Biotechnology in Countries Starting with "I" – Part 4: Ireland

This is a guest post from Susan K Finston, President of Finston Consulting. Do you have a response to Susan’s post? Respond in the comments section below.
Susan Kling Finston
Perhaps like me you are working and not on vacation this early August.  If so, I hope that you will join me in a mental vacation to the Emerald Isle.  So close your eyes and think of biotech in Ireland.

One data point that may come to mind is the country’s famously low corporate tax rate, particularly following recent reports of M&A activity driven in part by the opportunity to “buy into” Ireland’s 12.5% corporate tax bracket.

The buyer, Perrigo, may be the largest pharma company you never heard of:  a Michigan-based company with strengths in over-the-counter (OTC), generic prescription, and active pharmaceutical ingredients (APIs), nutritional products (formula, supplements), and related consumer products.

In a deal announced July 29th, Perrigo is buying Irish biotech Elan for $8.6 billion and moving to Ireland, reportedly to save $150 million annually in corporate taxes. This latest news involving a major U.S. company pulling up stakes and moving to Ireland to save on taxes likely may relaunch debate by American states over the plusses and minuses of “Ireland’s model for growth using state money and incentives to lure private biotechnology companies.”

So just how likely is it that tax rates are a key driver for M&A decisions and broader biotech growth?  Not very.

It may be unsettling to hear about a major U.S company jumping ship and giving up its nationality for reported tax gains, given our complicated feelings about homeland and nationality.  Corporations, however, are not people – sorry, Mr. Romney – and when they get to be as big as Perrigo, may not retain a clear national identity.

Perrigo’s strengths in generics and OTC products are driven, for example, through international acquisitions over the last decade, including Agis Industries (Israel), Galpharm Healthcare (UK), Laboratorios Diba (Mexico), and Orion Laboratories (Australia, New Zealand), among others.   Given ongoing operations of affiliated business units in Australia/New Zealand, Europe, Latin America, and the Middle East, how American is Perrigo – even before the Elan takeover?

More broadly,  as noted back in Biotechnology in Countries Starting with “I”  (Part 3  –  back in March 2013), Italy, and not Ireland, places third in the EU for biotech after the UK and Germany, as measured by the number of pure biotech companies. Italy’s corporate tax rate is nearly triple that of Ireland.

How does Ireland stack up in the EU looking –  beyond straight numbers of pure biotech companies?  According to the EU’s Innovation Scoreboard (2013), Ireland is the tenth (10th) most innovative market for biotechnology in Europe, falling short of the most successful biotech markets in the EU.

Using its own composite index including human resources, firm investment, strength of research systems, entrepreneurship intellectual assets and related economic impact, the EU’s top-4 picks are Denmark, Finland, Germany and Sweden.  Corporate tax rates play a limited role at best, in the biotechnology ecosystem.

Will we likely see similar transactions this year, where companies outside of Ireland acquire Irish assets and relocate to the Emerald Isle?  Possibly, given that M&A is again on the upswing and at least two Irish healthcare companies are rumored as attractive take-over targets.  There has to be more on the table than a more favorable tax rate to justify a term sheet, as one analyst has noted:

“A deal that is solely driven by tax purposes could be a slippery slope.” 


Susan K. Finston is President of Finston Consulting LLC, and, together with biotechnology pioneer Ananda Chakrabarty, is co-founder of Amrita Therapeutics Ltd., an emerging biopharmaceutical company based in India with cancer peptide drugs entering in vivoresearch. She is currently preparing to launch her first Crowd Funding campaign for Amrita Therapeutics first-ever therapeutic oncology medical device. For more information see or


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