences landscape, she adds. “Sustaining this position will require ongoing strategic focus, continued collaboration across Government and industry, and long-term investment in innovation and infrastructure.”
Yet according to Liam Kenny, managing director, John Paul Construction, there are clear indicators that the steady growth of Ireland’s life-sciences sector may finally be on the wane.
“We have observed in the last 18 months that investment in the life-sciences sector has declined,” Kenny says. “This has been evident through our pipeline management where we assess potential opportunities and the number of tenders that have arisen as a result.”
In Kenny’s opinion, this decline was obvious before the threat of tariffs. “It suggests wider considerations were in play, which would include infrastructure and housing availability in particular locations. Ireland still represents a strong proposition as a gateway to Europe but the sector as a whole needs confidence that its investment will stack up in the long term.”
Kenny says that if Ireland’s pharmaceutical sector is to thrive, we must be mindful of what the sector seeks – namely, critical infrastructure. “The National Development Plan has demonstrated both ambition and intent, what it requires now is detail,” he says. “When will projects go live, when is delivery targeted and how can the sector plan around that?”
Eager is more optimistic. “Ireland’s strategic location within the EU, skilled workforce and strong regulatory compliance record continue to sustain its appeal and the confidence of global life-sciences leaders, despite global tax reforms, rising operational costs and broader geopolitical and economic pressures.”
