Over the last 12 months things have really heated up in the US regarding inversions, particularly for US businesses targeting Ireland due to our corporation tax rate which is low comparatively with other jurisdictions. Initially the threats from US congress were insignificant but this changed drastically five months ago when actions were taken which prevented a number of inversions which were in process. The big one still seemed to be rolling on as Pfizer’s planned inversion with Irish based Allergan was to break all records, valued at $160 billion. Alas, it was not to be as Barack Obama introduced the country’s strictest rules to date, blocking the move.
Ireland’s economy has benefitted exceptionally from US moves to Ireland, both for EMEA HQs and Global HQs. It’s been a major factor in Ireland’s economic recovery over the past five years and the threat of the US curtailing future investment in Ireland is a frightening prospect for the thousands of Irish employees who are employed either directly or indirectly by US pharmaceutical businesses.
However, inversions are not the be all and end all of US investment into Ireland. Most of the businesses who were planning on an inversion to move to Ireland are still proceeding with plans to set up shop here. Although not a global HQ, a base here still offers more competitive tax advantages than our European counterparts, provides a concentration of high quality, senior level talent and the benefit of providing the smoothest gateway to ex-US markets due to our language, culture and proximity to the US.
Not only do I believe that the impact will be minimal, in my opinion there will be positive benefits from this. Ireland has always been a very manufacturing focused nation and when we spoke of R&D, this was mainly in med tech and in very small and mostly unsuccessful pockets of the pharmaceutical community. If inversions for US pharmaceutical businesses won’t be possible once commercialised, this is prompting investors to look at setting up operations from day one in Ireland. Increased early stage pharma companies means the potential for even more commercial pharmaceutical businesses in the future and thus, turning Ireland into an end to end hub for pharmaceutical development, manufacturing and supply.
The Irish are highly adaptable and resilient people whom I’m sure will turn what would potentially be seen as a negative for the pharma industry here into a hugely positive outcome for our future as hotspot for leading pharmaceutical and biopharmaceutical businesses.